Balaji Industrial Engineering Ltd. Vs Steel Authority of India Ltd. (Supreme Court of India)
Summary: The Supreme Court allowed the appeal filed by Balaji Industrial Engineering Ltd. against Steel Authority of India Ltd. and set aside the Calcutta High Court Division Bench’s judgment dated 2 February 2026. The dispute concerned whether a judgment delivered by a Single Judge on a petition under Section 34 of the Arbitration and Conciliation Act, 1996 could be treated as without jurisdiction merely because the petition had not been formally transferred to the Commercial Division under Section 15 of the Commercial Courts Act, 2015. The Supreme Court held that, in the particular circumstances, the Single Judge’s decision was not a nullity because the Judge was designated as a Commercial Court, as reflected in the cause list, and the respondent had participated in the proceedings without seeking transfer or raising an objection. The Court restored the Section 37 appeal to the Commercial Appellate Division for fresh adjudication on merits, leaving all contentions open.
Background: Iron Ore Contract and Arbitral Award
On 12 January 2005, Steel Authority of India Ltd. issued a tender for the sale of approximately 60,000 metric tonnes of Run-of-Mine iron ore. A contractual dispute subsequently arose concerning termination of the contract and alleged failure to deliver the contracted material. The dispute was referred to arbitration.
By an award dated 19 June 2013, the Arbitral Tribunal held, among other things, that Steel Authority of India Ltd. had wrongfully terminated the contract and failed to deliver the contracted iron ore. The Tribunal directed refund of the security amount, reimbursement of amounts paid and compensation for the additional expenditure incurred in purchasing iron ore from the market, together with interest.
Steel Authority of India Ltd. challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. During the pendency of that challenge, the Commercial Courts Act, 2015 came into force on 23 October 2015. The respondent did not apply for transfer of the pending petition to the Commercial Division.
Single Judge Dismissed the Section 34 Challenge on Merits
On 8 August 2023, the Single Judge of the Calcutta High Court dismissed the Section 34 petition. The Judge found that Steel Authority of India Ltd. had failed to deliver the contracted iron ore despite receiving payment and that the Arbitral Tribunal’s findings were supported by the evidence. The Single Judge concluded that no ground for interference with the arbitral award under Section 34 had been established.
Calcutta High Court Division Bench: Non-Transfer Rendered Decision Without Jurisdiction
Steel Authority of India Ltd. challenged the Single Judge’s order through an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, registered as APO/65/2024.
By its judgment dated 2 February 2026, the Division Bench held that the pending arbitration challenge ought to have been transferred to the Commercial Division in accordance with Section 15 of the Commercial Courts Act, 2015. The Division Bench observed that AP/1097/2013 had remained in the Non-commercial Division and that the Single Judge had disposed of the matter without treating it as a Commercial Division proceeding.
The Division Bench considered that the Court’s failure to transmit the petition should not prejudice the parties. It consequently set aside the Single Judge’s judgment on jurisdictional grounds and directed transmission and renumbering of the Section 34 petition for fresh disposal by the Commercial Division. The Division Bench expressly stated that it had not examined the merits of the arbitration dispute.
The High Court also directed continuation of an existing bank guarantee arrangement involving Rs. 5 crores, with an annual increase of 7%, until disposal of the Section 34 petition. The guarantee and its accruals were to abide by the outcome of that petition.
Supreme Court: Roster Authority and Section 15(5) Must Be Considered Together
Before the Supreme Court, Balaji Industrial Engineering Ltd. argued that the Single Judge had been designated as a Commercial Court and that the failure to transfer or renumber the petition was merely procedural or administrative. It submitted that such an omission could not invalidate a judgment rendered on merits.
Steel Authority of India Ltd. maintained that the Single Judge lacked the necessary roster allocation from the Chief Justice and that the judgment had therefore been correctly set aside as without jurisdiction.
The Supreme Court affirmed the established principle that the Chief Justice is the master of the roster and that a Bench deciding a matter outside its assigned roster acts without jurisdiction. Referring to Garden Reach Shipbuilders and Engineers Ltd. and earlier Supreme Court authorities, it reiterated the importance of roster allocation for judicial discipline and institutional coherence.
However, the Supreme Court found a decisive factual distinction in the present case: the cause list accompanying the Special Leave Petition showed that the Single Judge who decided the Section 34 petition was designated as a Commercial Court.
The Court also examined Section 15(5) of the Commercial Courts Act, 2015, which permits the Commercial Appellate Division, on an application by a party, to withdraw and transfer a qualifying pending proceeding that has not been transferred under the earlier subsections of Section 15. The respondent had made no such application and had participated in the Section 34 proceedings without objection, inviting a decision on merits.
In these circumstances, the Supreme Court held that the Single Judge’s judgment could not be treated as a nullity or as one passed without jurisdiction. The Division Bench had therefore erred in setting aside that judgment solely on jurisdictional grounds without examining the merits.
Final Ruling: Section 37 Appeal Remitted for Fresh Merits Adjudication
The Supreme Court quashed the Calcutta High Court Division Bench’s judgment dated 2 February 2026 and remitted the matter to the Commercial Appellate Division for fresh hearing and decision of the Section 37 appeal on merits. All contentions of the parties were expressly kept open. The Supreme Court allowed the appeal without any order as to costs.
The ruling does not finally decide the validity of the arbitral award or the substantive contractual claims. Its operative effect is to remove the jurisdictional basis on which the Division Bench had set aside the Single Judge’s decision and to require adjudication of the pending statutory appeal on merits.
Cases Discussed
- Garden Reach Shipbuilders and Engineers Ltd. v. GRSE Ltd. Workmens Union & Ors., 2025 SCC OnLine SC 582 (Supreme Court) — Followed and approved on the principle that a Bench adjudicating a matter outside the roster assigned by the Chief Justice lacks jurisdiction.
- Neeta Singh & Ors. v. State of Uttar Pradesh & Ors., 2024 SCC OnLine SC 5761 (Supreme Court) — Cited in support of the respondent’s submissions concerning roster allocation and jurisdiction.
- State of Rajasthan v. Prakash Chand & Ors., (1998) 1 SCC 1 (Supreme Court) — Referred to as an authority concerning the Chief Justice’s power to allocate judicial business and the master-of-roster principle.
- Pepsi Foods Ltd. & Anr. v. Special Judicial Magistrate & Ors., (1998) 5 SCC 749 (Supreme Court) — Cited by the respondent in support of its jurisdictional objection.
- Campaign for Judicial Accountability and Reforms v. Union of India & Anr., (2018) 1 SCC 196 (Supreme Court) — Referred to through the roster-related authorities relied upon by the Supreme Court.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Leave granted.
2.This appeal arises from the judgment and order dated 02.02.2026 passed by the Division Bench of the High Court of Calcutta. By the said judgment, the Division Bench, in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (1996 Act), set aside the judgment dated 08.08.2023, whereby the petition filed by the respondent under Section 34 of the 1996 Act had been dismissed. The Division Bench remitted the matter to the Commercial Division to be renumbered and heard afresh.
3.The facts giving rise to the filing of this appeal, in brief, are that on 12.01.2005, a tender was issued by the Steel Authority of India Limited (respondent) for the sale of approximately 60,000 metric 1 tonnes of Run-of-Mine (Iron Ore) on specified commercial terms. A dispute arose between the parties regarding termination and the alleged breach of contract and the same was referred to Arbitration.
4.The Arbitral Tribunal, by an award dated 19.06.2013, inter alia, held that the respondent had wrongfully terminated the Contract and failed to deliver the contracted Iron Ore to the appellant. The Tribunal accordingly directed the respondent to refund the security amount, reimburse the amounts paid, and compensate the appellant for the additional cost incurred in procuring Iron Ore from the market, along with interest.
5.The respondent challenged the Award dated 19.06.2013 in a petition under Section 34 of the 1996 Act before the learned Single Judge of the High Court. During the pendency of the said petition, the Commercial Courts Act, 2015 (2015 Act) came into force w.e.f. 23.10.2015. However, the respondent did not raise any objection regarding the transfer of the petition to the Commercial Division.
6.The learned Single Judge, by an order dated 08.08.2023, inter alia, held that the respondent had failed to deliver the contracted Iron Ore despite receiving payment, and that the findings recorded by the Arbitral Tribunal were based on the evidence on record. The learned Single Judge concluded that no grounds for interference under Section 2 34 of the 1996 Act were made out. Accordingly, the petition was dismissed.
7.The respondent thereafter filed an appeal under Section 37 of the 1996 Act. The Division Bench of the High Court, by the impugned order dated 02.02.2026, held that the petition under Section 34 of the 1996 Act ought to have been transferred to the Commercial Division under Section 15 of the 2015 Act. It was further held that the judgment and order had been passed by a non-Commercial Division. On this ground of lack of jurisdiction, the order dated 08.08.2023 passed by the learned Single Judge was set aside, and the petition was directed to be transmitted to the Commercial Division for renumbering and fresh hearing. The Division Bench clarified that it had not examined the merits of the case and all points raised by the parties are kept open. Accordingly, the appeal was disposed of. It is in this factual background that the present appeal arises for our consideration.
8.Learned senior counsel for the appellant, while inviting the attention of this Court to the cause list, submitted that the learned Single Judge was designated as Commercial Court and, therefore, the order passed by him cannot be treated as one without jurisdiction. It was contended that the distinction between the Commercial Division and the non- 3 Commercial Division is merely an internal administrative roster allocation and does not affect the inherent jurisdiction of the Court. It was further urged that the non-transfer of the matter under Section 15 of the 2015 Act, constitutes only a procedural or administrative irregularity and cannot render a judgment passed on merits as one without jurisdiction.
9.Learned senior counsel for the respondent, on the other hand, submitted that the learned Single Judge who decided the petition under Section 34 of the 1996 Act lacked jurisdiction, as he had not been assigned the roster by the Chief Justice to deal with such matters. It was contended that the order was without jurisdiction and was, therefore, rightly set aside by the Division Bench. In support of the aforesaid submissions, reliance has been placed on the decisions 1 of this Court.
10.We have considered the rival submissions and have perused the record.
11.The legal position concerning allocation of business and authority of the Chief Justice as the master of roster is well-settled. A two-Judge Bench of this Court in Garden Reach Shipbuilders and Engineers 2 Ltd. (supra), by placing reliance on the earlier decisions of this Court 1 Neeta Singh & Ors. v. State of Uttar Pradesh & Ors.; 2024 SCC OnLine SC 5761; State of Rajasthan v. Prakash Chand & Ors.; (1998) 1 SCC 1; Pepsi Foods Ltd. & Anr. v. Special Judicial Magistrate & Ors.; (1998) 5 SCC 749; Garden Reach Shipbuilders and Engineers Ltd. v. GRSE Ltd. Workmens Union & Ors.; 2025 SCC OnLine SC 582 2 State of Rajasthan v. Prakash Chand, (1998) 1 SCC 1 and Campaign for Judicial Accountability and 4 reiterated that any adjudication by a Bench in a matter not assigned to it by the Chief Justice would be without jurisdiction and in nullity. The mandate that a Bench acting outside the roster would lack jurisdiction is a salutary principle, integral to maintaining judicial discipline and institutional coherence. We are in agreement with the view expressed by a two-Judge Bench of this Court in Garden Reach Shipbuilders and Engineers Ltd. (supra).
12.We may advert to the facts of the case in hand. The cause list annexed with the Special Leave Petition clearly indicates that the learned Single Judge who decided the petition under Section 34 of the 1996 Act, was designated as a Commercial Court.
13.It is also pertinent to take note of Section 15 of the 2015 Act which contemplates transfer of pending cases to the Commercial Division. Sub-section (5) thereof, expressly provides that where such transfer has not taken place, the Commercial Appellate Division may, upon application of any party, withdraw and transfer the matter. Section 15 (5) reads as under: “In the event that such suit or application is not transferred in the manner specified in sub-section (1), sub-section (2) or sub-section (3), the Commercial Appellate Division of the High Court may, on the application of any of the parties to the suit, withdraw such suit or application from the court before which it is pending and transfer the same for trial or disposal to Reforms v. Union of India & Anr.; (2018) 1 SCC 196 5 the Commercial Division or Commercial Court, as the case may be, having territorial jurisdiction over such suit, and such order of transfer shall be final and binding.” Thus, Section 15(5) of the 2015 Act requires parties also to seek transfer.
14.In the instant case, admittedly, the respondent did not file any such application before the learned Single Judge dealing with the petition under Section 34 of the 1996 Act. The respondent participated in the proceeding without demur and invited a decision on merits.
15.Thus, in the facts of the case, it can safely be concluded that the learned Single Judge was designated as Commercial Court and the judgment rendered by him cannot be treated either as a nullity or one passed without jurisdiction.
16.The Division Bench, therefore, was not justified in setting aside the judgment of the learned Single Judge solely on the ground of lack of jurisdiction, without examining the merits of the case.
17.For the foregoing reasons, the impugned judgment and order dated 02.02.2026 passed by the Division Bench of the High Court is quashed and set aside. The matter is remitted to the Commercial Appellate Division of the High Court, which shall hear and decide the appeal under Section 37 of the 1996 Act afresh on merits. All contentions of the parties are kept open. 6
18.Accordingly, the appeal is allowed. There shall be no order as to costs.
1.Leave granted.
2.The appeal is allowed in terms of the signed order.
3.Pending interlocutory application(s), if any, is/are disposed of.
