Justice J.B. Pardiwala, Justice R. Mahadevan, Supreme Court
Once Application Filed In Due Compliance With Section 8 A&C Act, Civil Court’s Approach Should Not Be To See If It Has Jurisdiction : Supreme Court
|The Supreme Court held that once an Application in due compliance with Section 8 of the Arbitration and Conciliation Act, 1996 (A&C Act) is filed, the approach of the Civil Court should be not to see whether the Court has jurisdiction.
The Court held thus in a Special Leave Petition (SLP) preferred against the Judgment of the Madras High Court which rejected the Civil Revision Petition and affirmed the Order of the Commercial Court.
The two-Judge Bench of Justice J.B. Pardiwala and Justice R. Mahadevan observed, “Once an application in due compliance with Section 8 of the Act of 1996 is filed, the approach of the civil court should be not to see whether the court has jurisdiction. It should be to see whether its jurisdiction has been ousted. There is a lot of difference between the two approaches. Once it is brought to the notice of the court that its jurisdiction has been taken away in terms of the procedure prescribed under a special statute, the civil court should first see whether there is ouster of jurisdiction in terms or compliance with the procedure under the special statute.”
The Bench said that once there is an arbitration agreement between the parties, a judicial authority before whom an action is brought covering the subject-matter of the arbitration agreement is under a positive obligation to refer parties to arbitration by enforcing the terms of the contract.
Senior Advocate V. Prakash appeared on behalf of the Petitioners.
In this case, the Petitioners-Plaintiffs initiated a Suit in the Commercial Court and the Respondents-Defendants appeared. The Defendants preferred an Application under Section 8 of the A&C Act. The said Court allowed the said Application. Being dissatisfied with the same, the Petitioners moved to the High Court by way of a Civil Revision Application. The High Court rejected the said Revision Application. In such circumstances, the Petitioners approached the Apex Court.
Reasoning
The Supreme Court in view of the facts and circumstances of the case, noted, “The law is well settled that allegations of fraud or criminal wrongdoing or of statutory violation would not detract from the jurisdiction of the arbitral tribunal to resolve a dispute arising out of a civil or contractual relationship on the basis of the jurisdiction conferred by the arbitration agreement.”
The Court elucidated that the general law should yield to the special law - generalia specialibus non derogant and in such a situation, the approach shall not be to see whether there is still jurisdiction in the Civil Court under the general law.
“Such approaches would only delay the resolution of disputes and complicate the redressal of grievance and of course unnecessarily increase the pendency in the court”, it added.
The Court remarked that there is no element of discretion left in the Court or Judicial Authority to obviate the legislative mandate of compelling parties to seek recourse to arbitration.
“In view of the foregoing, we are of the view that no error, not to speak of any error of law, could be said to have been committed by the High Court in passing the impugned judgment and order”, it concluded.
Accordingly, the Apex Court dismissed the SLP.
Cause Title- K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr. (Neutral Citation: 2025 INSC 687)
Appearance:
Petitioners: Senior Advocate V. Prakash, AOR Prabhat Kumar, Advocates Aneesh Renganathan, Swadha Gupta, Karan Dang, and Vishwam Mishra.