Civil Courts Cannot Entertain Challenges To Arbitral Awards Under Arbitration Act: Calcutta High Court

The Calcutta High Court has reiterated that an arbitral award can be challenged only in accordance with the provisions of the Arbitration and Conciliation Act, 1996 and that a civil court has no jurisdiction to entertain a suit seeking to challenge the validity of such an award.

A Division Bench of Justices Arijit Banerjee and Apurba Sinha Ray made the observation while setting aside a Single Judge's order dated November 10, 2025 which had dismissed an application filed by Starlight Real Estate (Ascot) Mauritius Limited and another, objecting to the execution of an arbitral award, as barred by res judicata.

"An arbitral award could only be challenged in accordance with the provisions of the 1996 Act. A Civil Court in a suit could not entertain nor had the authority to entertain a challenge to an arbitral award. In other words, the Civil Court had no jurisdiction to entertain the suit that was filed by the appellants herein.", the Court said. 

The dispute arose from a joint venture agreement dated June 6, 2007 between Augustus Avani Land Developers Private Limited and Jagrati Trade Services Private Limited, along with three associate companies. Jagrati invoked arbitration against Augustus, resulting in an award dated May 16, 2013, directing Augustus to pay ₹20 crore with 9% interest to Ascot Realty Private Limited.

The appellants alleged that the award had been fraudulently obtained through collusion between Jagrati and Augustus's directors. The appellants then filed a civil suit challenging the award. Although a Single Judge partly rejected the plaint on May 14, 2015, a Division Bench on November 27, 2019 rejected it in its entirety, holding that the civil court could not entertain a challenge to the arbitral award. The Supreme Court dismissed the appellants' special leave petitions on February 6, 2024, while keeping their other remedies open.

The High Court's division bench considered whether, after holding that the civil court lacked jurisdiction to entertain the challenge to the arbitral award, the earlier Division Bench could also hold that the plaint disclosed no cause of action. The appellants argued that a court which lacks jurisdiction cannot pronounce upon any other aspect of the dispute.

The Court observed that the earlier rejection of the plaint on the grounds that the suit was barred by law and disclosed no cause of action did not amount to a decision on the merits. Such rejection therefore, would not operate as res judicata or prevent the appellants from raising the same issues in subsequent proceedings, subject to limitation.

"In my view, the contention of learned Senior Counsel for the appellants has considerable force. There are authorities legion to the effect that if a court finds a suit to be not maintainable because the court lacks jurisdiction to entertain it, that must be the end of the matter. Any observation or finding on any other aspect of the suit would be without jurisdiction and null and void. This makes complete sense and is wholly logical."

On the issue of res judicata, the Bench held that the Single Judge had erred in finding that the appellants' objections under Order XXI Rule 58 CPC, Section 151 CPC and Section 36 of the Arbitration and Conciliation Act, 1996 had already been decided on merits by the earlier Division Bench while rejecting their civil suit.

The Court accordingly revived the application and remanded it for fresh consideration, clarifying that it had not examined the merits of the challenge to the arbitral award and had left all other questions including maintainability on other grounds open.

For the Appellants: Dr. Aman Hingorani, Senior Advocate, Advocates Parikshit Lakhotia and Dibesh Kumar Dwivedi

For Respondent No. 1: Mainak Bose, Senior Advocate, Advocates Dhruv Surana and Jai Kumar Surana.