Madras High Court
Inderchand Kochar vs Praveen Kumar.G on 30 June, 2026
Author: P.Velmurugan
Bench: P. Velmurugan
OSA No. 112 of 2026
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 30-06-2026
CORAM
THE HON'BLE MR JUSTICE P. VELMURUGAN
AND
THE HON'BLE MRS.JUSTICE K. GOVINDARAJAN THILAKAVADI
OSA No. 112 of 2026 and
CMP No.15900 of 2026
Inderchand Kochar
S/o. Dhanraj Kochar.
No.66, Montieth Lane,
Egmore, Chennai 600 008.
..Appellant(s)
Vs
1. Praveen Kumar.G
S/o. Late. J. Ghewarchand,
173/84, Govindappa Naicken St,
Sowcarpet, Chennai 600 001.
2. Sangeetha P Jain
W/o. Praveen Kumar.G,
173/84, Govindappa Naicken St,
Sowcarpet, Chennai-1.
3. Sameep P Jain
S/o. Praveen Kumar.G,
Residing at D.No.40, 3rd Floor,
2nd Cross, 4th Block, Koramangala,
Bangalore 500 034.
4. Nishit Praveen Jain
S/o. Praveen Kumar,
Residing at D.No.40, IV Floor,
2nd Cross, 4th Block, Koramangala,
Bangalore - 500 034.
(R2 to R4 rep. by their Power of Attorney
Agent Praveen Kumar G, vide Registered
Power of Attorney dated 26.12.2022)
..Respondent(s)
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OSA No. 112 of 2026
Prayer: Original Side Appeal filed under Section XXXVI Rule 9 of OS
Rules read with Clause 15 of the Letters Patent of the High Court of Madras,
praying to set aside the impugned order dated 24.02.2026 passed by this Court
in A.No.4576 of 2025 in C.S.No.28 of 2025.
For Appellant(s): Mr.Vaibhav Rangarajan Venkatesh
For Respondent(s): Mr.AGD Bala Kumar
JUDGMENT
(Judgment of the Court was delivered by P.Velmurugan J.)
This appeal has been filed to set aside the order dated 24.02.2026 passed
by this Court in A.No.4576 of 2025 in C.S.No.28 of 2025.
2. The case of the appellant/defendant is that the respondents
herein/plaintiffs filed a suit before this Court in C.S.No.28 of 2025 seeking a
declaration that the Memorandum of Understanding (MoU) dated 22.10.2021
alleged to have been executed by the 1 st respondent in favour of the
appellant/defendant is not binding on the plaintiffs as it is forged and hence null
and void and non-est in law and also for other reliefs of permanent injunction
and mandatory injunction. Pending suit, the appellant/defendant filed an
application in A.No.4576 of 2025 seeking to reject the plaint and the same was
dismissed by the learned Single Judge by an order dated 24.02.2026.
Challenging the same, the present appeal has been filed by the defendant.
3. The learned counsel for the appellant submitted that the suit is barred
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under arbitration law, specifically under Section 16 of the Arbitration and
Conciliation Act (hereinafter referred to as “the Act”). He contended that the
Arbitrator is fully empowered to decide, as a preliminary issue, whether the
underlying agreement is genuine, whether a valid arbitration clause exists, and
whether the dispute is arbitrable. Furthermore, he submitted that following an
application filed under Section 11 of the Act, this Court appointed an Arbitrator
before whom the respondents have already filed a claim, which remains
pending. Therefore, the jurisdiction of the Civil Court is ousted, rendering the
suit non-maintainable. He further submitted that two independent forums cannot
decide the same questions simultaneously. If the arbitration proceedings
continue as per this Court’s directions, the Arbitrator will render findings
regarding the genuineness of the agreement and the arbitrability of the dispute.
In support of this, he relied upon a decision of the Hon’ble Supreme Court in
Salson Liquors Private Limited Vs. United Spirits Limited reported in 2026
SCC Online SC 338 and submitted that an Arbitrator can decide these issues as
preliminary points. Placing reliance on the following judgments, he submitted
that the suit is legally barred under Section 16 of the Arbitration and
Conciliation Act and is therefore not maintainable.
1. SBP & Co. Vs. Patel Engineering Ltd. reported in (2005) 8 SCC 618
“42. In our dispensation of justice, especially in respect of matters
entrusted to the ordinary hierarchy of courts or judicial authorities, the
duty would normally be performed by a judicial authority according to
the normal procedure of that court or of that authority. When the Chief
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Justice of the High Court is entrusted with the power, he would be
entitled to designate another Judge of the High Court for exercising that
power. Similarly, the Chief Justice of India would be in a position to
designate another Judge of the Supreme Court to exercise the power
under Section 11(6) of the Act. When so entrusted with the right to
exercise such a power, the Judge of the High Court and the Judge of the
Supreme Court would be exercising the power vested in the Chief Justice
of the High Court or in the Chief Justice of India. Therefore, we clarify
that the Chief Justice of a High Court can delegate the function under
Section 11(6) of the Act to a Judge of that Court and he would actually
exercise the power of the Chief Justice conferred under Section 11(6) of
the Act. The position would be the same when the Chief Justice of India
delegates the power to another Judge of the Supreme Court and he
exercises that power as designated by the Chief Justice of India.
43. In this context, it has also to be noticed that there is an ocean
of difference between an institution which has no judicial functions and
an authority or person who is already exercising judicial power in his
capacity as a judicial authority. Therefore, only a Judge of the Supreme
Court or a Judge of the High Court could respectively be equated with
the Chief Justice of India or the Chief Justice of the High Court while
exercising power under Section 11(6) of the Act as designated by the
Chief Justice. A non-judicial body or institution cannot be equated with
a Judge of the High Court or a Judge of the Supreme Court and it has to
be held that the designation contemplated by Section 11(6) of the Act is
not a designation to an institution that is incompetent to perform judicial
functions. Under our dispensation a non-judicial authority cannot
exercise judicial powers.
44. Once we arrive at the conclusion that the proceeding before
the Chief Justice while entertaining an application under Section 11(6)
of the Act is adjudicatory, then obviously, the outcome of that
adjudication is a judicial order. Once it is a judicial order, the same, as
far as the High Court is concerned would be final and the only avenue
open to a party feeling aggrieved by the order of the Chief Justice would
be to approach the Supreme Court under Article 136 of the Constitution.
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If it were an order by the Chief Justice of India, the party will not have
any further remedy in respect of the matters covered by the order of the
Chief Justice of India or the Judge of the Supreme Court designated by
him and he will have to participate in the arbitration before the Tribunal
only on the merits of the claim. Obviously, the dispensation in our
country, does not contemplate any further appeal from the decision of
the Supreme Court and there appears to be nothing objectionable in
taking the view that the order of the Chief Justice of India would be final
on the matters which are within his purview, while called upon to
exercise his jurisdiction under Section 11 of the Act. It is also necessary
to notice in this context that this conclusion of ours would really be in
aid of quick disposal of arbitration claims and would avoid considerable
delay in the process, an object that is sought to be achieved by the Act.
45. It is seen that some High Courts have proceeded on the basis
that any order passed by an Arbitral Tribunal during arbitration, would
be capable of being challenged under Article 226 or 227 of the
Constitution. We see no warrant for such an approach. Section 37 makes
certain orders of the Arbitral Tribunal appealable. Under Section 34, the
aggrieved party has an avenue for ventilating its grievances against the
award including any in-between orders that might have been passed by
the Arbitral Tribunal acting under Section 16 of the Act. The party
aggrieved by any order of the Arbitral Tribunal, unless has a right of
appeal under Section 37 of the Act, has to wait until the award is passed
by the Tribunal. This appears to be the scheme of the Act. The Arbitral
Tribunal is, after all, a creature of a contract between the parties, the
arbitration agreement, even though, if the occasion arises, the Chief
Justice may constitute it based on the contract between the parties. But
that would not alter the status of the Arbitral Tribunal. It will still be a
forum chosen by the parties by agreement. We, therefore, disapprove of
the stand adopted by some of the High Courts that any order passed by
the Arbitral Tribunal is capable of being corrected by the High Court
under Article 226 or 227 of the Constitution. Such an intervention by the
High Courts is not permissible.
46. The object of minimising judicial intervention while the matter
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is in the process of being arbitrated upon, will certainly be defeated if
the High Court could be approached under Article 227 or under Article
226 of the Constitution against every order made by the Arbitral
Tribunal. Therefore, it is necessary to indicate that once the arbitration
has commenced in the Arbitral Tribunal, parties have to wait until the
award is pronounced unless, of course, a right of appeal is available to
them under Section 37 of the Act even at an earlier stage.
47. We, therefore, sum up our conclusions as follows:
(i) The power exercised by the Chief Justice of the High Court or the
Chief Justice of India under Section 11(6) of the Act is not an
administrative power. It is a judicial power.
(ii) The power under Section 11(6) of the Act, in its entirety, could be
delegated, by the Chief Justice of the High Court only to another Judge
of that Court and by the Chief Justice of India to another Judge of the
Supreme Court.
(iii) In case of designation of a Judge of the High Court or of the
Supreme Court, the power that is exercised by the designated Judge
would be that of the Chief Justice as conferred by the statute.
(iv) The Chief Justice or the designated Judge will have the right
to decide the preliminary aspects as indicated in the earlier part of this
judgment. These will be his own jurisdiction to entertain the request, the
existence of a valid arbitration agreement, the existence or otherwise of
a live claim, the existence of the condition for the exercise of his power
and on the qualifications of the arbitrator or arbitrators. The Chief
Justice or the designated Judge would be entitled to seek the opinion of
an institution in the matter of nominating an arbitrator qualified in terms
of Section 11(8) of the Act if the need arises but the order appointing
appointing the arbitrator could only be that of the Chief Justice or the
designated Judge.
(v) Designation of a District Judge as the authority under Section
11(6) of the Act by the Chief Justice of the High Court is not warranted
on the scheme of the Act.
(vi) Once the matter reaches the Arbitral Tribunal or the sole
arbitrator, the High Court would not interfere with the orders passed by
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OSA No. 112 of 2026the arbitrator or the Arbitral Tribunal during the course of the
arbitration proceedings and the parties could approach the Court only
in terms of Section 37 of the Act or in terms of Section 34 of the Act.
(vii) Since an order passed by the Chief Justice of the High Court
or by the designated Judge of that Court is a judicial order, an appeal
will lie against that order only under Article 136 of the Constitution to
the Supreme Court.
(viii) There can be no appeal against an order of the Chief Justice
of India or a Judge of the Supreme Court designated by him while
entertaining an application under Section 11(6) of the Act.
(ix) In a case where an Arbitral Tribunal has been constituted by
the parties without having recourse to Section 11(6) of the Act, the
Arbitral Tribunal will have the jurisdiction to decide all matters as
contemplated by Section 16 of the Act.
(x)* Since all were guided by the decision of this Court in Konkan
Rly. Corpn. Ltd. v. Rani Construction (P) Ltd.2 and orders under Section
11(6) of the Act have been made based on the position adopted in that
decision, we clarify that appointments of arbitrators or Arbitral
Tribunals thus far made, are to be treated as valid, all objections being
left to be decided under Section 16 of the Act. As and from this date, the
position as adopted in this judgment will govern even pending
applications under Section 11(6) of the Act.
(xi) Where District Judges had been designated by the Chief
Justice of the High Court under Section 11(6) of the Act, the appointment
orders thus far made by them will be treated as valid; but applications if
any pending before them as on this date will stand transferred, to be
dealt with by the Chief Justice of the High Court concerned or a Judge
of that Court designated by the Chief Justice.
(xii) The decision in Konkan Rly. Corpn. Ltd. v. Rani Construction
(P) Ltd.2 is overruled.
48. The individual appeals will be posted before the appropriate
Bench for being disposed of in the light of the principles settled by this
decision.”
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2. Kvaerner Cementation India Ltd. Vs. Bajranglal reported in (2012) 5
SCC 214
“4. A bare reading of Section 16 makes it explicitly clear that the
Arbitral Tribunal has the power to rule on its own jurisdiction even when
any objection with respect to existence or validity of the arbitration
agreement is raised, and a conjoint reading of sub-sections (2), (4) and
(6) of Section 16 would make it clear that such a decision would be
amenable to be assailed within the ambit of Section 34 of the Act.
5. In this view of the matter, we see no infirmity in the impugned
order so as to be interfered with by this Court. The petitioner, who is a
party to the arbitral proceedings may raise the question of jurisdiction of
the arbitrator as well as the objection on the ground of non-existence of
any arbitration agreement in the so-called dispute in question, and on
such an objection being raised, the arbitrator would do well in disposing
of the same as a preliminary issue so that it may not be necessary to go
into the entire gamut of arbitration proceedings.”
3. Sundaram Finance Ltd. Vs. T.Thankam reported in (2015) 14 SCC 444
8. Once there is an agreement between the parties to refer the
disputes or differences arising out of the agreement to arbitration, and in
case either party, ignoring the terms of the agreement, approaches the
civil court and the other party, in terms of Section 8 of the Arbitration
Act, moves the court for referring the parties to arbitration before the
first statement on the substance of the dispute is filed, in view of the
peremptory language of Section 8 of the Arbitration Act, it is obligatory
for the court to refer the parties to arbitration in terms of the agreement,
as held by this Court in P. Anand Gajapathi Raju v. P.V.G. Raju.
…
…
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11. The attempt of the trial court and the approach made by the
High Court in bifurcating the cause of action, is fallacious. It would only
lead to delaying and complicating the process. The said issue is also no
more res integra. In Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya at
paras 16 and 17, it was held as follows: (SCC p. 536)
“16. The next question which requires
consideration is even if there is no provision for pardy
referring the dispute to arbitration, whether such a
course is possible under Section 8 of the Act. In our
view, it would be difficult to give an interpretation to
Section 8 under which bifurcation of the cause of
action, that is to say, the subject-matter of the suit or in
some cases bifurcation of the suit between parties who
are parties to the arbitration agreement and others is
possible. This would be laying down a totally new
procedure not contemplated under the Act. If
bifurcation of the subject-matter of a suit was
contemplated, the legislature would have used
appropriate language to permit such a course. Since
there is no such indication in the language, it follows
that bifurcation of the subject-matter of an action
brought before a judicial authority is not allowed.
17. Secondly, such bifurcation of suit in two parts, one
to be decided by the Arbitral Tribunal and the other to
be decided by the civil court would inevitably delay the
proceedings. The whole purpose of speedy disposal of
dispute and decreasing the cost of litigation would be
frustrated by such procedure. It would also increase
the cost of litigation and harassment to the parties and
on occasions there is possibility of conflicting
judgments and orders by two different forums.”
…
13. Once an application in due compliance with Section 8 of the
Arbitration Act is filed, the approach of the civil court should be not to
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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 general law should yield to the special law-
generalia specialibus non derogant. 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.”
4. Hema Khattar Vs. Shiv Khera reported in (2017) 7 SCC 716
“23. Admittedly, the cause of action for recovery of Rs 45 lakhs
claimed in the present suit is the expenditure alleged to have been
incurred by Appellant 2 pursuant to the oral agreement he claims he had
with the respondent sometime in April 2011. On the other hand, the cause
of action with respect to reliefs of declarations and injunction is the
agreement dated 6-6-2009. The alleged agreement dated 6-6-2009 was,
admittedly, between Appellant 1 and the respondent to which Appellant 2
was only a witness, which as per the terms of the plaint terminated later
on by mutual agreement between Appellant 1 and the respondent. At this
stage, it was agreed orally that Appellant 2, who is the husband of
Appellant 1, would take over the execution of the pending works.
Admittedly, Appellant 1 is not a party to the alleged oral agreement
between Appellant 2 and the respondent for supervision of the
construction by him.
24. From the materials available on secord, particularly, the
transcript of conversation between Appellant 2 and the respondent on 6-
4-2011 and 7-4-2011, we find that the oral agreement was substituted in
place of the alleged written agreement dated 6-6-2009. There is a
complete accord and discharge of the responsibilities and liabilities of
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Appellant 1 vis-à-vis the defendant and vice-versa. The plaint also avers
that after the accord between Appellant 1 and the respondent and
simultaneous discharge of the obligations, a distinct oral agreement was
entered into between Appellant 2 and the respondent. It is quite clear
from what has been stated above that the cause of action: the right to get
declarations with regard to the said contract as null and void or a right to
seek an injunction restraining the respondent from taking any action on
the basis of the said contract, if any, with regard to the prior written
agreement arises in favour of Appellant 1 against the respondent and not
in favour of Appellant 2 as he was not a party to the agreement dated 6-6-
2009. On the similar lines, the right to seek money decree, as is claimed
by the appellants, would be a distinct cause of action founded on
subsequent oral agreement between Appellant 2 and the respondent.
25. The learned Single Judge of the High Court, vide order dated
17-9-20122, directed the parties to elect as to whether they want the suit
to be treated as a suit for recovery of money by Appellant 2 against the
respondent or a suit for declarations and injunction by Appellant 1
against the respondent and to amend the plaint accordingly. The learned
Single Judge, after taking a considered view that the suit is bad for
misjoinder of parties and/or misjoinder of causes of action, held that the
application filed by the defendant under Section 8 of the Act would be
disposed of only after the appellants make an election in terms of this
order. The appellants herein, instead of amending the plaint, went in
appeal before the Division Bench, which got dismissed vide order dated
28-9-2012.
26. Since the suit was dismissed for misjoinder of parties and/or
causes of action, it is pertinent to mention here the law on the point which
is as under:
Order 2 Rule 3
“3. Joinder of causes of action. (1) Save as otherwise provided, a
plaintiff may unite in the same suit several causes of action against the
same defendant, or the same defendants jointly; and any plaintiffs having
causes of action in which they are jointly interested against the same
defendant or the same defendants jointly may unite such causes of action
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(2) Where causes of action are united, the jurisdiction of the Court
as regards the suit shall depend on the amount or value of the aggregate
subject-matters at the date of instituting the suit.”
Order 2 Rule 6
“6. Power of court to order separate trials.- Where it appears to
the court that the joinder of causes of action in one suit may embarrass or
delay the trial or is otherwise inconvenient, the court may order separate
trials or make such other order as may be expedient in the interests of
justice.”
In Black’s Law Dictionary it has been stated that the expression
“cause of action” is the fact or facts which give a person a right to
judicial relief. A cause of action, thus, means every fact, which, if
traversed, it would be necessary for the plaintiff to prove in order
to support his right to a judgment of the court. In other words, it is
a bundle of facts which taken with the law applicable to them
gives the plaintiff a right to relief against the defendant. It must
include some act done by the defendant since in the absence of
such an act no cause of action can possibly accrue. It is not
limited to the actual infringement of the right sued on but includes
all the material facts on which it is founded.
27. Order 2 Rule 3 provides for the joinder of several causes of
action and states that a plaintiff may unite in the same suit several causes
of action against the same defendant, or the same defendants jointly or
several plaintiffs having causes of action in which they are jointly
interested against the same defendant or defendants jointly may unite
them in one suit. The remedy for any possible inconvenience with regard
to the said rule is supplied by the provisions of Order 2 Rule 6, which
authorises the Court to order separate trials of causes of action which
though joined in one suit cannot be conveniently tried or disposed of
together.”
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5. Vidya Drolia Vs. Durga Trading Corporation reported in (2019) 20 SCC
406
4. Having heard the learned counsel on both sides, we may first set out
Section 11(6-A) of the Arbitration and Conciliation Act, which reads as
follows:
“11. Appointment of arbitrators.-(1)-(6)
(6-A) The Supreme Court or, as the case may be, the High Court,
while considering any application under sub-section (4) or sub-section
(5) or sub-section (6), shall, notwithstanding any judgment, decree or
order of any court, confine to the examination of the existence of an
arbitration agreement.”
5. The 246th Law Commission Report, which led to the enactment
of Section 11(6-A), stated as follows:
“Section 11(6-A) of the amendment contemplates a two-step
process to be adopted by a judicial authority when considering an
application seeking the reference of a pending action to arbitration. The
amendment envisages that the judicial authority shall not refer the
parties to arbitration only if it finds that there does not exist an
arbitration agreement or that it is null and void. If the judicial authority
is of the opinion that prima facie the arbitration agreement exists, then it
shall refer the dispute to arbitration, and leave the existence of the
arbitration agreement to be finally determined by the Arbitral Tribunal.
However, if the judicial authority concludes that the agreement does not
exist, then the conclusion will be final and not prima facie. The
amendment also envisages that there shall be a conclusive determination
as to whether the arbitration agreement is null and void.”
(emphasis supplied)
6. It will be seen that though the Law Commission Report speaks
not only of “existence” but also of an arbitration clause being null and
void, this has not translated itself into the language of Section 11(6-A).
On the contrary, Section 11(6-A) is to be contrasted with Section 16(1) of
the Act which reads as follows:
“16. Competence of Arbitral Tribunal to rule on its
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OSA No. 112 of 2026jurisdiction. (1) The Arbitral Tribunal may rule on its own
jurisdiction, including ruling on any objections with respect
to the existence or validity of the arbitration agreement, and
for that purpose,-
(a) an arbitration clause which forms part of a contract
shall be treated as an agreement independent of the other
terms of the contract; and
(b) a decision by the Arbitral Tribunal that the contract is
null and void shall not entail ipso jure the invalidity of the
arbitration clause.”
7. It will be noticed that “validity” of an arbitration agreement is,
therefore, apart from its “existence”. One moot question that therefore,
arises, and which needs to be authoritatively decided by a Bench of three
learned Judges, is whether the word “existence” would include weeding-
out arbitration clauses in agreements which indicate that the subject-
matter is incapable of arbitration. A Division Bench of this Court,
through one of the learned Judges, Kurian Joseph, J., has stated, in Duro
Felguera S.A. v. Gangavaram Port Ltd.4, that the scope of Section 11(6-
A) is limited to the following: (SCC p. 765, para 59)
“59. The scope of the power under Section 11(6) of the
1996 Act was considerably wide in view of the decisions in
SBP & Co.5 and Boghara Polyfab. This position continued
till the amendment brought about in 2015. After the
amendment, all that the courts need to see is whether an
arbitration agreement exists- nothing more, nothing less.
The legislative policy and purpose is essentially to minimise
the Court’s intervention at the stage of appointing the
arbitrator and this intention as incorporated in Section
11(6-A) ought to be respected.”
6) Ashwin Digambar Raikar v Sardar Baig (High court of Karnataka at
Bengaluru) in CMP NO.21 of 2023, Dated 29-01-2024
“12. A perusal of the aforesaid judgments of the Apex Court, it is
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clear that if there is a serious allegation of fraud which leads to vitiating
the agreement, needs voluminous evidence to prove the allegation and
renders the arbitration agreement void, the matter has to be referred to
the civil court and not the arbitral tribunal.
13. In view of the aforesaid facts and circumstances, I am of the
considered opinion that there is a serious allegation of fraud as firstly,
there is an allegation that the agreement containing the arbitration clause
is unregistered and not duly stamped; secondly, it is alleged that there
are no witnesses to the agreement and no witnesses have identified the
alleged thumb impressions and thirdly, the thumb impressions are alleged
as being forged and concocted. These disputed facts would indicate that
the plea of fraud permeates the entire contract and would have the effect
of rendering the entire contract including arbitration clause void, which
would be subject to scrutiny only by the civil court and not by the arbitral
tribunal. In other words, the various contentious issues and disputed/
complicated / complex questions of fact and voluminous evidence
warranting a full-fledged trial would be permissible only before the civil
court and the question of this Court exercising its jurisdiction under
Section 11 of the said Act of 1996 and referring the dispute to arbitration
would not arise in the facts and circumstances of this case.”
7. K. Mangayarkarasi Vs N.J. Sundaresan (2025) 8 SCC 299
“5. The petitioners being dissatisfied with the order passed by the
Commercial Court referred to above challenged the same before the
High Court by way of a civil revision application. The High Court
rejected the revision application vide the impugned judgment¹ holding as
under: (K. Mangayarkarasi case, SCC OnLine Mad paras 18-27)
“18. It is not in dispute that the 1st Petitioner/plaintiff is the
Proprietrix of the trade mark, after her father Late Angannan,
who died in 1986. The 1st Petitioner’s husband, Kathirvadivel
took over the business in 1984, after the death of Angannanm
and till he died in 1990, he was assisted by his brother,
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Jagadeeswaran in the business till he died in 2019. The 1st
respondent, Sundaresan, is the son of Jagadeeswaran.
Mangayarkarasi had a son, Muralidharan. He died leaving
behind two daughters, namely, Jaishree and Sreemathi.
Jaishree represents the petitioners, as power agent in this
proceeding. The two daughters of Mangayarkarasi are
Manonmani, who is the 2nd respondent and Sreedevi, who is
the 2nd Petitioner.
19. On perusal of the records it is seen that the
petitioners/plaintiffs filed a Suit in C.O.S. No. 147 of 2023
before the Commercial Court (District Judge Cadre),
Coimbatore, for permanent injunction, restraining the
defendants from interfering or using the plaintiff’s trade mark
of “Sri Angannan Briyani Hotel” and to pay damages of Rs
20,00,000 for the loss that the plaintiffs incurred due to the use
of the trade mark. Pending Suit, the 1st respondent/1st
Defendant filed an Application in IA No. 9 of 2023, praying to
refer the parties to Arbitration, which was allowed by the
Commercial Court, District Judge, Coimbatore. Aggrieved
over the same, the petitioners are before this Court with the
present civil revision petition.
20. On perusal of Clause 15 of “Deed of assignment of Trade
Marks”, dated 20-9-2017 and 14-10-2019, it is seen that in the
event of any dispute between the parties, parties agreed to get
such issues resolved. through Arbitration and in the event of
not finding a resolution through Arbitration, the Courtthaving
jurisdiction in Coimbatore to the exclusion of all other Courts.
The Clause 15 of “Deed of assignment of Trade Marks”, dated
14-10-2019, contains Arbitration Clause, which reads as
follows:
Arbitration Clause, which reads as follows:
'15. "Dispute Resolution"
In the event of any dispute, difference or claim arising
between the Parties under or in connection with this
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Agreement, parties agree to get such issues and disputes
resolved first through CONCILIATION failing which by
ARBITRATION and in the event of not finding a resolution
through arbitration, the Court having jurisdiction in
Coimbatore to the exclusion of all other Courts.’
21. Section 8 of the Arbitration and Conciliation Act, 1996
reads 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.
(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.’
22. The suit has been filed by the petitioners/plaintiffs
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by suppressing the Arbitration Clause. The right of the
respondents emanates out of the agreement between the
parties. When there is a valid contract between the parties
providing for Arbitration, all claims including enforceability
can only be adjudicated before an Arbitrator. Though the
petitioners disputed the execution of the agreement, the
existence of the agreement is not disputed. An Arbitration
Clause which forms a part of the Agreement shall be treated as
an agreement independent of the other terms of the Contract.
Further, the Arbitral Tribunal has power to decide on any
objections with respect to the existence of validity of the
agreement when there is an Arbitration Clause. The petitioners
and respondents having signed in the “Assignment Deed of
trade mark”, which contains the Clause regarding settlement of
dispute through arbitration, the Court below is right in
referring the matter to the Arbitral Tribunal.
23. As regards the contention of the petitioners that the
assignment Deed is brought fraudulently and therefore, when
fraud is pleaded, the matter cannot be referred to Arbitration is
concerned, no doubt, mere plea of fraud is insufficient to avoid
an arbitration proceedings. The contention of the petitioners
that the 1st Petitioner was misled to signing blank papers and
the 1st respondent filled up the same by including his name and
the 1st respondent has forged a fabricated deed as an
irrevocable deed, cannot be countenanced for the simple
reason that the 1st Petitioner wanted to assign the fabricated
deed as an irrevocable deed, cannot be countenanced for the
simple reason that the 1st Petitioner wanted to assign the trade
mark is not in dispute and the signatures not disputed. Once 1st
Petitioner admitted her signatures and the document ex facie
shows that it has been properly executed and the 2nd Petitioner
is also a party to the document and the assignment Deed is duly
executed and attested by a Notary Public, prima facie the
contention of the petitioners cannot be accepted. Further, the
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1st Petitioner/K. Mangayarkarasi and the 2nd Petitioner
Sreedevi and her Husband Ajith received several payments
from, the 1st respondent periodically, which is evident from the
statement of extract of the payments made by the 1st respondent
from 19-3-2021 to 23-2-2023.
24. The allegation of fraud must have some implication in
public domain to oust jurisdiction of arbitration. If an
allegation of fraud exists directly between the parties
concerned, the same will not be termed to be of serious nature
of fraud and hence would not be barred for arbitration. At this
juncture, it is worthwhile to refer the decision of the Hon’ble
Supreme Court in Sushma Shivkumar Daga4. Further, relying
on a earlier Judgment of the Supreme Court in Rashid Raza
cases (cited supra) the Supreme Court holds that two parties in
an Agreement. The first is that the plea permeates the entire
contract option of the arbitration agreement rendering it void
or secondly whether the allegation of fraud touches upon the
internal affairs of the parties inter se having no implication in
the public domain. The allegation must have some implication
in public domain to oust jurisdiction of arbitration. If an
allegation of fraud exists directly between the parties
concerned, the same will not be termed to be of serious nature
of fraud and hence would not be barred for arbitration.
Further, the Supreme Court in the Judgment in Deccan Paper
Mills case held that where the suit is inter parties with no
public domain, fraud as laid down in Avitel Post Studioz Ltd.7)
is not applicable. Where rectification of instrument under
Section 31 of the Specific Relief Act is strictly action inter
parties or by person who obtained derivative title from parties,
such action is in personam and the dispute is arbitrable.
25. The Law laid down by the Supreme Court in the
aforesaid Judgments squarely apply to the case on hand.
Admittedly, the dispute between the parties arise out of a
contract of assignment. There is no public cause involved in
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this dispute. The question involved is one between the parties
arise out of a contract of assignment. There is no public cause
involved in this dispute. The question involved is one arising
under the contract of assignment and its validity and binding
nature and what is the effect of several payment received by the
assignor from the 1st respondent, as assignee/on various dates,
which are matters to be considered by the Arbitral Tribunal
and this is undoubtedly covered by the arbitration clause. The
right claimed by the 1st respondent is contractual as assignee
of a trade mark. Disputes raised by the petitioners is that there
was no intention to assign the trade mark and that too
irrevocably to the 1st respondent, but at the same time, the
assignment in favour of the 2nd Petitioner is accepted. This
renders the position of the petitioners very week insofar as the
merits of the claim are concerned. This despite is arbitrable
and factual issues as also validity of the assignment and rights
flowing from it can be decided by the Arbitral Tribunal.
Further, the Suit is filed for the reliefs against the infringement
and passing off, which by their very nature would fall within
the jurisdiction of the Arbitrator. The right that is asserted by
the 1st respondent is not a right that emanates from the trade
mark Act, but a right that emanates from the assignment Deeds.
The assignment of a trade mark is by a contract and not by a
statutory act.
26. As regards the contention of the petitioners that disputes
involved in use of trade mark is not arbitrable is concerned, the
petitioners rely on a passing reference in Ayyasamy³ (cited supra),
where the Supreme Court held that where there are allegations of fraud
and such allegations are merely alleged, it may not be necessary to
nullify the effect of arbitration agreement between the parties and such
issues can be determined by the Arbitral Tribunal. This judgment
supports the plea of the 1st respondent, who wants the dispute to be
referred to Arbitration. Though fraud was pleaded in that proceeding,
the Supreme Court concluded that mere allegation of fraud was not
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sufficient to detract from the obligations of the parties to submit their
disputes to arbitration. Moreover, non-arbitrable disputes dealt with in
Booz Allen cases and Vidya Drolia case2. In Booz Allen cases, the
Supreme Court dealt with the disputes, which are arbitrable and which
non-arbitrable. This is clarified by a Three Judge Bench Decision of the
Supreme Court in Vidya Drolia case2. In view of the foregoing reasons,
this Court is not inclined to interfere with the findings of the Court
below.
27. In the result, the civil revision petition stands dismissed.
Consequently, the connected miscellaneous petitions are also dismissed.
However, there shall be no order as to costs.”
6. In such circumstances referred to above, the petitioners are before
this Court with the present petition.
7. Heard Mr V. Prakash, the learned Senior Counsel appearing for
the petitioners.
8. The law on the subject is no longer res integra. When the Arbitral
Tribunal is constituted at the instance of one of the parties and other party
takes up the position that such proceedings are not valid in law then what is
the court expected to do in law has been explained very succinctly by this
Court in Kvaerner Cementation (India) Ltd. v. Bajranglal Agarwal, as under:
(SCC p. 215, paras 3-5)
“3. There cannot be any dispute that in the absence of any
arbitration clause in the agreement, no dispute could be referred
for arbitration to an Arbitral Tribunal. But, bearing in mind the
very object with which the Arbitration and Conciliation Act, 1996
has been enacted and the provisions thereof contained in Section
16 conferring the power on the Arbitral Tribunal to rule on its
own jurisdiction, including ruling on any objection with respect
to existence or validity of the arbitration agreement, we have no
doubt in our mind that the civil court cannot have jurisdiction to
go into that question.
4. A bare reading of Section 16 makes it explicitly clear that
the Arbitral Tribunal has the power to rule on its own
jurisdiction even when any objection with respect to existence or
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reading of sub-sections (2), (4) and (6) of Section 16 would make
it clear that such a decision would be amenable to be assailed
within the ambit of Section 34 of the Act.
5. In this view of the matter, we see no infirmity in the
impugned order so as to be interfered with by this Court. The
petitioner, who is a party to the arbitral proceedings may raise
the question of jurisdiction of the arbitrator as well as the
objection on the ground of non-existence of any arbitration
agreement in the so-called dispute in question, and on such an
objection being raised, the arbitrator would do well in disposing
of the same as a preliminary issue so that it may not be necessary
to go into the entire gamut of arbitration proceedings.”
(emphasis supplied)
9. What would be the position in case a suit is filed by the plaintiff and
in the said suit, the defendant files an application under Section 8 of the 1996
Act questioning the maintainability of the suit on the ground that the party had
agreed to settle the disputes through the means of arbitration having regard to
the existence of an arbitration agreement between them?
4. The learned counsel for the respondents/plaintiffs submitted that the
respondents have challenged the order passed by this Court under Section 11 of
the Act by way of a Special Leave Petition (SLP), which is currently pending
before the Hon’ble Supreme Court. He further submitted that the respondents
vehemently denies the execution of the Memorandum of Understanding
(MOU), asserting that it is a forged and fabricated document. Although this
identical stand was taken during the Section 11 proceedings before this Court, it
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was not considered, thereby necessitating the filing of the present civil suit for a
declaration and other reliefs. He further contended that the grounds raised by
the appellant constitute their defense on merits, which cannot be adjudicated at
the stage of an application under Order VII Rule 11 of the CPC. Since the plaint
discloses a valid cause of action and is not barred by any law, the learned Single
Judge rightly dismissed the appellant’s application under Order VII Rule 11
CPC. Therefore, there is no merit in the present appeal, and the same is liable to
be dismissed.
5. Heard both sides and perused the materials available on record.
6. Admittedly, the respondents/plaintiffs have instituted a civil suit before
this Court, in C.S. No. 28 of 2025, seeking declaration that the Memorandum of
Understanding (MoU) dated 22.10.2021 alleged to have been executed by the 1 st
plaintiff as null and void and non-est in law and not binding on the plaintiffs on
the ground of forgery. During the pendency of the suit, the appellant/defendant
has filed an application under Order VII Rule 11 of the CPC for rejection of the
plaint which came to be dismissed by the impugned order.
7. According to the learned counsel for the appellant, this Court has
already appointed an Arbitrator by invoking Section 11 of the Act pursuant to
the arbitration clause in the MoU and the matter is actively seized by the
Arbitrator and that the Arbitrator has every power to decide all such issues and
thereby the jurisdiction of the Civil Court is ousted.
8. However, it is a well-settled proposition of law that while dealing with
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an application under Order VII Rule 11 of the CPC, the Court must look strictly
at the averments contained in the plaint, and the defence raised by the defendant
cannot be taken into consideration at that stage. Therefore, the plaint cannot be
rejected on the basis of the defence put forward by the defendant.
9. It is also well settled that while invoking Order VII Rule 11 CPC, the
scope of inquiry by the Court is extremely limited. The Court can reject a plaint
only if it satisfies the specific conditions enumerated under the rule, such as the
non-disclosure of a cause of action or being expressly barred by law. In the
absence of such clear infirmities, the Court cannot reject the plaint at the
threshold stage.
10. A reading of the plaint prima facie discloses a valid cause of action
and does not show that the suit is expressly barred by any law. The grounds
raised by the appellant are nothing but defence, which can only be adjudicated
after a full trial and cannot be considered at the preliminary stage.
11. There is no quarrel with the legal propositions laid down in the
various decisions cited by the learned counsel for the appellant. However, the
decisions do not deal with Order VII Rule 11 of the CPC.
12. A plain reading of the averments made in the plaint clearly shows that
the respondents/plaintiffs have disputed the execution of the MoU itself. Under
these circumstances, this Court finds that the civil suit is not barred either under
Section 8 or under Section 11, or under Section 16 of the Arbitration and
Conciliation Act. The stand taken by the appellant is not legally sustainable.
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13. Under these circumstances, this Court finds that the decisions relied
upon by the learned counsel for the appellant are not applicable to the facts of
the present case on hand. The appellant can take his defence in pending suit.
14. Therefore, this appeal is dismissed. Considering the facts and
circumstances, there shall be no order as to costs. Consequently, the connected
Miscellaneous Petition is closed.
(P.V.,J.) (K.G.T.,J.)
30-06-2026
Index: Yes/No
Speaking/Non-speaking order
Neutral Citation: Yes/No
KSA-2
To
The Sub Assistant Registrar
Original Side
Madras High Court
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P.VELMURUGAN, J.
AND
K.GOVINDARAJAN THILAKAVADI, J.
KSA-2
OSA No. 112 of 2026
30-06-2026
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