Case Note & Summary
The appellant, M/s. S.S. Dave and Company, a partnership firm, filed a civil suit against the respondent, Zilla Parishad, Chandrapur, seeking certain reliefs arising out of a contract for works. The trial court, by order dated 4.8.2014, returned the plaint under Order 7 Rule 11 of the Code of Civil Procedure, 1908, on the ground that the contract contained an arbitration clause (Condition No. 24) which provided for dispute resolution through a competent authority. The appellant challenged this order in appeal before the High Court. The High Court observed that the mere existence of an arbitration clause does not oust the jurisdiction of the civil court. The court noted that the trial court had not considered whether the dispute had been referred to arbitration or whether any application under Section 8 of the Arbitration and Conciliation Act, 1996 had been made. The High Court held that the plaint could not be returned solely on the basis of the arbitration clause, as the civil court retains jurisdiction unless the matter is actually referred to arbitration. Accordingly, the appeal was allowed, the impugned order was set aside, and the trial court was directed to proceed with the suit in accordance with law.
Headnote
A) Civil Procedure - Return of Plaint - Order 7 Rule 11 CPC - Arbitration Clause - The trial court returned the plaint holding that the dispute was covered by an arbitration clause in the contract. The High Court held that the existence of an arbitration clause does not oust the jurisdiction of the civil court unless the dispute is referred to arbitration under the Arbitration and Conciliation Act, 1996. The court set aside the order and directed the trial court to proceed with the suit. (Paras 2-4)
Issue of Consideration
Whether the civil court was justified in returning the plaint on the ground that the dispute is covered by an arbitration clause in the contract between the parties.
Final Decision
The appeal is allowed. The impugned order dated 4.8.2014 passed by the learned Civil Judge (Sr.Dn.), Chandrapur is set aside. The trial court is directed to proceed with the suit in accordance with law.
Law Points
- Arbitration clause does not oust civil court jurisdiction
- Return of plaint under Order 7 Rule 11 CPC is not automatic
- Civil court can entertain suit despite arbitration agreement if no application for reference is made
Case Details
2015 LawText (BOM) (06) 126
Appeal Against Order No.126 of 2014
Mr. N.R. Bhishikar for the Appellant, Mr. Akshay Sudame for the Respondent
M/s. S.S. Dave and Company
Zilla Parishad, Chandrapur
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Nature of Litigation
Appeal against order returning plaint in a civil suit arising out of a contract dispute.
Remedy Sought
The appellant sought to set aside the order returning the plaint and to direct the trial court to proceed with the suit.
Filing Reason
The trial court returned the plaint on the ground that the contract contained an arbitration clause, which the appellant contended did not oust the civil court's jurisdiction.
Previous Decisions
The trial court (Civil Judge, Senior Division, Chandrapur) passed an order on 4.8.2014 returning the plaint.
Issues
Whether the civil court was justified in returning the plaint on the ground that the dispute is covered by an arbitration clause in the contract between the parties.
Submissions/Arguments
The appellant argued that the existence of an arbitration clause does not oust the jurisdiction of the civil court and that the plaint could not be returned under Order 7 Rule 11 CPC on that ground alone.
The respondent supported the trial court's order.
Ratio Decidendi
The mere existence of an arbitration clause in a contract does not oust the jurisdiction of a civil court to entertain a suit. The plaint cannot be returned under Order 7 Rule 11 CPC solely on the ground that the dispute is covered by an arbitration clause, unless the matter has been referred to arbitration or an application under Section 8 of the Arbitration and Conciliation Act, 1996 has been made.
Judgment Excerpts
According to the learned Counsel for the appellant, in the impugned order, the learned trial Judge made reference to a clause in the contract between the parties, which is mentioned as below : Condition no.24. Dispute Redressal System...
The mere existence of an arbitration clause does not oust the jurisdiction of the civil court.
Procedural History
The appellant filed a civil suit in the court of Civil Judge (Sr.Dn.), Chandrapur. The trial court, by order dated 4.8.2014, returned the plaint under Order 7 Rule 11 CPC on the ground that the contract contained an arbitration clause. The appellant preferred an appeal against that order before the High Court of Bombay at Nagpur Bench.
Acts & Sections
- Code of Civil Procedure, 1908: Order 7 Rule 11
- Arbitration and Conciliation Act, 1996: Section 8
