2026 Supreme(Kar) 354

IN THE HIGH COURT OF KARNATAKA AT BENGALURU
Tara Vitasta Ganju, J.
Bharath Electronics Limited - Petitioner
Versus
Ibm India Private Limited - Respondent
Writ Petition No. 789 of 2022 (GM-CPC)
Decided On : 29-07-2026

Supervisory jurisdiction under Article 227 is restricted in commercial disputes. For Order VII Rule 11(d) CPC applications, courts must only consider plaint averments. Disputed questions regarding contractual linkages or arbitration clauses require trial, particularly when no application under Section 8 of the Arbitration and Conciliation Act is filed.

Headnote:(A) Constitution of India, Article 227 - Commercial Courts Act, 2015 - Scope of supervisory jurisdiction - The power under Article 227 must be exercised sparingly and not as an appellate remedy, particularly in proceedings arising out of the Commercial Courts Act - Interference is warranted only where non-correction would lead to manifest injustice, patent perversity, or jurisdictional failure, such as when errors are incapable of correction at a later stage. (Paras 35, 36)

(B) Code of Civil Procedure, 1908, Order VII Rule 11(d) and Section 20 - Rejection of plaint - The court must confine its examination solely to the averments contained in the plaint and the documents filed along with it - The defence set up by the defendant or any material outside the plaint is wholly irrelevant at the threshold stage of deciding an application for rejection of the plaint - Disputed questions of fact or mixed questions of law and fact requiring appreciation of evidence cannot be adjudicated under Order VII Rule 11. (Paras 39, 39.1, 39.2, 42, 43)

(C) Arbitration and Conciliation Act, 1996, Section 8 - Reference to arbitration - The existence of an arbitration agreement does not operate as an automatic bar to the jurisdiction of a civil court - A party seeking reference to arbitration must file an application under Section 8 before submitting their first statement on the substance of the dispute - In the absence of such an application, the jurisdiction of the civil or commercial court continues to subsist. (Paras 48, 48.1, 49)

(D) Contract Act, 1872 - Exclusive jurisdiction clauses - Parties may limit jurisdiction to a particular court by consent, provided the court is competent to have such jurisdiction in the first place and the clause is not absolutely restrictive. (Paras 51, 51.2)

Facts of the case:
A party furnished a performance bank guarantee for a project. The guarantee was subsequently invoked by the other party, leading the provider to institute a commercial suit seeking a declaration that the invocation was illegal and for the refund of the amount recovered. The defendant filed an application under Order VII Rule 11(d) of the Code of Civil Procedure, arguing that the dispute was governed by a tripartite agreement containing an arbitration clause and an exclusive jurisdiction clause for courts in another city. The commercial court dismissed the application, finding that the bank guarantee was linked to a separate business partner agreement and not the tripartite agreement. The defendant challenged this order under Article 227 of the Constitution.

Findings of Court:
The court found that the dispute regarding which agreement governed the performance bank guarantee constituted a disputed question of fact that could not be decided under Order VII Rule 11. Furthermore, since the defendant failed to file an application under Section 8 of the Arbitration and Conciliation Act, the court's jurisdiction was not ousted. The petition was also noted to be filed with inordinate delay without sufficient justification.

Issues: (i) Whether the order dismissing the application under Order VII Rule 11(d) of the Code of Civil Procedure warrants interference under Article 227 of the Constitution? (ii) Whether the dispute relating to the performance bank guarantee can ex facie be said to be governed by the tripartite agreement containing an arbitration and jurisdiction clause? (iii) Whether the petition is barred on account of delay and laches?

Ratio Decidendi: Adjudication under Order VII Rule 11 of the Code of Civil Procedure must be based on a meaningful reading of the plaint alone; it cannot be used to resolve disputes over which of multiple agreements governs a cause of action. Additionally, statutory bars created by arbitration agreements must be invoked via a proper Section 8 application under the Arbitration and Conciliation Act to oust the jurisdiction of a civil court.

Result: The petition is accordingly dismissed.

JUDGMENT :

Tara Vitasta Ganju, J.

Table of Contents

S.no	Description
I.	Preface
II.	Brief Facts:
III.	Impugned Judgment:
IV.	Contentions of the Petitioner/Defendant:
V.	Contentions of the Respondent/Plaintiff:
VI.	Issues for Consideration:
VII.	Analysis and Findings:
A.	Scope of Interference under Article 227 of the Constitution of India:
B.	Enquiry under Order VII Rule 11(d) of the CPC:
C.	Is the suit barred in view of the existence of an arbitration clause or a jurisdiction clause in the Tripartite Agreement:
D.	Disputed Questions of Fact:
E.	Delay and Laches:
VIII.	Conclusion:

I. Preface

1. The present petition is instituted under Article 227 of the Constitution of India, 1950 [hereinafter referred to as “the Constitution”] calling in question the Order dated 09.08.2019 passed by the LXXXII Additional City Civil and Sessions Judge, Bengaluru [hereinafter referred to as the “Commercial Court”] in Com. O.S. No. 3996 / 2017 [hereinafter referred to as the “Commercial Suit”], whereby I.A.No.3 filed by the petitioner / defendant under Order VII Rule 11(d) read with Section 20 of the Code of Civil Procedure, 1908 (hereinafter referred to as the “CPC”), seeking rejection/return of the plaint came to be dismissed [hereinafter referred to as the “Impugned Order”].

2. The dispute in the present proceedings arises out of the invocation of a Performance Bank Guarantee dated 22.03.2006 furnished by the respondent/plaintiff [hereinafter referred to as the “PBG”] in connection with the implementation of the MTNL project. The petitioner/ defendant contends that the dispute concerning the PBG is governed by the agreement dated 24.06.2006 executed between the parties [hereinafter referred to as the “Tripartite Agreement”], which contains an arbitration clause and an exclusive jurisdiction clause conferring jurisdiction upon the Courts at Delhi. Per contra, the respondent/plaintiff contends that the dispute pertaining to the PBG arises independently and is not governed by the Tripartite Agreement.

3. At the time the matter was initially examined, it was brought to the notice of this Court that Comm. O.S. No.3996/2017 was posted for trial and that, in the absence of interim protection, the present petition would be rendered infructuous. Taking note of the said submission, this Court, by order dated 10.07.2023, directed stay of all further proceedings in Comm. O.S. No.3996/2017 pending on the file of the learned Commercial Court, while reserving liberty in favour of the respondent/plaintiff to seek vacation or modification of the interim order.

3.1 Since the complete Trial Court Record was not available, this Court had requisitioned the same from the learned Commercial Court, which was subsequently returned.

4. This Court has, while examining a batch of petitions, W.P.Nos. 30565/2025, 28142/2025, 33094/2025, 11023/2021 on the question of interplay between the Commercial Courts Act, 2015 (hereinafter referred to as ‘the CC Act’) and Article 227 of the Constitution, by its Order dated30.01.2026, directed as under:

“1. One of the issues that arise in the present petition is whether the interim orders passed by a Commercial Court are amenable to the jurisdiction of this Court under Article 227 of the Constitution of India.

2. This Court is hearing a batch of matters on the same issue which is now listed for hearing on 04.02.2026 including WP No.3571 of 2023 and connected matters.

3. Since the issue that arises is similar, list this petition along with WP No.3571/2023 and connected matters on 04.02.2026.”

4.1 Arguments on the issue of challenge to the orders passed by the Commercial Court were addressed by the learned Senior Counsel and learned counsel appearing for the parties in this matter along with their contentions on the merits of this case.

4.2. Ms. Nayana Tara B G, was appointed as Amicus Curiae [in the connected matter in W.P.No.28142/2025 which was posted along with Kanpur Flowercycling Private Limited vs. M/s. Sarathi International Inc. , 2026 SCC OnLine Kar 6536 : NC: 2026:KHC

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