Kiran Raj

The Telangana High Court, comprising Justice Moushumi Bhattacharya and Justice B.R. Madhusudhan Rao, dismissed an appeal challenging the rejection of a civil suit filed to restrain arbitral proceedings under agreements between the parties. The court upheld the decision of the Commercial Court, which found that the suit was barred by law under Order VII Rule 11(d) of the Code of Civil Procedure, 1908, as the dispute fell within the exclusive jurisdiction of the arbitral tribunal under Section 16 of the Arbitration and Conciliation Act, 1996.

The dispute arose from agreements dated December 18, 2009, and April 11, 2011, under which the appellant, M/s. Singareni Collieries Company Ltd, procured long-wall mining equipment from the respondent, M/s. H.B.T. GMBH. The agreements contained an arbitration clause.

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The appellant filed a suit before the Commercial Court, seeking a permanent injunction to restrain the respondent from pursuing arbitration before the International Court of Arbitration under the International Chamber of Commerce (ICA). The appellant argued that arbitration was time-barred under Clause 15 of the 2009 agreement and that disputes should be adjudicated by civil courts in Khammam and Karimnagar.

The respondent filed an application under Order VII Rule 11 of the Code of Civil Procedure, 1908, arguing that the suit was barred by law, as Section 16 of the Arbitration and Conciliation Act, 1996, grants arbitral tribunals the exclusive authority to decide their jurisdiction. The Commercial Court allowed the application and rejected the plaint, prompting the appellant to file the present appeal.

The High Court examined whether the Commercial Court was correct in rejecting the plaint under Order VII Rule 11(d) of the Code of Civil Procedure, 1908, which mandates rejection if the suit appears, from the statements in the plaint, to be barred by any law.

The court noted:

"The test to be applied runs along the statements made in the plaint which are taken to be correct in their entirety, i.e., whether the statements made in the plaint would alone entitle the plaintiff to a decree."

The court stated that under Section 16 of the Arbitration and Conciliation Act, 1996, the arbitral tribunal has the exclusive power to rule on its own jurisdiction, including any objections regarding the validity of the arbitration agreement. It observed:

"The doctrine of kompetenz-kompetenz implies conferment of this very power on the Arbitral Tribunal and intends to minimize judicial intervention in the arbitral process."

The judgment referenced multiple Supreme Court decisions, including Kvaerner Cementation India Limited v. Bajranglal Agarwal, National Aluminium Company Limited v. Subash Infra Engineers Private Limited, and SBI General Insurance Co. Ltd. v. Krish Spinning, which affirm that courts should not interfere in matters where arbitral tribunals have jurisdiction.

Regarding the appellant’s argument that arbitration was time-barred, the court stated:

"Even if the appellant contends that the arbitration clause had been exhausted by expiry of the prescribed timeframe, such an issue can only be decided before the Arbitral Tribunal."

The court also addressed the appellant’s reliance on N.N. Global Mercantile Private Limited v. Indo Unique Flame Limited, which held that an insufficiently stamped arbitration agreement cannot be enforced. The court noted that this decision had been overruled by a seven-judge bench in In Re: Interplay Between Arbitration Agreements Under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899, making the appellant’s reliance on it misplaced.

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The High Court upheld the Commercial Court’s decision and dismissed the appeal. It concluded:

"We accordingly find sufficient basis to affirm the impugned order dated 04.11.2024 as correct. The impugned order does not give any scope for interference."

The court also vacated all interim orders granted earlier and directed that all connected applications be disposed of.

Advocates Representing the Parties

• For the Appellant: Sri E. Madan Mohan Rao, Senior Counsel

• For the Respondent: Sri Vedula Srinivas, Senior Counsel

Case Title: M/s. Singareni Collieries Company Ltd v. M/s. H.B.T. GMBH
Case Number: COMCA No. 3 of 2025
Bench: Justice Moushumi Bhattacharya, Justice B.R. Madhusudhan Rao

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