Objection To Civil Suit In View Of Arbitration Clause To Be Raised Before Court Of First Instance: Karnataka High Court

The Karnataka High Court has set aside a trial court order dismissing a suit filed by Nova Medical Centers Pvt Ltd. on the premise that the dispute is arbitrable. Court noted that the defendant had failed to raise objection as to jurisdiction of Civil Court. A single judge bench of Justice Anant Ramanath Hegde observed,

“It is a well-settled principle of law that the objection to entertain the suit based on the arbitration Clause is to be raised before the Court at the first appearance and not later.”

The appeal was preferred by the company running a Hospital where Jayaprakash (defendant) was admitted as a patient. Since after treatment he developed Septicemia, the company agreed to compensate him. However, the defendant allegedly interfered in the running of the hospital, constraining the company to file a suit for injunction.

The civil court dismissed the suit on the ground there is an Arbitration clause to resolve the dispute between the parties.

In appeal, the Company argued that objections relating to the jurisdiction of the Court to entertain the suit in the light and binding Arbitration clause, if any, between the parties must be raised at the first hearing. Since such objection was not raised, the Trial Court erred in dismissing the suit on the ground that the parties have to take recourse to the provisions of the Arbitration & Conciliation Act, 1996.

Noting that defendant had not entered appearance before the civil court, the bench said, “The conduct of the defendants would reveal that the defendants have waived their objection relating to the jurisdiction of the Court. The Court recorded the evidence. After having recorded evidence, the Court could not have dismissed the suit on the premise that the parties have to take recourse to the provisions of the Act of 1996.”

Further, it was noted that the Civil Court had not framed any points for consideration relating to the lawful possession of the Company and alleged interference by the defendant. The bench proceeded to decide the matter on merits.

Taking into account the oral and documentary evidence which remained undisputed, Court held plaintiff is in lawful possession of the property. It said, “The defendants have no right and interest in the affairs of the plaintiff and they cannot interfere in the hospital activities of the plaintiff. Accordingly, this Court is of the view that the plaintiff has made out a case for the grant of injunction as prayed for.”

Case Title: Nova Medical Centers Pvt Ltd And Sowmya & ANR

Case No: RFA 937/2016

Citation: 2023 LiveLaw (Kar) 311

Date of Order: 28-07-2023

Appearance: Advocate Girish K V for appellant.

Advocate Kiran S Kashyap for Advocate N C Mohan for respondents.

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