Employment Contracts Are Not “Commercial Disputes”: Delhi High Court on Commercial Courts Act and NCLT Jurisdiction in ARM Digital Media Pvt. Ltd. v. Ritesh Singh

I. Introduction

The decision of the Delhi High Court in ARM Digital Media Pvt. Ltd. & Ors. v. Ritesh Singh (2025 DHC 10726, decided on 01.12.2025) is a significant contribution to three interlocking questions of civil procedure and company/commercial law:

When does a dispute qualify as a “commercial dispute” under Section 2(1)(c) of the Commercial Courts Act, 2015 (“CC Act”)?
Does the existence of (or reference to) a shareholders’/investment agreement convert an employment dispute into a commercial dispute?
To what extent does Section 430 of the Companies Act, 2013 oust the jurisdiction of civil courts where director’s fiduciary duties and company affairs are implicated?

The case arises from an Employment Agreement dated 08.09.2016 between plaintiff no. 1, ARM Digital Media Pvt. Ltd., a digital marketing company, and the defendant, Ritesh Singh, who initially served as Managing Director and later as a non-executive director. Two individual promoters (plaintiffs nos. 2 and 3) are co-plaintiffs.

The plaintiffs allege that the defendant:

breached his employment obligations and fiduciary duties (including unilateral salary hikes and failures in statutory/secretarial compliances),
post-resignation, joined a competing entity (Insite Digital Pvt. Ltd. / Icogz) in violation of non-compete, confidentiality, and non-solicitation clauses, and
engaged in disruptive conduct (investor complaints, requisitioning EGMs, triggering NCLT oppression/mismanagement proceedings) allegedly to harm the company’s operations and reputation.

Faced with this civil suit, the defendant invoked Order VII Rule 11(d) of the Code of Civil Procedure, 1908 (CPC), seeking rejection of the plaint on purely jurisdictional / legal bars:

The dispute is a “commercial dispute” under Section 2(1)(c)(xii) CC Act (as it allegedly arises out of, or is inseparable from, a Share Subscription-cum-Shareholders’ Agreement (“SSSA”)), and should have been filed before a Commercial Court, with mandatory pre-institution mediation under Section 12A.
The jurisdiction of the civil court is barred by Section 430 of the Companies Act, 2013, and lies exclusively with the National Company Law Tribunal (NCLT), given that director’s duties and affairs of the company are implicated.

Justice Purushaindra Kumar Kaurav dismissed the application, holding that the suit is fundamentally an employment/personal service dispute, that it does not constitute a commercial dispute under the CC Act, and that civil court jurisdiction is not barred by Section 430. In doing so, the Court consolidates and extends a clear doctrinal line: employment contracts — even at promoter/MD level and even if contemplated in a shareholders’ agreement — are not “commercial disputes” within the meaning of the CC Act.

II. Summary of the Judgment

The Court addresses three principal issues:

Scope of Order VII Rule 11(d) CPC – At this stage, only the plaint and its documents can be considered, to see whether a cause of action is disclosed and whether the suit is barred by any law on its face. No defence materials can be examined; no fact-finding is permitted.
Whether the dispute is a “commercial dispute” requiring institution before a Commercial Court and Section 12A mediation – The Court:
- Undertakes a detailed interpretation of Section 2(1)(c) CC Act.
- Holds that contracts of employment/personal service are not “commercial disputes” even if they contain clauses on non-compete, confidentiality, IP, incentives etc.
- Rejects the argument that the Employment Agreement is inseparably part of the SSSA; notes that the SSSA has been terminated, while the Employment Agreement survives as an independent contract.
- Concludes the lis is not a commercial dispute, so the Commercial Courts regime and Section 12A mediation are inapplicable.
Whether Section 430 of the Companies Act bars the civil suit – The Court:
- Finds that the substance of the dispute is breach of employment obligations and director’s fiduciary duties under Section 166, not a pure oppression/mismanagement or internal management dispute.
- Notes that NCLT cannot adjudicate employment contracts or grant the full range of civil reliefs sought (injunctions for non-compete, non-solicitation, confidentiality; damages, etc.).
- Holds that Section 430’s bar is not attracted in such circumstances.

Reinforcing this conclusion, the Court cites the Supreme Court’s decision in Central Bank of India v. Prabha Jain, to hold that even if some reliefs could arguably be within a special forum’s domain, a plaint cannot be partially rejected under Order VII Rule 11 so long as any substantial relief remains within civil court jurisdiction.

The application under Order VII Rule 11(d) is therefore dismissed, with liberty to the defendant to raise all jurisdictional and legal objections at trial; and the suit is directed to proceed.

III. Legal Framework

A. Order VII Rule 11 CPC – Rejection of Plaint

Order VII Rule 11 CPC allows the court to reject a plaint at the threshold if:

it does not disclose a cause of action, or
the suit appears from the statement in the plaint to be barred by any law, among other grounds.

Key features, as reaffirmed in this judgment:

The court must look only at the plaint and its annexures, read as a whole, without importing defences or disputed facts.
The enquiry is limited to whether, on the face of the plaint, a legal bar exists or no cause of action is disclosed.
The court must not conduct a “roving enquiry” or weigh the truth of allegations; that is a matter for trial.

B. Commercial Courts Act, 2015 – Section 2(1)(c) “Commercial Dispute”

Section 2(1)(c) CC Act defines “commercial dispute” through an inclusive list, covering:

ordinary mercantile transactions;
export/import of goods/services;
construction, infrastructure contracts;
management and consultancy agreements;
joint venture agreements;
shareholders’ agreements (Section 2(1)(c)(xii));
subscription and investment agreements;
agreements for sale of goods or provision of services; etc.

The Court emphasises that, though broad, this definition is not unlimited: each category shares a “commercial thread” – it concerns trade, business, industry, mercantile obligations, or investment relationships. The use of ejusdem generis requires that open-ended words be read in line with the specific commercial categories listed.

C. Companies Act, 2013 – Sections 166 and 430

Section 166 prescribes statutory fiduciary duties of directors – to act in good faith, in the best interests of the company, to exercise due and reasonable care, and to avoid conflicts of interest, among others.
Section 430 bars civil court jurisdiction in respect of matters that are required to be determined by the NCLT or NCLAT under the Companies Act, e.g., oppression and mismanagement (Sections 241–242), reduction of share capital, etc.

The critical question is whether the particular dispute/relief falls within that exclusive NCLT domain. If it does not, Section 430 does not apply.

IV. Court’s Analysis

A. Scope of Order VII Rule 11 – Threshold and Method

The Court begins (paras 7–9) by restating the well-settled limits of Order VII Rule 11:

Only the plaint is relevant; the written statement and defences are irrelevant at this stage.
The plaint must be read as a whole; one cannot extract isolated sentences or passages to argue a bar.
The question is whether, assuming the facts to be true, the suit is barred by law or discloses no cause of action.

Citing Meena Vohra v. Master Hosts (P) Ltd., Sopan Sukhdeo Sable v. Assistant Charity Commissioner, and Hardesh Ores (P) Ltd. v. Hede & Co., the Court reiterates that Order VII Rule 11 is aimed at filtering out frivolous or legally barred suits but is not a substitute for trial on contested facts.

B. Employment Contracts Do Not Constitute “Commercial Disputes”

1. Statutory Interpretation of Section 2(1)(c) CC Act

In paras 10–18, the Court undertakes a careful reading of Section 2(1)(c). While acknowledging its breadth, the Court stresses that:

Each listed category concerns business, commerce, trade, industry or mercantile relationships.
Using ejusdem generis, general words such as “all other forms of business cooperation” must be confined to relationships having this commercial character.
It is not enough that one party is a commercial entity; the relationship itself must be primarily commercial, rather than personal-service-based.

This leads to a critical distinction:

Contracts “for services” (mercantile/professional services bought or sold in the market) may fall within “provision of services”.
Contracts “of service” (employment / personal service, involving employer’s control, supervision, discipline) are not commercial disputes.

2. High Court Precedents: Ekanek Networks, Elior India, Rachit Malhotra

The Court relies heavily on recent High Court jurisprudence:

Ekanek Networks Pvt. Ltd. v. Aditya Mertia (Delhi High Court)
Here, the Court held that breaches of an employment agreement – even one rich in clauses on remuneration, non-compete, non-solicitation, confidentiality, IP assignment, and termination – do not become a “commercial dispute” under Section 2(1)(c)(xviii) merely because they relate to “provision of services”. That expression, the Court clarified, must be understood in a strictly commercial sense, not as referring to employment relationships.
Sanjay Kumar v. Elior India Food Services LLP (Karnataka High Court)
The Karnataka High Court rejected an attempt to frame a claim for incentive payments under a long-term incentive plan as a “commercial dispute”. The incentive plan, though detailed and performance-linked, was held to be an offshoot of the underlying employment contract, and hence remained an employment dispute, not a mercantile one.
Rachit Malhotra v. One97 Communications Ltd. (Delhi High Court)
In this case, the plaintiff argued that an employee stock option (ESOP) scheme was akin to a shareholders’ agreement, attracting Section 2(1)(c)(xii) (shareholders’ agreements). The Court firmly rejected this, holding that ESOP rights, even though they touch upon shareholding, are fundamentally incidents of employment and cannot be recharacterised as a shareholders’ agreement dispute.

Taken together, these decisions support the proposition that employment-derived rights and obligations, even where they have financial or shareholding consequences, do not fall within the CC Act’s definition of commercial disputes.

3. Foreign Jurisprudence

The Court also draws on foreign authorities (para 18):

Borrowski v. Heinrich Fiedler Perforiertechnik GmbH (Alberta Court)
Johnson v. Unisys Ltd. (House of Lords)
Ross v. Christian & Timbers Inc. (Ontario Supreme Court)

These cases reinforce the understanding that employment relationships, even with internationally trading employers, are not “commercial legal relationships” for purposes of specialised commercial jurisdiction.

4. Application to the Facts of ARM Digital v. Ritesh Singh

Against this doctrinal backdrop, the Court examines the plaint:

The core allegations flow from:
- the Employment Agreement dated 08.09.2016, and
- the defendant’s statutory fiduciary duties as a director under Section 166.
The relevant breaches pleaded include:
- unauthorised self-approved salary increases,
- failure to ensure statutory/secretarial compliances within his remit,
- post-resignation misuse of confidential information,
- joining a direct competitor (Icogz), and
- soliciting the company’s clients and disrupting corporate processes (AGM, EGMs, investor complaints).

The Court concludes that, although these acts intersect with shareholding and corporate governance, they are anchored in the defendant’s personal service obligations as an employee/Managing Director and his fiduciary capacity as a director. They are not disputes about a shareholders’ agreement or an investment arrangement per se.

5. The “Composite/ Inseparable Agreements” Argument

The defendant’s principal attempt to bring the case within Section 2(1)(c)(xii) (shareholders’ agreements) was to argue that the Employment Agreement is an integral, inseparable part of the SSSA:

Clause 4.1(f) of the SSSA required promoters to sign an employment-cum-non-solicitation and non-disclosure agreement (Schedule 7).
The Employment Agreement’s recitals reference the SSSA and say it is “in connection with the transactions contemplated” by it.

On that basis, the defendant contended that:

Any attempt to enforce the Employment Agreement is, in substance, an attempt to enforce the SSSA.
The dispute is thus a “shareholders’ agreement” dispute under Section 2(1)(c)(xii) and falls within commercial jurisdiction.

The Court rejects this conflation for several reasons:

Termination of SSSA but not Employment Agreement – The plaintiffs showed that the SSSA was expressly terminated by a subsequent Share Purchase Agreement dated 04.08.2022, which terminated all “Existing Agreements”, including the SSSA. The Employment Agreement, however, was not terminated and continues to govern the relationship between the company and the defendant. Thus, the employment contract is now a stand-alone operative document.
Nature of the contracting parties – The Employment Agreement is between the company and the executive. Even if the investor or promoters were confirming parties, the substantive relationship is one of employer–employee/personal service, not of co-investors under a shareholders’ agreement.
Recitals do not change contract character – A recital acknowledging that the employment arises “in connection with” the SSSA does not merge the two agreements or convert an employment dispute into a commercial dispute. It merely records the commercial context for the personal service relationship.
No reliefs under SSSA sought – Crucially, none of the reliefs in the plaint require adjudication of rights under the SSSA. The claims can be decided entirely under:
- the Employment Agreement, the Articles of Association, and
- Section 166 fiduciary duties.
This factual separation is what Ekanek and Elior India described as decisive in upholding civil court jurisdiction over employment disputes even where other commercial documents exist in the background.

Thus, the Court holds (paras 19–24) that:

Disputes relating to employment agreements cannot be treated as “commercial disputes” within Section 2(1)(c) CC Act.
The present suit is therefore a regular civil suit, not one to be filed exclusively before a Commercial Court.
Consequently, pre-institution mediation under Section 12A CC Act is not mandatory here, and non-compliance with Section 12A is not a bar.

C. Section 430 Companies Act – No Ouster of Civil Court Jurisdiction

The defendant also argued that, since the plaint relies on Section 166 fiduciary duties and seeks reliefs that affect the conduct of the company’s affairs, the matter falls within Section 242(2)(a) (NCLT’s power to regulate conduct of company’s affairs) and is therefore barred from civil courts by Section 430.

The Court, however, distinguishes:

Pure oppression/mismanagement / internal governance issues, which the Companies Act assigns exclusively to the NCLT (Sections 241–242), from
Employment and personal fiduciary breaches by a director or officer, which may well be tried in civil courts.

Key reasoning:

The “gravamen” of the present dispute is:
- breach of the Employment Agreement (non-compete, non-solicitation, confidentiality, etc.),
- employment-related misconduct, and
- director’s fiduciary breaches under Section 166.
These issues do not fall within any specific statutory jurisdiction conferred exclusively on NCLT.
NCLT is not empowered to:
- adjudicate breaches of employment contracts as such, or
- grant the kinds of reliefs sought here (injunctions enforcing non-compete/non-solicitation, confidentiality obligations, and damages qua employment breach).

The Court distinguishes Suraj Prakash Arora v. Roshanara Club Ltd., where civil court jurisdiction was barred because the dispute related to pure company affairs and oppression/mismanagement, clearly falling within NCLT’s exclusive ambit. Here, by contrast, NCLT’s jurisdiction does not displace the civil court’s power to enforce employment/fiduciary obligations.

Accordingly, Section 430 is held inapplicable to bar this suit.

D. No Partial Rejection of Plaint – Effect of Central Bank v. Prabha Jain

The Court further notes (para 28) that even if, arguendo, some part of the relief could be said to impinge on NCLT’s domain, Order VII Rule 11 does not permit partial rejection of a plaint. Relying on the Supreme Court in Central Bank of India v. Prabha Jain:

If any relief in the plaint survives and falls within civil court jurisdiction, the plaint as a whole cannot be rejected under Order VII Rule 11.
The civil court also ought not, at this preliminary stage, to make binding observations that some reliefs are barred by law; those issues can be left open for later adjudication.

In this case, numerous reliefs (breach of non-compete, non-solicitation, confidentiality, damages, etc.) clearly lie within civil jurisdiction and beyond NCLT’s remedial reach. Hence, even on a “worst case” view for the plaintiffs, Order VII Rule 11(d) could not be invoked to reject the plaint.

V. Precedents Cited and Their Influence

1. Meena Vohra v. Master Hosts (P) Ltd. (Delhi High Court, 2025)

Used for two propositions:

Scope of Order VII Rule 11 – Only plaint averments count; the provision is to prevent abuse/frivolous suits but cannot be turned into a pseudo-trial.
Interpretation of “commercial dispute” – This case undertakes a detailed interpretation of Section 2(1)(c), emphasising the commercial character and applying ejusdem generis. The present judgment builds directly on that reasoning, importing its analytical structure to segregate commercial from non-commercial disputes.

2. Sopan Sukhdeo Sable v. Assistant Charity Commissioner (2004) 3 SCC 137

Supreme Court authority reinforcing that Order VII Rule 11 is to be applied strictly on the plaint’s averments, with the court obliged to reject suits that are an abuse of process. The present judgment uses it to underline the limited inquiry at the threshold stage.

3. Hardesh Ores (P) Ltd. v. Hede & Co. (2007) 5 SCC 614

Cited for the principle that a plaint must be read as a whole and in substance, not by isolating sentences or undertaking a factual enquiry into the truth of allegations. This guides the Court in resisting the defendant’s attempt to cherry-pick references to SSSA and NCLT proceedings to argue a jurisdictional bar.

4. Ekanek Networks Pvt. Ltd. v. Aditya Mertia (2024 SCC OnLine Del 8302)

A recent Delhi High Court decision squarely on point:

Held that “provision of services” in Section 2(1)(c)(xviii) CC Act must have a commercial connotation.
Drew a firm line between mercantile service contracts and employment/personal service contracts.
Rejected attempts to import employment disputes into the Commercial Courts’ domain.

The present judgment explicitly follows and extends this approach.

5. Sanjay Kumar v. Elior India Food Services LLP (Karnataka High Court)

Although not exhaustively quoted, the judgment relies on Elior India to show that:

Incentive schemes, even if highly structured and linked to performance, remain incidents of employment.
They cannot be transmuted into “commercial disputes” by clever drafting or labelling.

6. Bar of Indian Lawyers v. D.K. Gandhi and Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP (2020) 15 SCC 585

Cited in Ekanek (and adopted here) to emphasise:

The legislative purpose of the CC Act – to streamline and expedite genuine commercial/mercantile disputes.
The danger that over-expansive interpretations (pulling in non-commercial matters) would defeat that purpose by clogging commercial courts.

7. Rachit Malhotra v. One97 Communications Ltd. (2018 SCC OnLine Del 12410)

Central to rebutting the defendant’s reliance on Section 2(1)(c)(xii) (shareholders’ agreements). The case holds that:

ESOP schemes, though related to shares, are fundamentally employment-linked benefits.
They cannot be treated as shareholders’ agreements to invoke commercial jurisdiction.

By analogy, the Court here holds that an employment agreement contemplated by or referencing a SSSA remains an employment contract, not a shareholders’ agreement.

8. Baskar Naidu v. Arvind Yadav (W.P. No. 6985 of 2024)

Relied upon by the defendant to show that disputes arising from shareholders’ agreements do fall within Section 2(1)(c)(xii) and must go to Commercial Courts. The Delhi High Court distinguishes it on facts: Baskar Naidu concerned a pure shareholders’ agreement, whereas ARM Digital involves primarily an employment contract with only contextual links to an investment transaction.

9. A.D. Padmasingh Isaac v. Karaikudi Achi Mess Fairlands and Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd. (2022) 10 SCC 1

These authorities, cited by the defendant, establish that Section 12A pre-institution mediation is mandatory for commercial disputes and that non-compliance is a bar to institution. The Court here does not dispute that principle; instead, it sidesteps it by holding that the underlying dispute is not a commercial dispute to begin with.

10. Suraj Prakash Arora v. Roshanara Club Ltd. (2025 SCC OnLine Del 2518)

Relied upon by the defendant to argue Section 430 ouster. The Court explains that Suraj Prakash was about matters within Section 242(2)(a) – regulation of company’s affairs – i.e., a classic oppression/mismanagement scenario. The present case, anchored in employment and fiduciary obligations, is materially distinct.

11. Central Bank of India v. Prabha Jain (2025) 4 SCC 38; VINOD INFRA DEVELOPERS LTD. v. MAHAVEER LUNIA (2025 SCC OnLine SC 1208)

These decisions clarify that:

No partial rejection of plaint is permissible under Order VII Rule 11.
Even if some relief is barred, so long as one substantial relief survives, the plaint must proceed to trial in its entirety.

The Delhi High Court applies this to underscore that, in any event, the presence of clearly civil/employment reliefs prevents rejection of the plaint in toto.

12. Foreign Decisions: Borrowski, Johnson v. Unisys, Ross v. Christian & Timbers

Used to bolster the conceptual point that employment contracts, even high-level executive ones, are not “commercial” relationships for purposes of specialised commercial courts. These comparative references support the Court’s doctrinal choice to keep employment disputes out of the commercial docket.

VI. Simplifying Key Legal Concepts

1. “Commercial Dispute” vs. Employment Dispute

A commercial dispute under the CC Act typically involves:

trade and commerce (sale of goods, provision of professional/mercantile services),
financial / investment relationships (loans, shareholders’ agreements, subscription agreements), or
business collaborations (joint ventures, franchise, distribution, IP licensing, etc.).

An employment dispute involves:

a personal contract of service (employer–employee relationship),
duties of loyalty, obedience, and performance under the employer’s control and supervision,
issues such as salary, incentives, non-compete/non-solicitation, confidentiality tied to that employment.

This judgment reaffirms that employment disputes remain outside the CC Act’s commercial docket, even if they contain non-compete and IP clauses or are contemplated in an investment transaction.

2. Order VII Rule 11 CPC – “Barred by Law”

At the threshold stage, a plaint can be rejected as “barred by law” if:

a statute clearly says that such disputes must go to a specific forum (e.g., NCLT, DRT, Consumer Forum), or
a condition precedent (like a mandatory notice or pre-institution mediation) is missing and the statute treats that as a bar to suit.

But the “bar” must be evident from the plaint itself, without needing to investigate facts or examine defences.

3. Section 430 Companies Act – Ouster of Civil Court Jurisdiction

Section 430 says civil courts shall not have jurisdiction regarding matters that the NCLT or NCLAT is empowered to determine. This:

does not mean every dispute involving a company must go to NCLT,
only those specific matters for which the Companies Act grants exclusive jurisdiction (e.g., oppression/mismanagement, reduction of capital, certain amalgamations, etc.) are reserved for NCLT.

If a dispute concerns employment contracts, contractual damages, or fiduciary breaches that are not expressly assigned to NCLT, civil courts retain jurisdiction.

4. Fiduciary Duty of Directors under Section 166

Section 166 codifies directors’ duties:

to act in good faith in the best interests of the company, its employees, shareholders, and the community;
to exercise due and reasonable care, skill, and diligence;
to avoid situations in which their interests conflict with those of the company.

In this case, alleged breaches include:

self-serving remuneration hikes,
failure to ensure statutory compliances,
joining a competitor and misusing confidential information while still a director/promoter.

Such fiduciary breaches can be enforced in civil court, unless the specific relief sought lies solely within NCLT’s statutory domain.

5. Composite/Linked Agreements

Sometimes, multiple agreements form part of a single composite transaction (e.g., a main shareholders’ agreement plus ancillary security documents). Courts may then treat them as inseparable. However:

the key question is whether enforcement of one necessarily requires enforcement of the other; and
if one agreement has become inoperative (e.g., terminated), while the other survives and is independently enforceable, they cease to be “inseparable” in law.

Here, the Court holds that the Employment Agreement survives independently of the terminated SSSA and that the reliefs sought do not require adjudication under the SSSA.

6. Partial Rejection of Plaint

Under Order VII Rule 11, the court can reject a plaint, not individual paragraphs or specific reliefs. If:

at least one substantial cause of action and one relief are within jurisdiction and not barred by law,

the entire suit must be allowed to proceed; any allegedly barred relief can be handled at trial or in final judgment. This prevents fragmentation of suits and premature determinations on complex jurisdictional overlaps.

VII. Impact and Implications

1. Clear Boundary: Employment Disputes vs. Commercial Courts

This judgment crystallises a now robust line: employment contracts – including those of founders, promoters, and top executives – are not “commercial disputes” for CC Act purposes, even if:

the employment is required by or linked to a shareholders’ / subscription agreement, or
the contract contains non-compete, non-solicitation, IP assignment and confidentiality clauses with obvious commercial implications.

Consequences:

Forum selection: Parties cannot insist that disputes under such employment contracts must go to commercial courts; regular civil courts will often be the appropriate forum (subject to pecuniary/jurisdictional limits and any valid arbitration clauses, if present).
Docket control: Commercial Courts remain reserved for genuine business/mercantile disputes, avoiding being overwhelmed by employment litigation dressed up as commercial suits.

2. Drafting of Investment and Employment Documentation

For corporate and transactional lawyers, the judgment sends clear signals:

Including employment obligations as conditions precedent or schedules to investment/shareholders’ agreements does not automatically turn later employment disputes into “commercial disputes”.
Recitals stating that employment is “in connection with” a shareholders’ agreement will not, by themselves, displace the fundamental personal-service character of the contract.
If parties desire commercial dispute resolution mechanisms (e.g., Commercial Courts or specialised arbitration) for employment-linked issues, they must rely on valid dispute resolution clauses, but cannot rely solely on the statutory concept of “commercial dispute”.

3. Interaction with Section 12A CC Act (Pre-Institution Mediation)

The decision effectively narrows instances in which Section 12A pre-institution mediation is a bar. Many high-value executive employment disputes involving alleged breaches of non-compete, confidentiality, or fiduciary duty:

will not be subject to Section 12A at all, since they are not “commercial disputes” to begin with; and
can be instituted directly in civil court without undergoing the pre-institution mediation process mandated for commercial suits.

4. Civil Courts vs. NCLT: Simultaneous / Parallel Proceedings

The facts reflect an increasingly common scenario: the same breakdown in corporate relationships generating:

civil suits (e.g., for breach of employment contracts, confidentiality, non-compete), and
NCLT proceedings (e.g., oppression/mismanagement petitions, investor complaints to RoC).

The judgment clarifies that:

Parallel tracks may legitimately exist – civil courts handle personal service and fiduciary breach claims; NCLT handles company-level acts of oppression/mismanagement.
Section 430 cannot be used as a blunt instrument to push all disputes involving directors or company affairs into NCLT.

5. Strengthening the “No Partial Rejection” Doctrine

Relying on Central Bank v. Prabha Jain, the judgment strengthens the doctrinal bar against partial rejection of plaints. For defendants, it emphasises the need to:

either show that the entire suit is barred by law, or
reserve jurisdictional objections (such as Section 430, or specialised forum provisions) for trial or appropriate applications at later stages.

VIII. Critical Assessment

The judgment is doctrinally coherent and aligns with both statutory purpose and comparative jurisprudence:

It preserves the integrity of the Commercial Courts system, ensuring it remains focused on genuine commercial disputes.
It respects the limited but important role of NCLT, without allowing Section 430 to swallow all civil litigation involving companies.
It gives clear guidance on drafting and structuring complex corporate transactions where senior executives are both employees and shareholders/promoters.

Some potential grey areas remain:

Borderline cases where the reliefs under a shareholders’ agreement and employment agreement are deeply intertwined may continue to pose difficult jurisdictional questions, especially if enforcement of one truly cannot occur without enforcement of the other.
Where employment terms and investment terms are rolled into a single composite document (rather than separate agreements), future courts may need to parse whether, and to what extent, different parts of that document should be characterised differently for jurisdictional purposes.

Nevertheless, ARM Digital v. Ritesh Singh adds an important, clarifying layer: label and context do not override the substance of an employment relationship, and courts will look at the actual source and nature of obligations rather than the broader transactional setting.

IX. Conclusion

The Delhi High Court’s decision in ARM Digital Media Pvt. Ltd. & Ors. v. Ritesh Singh establishes and consolidates a clear rule:

Employment contracts and personal service obligations – even where intertwined with investment and shareholding arrangements – are not “commercial disputes” within Section 2(1)(c) of the Commercial Courts Act, 2015.
The mere fact that an employment agreement is contemplated by, or annexed to, a shareholders’ agreement does not convert employment-related breaches into shareholder disputes for jurisdictional purposes.
Section 430 of the Companies Act does not oust civil court jurisdiction over claims based on employment obligations and director’s fiduciary duties, save where the dispute squarely falls within NCLT’s exclusive statutory remit.
Order VII Rule 11 CPC cannot be used to partially reject a plaint; as long as any substantial relief is maintainable, the suit must proceed.

For practitioners, the case offers a well-reasoned roadmap on:

how to characterise complex disputes at the intersection of employment, corporate governance, and investment;
how to resist (or invoke) Commercial Courts and NCLT jurisdiction; and
how courts are likely to scrutinise attempts to repackage employment disputes as commercial or company-law matters.

In the broader legal landscape, the judgment enhances certainty in forum selection, protects the intended domain of specialist tribunals and commercial courts, and reiterates the centrality of substance over form in jurisdictional analysis.