Technical Jurisdiction Objections Cannot Defeat Merits Of Commercial Disputes Chhattisgarh High Court

The Chhattisgarh High Court on 2 July held that a party cannot defeat adjudication of a commercial dispute on merits by raising a technical objection that it filed a Section 34 application under the Arbitration and Conciliation Act, 1996 before a court without pecuniary jurisdiction.

Justice Ravindra Kumar Agrawal dismissed a writ petition filed by Gulab Chand Jain challenging the transfer of the Municipal Corporation, Raipur's challenge to an arbitral award directing it to pay Rs. 2.32 crore with 8% annual interest to the contractor, and upheld the transfer of the proceedings from the Court of the 9th Additional District Judge, Raipur to the Commercial Court (District Judge Level), Nava Raipur. He observed:

"The transfer did not confer jurisdiction where none existed; rather, it facilitated continuation of proceedings before the Court which alone possessed jurisdiction under the statutory notification. No adjudication on merits was undertaken by the transferor Court after noticing the pecuniary limitation. The learned 9th Additional District Judge, Raipur merely acted in aid of implementation of the statutory notification and the directions issued by the High Court."

The dispute arose from a contract that the Municipal Corporation, Raipur awarded to Gulab Chand Jain for widening a road, constructing a divider and carrying out plantation work. The Corporation issued the work order on 29 August 2011 and required the contractor to complete the work within ten months.

The contractor claimed that encroachments prevented the Corporation from handing over the work site on time. It alleged that the Corporation later released only small stretches of land, forcing it to execute the work in parts. After the contractor sought closure of the contract, the Corporation terminated it on 31 October 2014, leading to arbitration proceedings.

On 20 October 2024, the sole arbitrator awarded Rs. 2,32,11,100 to the contractor with 8% annual interest until payment. The Municipal Corporation challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 (which allows a party to seek setting aside of an arbitral award) on 14 January 2025 before the Court of the 9th Additional District Judge, Raipur.

Meanwhile, the contractor initiated execution proceedings on 30 June 2025, believing that the Corporation had not filed a valid challenge. After receiving notice of the Section 34 proceedings on 8 September 2025, the contractor objected that the Court lacked pecuniary jurisdiction because the award exceeded Rs. 2 crore.

The 9th Additional District Judge, Raipur transferred the proceedings on 21 November 2025 to the Commercial Court (District Judge Level), Nava Raipur. The Commercial Court rejected the contractor's objection on 9 April 2026, prompting the contractor to approach the High Court under Article 227 of the Constitution, which empowers the High Court to supervise subordinate courts and tribunals.

Before the High Court, Gulab Chand Jain argued that the Section 34 application should have been rejected or returned because the Municipal Corporation filed it before a court that lacked pecuniary jurisdiction. It also argued that the 9th Additional District Judge, Raipur could not transfer the proceedings. The Municipal Corporation contended that it filed the challenge within the prescribed limitation period and that the transfer only ensured that the Commercial Court designated under the Commercial Courts Act, 2015 decided the matter.

Rejecting the contractor's submissions, the Bench held that the revised pecuniary jurisdiction introduced under the Commercial Courts Act, 2015 through the State Government's notification dated 20 December 2023 and the High Court's circular dated 21 December 2023 required pending commercial disputes, including applications challenging arbitral awards, to move before the newly designated Commercial Courts.

It held that the legislative intent behind the change was to preserve continuity of proceedings and prevent parties from starting fresh litigation merely because of a change in jurisdiction. The Bench also held that a Section 34 application does not amount to a plaint and therefore cannot be rejected under Order VII Rule 11 of the Code of Civil Procedure, which deals with rejection of plaints.

Further, it observed that the transfer only implemented the statutory notification and the High Court's directions. It held that the transfer neither granted jurisdiction to an incompetent court nor caused prejudice to the contractor. Finding that procedural law should advance justice rather than obstruct proceedings, the Bench held that no jurisdictional error or failure of justice required interference under Article 227.

Accordingly, the High Court dismissed the writ petition and allowed the Municipal Corporation's challenge to the arbitral award to continue before the Commercial Court (District Judge Level), Nava Raipur.

For Petitioner: Mr. Ramendra Kishore Prasad, Advocate

For Respondents: Mr. H.B. Agrawal, Senior Advocate along with Mr. Pankaj Agrawal, Advocate