Karnataka High Court

Betamax Limited vs State Trading Corporation on 29 March, 2022

Bench: B.M.Shyam Prasad

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                                                               R

     IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 24TH DAY OF APRIL, 2019

                          PRESENT
          THE HON'BLE MR. L. NARAYANA SWAMY,
                 ACTING CHIEF JUSTICE
                           AND
     THE HON'BLE MR. JUSTICE ASHOK G.NIJAGANNAVAR

                   A.P. IM No.5 of 2017
                           C/W
                   A.P.EFA No.3 of 2017

IN A.P. IM No.5 of 2017

BETWEEN:

BETAMAX LIMITED
A COMPANY ORGANISED UNDER THE LAWS OF
MAURITIUS, HAVING ITS OFFICE AT
LA TOUR KOENIG,
POINTE AUX SABLES, MAURITIUS
REPRESENTED BY ITS DIRECTOR,
MR VEEKRAM BHUNJUN                        ... PETITIONER

(BY SRI.DHYAN CHINNAPPA, SENIOR COUNSEL FOR
    SRI.PRADEEP NAYAK & SRI.VIKAS MAHENDRA, ADVS.)

AND:

1.    STATE TRADING CORPORATION
      A MAURITIAN BODY CORPORATE SET UP
      UNDER THE PROVISION OF THE STATE
      TRADING CORPORATION ACT, 1982 (ACT 24/1982,
      LEGISLATION OF REPUBLIC OF MAURITIUS)
      HAVING ITS REGISTERED OFFICE AT
                                                                    2




     55 BUSINESS ZONE
     EBENE CYBERCITY 72201, MAURITIUS
     REPRESENTED BY ITS GENERAL MANAGER

2.   NEW MANGALORE PORT TRUST
     A PORT ESTABLISHED UNDER THE
     MAJOR PORT TRUST, ACT, 1963, HAVING ITS
     REGISTERED OFFICE AT
     PANAMBUR, MANGALORE - 575 010
     D.K. DISTRICT, KARNATAKA
     REPRESENTED BY ITS CHAIRMAN    ... RESPONDENTS

(BY SRI.GANAPATHI HEGDE, ADV. FOR R2;
    SMT.K.S.ANASUYA DEVI, CGC FOR UNION OF INDIA
    SRIYUTHS HIROO ADVANI, SHREYAS JAYSIMHA,
    ASIF LAMPWALA, SHEIKH YUSUF ALI,
    MADHOOJA MULAY, ADVS. FOR R1)

     THIS    PETITION   IS   FILED    UNDER    SEC     9    OF   THE
ARBITRATION AND CONCILIATION ACT 1996, AND AMENDMENT
ACT 2015 (NO.3/2016) PRAYING TO: A. ORDER ATTACHMENT
OF   THE    CARGO   DETAILED   IN    THE     SCHEDULE      WRITTEN
HEREUNDER AND RESTRAIN THE RESPONDENT NO. 1, ITS
AGENTS,     SERVANTS    OR   ANY     OTHER    PERSON       CLAIMING
THROUGH OR UNDER IT, ITS ASSIGNEES OR SUCCESSORS,
FROM SELLING, ALIENATING OR OTHERWISE REMOVING ANY
OF   THE    CARGO   DETAILED   IN    THE     SCHEDULE      WRITTEN
HEREUNDER, OUTSIDE THE JURISDICTION OF THIS HON'BLE
COURT; IN ORDER TO SECURE THE AMOUNT AWARDED BY THE
ARBITRAL    TRIBUNAL    IN   ARB     NO.084    OF    2015    DATED
05.06.2017 (ANNEXURE -E) AND ETC.,.
                                                      3




A.P. EFA NO.3 OF 2017

BETWEEN:

BETAMAX LIMITED
A COMPANY ORGANISED UNDER THE LAWS OF
MAURITIUS
HAVING ITS OFFICE AT
LA TOUR KOENIG
POINTE AUX SABLES
MAURITIUS
REPRESENTED HEREIN BY ITS DIRECTOR
MR.VEEKRAM BHUNJUN                 ... PETITIONER

(BY SRI.DHYAN CHINNAPPA, SENIOR COUNSEL FOR
    SRI.PRADEEP NAYAK & SRI.VIKAS MAHENDRA, ADVS.)

AND:

STATE TRADING CORPORATION
A MAURITIAN BODY CORPORATE SET UP UNDER THE
PROVISIONS OF THE STATE TRADING CORPORATION
ACT, 1982 ACT 24/1982, LEGISLATION OF
REPUBLIC OF MAURITIUS) HAVING ITS
REGISTERED OFFICE AT 55 BUSINESS ZONE
EBENE CYBERCITY 72201
MAURITIUS
REPRESENTED BY ITS GENERAL MANAGER
                                       ... RESPONDENT

   (SRIYUTHS HIROO ADVANI, SHREYAS JAYSIMHA,
   ASIF LAMPWALA, SHEIKH YUSUF ALI,
   MADHOOJA MULAY, ADVS. FOR R1)


       THIS PETITION IS UNDER SEC.47, 48 AND 49 OF THE
ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO: I.
TO ENFORCE THE AWARD PASSED BY THE TRIBUNAL DATED 5
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JUNE 2017 IN ARB NO.084 OF 2015 AND EXECUTE THE AWARD
FILED HEREWITH IN THE EXECUTION PETITION ANNEXED
HEREWITH. II. PASS SUCH OTHER ORDER AS THIS HON'BLE
COURT MAY DEEM FIT AND PROPER IN THE INTEREST OF
JUSTICE.


      THESE PETITIONS HAVING BEEN HEARD AND RESERVED
FOR    ORDER     ON    07.01.2019     AND    COMING      ON    FOR
PRONOUNCEMENT         OF    ORDER     THIS    DAY,    ASHOK         G
NIJAGANNAVAR., MADE THE FOLLOWING:-


                               ORDER

APIM No.5/2017 is filed under Section 9 of the Arbitration

& Conciliation Act, 1996, (for short, `the Act') for interim orders

and the other AP-EFA No.3/2017 is filed under Section 47, 48

and 49 of the Act, as amended by the Amendment Act, 2015, for

enforcement of the award dated 05.06.2017.

2. These two petitions were posted for admission on

07.01.2019. The learned counsel for the first respondent raised

the following preliminary objections regarding jurisdiction, etc.

(i) Arbitration proceedings started prior to amendment to Arbitration & Conciliation Act, 1996 and the amendment being prospective, Amendment Act which has come into

effect on 23.10.2015 does not apply to the present proceedings and the Court to enforce foreign award is either Principal Civil Court of original jurisdiction in a district, and includes the High Court of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit. If it is to be held that this Court has jurisdiction, then it is the learned Single Judge and not the Division Bench.

(ii) In view of Commercial Courts Act, a Commercial Division to be set up in the High Court. Then the matter will have to be heard by a Single Judge.

(iii) Right to appeal conferred under Section 37 of the Act, will be affected by virtue of matter being heard by a Division Bench.

(iv) Since the amendment Act does not apply to the present proceedings, application under Section 9 of the Act cannot be filed.

3. It is necessary to decide first whether this Court has

jurisdiction to hear these proceedings or it is the principal Civil

Court of original jurisdiction in a district. The decision on the

other points raised for consideration whether to be gone into or

not is depending upon decision on the first point.

4. The learned counsel for the petitioner contended that

whether the Act applies prospectively or retrospectively is

irrelevant in the context of the change of forum from the District

Court to the High Court. The procedural amendments which

change forum or the procedure always operate retrospectively

unless the Amendment Act provides otherwise specifically. The

learned Senior Counsel in this regard placed reliance on the

decision in Board of Control for Cricket in India v. Kochi Cricket

(2018 (6) SCC 287). It is stated, the present proceedings were

filed on 22.11.2017, which is after coming into force of

Amendment Act on 23.10.2015 and therefore the Amendment

Act applies to the present proceedings.

5. On the other hand, the learned Counsel for

Respondent No.1 submits that notice of arbitration having served

on May 14, 2015, in terms of Section 21 of the Act, the

arbitration proceedings commenced well before coming into

force of Amendment Act on 23.10.2015 and therefore the

Amendment Act does not apply to the present proceedings. The

learned Counsel placing reliance on Ardee Infrastructure Projects

Pvt. Ltd., v. Anuradha Bhatia & Ors of the Delhi High Court

(Judgment delivered on: 06.01.2017 + FAO (OS) No.221/2016)

and Global Aviation Services Pvt. Ltd. v Airport Authority of India

of the Bombay High Court (Commercial Arbitration Petition

No.434 of 2017), contended that reference to "Court" in Section

48 of the Act, would be a court as defined under Section 2(1)(e)

of the Act and it is the "the principal Civil Court of original

jurisdiction", which in this case would be the District Court at

Mangalore. It is further contended that if this Court were to hold

that Amending Act of 2015 applies, then as per Section 2(e)(ii),

it refers to a Single Judge of this High Court and not to the

Division Bench. The learned Counsel submits that when the Act

prescribes the "Court" for considering the petitions in question,

Circular dated August, 22, 2016, is of no consequence and

matter will have to be referred to the Single Judge. It is also

contended referring to Sections 6, 8 & 9 of the Karnataka High

Court Act, 1961 and Rules made there under that only Single

Judge can hear petitions under Section 9 and Sections 48 to 49

of the Act and not the Division Bench.

6. We have given our anxious consideration to the

respective submissions made by the learned Senior Counsel for

the petitioner and the learned counsel for the respondent No.1.

7. The amendment brought to the Act includes Section

relating to definition Section 2 of the Act also. It is, therefore,

first of all we have to decide, whether the Act applies to the

present proceedings or the Amended Act.

8. Section 21 of the Act deals with commencement of

arbitral proceedings, which reads as follows:

"21. Commencement of arbitral proceedings.- Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent."

9. Further Section 26 of The Arbitration & Conciliation

(Amendment) Act, 2015, which prescribes application of the

amended Act, reads as follows:

"26. Act not to apply to pending arbitral proceedings.- Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act."

10. In the instant case, it is the contention of Respondent

No.1 that notice of arbitration is dated 15.05.2015, a copy of the

same is produced at Annexure-D at Page No.215. This is not in

dispute. However, it is the contention of the petitioner that

Amendment Act came into force on 23.10.2015 and the present

proceedings were filed on 22.11.2017, based on the date of filing

the present petitions and thus the Amendment Act, 2015 applies

to the present proceedings. Considering the provisions of

Section 21 of the Act and Section 26 of the Amendment Act, it is

the date of commencement of arbitral proceedings which is an

essential criteria and not the date on which the present petitions

are filed before this Court. Therefore, date of commencement of

arbitral proceedings being prior to coming into force of

Amendment Act on 23.10.2015, it is the Act which is applicable

to the present proceedings and not the Amendment Act 2015.

The decision in Board of Control for Cricket in India v. Kochi

Cricket (2018 (6) SCC 287) on which reliance is placed by

learned Senior Counsel for the petitioner, cannot be of any help

for his contention that the Amendment Act, 2015 is retrospective

and it is applicable to the present proceedings. It is held in

Para-54 of the judgment that whether certain provisions are

clarificatory, declaratory or procedural and therefore

retrospective, is a separate and independent enquiry, which we

are not required to undertake in the facts of the present cases,

except to the extent indicated above, namely, the effect of the

substituted Section 36 of the Amendment Act.

11. Next comes the "Court", which has jurisdiction to deal

with the present proceedings. The word "Court" is defined under

Section 2(1)(e) of the Act as follows:

"2(1)(e). "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes".

12. It is noticed that under Section 2(1)(e) it excludes

certain Courts. The exclusion clause excludes any Civil Court

inferior to such Principal Civil Court or any Court of Small Causes

to exercise jurisdiction or to entertain the petition or application

under the Act. The exclusion is specific. On a conjoint reading of

inclusion and exclusion clauses of Section 2(1)(e), it would

emerge that Legislature in its wisdom thought it necessary to

confer jurisdiction to decide the questions forming the subject-

matter of a suit under the Act with the "Principal Civil Court" of a

"District" and by excluding any other Civil Court of a grade

inferior to such Principal Civil Court or any Court of Small

Causes. The words "Principal Civil Court" is defined in Section

14 of Karnataka Civil Courts Act, which reads as under:

"Section 14. Jurisdiction of District Court.-(1) The District Court shall be deemed to be the Principal Civil Court of original jurisdiction within the local limits of its jurisdiction".

13. The two sections namely Section 2(1)(e) of the Act and

Section 14 of Karnataka Civil Courts Act make it clear that

"Principal District Judge" of that particular District would be the

Principal Civil Court of original jurisdiction within the local limits

of its jurisdiction, which would be entitled to decide the

questions forming the subject-matter of arbitration. Thus,

Principal Civil Court of original jurisdiction in a District would

mean and include only the Principal District Judge of the District.

In the instant case, it is the Principal District Judge, at Mangalore

is the Court, which has jurisdiction to deal with the present

petitions.

14. For the above reasons and the view taken by us on