A court finding it lacks territorial jurisdiction over an arbitration challenge is legally prohibited from adjudicating the merits of the case; its authority is restricted to returning the application to the party for filing in the court of competent jurisdiction.

ORAL JUDGMENT

(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)

1. Both the above set of appeals under Section-37 of the Arbitration and Conciliation Act’ 1996 [in short as “the Act’1996”] and cross-objections filed by the respondent/cross-objector, are raising common issues and are between the same parties, arising out of two separate judgments in two proceedings under Section-34, passed by the Commercial Court at City Civil Court at Ahmedabad. Hence, all the matters have been heard together and are being decided by this common judgment with the consent of the learned counsels for the parties.

2. Mr. Saurabh Soparkar, learned senior counsel assisted by Ms. Pragati Pahwa, learned advocate for the appellant in the instant appeal, would submit that the cross-objections filed by the respondent herein are not maintainable, inasmuch as, the respondent has earlier filed an appeal under Section 37 being First Appeal No.595 of 2026 to challenge the findings of the Court in the impugned order under Section-34, on the issue of territorial jurisdiction. The said appeal, however, has been withdrawn by the order dated 26.02.2026 on the request of the respondent, they cannot, therefore, be permitted to maintain the cross-objections in the instant appeal.

3. This submission will not detain us for long, inasmuch as, on a bare reading of the order of withdrawal dated 26.02.2026 of First Appeal No.595 of 2026 filed by the respondent herein, would indicate that liberty was granted to the appellant therein/respondent herein to approach this Court at an appropriate stage. In view of the liberty granted by this Court, the cross-objections of the respondent herein cannot be rejected as not maintainable.

4. Even otherwise, as per own submission of the learned senior counsel for the appellant, the cross-objections are maintainable in an appeal against the order of the Court under Section-34, on an issue decided against the objector.

5. In view of the above, while holding that the cross-objections filed by the respondent herein are maintainable, we treat them as cross-appeals under Section-37 of the Arbitration and Conciliation Act’ 1996.

6. We, therefore, proceed with the hearing of all the appeals including cross-appeals filed by the parties.

7. Having heard learned counsel for the parties and perused the record, pertinent is to note that the First Appeals and the cross-objections are filed by the rival parties against the judgment and order dated 09.02.2026 passed by the Judge, Commercial Court, City Civil Court, Ahmedabad in dismissing the application under Section-34 of the Act’ 1996. Insofar as the appeal filed by the appellant herein namely the original applicant, who had filed the application under Section-34 of the Act’ 1996, the challenge is on the ground that the commercial court once has decided the issue qua lack of its territorial jurisdiction, it could not have proceeded to decide on the merits of the application under Section-34 of the Act’ 1996. The submission is that only course open for the Court under Section 34, was to return the application in accordance with the provision of Order 7 Rule of Code of Civil Procedure, leaving it open for the applicant to present it before the competent court having territorial jurisdiction to adjudicate the dispute.

8. The sub