3F Industries Limited, vs Transparent Technologies Solutions ...
2024 Latest Caselaw 7583 AP

Andhra Pradesh High Court - Amravati

3F Industries Limited, vs Transparent Technologies Solutions ... on 23 August, 2024

 APHC010335012024
                     IN THE HIGH COURT OF ANDHRA PRADESH
                                   AT AMARAVATI                           [3470]
                            (Special Original Jurisdiction)

                FRIDAY ,THE TWENTY THIRD DAY OF AUGUST
                    TWO THOUSAND AND TWENTY FOUR

                                   PRESENT

           THE HONOURABLE SRI JUSTICE RAVI NATH TILHARI

             THE HONOURABLE SRI JUSTICE NYAPATHY VIJAY

                    CIVIL REVISION PETITION NO: 1847/2024

Between:

3f Industries Limited,                                           ...PETITIONER

                                      AND

Transparent Technologies Solutions Private Limited             ...RESPONDENT

Counsel for the Petitioner:

1. VENKAT CHALLA

Counsel for the Respondent:

1. V YATENDRA KUMAR

The Court made the following:

Heard Sri Venkat Challa, learned counsel for the petitioner and Sri V.

Yatendra Kumar, learned counsel for the respondent.

2. This Civil Revision Petition under Section 115 Code of Civil Procedure (in

short 'CPC') has been filed by the petitioner/Judgment petitioner/ Debtor (J.Dr.), challenging

the order dated 26.07.2024 in E.P.No.20 of 2024 passed by the XI Additional

District Judge, Tadepalligudem Tadepalligudem.

3. By the said order, for attachment of property Order 21 Rule 54 CPC, notice

has been issued to the petitioner.

4. The dispute having arises, between the petitioner and the respondent, an

arbitrator was nominated vide letter dated 17.03.2020. The petitioner objected the

same. The petitioner filed an application vide ARB.APPl.No.27 of 2020 under

Section 11(6) of the Arbitration and Conciliation Act, 1996 (in short 'Arbitration

Act') for appointment of any suitable arbitrator. However, the proceedings before

the nominated arbitrator continued. The petitioner did not participate. The award

was passed on 25.11.2021 in favour of the respondent. The petitioner filed

I.A.No.1 of 2022 in ARB.APPL.No.27 of 2020 and submitted that the award dated

25.11.2021 was exparte and had no legal validity and sanctity and was non est in

law, with further prayer to stay the enforcement of the award. Those proceedings

are pending, without any stay order.

5. The respondent filed E.P.No.20 of 2024 for execution of award.

6. The petitioner did not file any objection. A memo is said to have been filed,

about the ARB.APPl.No.27 of 2020 pending before the High Court under Section

11(6) of Arbitration Act as also I.A.No.1 of 2022. The Execution Court passed the

order dated 26.07.2024, fixing 23.08.2024 to issue Rule 54 notice and

attachment, on payment of process.

7. Learned counsel for the petitioner submitted that the Civil Court i.e., XI

Additional District Judge, Tadepalligudem, has no jurisdiction to execute the

award. There is lack of inherent jurisdiction. He further submitted that even if it be executable, it can be executed only by the Commercial Court at Visakhapatnam

and not by the present Civil Court, in view of Section 10 & 15 R/w. Section 2(1)(i)

of the Commercial Courts Act, 2015 (in short 'the Act'). The specified value of the

award is Rs.78,66,839/-.

8. Learned counsel for the petitioner placed reliance in M/s. Obulapuram

Mining Company Pvt. Ltd., v. R.K. Mining Private Limited 1 , decided on

12.09.2023 by the Co-ordinate Bench. He submitted that as per the judgment in

M/s. Obulapuram Mining Company Pvt. Ltd., (1st supra), the execution

petition/application is also the 'application' within the meaning of Sections 10 &

15 and with effect from 16.05.2019, by virtue of G.OMs.No.78, which constituted

two Commercial Courts in the State of Andhra Pradesh in Vijayawada and

Visakhapatnam, only such Commercial Courts have jurisdiction over the

Commercial disputes of specified value even for execution and not the Civil

Courts. He submitted that the execution petition which was pending in the Civil

Court was transferred to the Commercial Court, Vijayawada, with further direction

to start the proceedings afresh from 16.05.2019, also observing that all the orders

passed after 16.05.2019 were by a coram non-judice; and were bad in law. He

submitted that in the present case, the award being of the specified value of

Commercial dispute, the execution petition should have been filed in the

Commercial Court. The Civil Court where it is pending lacks inherent jurisdiction.

He further submitted that SLP.No.23322-23325 of 2023 was filed against the

judgment in M/s. Obulapuram Mining Company Pvt. Ltd., (1st supra), which is

pending before Hon'ble the Apex Court in which there is stay on transfer of the

execution petition. He further submitted that another Co-ordinate Bench in

U.V.Satyanarayana v. M/s.Shriram City Union Finance Ltd.2, considering the

judgment in M/s. Obulapuram Mining Company Pvt. Ltd., (1st supra), as also

the stay order passed in SLP, set aside the proceedings in EP.No.151 of 2017

which were before the learned Principal District Judge, East Godavari District,

with a liberty to respondent therein to either move for transfer of the execution

petition to the Commercial Court at Visakhapatnam or in the alternative to

withdraw the same and move a fresh execution petition before the Commercial

Court.

9. Sri V. Yatendra Kumar, learned counsel for the respondent placed reliance

in Bellam Balakrishna v. Greenmount Developers 3 decided on 28.08.2023 to

contend that another Co-ordinate Bench of this Court, held that, until the State

Government issues a notification in consultation with the High Court, the

pecuniary value of three lakhs, as fixed in Section 2(1)(i) of the Act, will not come

into operation. He submitted that considering the specified value of the award, for

execution before the Civil Court, being less than One Crore and in the absence of

any notification under Section 3(1A) of the Act, the Civil Court has the jurisdiction

to execute, and not the Commercial Court.

10. We have considered the aforesaid submissions and perused the

provisions of the statute as also the judgments cited.

11. Section 2(1)(i) of the Act reads as under:

"(i) "Specified Value", in relation to a commercial dispute, shall mean the value of the subjectmatter in respect of a suit as determined in accordance with section 12 which shall not be less than three lakh rupees or such higher value, as may be notified by the Central Government."

12. In Section 2(1)(i), the expression "which shall not be less than three lakh

rupees" was substituted by Act No. 28 of 2018 vide Section 4(II), for the

expression "which shall not be less than one Crore rupees", with effect from

03.05.2018.

13. Section 3(1A) of the Act reads as under:

(1A) Notwithstanding anything contained in this Act, the State Government may, after consultation with the concerned High Court, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary.

14. Section 2(1)(i) and 3(1A) both provide for 'notification' to specify such

pecuniary value, which shall not be less than three lakh rupees or for such higher

value. Notification, in the former case i.e., Section 2(1)(i) is by Central

Government, and in the later case Section 3(1A) is by the State Government as it

considers necessary, in consultation with the High Court for whole or part of the

State. The power of the State Government is, notwithstanding anything contained

in the Commercial Courts Act, which includes Section 2(1)(i).

15. Prima facie, we are of the view that, under Section 2(1)(i) it is for the

Central Government to determine the specified value, by notification. The State

Government has also the power under Section 3(1A) to do so, by notification. So,

even if there is notification by the Central Government, the State Government

may also issue notification to specify the specified value, subject to Sub-Section

(1A). In the absence of any notification by the Central Government and also by the State Government the amended provision in Section 2(1)(i) shall not become

operative. Prima facie, we are of the view that there must be a notification for the

specified value, which shall not be less than three lakh rupees. The Act No. 28 of

2018, only enables the Central Government as also the State Government, to fix

specified value, by notification. In the absence of any notification there would be

no specification of a specified value. In other words, prima facie, the amendment

of Act 28 of 2018 cannot be read as specifying the 'specified value' of its own

force. After such amendment, the notification must follow. It is well settled in law

that once the statute prescribes specified procedure that has to be followed.

Consequently, the specified value has to be notified and in the absence of any

notification, merely by the amendment it cannot be that the specified value for

Commercial Court stands amended as not less than three lakh rupees or that the

commercial disputes of the specified value from three lakh rupees shall be in the

Commercial Court and the jurisdiction of the Civil Court stands barred or ousted.

16. Learned counsels for both the parties submitted that there is no notification

either by the Central Government or by the State Government.

17. In M/s. Obulapuram Mining Company Pvt. Ltd., (1st supra), a Co-

ordinate Bench held in para 53 as under:

53) Therefore, the following conclusions are reached by ironing out the creases:

a) The Commercial Court alone is competent to execute decrees, which are above the specified value. The regular Civil Court will not have the jurisdiction to entertain such Execution Petitions with effect from 16.05.2019 in the State of Andhra Pradesh.

b) It is only the Commercial Court, Vijayawada or the Commercial Court at Visakhapatnam which can entertain the Execution Petitions if they are above the specified value in view of the G.O.Ms.No.78.

c) All orders passed after 16.05.2019 are orders passed by a coram non-judice.

They suffer from an inherent lack of jurisdiction and they are held to be per se bad in law.

d) The pending E.P.No.13 of 2016 shall be transferred to the Commercial Court, Vijayawada, and both the parties are given liberty to start the proceedings afresh from the said date i.e., 16.05.2019.

18. In M/s. Obulapuram Mining Company Pvt. Ltd., (1st supra), the specified

value was 32.86 Crores i.e., above One Crore.

19 In Bellam Balakrishna (3rd supra) a Co-ordinate bench held that even

though the specified value is specified in Section 2(1)(i) of the Act as not less

than three lakhs, still under Section 3(1A) of the Act a discretion is left to the

State Government by notification to specify the pecuniary value which shall not

be less than three lakhs and not more than the pecuniary jurisdiction of the

District Courts. This proviso, like all other provisos, carves out an exception to the

main section and therefore, the State Government has to issue a notification

fixing the value between three lakhs to the pecuniary jurisdiction exercisable by

the District Court. That was also clarified and amplified by Section 3(1A) by Act

28 of 2018, which starts with a non-obstante clause and states that

"notwithstanding anything contained in the Act", which was interpretated to make

it clear that, the further notification was needed from the State in consultation

from the High Court. It was held that in the absence of notification by the State Government the pecuniary value of three lakhs as fixed in Section 2(1)(i) will not

come into operation.

20. In Bellam Balakrishna (3rd supra), a Co-ordinate Bench held as under:

"Therefore, on consideration of all the above, this Court is of the opinion that until the State Government issues a notification in consultation with the High Court, the pecuniary value of three lakhs, as fixed in Section 2(i) of the Act, will not come into operation. Therefore, this Court does not find any error in the objections raised by the Commercial Judge."

21. Another Co-ordinate Bench in U.V.Satyanarayana (2nd supra) held that

Section 2(i) of the Act had fixed the specified value to mean a value in respect of

a suit which shall not be less than Rs. 1 Crore. However, this value was reduced

to Rs. 3 lakhs by an Ordinance No.3 of 2018, which was subsequently replaced

by the Central Act No.28 of 2018, with effect from 03.05.2018. The Co-ordinate

Bench held that the Principal District Judge, East Godavari could not deal with

E.P.No.151 of 2017, unless it was shown that the specified value was more than

the amount being claimed in the execution petition. The Co-ordinate Bench took

a view that the matter had to be placed before the Commercial Court.

22. Para Nos.9 to 14 in U.V.Satyanarayana (2nd supra) read as follows:

9. Section 2(1)(e) of the Arbitration Act defines Court to mean the Principal Civil Court of original jurisdiction in the District. Section 36 of the Arbitration Act stipulates that enforcement of an arbitral award is to be done in accordance with the provisions of the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the Court. This would mean that execution petitions would have to be filed before the Principal Civil Court of original jurisdiction in the District in as much as the Court has been defined under Section 2 (1)(e) to mean Principal Civil Court.

10. However, Section 10(3) of the Commercial Courts Act, 2015 reads as follows:-

"Section-10: Jurisdiction in respect of arbitration matters - Where the subject-matter of an arbitration is a commercial dispute of a Specified Value and-

(1) .......

(2) ......

(3) If such arbitration is other than an international commercial arbitration, all applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) that would ordinarily lie before any principal civil court of original jurisdiction in a district (not being a High Court) shall be filed in, and heard and disposed of by the Commercial Court exercising territorial jurisdiction over such arbitration where such Commercial Court has been constituted."

11. In view of this provision, the Principal Civil Court of original jurisdiction would have to be treated to be the Commercial Court having territorial jurisdiction over the said area. It may also be noted that Section 21 states that the Commercial Courts Act, 2015, save as otherwise provided will have effect over every other law which is in force for the time being.

12. This would clearly denude the power of the Learned Principal District Judge, East Godavari to deal with E.P.No.151 of 2017 unless it is shown that the specified value is more than the amount being claimed in the execution petition.

13. Section 2(i) of the Commercial Courts Act, 2015 had fixed the specified value to mean a value in respect of a suit which shall not be less than Rs.1,00,00,000/-. However, this value was reduced to Rs.3,00,000/- by an Ordinance No.3 of 2018, which was subsequently replaced by the Central Act No.28 of 2018, with effect from 03.05.2018.

23. In U.V.Satyanarayana (2nd supra), value of the award was Rs.46,46,965/-

i.e., below One Crore rupees.

24. The apparent conflict which we find is that, in Bellam Balakrishna (3rd

supra), without notification, the amendment vide Act No.28 of 2018 was held not

to be operative so as to make the specified value 'not less than three lakhs',

whereas in U.V.Satyanarayana (2nd supra) the specified value has been taken

as amended vide Act No.28 of 2018, itself, to be 'not less than three lakhs'.

25. In U.V.Satyanarayana (2nd supra) the previous judgment of the Co-

ordinate Bench in Bellam Balakrishna (3rd supra) was not noticed and appears

that the same was not placed before the Co-ordinate Bench. Section 3(1A) also

does not find consideration in U.V.Satyanarayana (2nd supra) which was

considered in Bellam Balakrishna (3rd supra).

26. There is thus, apparent conflict in U.V.Satyanarayana (2nd supra) and in

Bellam Balakrishna (3rd supra). Both are by the Co-ordinate Benches.

27. We therefore consider it proper to refer the following questions to the

larger bench and accordingly we make the reference:

A. Whether the Amendment Act No.28 of 2018, in respect of Sections 2(1)(i) & 3(1A) of the Commercial Courts Act, 2015, by itself amends the 'specified value' as 'not less than three lakhs rupees', for the jurisdiction of the Commercial Court or it only enables the Central Government & the State Government(s) to do so, by notification specifying any amount, which shall not be less than three lakhs, as 'specified value', and it is only after such notification, the specified value shall stand amended ?

B. Whether the 'specified value' in Section 2(1)(i) in Commercial Courts Act, 2015, as substituted by Act 28 of 2018 to the effect "which shall not be less than Rupees three lakhs" in the place of "which shall not be less than Rupees One Crore" shall be operative and effective from

i) the date of amendment i.e., w.e.f. 03.05.2018; or

ii) on the date notified in the notification being issued by the Central Government under Section 2(1)(i) of the Act; or

iii) on the date notified in the notification being issued by the Andhra Pradesh State Government in consultation with the High Court of Andhra Pradesh, as provided under Section 3(1A) of the Commercial Courts Act ?

C. Which judgment, U.V.Satyanarayana (2nd supra) or Bellam rd Balakrishna (3 supra), lays down the law correctly ?

28. The Registry shall place the matter before Hon'ble the Chief Justice for

constitution of the larger Bench.

29. By an order dated 22.08.2024, we provided that the Execution Court shall

adjourn the matter and fix any date in the next week. Learned counsel for the

petitioner submitted that in the Execution case, the matter is for attachment of

property, and the petitioner is ready to make deposit of 20% of the awarded

amount under execution.

30. Accordingly, we provide that till the next date of listing, the execution

proceedings in E.P.No. 20 of 2024 shall remain stayed subject to the petitioner

depositing 20% of the awarded amount before the execution Court within a

period of three weeks from today. The execution proceedings shall remain stayed

for a period of three weeks as well, to enable the petitioner to make the deposit.

31. List before the appropriate Bench after the reference is answered.

___________________ RAVI NATH TILHARI,J

__________________ NYAPATHY VIJAY,J

Dated:23.08.2024 AG