Court Rules that Designated Commercial Court Holds Exclusive Jurisdiction over Section 34 Arbitration Applications; Application Returned to Parties
In a significant judgment delivered on October 14, 2026, the Madhya Pradesh High Court at Jabalpur set aside an order passed by the Principal District Judge, Betul, for entertaining an application under Section 34 of the Arbitration and Conciliation Act, 1996, which challenged an arbitral award. The High Court held that the Principal District Judge lacked subject-matter jurisdiction to entertain the application since the designated Commercial Court at Bhopal, under Section 3 of the Commercial Courts Act, 2015, had exclusive jurisdiction over disputes arising in District Betul.
The appellant, Deepak Sainani, filed an appeal against the order dated December 19, 2024, passed in Case No. 04/2024 by the Principal District Judge, Betul. The application under Section 34 had challenged the arbitral award dated December 11, 2020. The appellant contended that the Principal District Judge ought to have returned the application because the Commercial Court at Bhopal was the only court competent to entertain such disputes, as notified under the Commercial Courts Act, 2015.
Relying heavily on the Supreme Court's decision in Harshad Chiman Lal Modi v. DLF Universal Ltd., (2005) 7 SCC 791, the High Court reiterated that jurisdiction over the subject-matter is fundamental and distinct from territorial or pecuniary jurisdiction. A court lacking subject-matter jurisdiction cannot entertain the matter, and any order passed by such a court is a nullity. The High Court emphasized that the Principal District Judge at Betul had no jurisdiction to entertain the Section 34 application, and thus the order passed was void.
The respondent, Angel Broking Ltd., argued that since the appellant had voluntarily chosen the wrong forum and suffered an adverse order, it could not now claim lack of jurisdiction. They also raised a procedural objection that once a decree/order has been passed, the application cannot be returned under Order VII Rule 10 of the Code of Civil Procedure (CPC).
Addressing this contention, the High Court referred to the Explanation below Order VII Rule 10(1) CPC, which permits a court of appeal or revision, after setting aside the decree or order, to direct the return of the plaint or application. The Court held that since the order was a nullity, it was appropriate to set it aside and direct the return of the Section 34 application to the appellant, thereby allowing the parties to pursue the remedy before the correct forum.
The Court clarified that it had not expressed any opinion on the merits of the claim of either party but strictly confined its decision to the jurisdictional issue.
This ruling underscores the importance of filing arbitration-related applications before the designated Commercial Courts as per the statutory scheme and serves as a reminder that courts lacking subject-matter jurisdiction must not entertain such matters.
Bottom Line:
Arbitration and Conciliation Act, 1996 Section 34 application challenging arbitral award cannot be entertained by Principal District Judge when designated Commercial Court had exclusive jurisdiction under Section 3 of Commercial Courts Act, 2015 - Order passed without subject-matter jurisdiction is nullity - Appellate Court can set aside such order and direct return of application in view of Explanation to Order VII Rule X(1) CPC.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Section 34, Commercial Courts Act, 2015 Section 3, Code of Civil Procedure Order VII Rule 10(1) Explanation
Deepak Sainani v. Angel Broking Ltd., (MP)(Jabalpur) : Law Finder Doc Id # 3001775
