Civil Courts lack jurisdiction in matters under ongoing arbitration as per contractual agreements, leading to dismissal of related civil suits.

Judgment

DATE OF JUDGMENT

31 /07/2025

These civil revision petitions have been filed by the defendant Nos. 1 and 2 (for short 'the defendants') under Section 115 of the Code of Civil Procedure, 1908 against the order dated 15.01.2025 passed by Additional District and Sessions Judge No. 3, Jaipur District, Jaipur (for short 'the trial Court'), by which the trial Court dismissed the application filed by the defendants under Order VII Rule 11 CPC.

Learned counsel for the defendants submits that respondent No. 1-plaintiff (for short 'the plaintiff') filed a civil suit for declaration and permanent injunction against the defendants in which defendants filed an application under Order VII Rule 11 CPC but the trial Court vide order dated 15.01.2025 wrongly dismissed the application filed by the defendants.

Learned counsel for the defendants also submits that civil Court had no jurisdiction to try the suit because by way of suit, plaintiff wanted to execute the business conducting agreement dated 25.01.2023, and only commercial Court had jurisdiction to try the suit. As per the plaintiff's contention, disputed property was transferred to S. Nand Kumar and Company Pvt. Ltd., and as per the agreement dated 25.01.2023 arbitration proceedings are maintainable as such the dispute between the plaintiff and defendant No. 1 has already been referred to the Arbitrator. The agreement between Shubham Resort Pvt. Ltd. and M/s Golden Plates Banquets Private Ltd. was terminated by legal notice dated 17.04.2024. Thereafter, the plaintiff had filed an application under Section 9 of the Arbitration and Conciliation Act before the Commercial Court No. 1, Jaipur Metro, Jaipur, and the Commercial Court vide order dated 02.09.2024 dismissed the application observing that after termination of the said agreement, the plaintiff had no right over the said property. The plaintiff could only seek compensation in terms of Section 64 of the Easement Act. The plaintiff challenged the said order dated 02.09.2024 before this Court by filing DBCMA No. 4192/2024 and the Division Bench of this Court vide order dated 19.10.2024 dismissed the appeal and affirmed the order passed by the commercial Court.

Learned counsel for the defendants further submits that as per the conditions of the agreement, civil court had no jurisdiction because arbitration proceedings are going on. In the plaint, contention of the plaintiff that arbitration proceedings may take time is not the ground to file the suit. Whether agreement was wrongly terminated or not, is to be decided by the Arbitrator and not by the civil Court. So, order dated 15.01.2025 passed by the trial Court be set aside and the suit filed by the plaintiff be dismissed on the ground of no cause of action and for want of jurisdiction.

Learned counsel for the defendants has placed reliance upon the following judgments:-

1. T. Arvindandam V. T.V. Satypal & Anr. reported in (1977) 4 SCC 467.

2. K. Akbar Ali V.K. Umar Khan & Ors. reported in (2021) 14 SCC 51.

3. Key Pee Buildtech Pvt. Ltd. V. Shahjahan Begum reported in MANU/RH/0432/2015.

4. Madan Lal Vaid V. Nand Kumar Walia & Ors reported in MANU/DE/1282/2001.

5. Holy Health & Education Society V. Delhi Development Authority reported in MANU/DE/0413/1999.

6. Kvaerner Cementation India Ltd. V. Bajranglal Agarwal & Anr. reported in (2012) 5 SCC 2014.

7. Sardar Harnam Puri V. Union of India reported in 2005 SCC Online Raj. 84.

8. Naolin Infrastructure Pvt. Ltd. V. Kalpana Industries reported in 2024 SCC Online TS 1618.

9. Disrict Cricket Association V. Rajasthan Cricket Association & Ors. in S.B. Civil Second Appeal No. 70/2020 decided on 14.09.2020.

Learned counsel for the plaintiff has opposed the arguments advanced by learned counsel for the defendants and submits that plaintiff and S. Nand Kumar and Company Pvt. Ltd. had no privity of contract. No arbitration agreement was executed between them. Defendants wrongly terminated the agreement and transferred the property to S. Nand Kumar and Comp