Universal Test Solutions Llp vs S L K Software Services Private ...
2023 Latest Caselaw 3010 Kant

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                                                  NC: 2023:KHC:19859
                                                    WP No. 22221 of 2022




                   IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                          DATED THIS THE 8TH DAY OF JUNE, 2023

                                        BEFORE
                       THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
                        WRIT PETITION NO. 22221 OF 2022 (GM-CPC)
                BETWEEN:
                UNIVERSAL TEST SOLUTIONS LLP
                A LIMITED LIABILITY PARTNERSHIP REGISTERED UNDER THE
                LIMITED LIABILITY PARTNERSHIP ACT 2008 UNDER
                REGISTRATION NO.AAB-1485 AND HAVING ITS REGISTERED
                OFFICE AT C/O 303, ANURAG BUSINESS CENTER VT PATIL MARG,
                NEAR AMAR THEATER CHEMBUR (E)
                MUMBAI-400071
                BY ITS PARTNER MR ANANND KHOSLA
                                                             ...PETITIONER
                (BY SRI. JOSHUA HUDSON SAMUEL.,ADVOCATE)
                AND:

                S L K SOFTWARE SERVICES PRIVATE LIMITED
                A COMPANY REGISTERED UNDER THE PROVISIONS OF THE
                COMPANIES ACT 1956 AND HAVING ITS REGISTERED OFFICE AT
                SLK1 40/A, KHB INDUSTRIAL AREA
                YELAHANKA, BANGALORE-560064
Digitally       REPRESENTED BY ITS MANAGING DIRECTOR
signed by
                                                          ...RESPONDENT
VANDANA S
Location:       (BY SMT. TAMARRA SEQUIERA, ADVOCATE)
High Court of
Karnataka             THIS W. P IS FILED UNDER ARTICLE 227 OF THE
                CONSTITUTION OF INDIA PRAYING TO CALL FOR RECORDS IN
                COMM A.P NO.1/2020,ON THE FILE OF THE LXXXIII ADDL. CITY
                CIVIL AND SESSION JUDGE (COMMERCIAL COURT), BANGALORE
                (CCH-84) AND AFTER EXAMINING THE LEGALITY AND VALIDITY OF
                THE IMPUGNED ORDER DATED 26.07.2022       REJECTING THE
                APPLICATION FILED BY THE PETITIONER, FOR DIRECTIONS TO
                THE REGISTRAR CITY CIVIL COURT, BANGALORE.

                      THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN
                'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:
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                                          NC: 2023:KHC:19859
                                             WP No. 22221 of 2022




                                ORDER

This petition is directed against the impugned order

dated 26.07.2022 passed in COM.A.P.1/2020, whereby the

application dated 18.05.2022 filed by the petitioner-defendant

under Section 151 CPC for a direction to the Registrar of City

Civil Court, Bangalore, to invoke the Bank Guarantee dated

07.10.2021 issued on behalf of the respondent to disburse the

same to the petitioner herein was rejected by the Commercial

court.

2. Heard learned counsel for the petitioner and learned

counsel for the respondent and perused the material on

record.

3. In addition to reiterating the various contentions

urged in the petition and referring to the material on record,

learned counsel for the petitioner submits that though the

petitioner had sought for a direction to invoke the Bank

Guarantee furnished by the petitioner, the said application

dated 18.05.2022 was in the nature of seeking review of the

order dated 30.10.2021 passed in COM.A.P.1/2020 passed by

the Commercial court which directed release of the amount of

Rs.4,80,02,855/- in favour of the petitioner but did not issue

NC: 2023:KHC:19859 WP No. 22221 of 2022

any direction regarding payment of a sum of Rs.3,20,01,903/-

covered under the Bank Guarantee in favour of the petitioner

who had accordingly filed the instant application. It was

therefore submitted that the impugned order passed by the

Commercial court deserves to be set aside and the instant

application dated 18.05.2022 deserves to be allowed by

treating the same as an application for review, particularly

when the sole ground on which the Commercial court has

rejected the application was that the Court had become

functus officio and the only remedy available to the petitioner

was to execute the Arbitral award.

4. Per contra, learned counsel for the respondent

submits that there is no merit in the petition and the same is

liable to be dismissed.

5. The material on record discloses that aggrieved by

the arbitral award dated 30.09.2019 passed by the sole

arbitrator, the respondent filed the instant COM.A.P.1/2020, in

which, the interim order was passed in favour of the

respondent against the petitioner on 17.03.2020 by the

Commercial Court directing the respondent to deposit 60% of

NC: 2023:KHC:19859 WP No. 22221 of 2022

the award amount and to furnish security for the balance 40%

of the award amount. In furtherance of the same, the

respondent deposited a sum of Rs.4,80,02,855/- (60%) and

furnished Bank Guarantee in a sum of Rs.3,20,01,903/- (40%)

in the name of Registrar, City Civil Court, Bangalore.

Subsequently, vide the final judgment / order dated

30.10.2021, the Commercial Court dismissed the aforesaid

COM.A.P.1/2020 filed by the respondent. In addition to

dismissing the said petition, the Commercial court also

directed a sum of Rs.4,80,02,855/- (60%) deposited by the

respondent to be released / disbursed in favour of the

petitioner together with accrued interest after expiry of the

appeal period. It is not in dispute that the said judgment and

order dated 30.10.2021 passed in COM.A.P.1/2020 has been

accepted by the respondent who has not challenged the same

and has attained finality and become conclusive and binding

upon the respondent.

6. Subsequent to the expiry of appeal period, petitioner

herein filed the instant application on 18.05.2022 under

Section 151 CPC seeking direction to the Registrar of the City

NC: 2023:KHC:19859 WP No. 22221 of 2022

Civil Court to invoke the Bank Guarantee dated 07.10.2021

furnished /submitted by the respondent and to disburse the

same in its favour. The said application having been opposed

by the respondent, the Commercial court proceeded to pass

the impugned order rejecting the application on the ground

that subsequent to the final order dated 30.10.2021 referred to

supra, the Commercial court had become functus officio and

did not have any jurisdiction or authority of law to pass the

impugned order on the said application and upon disposal of

the petition, the interim order would stand vacated by doctrine

of merger and consequently, furnishing of the Bank Guarantee

would not arise. Aggrieved by the impugned order, the

petitioner is before this Court by way of the present petition.

7. A perusal of the final judgment and order dated

30.10.2021 passed in COM.A.P.1/2020 will indicate that the

Commercial court has upheld the arbitral award and came to

the conclusion that the respondent was liable to pay

Rs.8,00,04,758/- together with interest to the petitioner. In

addition to disposing of the aforesaid petition under Section 34

of the Arbitration and Conciliation Act, 1994, as stated supra,

NC: 2023:KHC:19859 WP No. 22221 of 2022

the Commercial court has also directed release of 60% of the

amount deposited by the respondent. It is therefore clear that

the instant application seeking release of Bank Guarantee of

40% is in the nature of seeking review of the final judgment

and order of the Commercial court insofar as it relates tonot

issuing any directions in respect of the Bank Guarantee which

was furnished pursuant to the interim order dated 17.03.2020.

8. Under these circumstances, since the Commercial

court rejected the application only on the ground that it has

become functus officio and since the grievance of the

petitioner is that there is an error apparent on the face of the

record in the final judgment and order dated 30.10.2021

insofar as it relates to non-issuance of directions relating to

Bank Guarantee and the instant application is filed in this

regard, I deem it just and appropriate to set aside the

impugned order and directing Commercial court to treat /

register the said application as independent review petition /

application and consider and pass appropriate orders on the

same in accordance with law after providing an opportunity to

both sides.

NC: 2023:KHC:19859 WP No. 22221 of 2022

9. In the petition, I pass the following:-

ORDER

(i) Petition is hereby allowed.

(ii) The impugned order dated 26.07.2022 passed on an

application in COM.A.P.1/2020 by the Commercial court is hereby

set aside.

(iii) The matter is remitted back to the Commercial court for

reconsideration afresh of the application filed by the petitioner

dated 18.05.2022 by treating the same as a review petition /

application and pass appropriate orders in accordance with law

after providing sufficient and reasonable opportunity to both the

petitioner and respondent within a period of four weeks from the

date of receipt of a copy of this order.

(iv) Parties undertake to appear before the Commercial court

on 15.06.2023 without awaiting further notice from the court.

(v) All rival contentions on all aspects of the matter are kept

open and no opinion is expressed on the same.

Sd/-

JUDGE

Srl.