Safiya Malik

The High Court of Delhi Single Bench of Justice Purushaindra Kumar Kaurav dismissed a petition seeking appointment of a sole arbitrator to decide disputes between an automobile manufacturer and its dealership arising from a dealership agreement and its termination. The Court observed that where a judicial authority has already declined a reference to arbitration under Section 8 of the Arbitration and Conciliation Act, a subsequent invocation of Section 11(6) for appointing an arbitrator is not permissible, as the parties are bound by issue estoppel and res judicata. In this case, the prior order had found that the relied-upon clause did not constitute an arbitration agreement, and that finding could not be reopened through Section 11 proceedings.

JSW MG Motor India Pvt. Ltd., an automobile manufacturer, filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of a sole arbitrator to adjudicate disputes with its dealer, M/s Tristar Auto Agencies (Vizag) Pvt. Ltd. The parties had initially entered into a dealership arrangement pursuant to a letter of intent dated 29.10.2018, followed by a dealership agreement dated 04.11.2019 which expired by efflux of time. Subsequently, a fresh dealership agreement dated 17.07.2023 was executed. Disputes arose under this agreement, leading the petitioner to terminate the dealership by letter dated 29.11.2024.

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The respondent challenged the termination by filing O.S. before the Principal District Judge, Visakhapatnam, seeking a declaration that the termination was non-est in law. In that suit, the petitioner filed an application under Section 8 of the Arbitration Act seeking reference of disputes to arbitration in terms of Clause 63 of the agreement. While the Section 8 application was pending, the petitioner filed the present Section 11 petition before the Delhi High Court. The Section 8 application was eventually dismissed by order dated 27.10.2025, holding that Clause 63 did not constitute an arbitration agreement. The petitioner nevertheless pursued the present petition contending that distinct disputes subsisted requiring arbitral adjudication.

The Court examined whether a petition under Section 11 could be entertained after rejection of a Section 8 application between the same parties. Relying on binding precedent, the Court noted that once a judicial authority declines reference to arbitration and such decision attains finality, subsequent invocation of Section 11 is impermissible. The Court quoted the Supreme Court to observe that “the application filed … under Section 11 of the Act is nothing but an abuse of process” and that once a civil court holds it has jurisdiction despite an arbitration clause, “the principle of res judicata will also be attracted”.

Applying these principles, the Court referred to earlier decisions of the Delhi High Court holding that “the High Court while exercising judicial function under Section 11(6) can determine the issue of maintainability … including … res judicata” and that subsequent proceedings are barred once a finding has attained finality.

The Court then considered Clause 63 of the dealership agreement. It extracted the Principal District Judge’s finding that Clause 63.1, using the expression “may refer any or all disputes”, was optional and did not create a mandatory arbitration agreement. The PDJ had concluded that “the said Clause No. 63.1 … does not create any arbitration agreement and hence, the dispute … cannot be referred to arbitration”.

The High Court recorded that the PDJ’s order was passed by a court of competent jurisdiction and had not been set aside. It observed that the parties were bound by that finding and it was “not open to the petitioner to take a stand contrary to the finding rendered in the PDJ’s Order”. The Court further stated that re-examining the nature of Clause 63 would “lie at the teeth of the PDJ’s Order”.

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Addressing the argument that distinct disputes were raised, the Court observed that the core issue before the PDJ related to interpretation of Clause 63 and whether it constituted an arbitration agreement. It recorded that such a finding “cannot be made nugatory and otiose by merely seeking a reference of disputes different from those covered by the said order”. The Court clarified that respect for binding judicial orders was essential to orderly administration of justice, otherwise parties would repeatedly approach different courts for identical reliefs.

The Court held that “the present petition is barred by res judicata” and that the petitioner, being bound by the order of the Principal District Judge, was “prevented from seeking the present reference for arbitration owing to issue estoppel”. It accordingly directed that “the present petition is dismissed” and that “pending applications if any stand disposed of”.

Advocates Representing the Parties

For the Petitioner: Mr. Zeeshan Hashmi, Mr. Ankit Parashar, Ms. Jyoti Rajpurohit and Ms. Mitali Yadav, Advocates.
For the Respondent: Mr. Ankit Jain, Senior Advocate with Mr. K.P. Sundar Rao, Mr. Udesh Puri and Mr. Eish Kesharwani, Advocates.

Case Title: JSW MG Motor India Pvt. Ltd. v. Tristar Auto Agencies (Vizag) Pvt. Ltd.
Neutral Citation: 2025: DHC:10164
Case Number: ARB.P. 682/2025
Bench: Justice Purushaindra Kumar Kaurav