Madras HC Refuses To Strike Off Suit In Dispute Over 49th South India Motor Rally Despite Arbitration Clause

The Madras High Court has refused to strike off a civil suit over disputes relating to a motorsports event, including the 49th South India Rally, holding that the existence of an arbitration clause does not by itself bar the jurisdiction of a civil court.

“Further, the existence of an arbitration clause does not ipso facto bar the jurisdiction of the Civil Court unless the procedure contemplated under the Section 8 of the Arbitration and Conciliation Act, 1996 is duly invoked before the competent Court. Such issues are to be raised and decided before the trial Court and cannot be a ground to invoke Article 227 at the threshold to strike off the plaint”, a single-judge bench of Justice T.V. Thamilselvi held.

The dispute arises from a Memorandum of Understanding dated April 20, 2022 between the Federation of Motor Sports Clubs of India (FMSCI), Blue Band Sports Private Limited, and Madras Motor Sports Club. It relates to their respective rights and obligations in organising motorsport events, including the 49th South India Rally.

Alleging a breach of these obligations, Blue Band Sports Private Limited approached the Principal District Munsif Court in Coimbatore. The trial court granted an interim injunction in its favour.

FMSCI then came to the High Court with a plea to strike off the plaint. It also sought a stay on the trial court proceedings and suspension of the interim injunction. Relying on the arbitration clause, it argued that the suit was not maintainable and accused Blue Band Sports of suppressing material facts.

In response, Blue Band Sports maintained that the agreement remains in force. It said the dispute turns on factual issues that should be examined by the trial court.

It also argued that the High Court's supervisory jurisdiction cannot be invoked when an effective alternative remedy exists.

The Court noted that the contract between the parties continues to remain in force and has not been terminated. It held that its supervisory jurisdiction under Article 227 is limited and cannot be used to bypass the trial court or decide disputed issues at the outset.

The court emphasised that such power is to be exercised sparingly and only in cases involving a patent lack of jurisdiction or manifest perversity. The Court added that questions relating to the maintainability of the suit, the arbitration clause, and alleged suppression of facts must be examined by the trial court.

It also relied on Supreme Court precedent and observed, “When an effective alternative remedy is available, invocation of the extraordinary jurisdiction under Article 227 is not warranted.”

The Court further observed, “Such issues are to be raised and decided before the trial Court and cannot be a ground to invoke Article 227 at the threshold to strike off the plaint.”

Finding no merit in the petition, the court dismissed the civil revision petition and vacated the interim stay granted earlier, leaving the parties to pursue remedies before the appropriate forum in accordance with law.

For Petitioner (The Federation of Motor Sports Clubs of India): Advocates Kadambri Suresh, S.V. Pravin Rathinam.

For Respondent (Blue Band Sports Private Limited): Advocates V. Raghavachari, S.S. Saravanan.