The Delhi High Court has dismissed an arbitration petition filed by JSW MG Motor India Pvt. Ltd., holding that the plea for the appointment of an arbitrator was barred by the principles of res judicata and issue estoppel. Justice Purushaindra Kumar Kaurav ruled that since a competent civil court in Visakhapatnam had already rejected the company’s application under Section 8 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), holding that the clause in question did not constitute a valid arbitration agreement, the petitioner could not subsequently invoke Section 11 jurisdiction for the same relief.
Case Background
The petitioner, JSW MG Motor India Pvt. Ltd., an automobile company, entered into a dealership agreement with the respondent, M/s Tristar Auto Agencies (Vizag) Pvt. Ltd., on July 17, 2023 (“said Agreement”). Following alleged breaches by the respondent, the petitioner terminated the agreement via a letter dated November 29, 2024.
In January 2025, the respondent challenged the termination by filing a civil suit (O.S. No. 6 of 2025) before the Principal District Judge (PDJ), Visakhapatnam, seeking a declaration that the termination letter was non-est in law.
In response, JSW MG Motor filed an interim application (I.A. No. 470 of 2025) on January 20, 2025, under Section 8 of the Arbitration Act, requesting the District Court to refer the dispute to arbitration based on Clause 63 of the agreement. While this application was pending, the petitioner approached the Delhi High Court on May 1, 2025, filing the present petition under Section 11 of the Arbitration Act for the appointment of a sole arbitrator.
Subsequently, on October 27, 2025, the Principal District Judge, Visakhapatnam, rejected the Section 8 application (“PDJ’s Order”), concluding that Clause 63 did not constitute a mandatory arbitration agreement.
Arguments of the Parties
Before the High Court, the counsel for the petitioner contended that disputes had arisen regarding the agreement which required adjudication by an arbitrator under Clause 63. The counsel argued that the PDJ’s Order did not affect the High Court’s jurisdiction or the petitioner’s right to seek a reference, asserting that “the disputes before the PDJ were distinct from those sought to be referred in the present petition.”
Conversely, the counsel for the respondent argued that the agreement itself did not exist and claimed the respondent’s signatures were “forged/fabricated/non-est in law.” Further, it was submitted that Clause 63 did not constitute a valid arbitration agreement as it did not “manifest an intent of the parties to settle their disputes for arbitration.”
The Court’s Analysis
Justice Kaurav examined the PDJ’s Order, which had observed that Clause 63.1 used the terminology “…may refer any or all disputes… to binding arbitration.” The District Judge had opined that the reference to arbitration was optional, not mandatory, and thus did not create a binding arbitration agreement.
The High Court noted that the PDJ’s Order had not been set aside in any appeal and therefore bound the parties. The Court observed:
“It is, therefore, not open to the petitioner to take a stand contrary to the finding rendered in the PDJ’s Order.”
The Court rejected the petitioner’s submission that the High Court should independently interpret Clause 63 to find a “concretised intent” for arbitration. Justice Kaurav held that doing so “would lie at the teeth of the PDJ’s Order, with which the parties to the present petition are bound by.”
Addressing the legal principles involved, the Court relied on the Supreme Court’s decision in Anil v. Rajendra (2015), which established that once a judicial authority declines a referral under Section 8 and the decision becomes final, a subsequent invocation of Section 11 is impermissible due to issue estoppel. The Court also cited its own recent decisions in Antique Art Export Pvt. Ltd. v. United India Insurance Company Ltd. and Surender Bajaj v. Dinesh Chand Gupta, reiterating that finding of a civil court regarding the non-existence of an arbitrable dispute is binding.
The High Court further dismissed the argument that the disputes in the Section 11 petition—concerning services standards, invoicing discrepancies, and incentives—were distinct from those in the civil suit.
“The issue, at its core, in PDJ’s Order pertained to the interpretation of Clause 63 of the said Agreement, and whether it constitutes an arbitration agreement. The finding in the said order cannot be made nugatory and otiose by merely seeking a reference of disputes different from those covered by the said order,” the Court held.
Decision
The High Court concluded that the petition was barred by res judicata and that the petitioner was prevented from seeking a reference for arbitration owing to issue estoppel.
“The present petition is dismissed,” Justice Kaurav ordered.
Case Details:
- Case Title: JSW MG Motor India Pvt. Ltd. v. M/s Tristar Auto Agencies (Vizag) Pvt. Ltd.
- Case Number: ARB.P. 682/2025
- Bench: Justice Purushaindra Kumar Kaurav
