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Punjab & Haryana High Court: While considering a civil revision challenging dismissal of an application under Order 7 Rule 11, Civil Procedure Code, 1908 (CPC), a Single Judge Bench of Lapita Banerji, J., held that the reliefs sought in the civil suit extended beyond the subject-matter of the arbitration agreement, and that the arbitrator would not be able to consider the interests of other parties entitled in equity and law.
Accordingly, the Court upheld the impugned order and dismissed the present petition.
Background
In the present case, the petitioner and his 2 brothers had entered into an arbitration agreement dated 5 July 1999 concerning division of the assets and properties of their father. The parties were initially referred to arbitration, but the proceedings could not be concluded.
An application under Section 11, Arbitration and Conciliation Act, 1996 was thereafter filed before the High Court, and a sole arbitrator was appointed in 2017. However, the arbitral proceedings were terminated on 6 January 2018 as the arbitrator’s fees had not been paid.
After termination of the arbitral proceedings, the respondents instituted a civil suit in 2018 seeking, inter alia, partition and separate possession of properties and rendition of accounts.
The petitioner subsequently approached the High Court for appointment of a sole arbitrator. By order dated 27 April 2023, the coordinate Bench granted liberty to the parties to avail themselves of remedies in accordance with law. Thereafter, the petitioner approached the previously appointed arbitrator, who recalled the order terminating the proceedings and continued with the arbitration.
Meanwhile, the petitioner had filed an application under Order 7 Rule 11 CPC, contending that the civil suit was liable to be rejected because the disputes were subject to arbitration. The said application was dismissed by the Civil Judge (Junior Division), aggrieved by which the petitioner approached the High Court.
Analysis
The Court examined the reliefs claimed in both the arbitration proceedings and the civil suit and opined that not only division of assets was prayed for but also a preliminary decree for possession by way of partition was sought.
The Court observed that in passing a preliminary decree, it would not only look into the interests of the parties to the arbitration agreement but also the interests of other parties entitled in equity and law, which the learned arbitrator would not be able to do.
Further, the Court noted that rendition of accounts of M/s T.G. Aggarwal & Co. had also been prayed for in the civil suit, as it was alleged that the petitioner was managing the affairs of the firm and was in joint possession of the firm but was not accounting for the profits. The Court observed that the said claim was not the subject-matter of the arbitration agreement.
The Court also considered the reasoning in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya, (2003) 5 SCC 531 and Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 and further found no impropriety or mala fides in the conduct of the respondents in pursuing the civil suit, as the civil suit had been filed in 2018 immediately after the learned arbitrator terminated the arbitral proceedings.
The Court also noted that the arbitral proceedings were subsequently revived in 2023 but were still pending despite the expiry of the mandate stipulated under Section 29-A, Arbitration and Conciliation Act, 1996, which had neither been extended by consent of the parties nor by orders of a competent court.
Decision
Accordingly, the Court found no perversity in the impugned order, thus, dismissed the civil revision at hand.
However, the Court clarified that the petitioner would not be precluded from raising all the issues in his defence before the learned trial court in his written statement.
[Vijay Kumar Aggarwal v. Shubham Aggarwal, CR No. 4293 of 2025 (O&M), decided on 14-9-2026]
Advocates who appeared in this case:
For the Petitioner: Naveen Kumar and Ashima Mor, Advocates
For the Respondent: Gurpreet Singh, Sr. Advocate, Karanvir Kathuria, Gunjan Nahata, and M.S. Kohli, Advocates
