An arbitration clause does not automatically bar a civil suit absent timely Section 8 invocation.

The first respondent, a partner of the partnership firm “M/s. Srinidhi,” instituted O.S. No. 4719/2020 seeking directions against the petitioner, another partner, to cooperate in the day-to-day affairs of the firm and sign its cheques for its smooth functioning.

The petitioner contended that the dispute arose under the partnership deed dated 17 April 2013, which contained an arbitration clause.

He therefore filed I.A. No. 10 under Order VII Rule 11(d) of the Code of Civil Procedure, 1908, read with Section 8 of the Arbitration and Conciliation Act, 1996, seeking rejection of the plaint or reference of the dispute to arbitration.

The trial court rejected the application on 17 April 2025, holding that the Section 8 application was not filed before submission of the defendant’s first statement on the substance of the dispute; the written statement had been filed on 14 June 2022, whereas the suit was instituted in 2020.

The petitioner challenged that order under Section 115 CPC.

1. Whether the mere existence of an arbitration clause in the partnership deed automatically ousts the jurisdiction of the Civil Court and renders the suit not maintainable?

2. Whether the defendant could invoke Order VII Rule 11(d) CPC to secure rejection of the plaint on the ground that the dispute was subject to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996, particularly when the Section 8 application was filed after the prescribed stage?

Section 8 of the Arbitration and Conciliation Act, 1996 provides a mechanism for referring parties to arbitration where a valid arbitration agreement exists, but the application must be made not later than the date of submitting the first statement on the substance of the dispute.

The existence of an arbitration agreement does not, by itself, automatically oust the jurisdiction of the Civil Court.

Order VII Rule 11 CPC requires the court to examine the plaint and the documents accompanying it; an arbitration clause does not, by itself, establish that the plaint discloses no cause of action or that the suit is barred by law.

A defendant who fails to invoke Section 8 at the stage prescribed by statute cannot indirectly obtain the same relief by seeking rejection of the plaint under Order VII Rule 11 CPC.

The Court held that although the partnership deed contained an arbitration clause, the petitioner was required to invoke Section 8 within the statutory period.

The suit had been filed in 2020, and the petitioner submitted his written statement only in 2022; the Section 8 application was therefore not made at the stage contemplated by the statute.

The petitioner could not treat the arbitration clause as an absolute jurisdictional bar or use Order VII Rule 11(d) CPC as an alternative means of securing a reference after failing to comply with Section 8.

Rejection of the plaint was also inappropriate because the existence of the arbitration clause did not demonstrate, from the plaint itself, that the suit disclosed no cause of action or was barred by law.

The trial court had therefore correctly rejected I.A. No. 10.

It held that the arbitration clause did not automatically bar the Civil Court’s jurisdiction and that the petitioner’s delayed application under Section 8 could not be sustained through Order VII Rule 11(d) CPC.

The Civil Revision Petition was dismissed, and all pending interlocutory applications were ordered to stand closed.