Question On Existence Of Arbitration Clause Cannot Be Re-agitated U/S 11 After Being Settled U/S 8 A&C Act: Delhi High Court

The Delhi High Court Bench of Justice Purushaindra Kumar Kaurav has observed that when a party invokes Section 11(6), Arbitration and Conciliation Act (“ACA”) after a judicial authority has declined a referral under Section 8, ACA, it is impermissible for the Court to appoint an arbitrator, owing to issue estoppel and also res judicata.FactsThe Petitioner i.e. JSW MG Motor India Pvt Ltd. (“JSW”), an automobile company filed the present petition against the Respondent i.e. M/s Tristar Auto Agencies (Vizag) Pvt. Ltd. (“Tristar”), an automobile dealership under Section 11, ACA for appointment of a sole arbitrator to adjudicate disputes between them.The parties had entered into a dealership agreement on 17.07.2023 (“Agreement”) in relation to which certain disputes had arisen. JSW has alleged that owing to breaches by Tristar, it had to terminate the agreement vide termination letter dated 29.11.2024. This letter was challenged by Tristar in January, 2025 by filing a suit before Principal District Judge, Visakhapatnam (“Suit”) seeking inter alia, a declaration that the said termination letter is invalid in law. In the Suit, JSW filed an interim application dated 20.01.2025, under Section 8, ACA seeking that the dispute be referred for arbitration in terms of arbitration clause contained in the said Agreement. During the pendency of the interim application, on 01.05.2025, the present petition under Section 11, ACA came to be filed for the appointment of a sole arbitrator to adjudicate the disputes between the parties. Meanwhile, the interim application in the Suit was decided by the Principal District Judge, Vishakhapatnam vide order dated 27.10.2025 (“PDJ's Order”), whereby the application filed by JSW under Section 8, ACA was rejected. Contentions The Counsel for JSW submitted that the disputes which had arisen between the parties were in relation to the Agreement and needed to be adjudicated by an arbitrator in terms of Clause 63 of the Agreement. He further submitted that the PDJ's Order did not affect this Court's jurisdiction neither did it affect the right of JSW to seek a reference for arbitration as the disputes before the PDJ were distinct from those sought to be referred in the present petition. On the other hand, the Counsel for Tristar submitted that the said Agreement itself did not exist and Tristar's signatures, if any were forged/fabricated. It was further submitted that Clause 63 of the Agreement does not in actuality constitute an arbitration agreement as it does not demonstrate an intent of the parties to settle their disputes through arbitration. Observations The Court discussed the precedents on this point. Placing reliance on Anil v. Rajendra (2015) 2 SCC 583; Antique Art Export Pvt. Ltd. v. United India Insurance Company Ltd. (2023) SCC OnLine Del 1091; Surender Bajaj v. Dinesh Chand Gupta and Ors 2025 DHC 7387, the Court observed that when a party invokes Section 11(6), ACA after a judicial authority has declined a referral under Section 8, ACA, it is impermissible for the Court to appoint an arbitrator, owing to issue estoppel and also res judicata. The Court analysed the PDJ's Order and observed that the order was passed by a court of competent jurisdiction. The said order gave a finding that Clause 63 which was alleged by JSW to be the arbitration clause of the Agreement, did not in fact constitute an arbitration agreement. The Court further observed that PDJ's Order had not been set aside in appeal or any other appropriate proceeding. Therefore, it applies to and binds the parties to the present petition. It was therefore, not open to JSW to take a stand contrary to the finding rendered in the PDJ's Order. The Court clarified that it could not conduct a threadbare analysis of the various provisions of the Agreement as doing so would lie at the teeth of the PDJ's Order by which the parties to the present petition are bound. The Court clarified that while the PDJ's Order does not bind this Court, the fact that there is a binding judicial order operating between the parties, it ought to be respected. Allowing such a practice would encourage the party of an adverse judicial order to knock on the doors of different Courts seeking the same relief, a practice which cannot be permitted. Thus, the Court concluded that the present petition was barred by res judicata and JSW being bound by PDJ's order was prevented from seeking the present reference for arbitration owing to issue estoppel. Accordingly, the present petition was dismissed. Case Title – JSW MG Motor India Pvt. Ltd. v. M/s Tristar Auto Agencies (Vizag) Pvt. Ltd.Citation: 2025 LiveLaw (Del) 1699Case No. – ARB.P. 682/2025Appearance- For Petitioner- Mr. Zeeshan Hashmi, Mr. Ankit Parashar, Ms. Jyoti Rajpurohit and Ms. Mitali Yadav, Advocates For Respondent – Mr. Ankit Jain, Sr. Adv with Mr. K.P. Sundar Rao, Mr. Udesh Puri, Mr. Eish Kesharwani, Advocates Date – 18.11.2025Click Here To Read/Download Order

Question On Existence Of Arbitration Clause Cannot Be Re-agitated U/S 11 After Being Settled U/S 8 A&C Act: Delhi High Court

Arpita Pande

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Arpita Pande

Question On Existence Of Arbitration Clause Cannot Be Re-agitated U/S 11 After Being Settled U/S 8 A&C Act: Delhi High Court

Arpita Pande

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

Arpita Pande

This is a premium content
Available exclusively to
Our subscribers