Introduction
The Delhi High Court in the case of ARM Digital Media Pvt.Ltd. V. Ritesh Singh (2025), decided by Justice Purushaindra Kumar Kaurav, looked into whether issues from employment agreements fall under the definition of “commercial disputes” as per the Commercial Courts Act, 2015.
The Court concluded that employment contracts are personal service agreements and not commercial disputes. As a result, these kinds of cases should be handled by regular civil courts instead of commercial courts.
Background of the Case
The case started from an Employment Agreement signed on 8 September 2016 between ARM Digital Media Pvt. Ltd. and Ritesh Singh.
Initially, Singh worked as Managing Director and later became a non-executive director. The company / accused Singh of increasing his salary without permission, not following legal rules, and breaking his duty of loyalty, which was discovered between late 2022 and early 2023.
After leaving his position as Managing Director on 31 March 2023, Singh joined a competitor company, Insite Digital Private Limited, as Chief Growth Officer.
The original company claimed this was a breach of the non-compete, confidentiality, and non-solicitation clauses in the Employment Agreement and the company’s rules.
Application under Order VII Rule 11 CPC
Singh filed an application to stop the case from moving forward under Order VII Rule 11(d) of the Code of Civil Procedure, 1908.
He argued that the dispute was a commercial one because the Employment Agreement was connected to a Share Subscription-cum-Shareholders’ Agreement signed on the same day. This, he said, meant the case should be handled by a commercial court and must go through mediation first, as required by Section 12A of the Commercial Courts Act, 2015.
The company disagreed and said that the Shareholders’ Agreement had ended with a later Share Purchase Agreement from 4 August 2022, while the Employment Agreement remained in effect.
They also claimed the case involved breaches of employment duties and legal obligations under the Companies Act, 2013.
Court’s Observations
The Court reminded that when considering an application under Order VII Rule 11 CPC, they only check the claims in the case, not the facts that are in question.
On the main point, the Court said that employment agreements are personal service contracts and not commercial disputes as per the Commercial Courts Act, 2015.
Using the principle of ejusdem generis, the Court explained that commercial disputes come from relationships mainly related to business, trade, or commercial activities.
The Court also mentioned that having clauses about confidentiality, intellectual property, non-compete, or non-solicitation doesn’t change an employment contract into a commercial contract.
The Court referred to the case of Ekanek Networks Pvt. Ltd. V. Aditya Mertia (2024), where it was stated that “provision of services” under the Act must be clearly commercial and not related to service contracts where the employer has control.
Rejection of Inseparability Argument
The Court dismissed the plea that the Employment Agreement was connected to the Shareholders’ Agreement.
It said that the termination of the Shareholders’ Agreement and the ongoing nature of the Employment Agreement showed they were separate. Just mentioning the Shareholders’ Agreement in the contract wasn’t enough to make the employment case a commercial one.
Conclusion
The Delhi High Court rejected the application to stop the case and said the issue was a civil matter to be decided by a regular civil court.
The judgment makes it clear that even if an employment contract has some commercial clauses, it is still considered a civil issue and not a commercial one. This decision helps ensure that people can access court remedies for employment issues without the commercial courts taking over unnecessarily.
By: Devanshi Singh
Advocate
High Court, Allahabad
Disclaimer:
This article is intended solely for academic and professional discussion. It does not constitute legal advice or a formal opinion. The views expressed are personal and based on the author’s understanding of the statutory provisions and judicial precedents as on the date of writing. Readers are advised to consult the relevant statutory provisions and professional advisors before acting on the basis of this article.
