Karnataka High Court

Pranava Electronics Private Ltd vs M/S Autoliv India Pvt Ltd on 15 February, 2024

Author: P.S. Dinesh Kumar

Bench: P.S. Dinesh Kumar

                                            W.P. No.22431/2023

                              1

       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

         DATED THIS THE 15TH DAY OF FEBRUARY, 2024

                          PRESENT

      THE HON'BLE MR. P.S. DINESH KUMAR, CHIEF JUSTICE

                            AND

     THE HON'BLE MR. JUSTICE T.G. SHIVASHANKARE GOWDA

       WRIT PETITION NO. 22431 OF 2023 (GM-RES)

BETWEEN:

1.     PRANAVA ELECTRONICS PRIVATE LTD.
       A COMPANY INCORPORATED UNDER THE
       COMPANIES ACT, 1956
       HAVING ITS OFFICER AT:
       101, EDEN PARK, NO.20
       VIJAY MALLYA ROAD
       BANGALORE-560 001.
       REPRESENTED BY ITS DIRECTOR
       MR. S.R. AJIT

2.     KANYA INVESTMENT PVT. LTD.
       A COMPANY INCORPORATED UNDER THE
       COMPANIES ACT, 1956
       HAVING ITS OFFICE AT
       101, EDEN PARK, NO.20
       VIJAY MALLYA ROAD
       BANGALORE-560 001.
       REPRESENTED BY ITS
       AUTHORISED SIGNATORY AND MANAGER
       MR. A. SURYANARAYANA                     ...PETITIONERS

(BY SHRI. D.L.N. RAO, SENIOR ADVOCATE FOR
    SHRI. NAVKESH MUNISH BATRA, ADVOCATE)
                                                       W.P. No.22431/2023

                                     2

AND:

M/S AUTOLIV INDIA PVT. LTD.
A COMPANY INCORPORATED
UNDER THE COMPANIES ACT, 1956
HAVING ITS OFFICE AT: PLOT NO.31, 32 P AND 33 P
IT PARK AREA OF HI TECH
DEFENCE AEROSPACE PARK
DEVANAHALLI
BANGALORE-562 149.
REPRESENTED BY ITS DIRECTOR
NARASIMHA MURTHY .T                                         ...RESPONDENT

(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
    SHRI. V.G. PRASHANTH, ADVOCATE)

      THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF
THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF
CERTIORARI OR ANY APPROPRIATE WRIT, ORDER OR DIRECTION IN THE
NATURE OF CERTIORARI SETTING ASIDE/QUASHING THE IMPUGNED
ORDER, DATED 27.07.2023, PASSED BY THE LD. SOLE ARBITRATOR, IN
THE MATTER OF A.C. No. 648 OF 2022, ON THE PETITIONERs IA NO.1,
IN THE INTEREST OF JUSTICE AND EQUITY (ANNEXURE-A HERETO) AND
ETC.

     THIS WRIT PETITION, HAVING BEEN HEARD AND RESERVED FOR
ORDERS ON 11.01.2024, COMING ON FOR PRONOUNCEMENT OF
ORDERS THIS DAY, CHIEF JUSTICE, PRONOUNCED THE FOLLOWING:-

                                 ORDER

This writ petition is presented with the following prayers:

"i. issue a writ of certiorari or any appropriate writ, order or direction in the nature of certiorari setting aside/quashing the Impugned Order, dated 27.07.2023, passed by the Ld. Sole Arbitrator, in the matter of A.C. No. 648 of 2022, on the Petitioner's I.A. No. 1, in the interest of justice and equity. (Annexure - A hereto).

ii. issue a writ of certiorari or any appropriate writ, order or direction in the nature of certiorari setting aside/quashing the Impugned Order, dated 23.08.2023, passed by the Ld. Sole Arbitrator, in the matter of A.C. No. 648 of 2022, on the Petitioner's Memo, dated 15.07.2023, in the interest of justice and equity. (Annexure - B hereto).

iiii. allow the Petitioner's Memo, dated 15.07.2023 (Annexure - P hereto) and dismiss Claim Statement filed by the Respondent herein;

iv. Order that, only the Counter Claim of the Petitioners herein in A.C. No. 648 of 2022 be proceeded with; or in the alternative to prayers (i) to (iv):

v. grant such further and other relief(s) that this Court may deem fit in the facts and circumstances of the case."

2. Heard Shri. DLN Rao, learned Senior Advocate for

the petitioner and Shri. Uday Holla, learned Senior Advocate

for the respondent.

3. Briefly stated facts of the case are, SSRB Food

Processing Pvt. Ltd.1, was the absolute owner of the suit

property. SSRB leased the suit property to

'SSRB' for short

M/s. Autoliv India Pvt. Ltd for a period of 25 years vide lease

deed dated 15.11.2009, which was followed by three further

documents in the form of Amendments to the said Lease

Deeds as 1st Amendment, 2nd Amendment, 3rd Amendment,

dated 19.01.2020, 05.02.2010 and 27.04 2010 respectively.

4. Through four registered Sale Deeds dated

16.07.2010, petitioner-Pranava Electronics Pvt. Ltd purchased

the suit property from SSRB. 'Pranava Ltd' entered into a

fresh lease deed titled "Fourth Amendment to Lease Deed'

with Autoliv Ltd., and one more amendment on 28.09.2018.

Autoliv Ltd issued a termination notice and filed C.M.P No.

362/2022 for appointment of an Arbitral Tribunal and the

same was allowed, but dispute under the unstamped 5th

Amendment was not referred. Even in the Arbitral

proceedings, 5th Amendment was abandoned. Pranava Ltd.

filed an interloculatory application praying for a direction

against Autoliv Ltd., to get 4th and 5th amendments

adjudicated and to pay deficit stamp duty.

5. The I.A was rejected. Hence, this writ petition.

6. Shri. Rao, for the Pranava Ltd., submitted that all

reliefs prayed in the claim statement arise out of unstamped

and unregistered 5th amendment which has been abandoned

by Autoliv Ltd; abandoning 5th amendment does not revive

the 4th amendment which is insufficiently stamped.

7. Opposing the writ petition, Shri. Holla submitted

that the writ petition is not maintainable; the 4th amendment

is sufficiently stamped and the 5th amendment is given up;

and the learned Arbitrator has rightly not expanded his

jurisdiction.

8. We have carefully considered rival contentions and

perused the records.

9. Undisputed facts of the case are Pranava Ltd., has

leased the suit property to Autoliv Ltd under a lease deed

titled as 'Fourth Amendment'. Subsequently, an amendment

to the said lease was carried out and the new document titled

as 'Fifth Amendment' was executed. Autoliv Ltd, initiated

arbitral proceedings against Pranava Ltd, on the basis of the

fourth Amendment. Pranava Ltd filed an I.A. before the

learned sole Arbitrator seeking direction against Autoliv Ltd.,

to pay sufficient stamp fee on the fourth amendment, which

was rejected. Pranava Ltd also filed a memo seeking quashing

of the claim on the ground that fifth Amendment has not been

referred to in the proceedings.

10. It was argued by Shri. Holla that this writ petition

is not maintainable, because the issues have to be

adjudicated under the Arbitration and Conciliation Act, 1996.

In support of this contention, he relied upon SBP & CO v.

Patel Engineering Ltd2.

11. We have perused the said authority. Para 45 and

46 reads thus:

"45. It is seen that some High Courts have proceeded on the basis that any order passed by an Arbitral Tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution. We see no warrant for

(2005) 8 SCC 618

such an approach. Section 37 makes certain orders of the Arbitral Tribunal appealable. Under Section 34, the aggrieved party has an avenue for ventilating its grievances against the award including any in-between orders that might have been passed by the Arbitral Tribunal acting under Section 16 of the Act. The party aggrieved of any order of the Arbitral Tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal.

This appears to be the scheme of the Act. The Arbitral Tribunal is, after all, a creature of a contract between the parties, the arbitration agreement, even though, if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the Arbitral Tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the Arbitral Tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution. Such an intervention by the High Courts is not permissible.

46. The object of minimising judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 or under Article 226 of the Constitution against every order made by the Arbitral Tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the Arbitral Tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage."

12. Shri. Holla has also relied upon Bhaven

Construction v. Sardar Sarovar Narmada Nigam Ltd3.

The relevant portion of the judgment reads as follows:

"18. ............... It is therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute or a clear "bad faith"

shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient."

13. It is settled that an Arbitral proceeding can be

interfered in writ proceedings only in exceptional cases.

Parties shall have to wait till the award is pronounced and the

subsequent remedy available is, an appeal under Section 37

of the Arbitration and Conciliation Act, 1996.

14. Shri. Rao mainly opposed the impugned orders on

two grounds, firstly that the fourth amendment is

insufficiently stamped and secondly that the Fifth Amendment

has not been relied in the arbitration proceedings.

(2022) 1 SCC 75

15. Both these grounds require proper examination of

evidence and have to be adjudicated on merits. At this