Delhi High Court | Dismissal Of Plea Under Section 8 Of Arbitration Act Operates As Res Judicata | Section 11 Court Cannot Subsequently Refer Parties To Arbitration
Isabella Mariam
The High Court of Delhi Single Bench of Justice Purushaindra Kumar Kaurav has dismissed a petition seeking the appointment of an independent arbitrator. The Court directed that the relief sought could not be entertained in view of a prior judicial determination by the Civil Judge and the Appellate Court. The Bench held that repeating the same prayer for reference to arbitration would attract the bar of res judicata. The Court concluded that the petition stands dismissed while granting liberty to the petitioner to take appropriate recourse in accordance with law.
The matter originated from a Collaboration Agreement entered into on 26.11.2018 between the petitioner and the respondents. Under this agreement, the petitioner was to undertake construction in lieu of which the ownership and possession of the second floor of the constructed property was to be handed over to him. According to the petitioner, despite having completed the construction in full, the respondents denied him the possession and ownership rights of the said floor. Based on this contention, the petitioner invoked Clause 17 of the Collaboration Agreement, which contained an arbitration clause, and approached the High Court seeking the appointment of an independent arbitrator.
The petitioner, through counsel, submitted before the Court that the dispute arising under the Collaboration Agreement was expressly amenable to arbitration. It was further argued that the petitioner had fully discharged his obligations under the agreement by completing construction and was therefore entitled to ownership and possession of the second floor as stipulated.
Conversely, the respondents, represented through counsel, opposed the petition on grounds of maintainability. They submitted that the petition was devoid of merit as the issues had already been raised before competent courts and decided against the petitioner. The respondents stated that they were the lawful owners of the property situated at Plot No. 132, B-1, Paschim Vihar, New Delhi, having purchased the same through a registered sale deed dated 10.08.2018. To protect their rights, they had instituted a civil suit before the Civil Judge-01, Tis Hazari Courts (West), New Delhi, seeking a decree of permanent injunction against the petitioner.
Upon being served in the civil suit, the petitioner filed an application under Section 8 of the Arbitration and Conciliation Act, 1996. The application sought reference of the dispute to arbitration in reliance on Clause 17 of the Collaboration Agreement. However, the Civil Judge, by order dated 06.05.2023, rejected the application. The rejection was premised on multiple grounds. First, the Court recorded that the petitioner had not complied with the mandatory requirement of Section 8(2) of the Act, which necessitates the filing of the original arbitration agreement or a duly certified copy. Second, the application was filed without producing the original Collaboration Agreement or establishing its possession. Third, the Court noted that defendants other than the petitioner had neither signed the Collaboration Agreement nor filed any application under Section 8, rendering the reference to arbitration legally untenable.
The petitioner preferred an appeal against the Civil Judge’s order before the Court of District Judge-07, Tis Hazari Courts, West, Delhi. On 18.04.2024, the Appellate Court dismissed the appeal, upholding the trial court’s findings. The Appellate Court observed that the dispute involved a joint cause of action against multiple defendants, two of whom were not signatories to the Collaboration Agreement and had already filed their written statements. Therefore, allowing arbitration against only one party would result in splitting the cause of action, which was impermissible under the Arbitration and Conciliation Act.
In the present petition under Section 11 of the Arbitration and Conciliation Act, 1996, the petitioner contended that the rejection of his application under Section 8 by the Civil Judge was on technical grounds and should not bar his fresh attempt to seek reference to arbitration. It was argued that the scope and subject matter of the civil suit and the arbitration petition were distinct. While the civil suit sought a decree of permanent injunction, the arbitration petition sought possession of the second floor under the Collaboration Agreement.
The respondents maintained that the rejection of the application under Section 8, followed by the dismissal of the appeal, foreclosed the petitioner’s present attempt under Section 11. According to them, the principle of res judicata applied squarely to the facts of the case, preventing re-agitation of the same prayer before a different forum.
The Court considered the submissions of both sides and examined the orders passed by the Civil Judge on 06.05.2023 and the Appellate Court on 18.04.2024. Extracts from the orders of the Civil Judge, particularly paragraphs 12 to 16, stated deficiencies in the petitioner’s Section 8 application, including the failure to file the original agreement or a duly certified copy and the absence of signatures from witnesses.
Similarly, the order of the Appellate Court, specifically paragraphs 11 and 12, held that the dispute was joint in nature, involving parties not bound by the arbitration agreement, and that referring only part of the matter to arbitration would lead to impermissible splitting of causes of action.
The Court observed that the rejection of the petitioner’s earlier application under Section 8 was undisputed. Justice Purushaindra Kumar Kaurav recorded: “It remains undisputed that vide order dated 06.05.2023, the application filed by the petitioner came to be rejected by the Civil Judge.” The Court further referred to the findings of the Civil Judge, particularly paragraph 15, which stated: “The mandatory requirement of Section 8(2) of Arbitration & Conciliation Act is filing of original agreement or duly certified copy thereof. Defendant no.1 has not filed the original collaboration agreement containing the arbitration clause. Defendant no.1 has not even stated in his application whether the original agreement is in possession of some other party. No application has been filed by defendant no.1 calling the other party to produce the original agreement if the original collaboration agreement was not with the defendant no.1. In view of the above, the application stands dismissed.”
The Court also took note of the appellate order dated 18.04.2024. Referring to paragraph 11 of the said order, it was observed: “The perusal of the prayer clause of the application moved by the appellant reveals that the same was filed only on behalf of defendant no.1 / appellant and through the same he was praying for referring the present case for Arbitration in view of the Clause 17 of the Collaboration Agreement in question. Moreover, during the course of the arguments, Ld. counsel for appellant has prayed for sending the matter to Arbitration only qua him and if this court accede with the request of the appellant, the same would lead to splitting of the parties and referring the part of the subject matter to Arbitration, which is not permissible under the Scheme of A&C Act.”
The Court noted that the Appellate Court in paragraph 12 had further recorded: “The perusal of the plaint filed by the plaintiff / respondent also reveals that the cause of action against defendant no.1 / appellant, defendant 2 and 3 is a joint cause of action and it is relevant to underline that defendant no.2 and 3 are neither the signatories to the Collaboration Agreement in question dated 10.12.2018 nor they have moved any application seeking the reference of the matter pending before the Ld. Trial Court to Arbitration and have already filed their written statements, disclosing their defence.”
On these grounds, Justice Kaurav held: “On perusal of the finding rendered in paragraph no.11, the same would clearly reveal that the Court has opined that sending the parties to an Arbitrator would lead to splitting of the parties and referring the part of the subject matter to Arbitration, which is not the scheme of the Act of 1996.”
The Court then concluded: “Though various submissions have been made by the learned counsel for the petitioner to contend that such a finding is erroneous and does not bind this Court, however, so long as the order dated 18.04.2024 is not set aside or interfered with, the Court is of the opinion that in the instant application, the similar prayer cannot be repeated to refer the parties to the Arbitrator as the same would amount to res judicata.”
The Court edismissed the petition. Justice Purushaindra Kumar Kaurav recorded: “Under the aforesaid circumstances, the Court is not inclined to accept the prayer made in the instant application.” It was directed: “Accordingly, the instant petition stands dismissed.”
At the same time, the Court provided liberty to the petitioner, stating: “The petitioner, however, shall be at liberty to take appropriate recourse in accordance with law.”
The Court further clarified that: “In view of this order, the order dated 06.05.2025 passed by the Court ceases to operate.”
Advocates Representing the Parties
For the Petitioner: Mr. Kartik Jasra, Mr. Shivam Jasra, Ms. Vidhi Sharma and Mr. Nakul Khanna, Advocates.
For the Respondents: Mr. Tushar Mahajan and Mr. Tanmay, Advocates.
Case Title: Surender Bajaj v. Dinesh Chand Gupta & Ors.
Neutral Citation: 2025: DHC:7387
Case Number: ARB.P. 1076/2025
Bench: Justice Purushaindra Kumar Kaurav
