The civil court cannot adjudicate disputes covered by an arbitration agreement; such disputes must be referred to arbitration.

This second appeal under Section 100 of the Code of Civil Procedure (“C.P.C.” for short) is filed aggrieved against the Judgment and decree, dated 22.01.2020 in A.S.No.43 of 2019, on the file of the Principal District Judge, Srikakulam, (“First Appellate Court” for short) modifying the decree, dated 28.03.2018 in O.S.No.02 of 2011, on the file of the Principal Senior Civil Judge, Srikakulam (“Trial Court” for short). Cross Objections are filed by the defendant in the suit proceedings.

2. The appellant herein is the plaintiff and the respondent herein is the defendant in O.S.No.02 of 2011.

3. The plaintiff initiated action in O.S.No.02 of 2011, on the file of the Principal Senior Civil Judge, Srikakulam, with a prayer for grant of permanent injunction, restraining the defendant and any other person claiming under the defendant, from ever claiming or enforcing the defendant’s share of profit and loss in the firm M/s. Ajantha Real Estates, Srikakulam and for other reliefs.

4. The defendant/petitioner filed a petition vide I.A.No.373 of 2017 in O.S.No.2 of 2011, on the file of the Principal Senior Civil Judge, Srikakulam, under Order 7 Rule 11 R/w Section 151 of the Code of Civil Procedure , R/w Section 8 of the Arbitration and Conciliation Act with a prayer to reject the plaint.

5. The learned trial Judge allowed the petition vide I.A.No.373 of 2017 in O.S.No.2 of 2011 without costs and rejected the suit filed by the plaintiff. Felt aggrieved of the same, the unsuccessful plaintiff in the above interlocutory application filed appeal suit before the First Appellate Court. The learned First Appellate Judge partly allowed the appeal by modifying the order dated 28.03.2018, passed by the learned Principal Senior Civil Judge, Srikakulam in I.A.No.373 of 2017 in O.S.No.02 of 2011 by directing the Court of the Principal Senior Civil Judge, Srikakulam, to refer the parties to the Arbitrator as per Section 8 of the Arbitration and Conciliation Act . Aggrieved thereby, the unsuccessful plaintiff in I.A.No.373 of 2017 in O.S.No.02 of 2011 approached this Court by way of second appeal.

6. For the sake of convenience, both parties in the appeal will be referred to as they are arrayed in the original suit.

7. The case of the defendant/petitioner, in brief, as set out in the petition averments in I.A.No.373 of 2017 in O.S.No.02 of 2011, is as follows:

The defendant, plaintiff, and some others are partners of M/s. Ajantha Real Estates, Srikakulam. The said firm is registered, and the plaintiff, defendant, and others entered into a partnership deed, wherein there is a clause that “all the matters of disputes among the partners shall be settled through arbitration only, subject to the provisions of the Arbitration Act.” The petitioner/defendant pleaded that the original document of the partnership deed is with the plaintiff, and the plaintiff, by suppressing the above facts, filed the suit in O.S.No.02 of 2011 for an equitable relief of injunction to harass the defendant. The petitioner/defendant further pleaded that when there is an arbitration clause in the partnership deed, the plaintiff has no right to file a civil suit in a civil court, and further, there is no option left to the judicial authority under law but to refer the parties to arbitration. As such, the petitioner/defendant pleaded that there is no cause of action to pursue the case in the civil court, and the plaintiff is not entitled to any relief.

8. The case of the plaintiff/respondent, in brief, as per the averments in counter affidavit filed by the plaintiff/ respondent in I.A.No.373 of 2017 in O.S.No.02 of 2011, is as follows:

The respondent pleaded that