1 2025:CGHC:14790-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR FA No.16 of 2021 1 - Technodrillers, A Registered Partnership Firm, Through Its Partner Moolchand Jain, S/o Late Shri Phoolchand Jain Resident of C-135, Sector 5, Tagore Nagar, Raipur, District Raipur Chhattisgarh Appellant versus 1 - Electro Therm India Limited, Address - 72 Balodiya Via Thaltej, Ahemdabad, Gujrat, District : Ahmadabad, Gujarat 2 - Chief Manager, Bank of Baroda, Branch Vivekanand Nagar, B-1, Shailendra Nagar, Raipur, District - Raipur Chhattisgarh Respondent(s) FA No.15 of 2021 1 - Technodrillers A Registered Partnership Firm, Through Its Partner Moolchand Jain, S/o Late Shri Phoolchand Jain Resident Of C 135, Sector 5, Tagore Nagar, Raipur , District Raipur Chhattisgarh Appellant Versus 1 - Electro Therm India Limited Address 72, Balodiya Via Thaltej, Ahemdabad, Gujrat., District : Ahmadabad, Gujarat 2 - Chief Manager Bank Of Baroda, Branch Vivekanand Nagar, B-1, Shailendra Nagar, Raipur, District Raipur, Chhattisgarh Respondent(s) Digitally signed by RAMAKANT NIRALA 2 For Appellant : Mr. Ashish Surana, Advocate For Respondent No.1 : Mr. Sudeep Verma, Advocate For Respondent No.2 : Mr. Ayush Mahiswar, Advocate on behalf of Mr. Ankit Singhal, Advocate Hon’ble Smt. Justice Rajani Dubey Hon’ble Shri Justice Sachin Singh Rajput Judgment on Board Per Rajani Dubey, J. 27/03/2025 1. Since both the appeals arise out of same order under challenge and involve common question of law and fact, therefore, both are heard together and are being disposed of by a common judgment. 2. The present appeals have been filed by the appellant/plaintiff challenging the order dated 24.02.2021 passed by the learned 2nd Additional District Judge, Raipuir in Civil Suit Nos.58-A/2019 & 59-A/2019. 3. Learned counsel for the appellant in both the appeals submits that the appellant/plaintiff company filed civil suit against the respondents/defendants for permanent injunction and declaration, but the learned Trial Court did not appreciate the legal provisions and on filing application under Order 7 Rule 11 of CPC by the respondents/defendants dismissed the suit of the plaintiff by the impugned order. The impugned order passed by the learned Trial Court rejecting the plaint is illegal, erroneous and contrary to law. The learned Trial Court has failed to appreciate that while adjudicating the application under Order 7 3 Rule 11 of CPC, only the plaint averments can be considered and not evidence and written statement of the defendant. The learned Trial Court erred in holding that the plaint is liable to be rejected as there is arbitration clause in acceptance order. The learned Trial Court ought to have considered that there is no arbitration agreement between the plaintiff and the defendant No.1. The learned Trial Court erred in considering the averments made in the plaint and the relief claimed by the plaintiff. The learned Trial Court erred in holding the plaint to be barred by law. The learned Trial Court did not appreciate the provisions of Arbitration Act and summarily dismissed the suit of the plaintiff/appellant. Learned counsel for further submits that the plaintiff has specifically denied the existence of any arbitration agreement between the plaintiff and the defendant No.1. The learned Trial Court ought to have considered that there is no arbitration agreement as defined under the Arbitration and Conciliation Act, 1996 (for short ‘the Act, 1996’) between the plaintiff and the defendant No.1. The impugned order passed by the learned Trial Court is contrary to provisions of the Order 7 Rule 11 of CPC. The learned Trial Court without any pleading by the respondents/defendants summarily dismissed the suit of the plaintiff, which is against the settled principles of law. The learned Trial Court also did not appreciate Section 8 of the Act, 1996, as such the impugned order is liable to be set aside. Reliance has been placed on the judgment rendered by the 4 Hon’ble Supreme Court in the matters of Hindustan Petroleum Corporation Ltd vs Pinkcity Midway Petroleums, reported in (2003) 6 SCC 503, Mahesh Kumar vs Rajasthan State Road Transport Corporation, Jodhpur, reported in 2005 SCC Online Raj 71 and Maa Sarada and Co. vs Sahidul Hoque, reported in 2018 SCC Online Gau 2102. 4. Learned counsel for the respondents/defendants oppose the prayer made by the appellant’s counsel and jointly submit that the learned Trial Court has rightly appreciated the pleadings of the respondents/defendants and after appreciation of material available on record rightly dismissed the suit of the plaintiff, therefore, both the appeals are without any merit and are liable to be dismissed. 5. Heard learned counsel for the parties and perused the material available on record. 6. It is clear from the record of the learned Trial Court that the plaintiff/appellant company Technodrillers through its partner Moolchand Jain filed two civil suits bearing Civil Suits No.58-A/2019 and 59-A/2019 against the respondents/defendants for declaration and permanent injunction. In both the suits, the respondent No.1/defendant No.1 filed application under Order 7 Rule 11 of CPC on this ground that in the acceptance order, there is arbitration clause and jurisdiction of dispute would be at Ahmedabad, Gujrat Court. The learned Trial Court by the impugned order dated 24.02.2021 5 allowed the application of the respondent No.1/defendant No.1 under Order 7 Rule 11 of CPC and dismissed the plaintiff’s suit on this ground that there is arbitration clause, therefore, as per Arbitration Act, 1996 , suit is barred by law. The operative part of the impugned order is as under:- “vr% vf/kfu;e dh mDr nksuksa /kkjkvksa ds v/;;u ls ,oa mHk;i{k ds e/; gq;s djkj ,oa mijksDr of.kZr 'krksZ ds vk/kkj ij ;g fof/kd fLFkfr Li"V gks tkrh gS fd mHk; i{kdkj ds e/; ek/;LFke djkj ds rgr fdlh Hkh fookn dh fLFkfr mRiUUk gksus ij mls ,dy e/;LFke ls fuiVkus fd;s tkus gsrq r; gqvk FkkA ,slh fLFkfr esa tgka i{kdkjksa ds e/; 'krsZ r; Fkh ogka izdj.k dk bl U;k;ky; ds le{k lquokbZ dk {ks=kf/kdkj ugha jg tkrk gSA bl laca/k esa izfroknh dz01 }kjk izLrqr ekuuh; mPPkre U;k;ky; dk U;k;n`"Vkar& ,-vkbZ-vkj- 2009 ,l-lh- 12 es0 'kfDrHkksx QwM~l fy0 fo0 dksykf’kfiax fyfeVsM] ekxZn’kZuh; gSA blds vkykok ekuuh; N0x0 mPp U;k;ky; fcykliqj dk U;k;n`"Vkar& 2017 ¼ 1½ lh- ts-,y-ts 345 >kalh vksjy Vksy os izk0 fy0 fo0 cSad vkQ bafM;k ,oa vU;] izLrqr fd;k gS ftlesa ek/;LFke djkj ds oS/k ,oa i{kdjksa ds e/; vkc}dj gksus ds vk/kkj ij ekeys dks ek/;LFke ds fy, fufnZ"V fd;k tkuk crk;k gSA blh rg U;k;n`"Vkar& ,-vkbZ-vkj- 2017 ¼ ,u-vks-lh-½ 869 ¼jktLFkku½ Jherh ljkst nsoh fo0 fMIVh Mk;jsDVj ,l-vkbZ- ch ,e-,p-,- t;iqj ,oa vU; izLrqr fd;k gS ftlesa i{kdkjksa ds e/; fookn mRiUu gksus ij e/;LFk ds le{k izdj.k dks Hksts tkus dk Dykst ,xzhesaV essa gksus ij O;ogkj izfdz;k lafgrk ds rgr vkns’k&7 fu;e&11 ds rgr okn dks [kkfjt fd;s tkus ;ksX; crk;k gSA blh rjg U;k;n`"Vkar&2003 ¼2½ ,e-ih-,y-ts- 307 ygkj ifCyflVh lfoZl bykgkckn fo0 ;wfu;u vkWQ bafM;k esa Hkh okn dh fo"k; OkLrq ek/;LFke djkj ds vUrxZr gksus ds vk/kkj ij U;k;ky; ds fy, i{kdkjksa dks ek/;LFke ds ikl fufnZ"V djuk vkKkid gksuk crk;k gSA bl rjg ekuuh; ofj"Bre U;k;ky;ksa us Hkh vf/kfu;e dh mDr /kkjkvksa dk leFkZu djrs gq;s i{kdkjksa ds e/; ek/;LFke djkj gksus ds vk/kkj ij fookn dks e/;LFk ds le{k Hksts tkus dks vkKkid gksuk crk;k gS vkSj tSlk fd Li"V gS fd bl izdj.k esa Hkh mHk;Ik{k ds e/; ek/;LFke djkj ds rgr fdlh izdkj dk fookn mRiUu gksus ij fookn dks fuiVkus ds fy, e/;LFk ds le{k izLrqr fd;k tkuk r; Fkk] ,sls esa vf/kfu;e ds rgr ,oa ekuuh; U;k;ky;ksa ds fn’kkfunsZ’k ds vk/kkj ij bl izdj.k dks Hkh e/;LFk ds le{k Hkstk tkuk mfpr ,oa fof/kd ik;k tkrk gS 6 ftl dkj.k izdj.k vkns’k&7 fu;e&11 ¼?k½ O;0iz0la0 ds rgr fof/k }kjk oftZr gksuk ik;k tkrk gS vkSj mDr vk/kkj ij izfroknh dz01 }kjk izLrqr vkosnu vkns’k&7 fu;e&11 O;0iz0la0 Lohdkj ;ksX; gksuk ik;k tkrk gSA vr% mijksDr o.kZu ds vk/kkj ij izLrqr vkosnu varxZRk vkns’k&7 fu;e&11 O;0iz0la0 Lohdkj fd;k tkrk gS ,oa oknh }kjk izLrqr okn okLrs mn~?kks"k.kk ,oa LFkkbZ fu"ks/kkKk vf/kfu;e ds rgr fof/k }kjk oftZr gksus ds vk/kkj ij [kkfjt fd;k tkrk gSA vr% okn [kkfjt fd;k x;kA” 7. The Hon’ble Apex Court in the matter of Hindustan Petroleum Corporation Limited (supra) held in paras 14, 15 & 16 as under:- “14. This Court in the case of P. Anand Gajapathi Raju & Ors. v. P. V. G. Raju (Dead) & Ors. [2000 (4) SCC 539] has held that the language of Section 8 is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. Therefore, it is clear that if, as contended by a party in an agreement between the parties before the Civil Court, there is a clause for arbitration, it is mandatory for the Civil Court to refer the dispute to an arbitrator. In the instant case the existence of an arbitral clause in the agreement is accepted by both the parties as also by the courts below but the applicability thereof is disputed by the respondent and the said dispute is accepted by the courts below. Be that as it may, at the cost of repetition, we may again state that the existence of the arbitration clause is admitted. If that be so, in view of the mandatory language of Section 8 of the Act, the courts below ought to have referred the dispute to arbitration. 15. The question then would arise: what would be the role of the Civil Court when an argument is raised that such an arbitration clause does not apply to the facts of the case in hand ? Learned counsel for the appellant contends that it is a matter which should be raised before the arbitrator who is competent to adjudicate upon the same and the Civil Court should 7 not embark upon an inquiry in regard to the applicability of the arbitration clause to the facts of the case. While learned counsel appearing for the respondent contends that since the applicability of the arbitration clause to the facts of the case goes to the very root of the jurisdiction of the reference to arbitration, this question will have to be decided by the Civil Court before referring the matter to arbitration even in cases where there is admittedly an arbitration clause. The answer to this argument, in our opinion, is found in Section 16 of the Act itself. It has empowered the Arbitral Tribunal to rule on its own jurisdiction including rule on any objection with respect to the existence or validity of the arbitration agreement. That apart, a Constitution Bench of this Court in Konkan Railway (supra) with reference to the power of the arbitrator under Section 16 has laid down thus : "It might also be that in a given case the Chief Justice or his designate may have nominated an arbitrator although the period of thirty days had not expired. If so, the Arbitral Tribunal would have been improperly constituted and be without jurisdiction. It would then be open to the aggrieved party to require the Arbitral Tribunal to rule on its jurisdiction. Section 16 provides for this. It states that the Arbitral Tribunal may rule on its own jurisdiction. That the Arbitral Tribunal may rule "on any objections with respect to the existence or validity of the arbitration agreement" shows that the Arbitral Tribunal's authority under Section 16 is not confined to the width of its jurisdiction, as was submitted by learned counsel for the appellants, but goes to the very root of its jurisdiction. There would, therefore, be no impediment in contending before the Arbitral Tribunal that it had been wrongly constituted by reason of the fact that the Chief Justice or his designate had nominated an arbitrator although the period of thirty days had not expired and that, therefore, it had no jurisdiction." (emphasis supplied). 16. It is clear from the language of the Section, as interpreted by the Constitution Bench judgment in Konkan Railway (supra) that if there is any objection as to the applicability of the arbitration clause to the facts of the case, the same will have to be raised before the concerned Arbitral Tribunal. Therefore, in our opinion, in this case the courts below ought not to have proceeded to examine the applicability of the arbitration clause to the facts of the case in hand but ought to have left that issue to be determined by the 8 Arbitral Tribunal as contemplated in Clause 40 of the Dealership Agreement and as required under Sections 8 and 16 of the Act.” 8. Section 8 of the Arbitration and Conciliation Act, 1996 provides as under:- “8. Power to refer parties to arbitration where there is an arbitration agreement. [(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.] (2)The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.[Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.] [Inserted by Act No. 3 of 2016 dated 31.12.2015.] (3)Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.” 9. Thus, it is clear that from the above guidelines of the Hon’ble Apex Court and provisions of the Act that the Court has mandatory duty to refer the dispute arising between the 9 contracting parties to arbitration where arbitration clause exists, but in the present case the learned Trial Court found that in acceptance letter, arbitration clause is present, as such civil suit is barred by law and accordingly dismissed the suit under Order 7 Rule 11 of CPC. 10. Order 7 Rule 10 of CPC provides as under:- “Return of plaint.—(1) [Subject to the provisions of rule 10A, the plaint shall] at any stage of the suit be returned to be presented to the Court in which the suit should have been instituted.” The aforesaid rules makes it clear that if the learned Trial Court finds that the suit is liable to be referred before the mediator, then the learned Trial Court itself shall refer the dispute before the mediator or upon any prayer made so under Order 7 Rule 10 of CPC. If the learned Trial Court finds that the Civil Court has no jurisdiction, then the Court shall return the plaint to the plaintiff to file before the competent authority, but in the present case, the learned Trial Court wrongly dismissed the suit of the plaintiff, as such the impugned order is not sustainable. 11. Consequently, both the appeals are allowed. The impugned order dated 24.02.2021 passed in both Civil Suit Nos.58-A/2019 & 59-A/2019 is hereby set aside. The matter is remitted back to the learned Trial Court with this direction that the learned Trial Court after hearing both the parties shall pass order according to the provisions of the Act, 1996 as well as the guidelines of the Hon’ble Apex Court. If the learned Trial Court finds that the Civil 10 Court has no jurisdiction, then it shall proceed ahead under Order 7 Rule 10 of CPC and If the learned Trial Court finds that the matter is liable to be referred before the arbitrator, then it shall proceed for referring the matter before the arbitrator, if both the parties agree. 12. Needless to say that the both the parties are at liberty to amend their pleadings and file additional documents. 13. It is also made clear that this Court has not expressed any opinion on the merits of the case. The Trial Court without being influenced by the order of this Court shall consider and decide the case on its own merit. 14. The parties shall appear before the Trial Court on 01.05.2025. Sd/- Sd/- Rajani Dubey Sachin Singh Rajput Judge Judge Nirala