Citation : 2023 Latest Caselaw 6803 Ori
Judgement Date : 30 May, 2023
Signature Not Verified
Digitally Signed
Signed by: SASANKA SEKHAR SATAPATHY
Designation: SECRETARY
Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 30-May-2023 17:50:23
HIGH COURT OF ORISSA: CUTTACK
C.M.P No.1193 of 2022
(In the matter of an application under
Article 227 of the Constitution of India, 1950)
*******
Shreedatt Dash ... Petitioner
-versus-
M/s. Z. Estate Private Ltd. (ZEPL) ... Opposite Parties
and another
Advocate for the Parties
For the Petitioner : Mr. Rajjeet Roy, Advocate
For Opp. Party No.1 : Mr. Banshidhar Baug, Advocate
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Date of Judgment: 30.05.2023
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CORAM:
JUSTICE KRUSHNA RAM MOHAPATRA
JUDGMENT
KRUSHNA RAM MOHAPATRA, J.
1. This matter is taken up by virtual/physical mode.
2. Order dated 22nd July, 2021 (Annexure-1) passed by learned District Judge, Khurda at Bhubaneswar in ARBP No.2 of 2021 (appeal) and subsequent order dated 6th September, 2022 (Annexure-2) passed by learned Civil Judge, Senior Division (Commercial Court), Bhubaneswar in the said appeal are under challenge in this CMP.
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
3. By order under Annexure-1, learned District Judge transferred ARBP No.2 of 2021 to the designated Commercial Court, namely, Senior Civil Judge (Commercial Court), Bhubaneswar (for brevity 'the Commercial Court'). Order under Annexure-2 relates to rejection of an application filed by the Petitioner assailing the jurisdiction of the said Court to entertain the appeal.
4. This CMP finds its origin from Civil Suit No.1295 of 2020 filed by the Petitioner for declaration that the letters and e- mails dated 12th August, 2020 issued by Defendants as void and not binding on the Petitioner and also for a decree of permanent injunction to restrain the Defendants from creating any third party interest over the suit schedule properties along with cost.
5. Since the issue involved in the CMP is a pure question of law, detailed narration of fact is not necessary. Briefly stated the parents of the Plaintiff during their lifetime had entered into an agreement with Defendant No.1-Z Estate Private Limited on 14th March, 2012 to purchase two numbers of flats, i.e., Flat-702 at 7th floor of 8th tower and Flat-1203 at 12th floor of the said 8th tower in Z-1 Housing Project. Father of the Plaintiff/Petitioner, namely, Sreedhar Dash died on 28th December, 2015 and his mother, namely, Sobhamayee Dash had pre-deceased her husband on 9th August, 2013 leaving behind the Petitioner and his siblings, namely, Siddharth Dash (son) and two daughters, namely, Smt. Shampashree Mund and Dr. Swatishree
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
Panda. After death of their parents, dissensions arose between the Petitioner and his siblings in respect of their immovable properties. Plaintiff/Petitioner claimed right over the suit property by virtue of a Will for which Test Case Nos.21 of 2017 and 22 of 2017 are pending in the Court of learned District Judge, Khurda at Bhubaneswar. At this juncture, alleging non-payment of outstanding dues in respect of the aforesaid two flats, the Defendant/Opposite Party No.1 cancelled the agreement executed by parents of the Petitioner, vide letter and e-mail dated 12th August, 2020. Hence, the suit was filed for the aforesaid relief. The Defendants/Opposite Parties on their appearance filed an application on 6th January, 2021 under Section 8 of the Arbitration and Conciliation Act, 1996 (for brevity 'Arbitration Act') with a prayer to refer the parties to arbitration. Learned Senior Civil Judge, Khurda rejected such application vide order dated 18th February, 2021 (Annexure-5). Being aggrieved, the Defendants preferred appeal in ARBP No.2 of 2021 under Section 37(1)(a) of the Arbitration Act before learned District Judge, Khurda at Bhubaneswar.
5.1 When the matter stood thus, learned District Judge, vide its order dated 22nd July, 2021 (Annexure-1), transferred the appeal to the Court learned Senior Civil Judge (Commercial Court), Bhubaneswar, i.e., the Commercial Court, for disposal in accordance with law. The case record of ARBP No.2 of 2021 was received by the Commercial
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
Court on 12th August, 2021. Subsequently, the Petitioner filed an application before the Commercial Court on 16th August, 2022 contending that the said Court lacks jurisdiction to try the appeal and prayed for return of the file to the Court of learned District Judge, Khurda at Bhubaneswar for its adjudication. Said application was rejected vide order dated 6th September, 2022 (Annexure-
2), holding that such an application is not maintainable. Hence, this CMP has been filed assailing the said orders under Annexures-1 and 2.
6. Facts narrated above are not disputed by learned counsel for the parties.
6.1 Mr. Roy, learned counsel for the Plaintiff-Petitioner, in course of his argument, referred to several provisions of the Arbitration Act and Commercial Courts Act, 2015 (for brevity 'CC Act'). It is his submission that Government of Odisha in consultation with High Court of Orissa, vide its notification dated 13th November, 2020, conferred the jurisdiction and power of Commercial Court on the Court of Civil Judge (Senior Division) in different districts. Similarly, vide notification dated 11th January, 2021, State Government designated District and Sessions Judges of different districts as Commercial Appellate Courts for the purpose of exercising jurisdiction and powers on those Commercial Courts with effect from the date those Commercial Courts became functional. High Court of Orissa vide its memo dated 27th April, 2021 notified Senior
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Civil Judge (Commercial Court), Bhubaneswar to be functional with effect from 3rd May, 2021 and directed transfer of the case records pertaining to commercial disputes under the CC Act to the Commercial Court for its smooth functions. The notification dated 13th November, 2020 was under challenge in the case of M/s M.G. Mohanty and another Vs. State of Odisha and other batch of cases, reported in 2022 SCC OnLine Orissa 1070. In the said case, the challenge was with regard to transferring of cases pending before learned District and Sessions Judge, Khurda at Bhubaneswar to the Senior Civil Judge (Commercial Court). Holding the notification dated 13th November, 2020 to be valid, this Court held that Senior Civil Judge (Commercial Court), Bhubaneswar has jurisdiction to try the commercial disputes. Relying upon Gaurang Mangesh Suctancar Vs. Sonia Gaurang Mangesh Suctancar, reported in MANU/MH/2578/2020, this Court also held that if there is any conflict between the two Acts, Arbitration Act would prevail as regards substantial provision and CC Act shall cover the procedural niceties. View taken in the case of M/s M.G. Mohanty (supra) has been confirmed by the Hon'ble Supreme Court in the case of Jaycee Housing Private Limited and others Vs. Registrar (General), Orissa High Court, Cuttack and others, reported in (2023) 1 SCC 549. It is his submission that in all these aforesaid case laws, the jurisdiction of the Commercial Court to adjudicate applications under Sections 9, 14 and 34 of the Arbitration
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
Act was in question. The instant case is a departure in the sense that an appeal pending in the Court of learned District Judge, Khurda at Bhubaneswar was being transferred to the Commercial Court. In the case of Jaycee Housing Private Limited (supra), Hon'ble Supreme Court, while upholding the notification dated 13th November, 2020, observed as under:-
"26. Therefore, considering the aforestated provisions of the 2015 Act and the Objects and Reasons for which the 2015 Act has been enacted and the Commercial Courts, Commercial Division and Commercial Appellate Division in the High Courts are established for speedy disposal of the commercial disputes including the arbitration disputes, Sections 3 & 10 of the 2015 Act shall prevail and all applications or appeals arising out of arbitration under the provisions of the 1996 Act, other than international commercial arbitration, shall be filed in and heard and disposed of by the Commercial Courts, exercising the territorial jurisdiction over such arbitration where such Commercial Courts have been constituted.
27. If the submission on behalf of the appellants that all applications/appeals arising out of arbitration under the provisions of the 1996 Act, other than the international commercial arbitration, shall lie before the Principal Civil Court of a district, in that case, not only the Objects and Reasons of enactment of the 2015 Act and establishment of Commercial Courts shall be frustrated, even Sections 3, 10 & 15 shall become otiose and nugatory.
28. If the submission on behalf of the appellants is accepted, in that case, though with respect to other commercial disputes, the applications or appeals shall lie before the Commercial Courts established and constituted under Section 3 of the 2015 Act, with respect to arbitration proceedings, the applications or appeals shall lie before the Principal Civil Court of a district. There cannot be two fora with respect to different commercial disputes."
(underlined for emphasis)
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
6.2 In view of the above, the Court of learned District Judge, Khurda being the designated Commercial Appellate Court by the State Government in exercise of its power under Section 3A of the CC Act should hear appeals in terms of Section 13 of the said Act. He further submitted that the applications and 'appeals' finds place under Section 10(3) of the CC Act would not include an appeal under Section 37 (1)(a) of the Arbitration Act challenging an order refusing an application under Section 8 of the Arbitration Act. The appeal of present nature was not the subject matter of disputes in the above referred case laws.
Although Section 10(3) of the CC Act provides that all applications and appeals arising out of an arbitration, other than international commercial arbitration, shall be filed and disposed of by a Commercial Court exercising territorial jurisdiction over such arbitration, the same by no stretch of imagination include the appeal under Section 37 of the Arbitration Act, more particularly an appeal under Section 37 (1)(a) of the said Act. It is his submission that Section 37 of the Arbitration Act has been divided into two parts. Section 37(1) deals with an appeal against orders under three contingencies, viz., firstly against an order refusing to refer parties to arbitration under Section 8 of the said Act; secondly against an order granting or refusing to grant any measure under Section 9 and thirdly against an order setting aside order refusing to set aside an arbitral award under Section 34 of the said Act. Commercial Courts being conferred with jurisdiction of hearing an application under
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
Sections 9, 14, 29(A) and 34 of the Arbitration Act, an appeal against said order would lie to the District Judge being designated as Commercial Appellate Court by the State Government. Similarly, an order rejecting an application under Section 8 of the Arbitration Act by the Commercial Court could be challenged under Section 37 (1)(a) of Arbitration Act read with Section 13 of the CC Act before the Principal Civil Court, or a designated Commercial Appellate Court. Section 10 of the CC Act does not include an appeal of the present nature. Therefore, the substantive right of appeal as envisaged under Section 37(1) of the Arbitration Act read with Section 13 of the CC Act cannot be abridged and hearing of the appeal filed by the Opposite Party by a Commercial Court would be inconsistent with the legislative mandate. When the District Judge, Khurda at Bhubaneswar has been designated as Commercial Appellate Court by the State Government in consultation with the High Court of Orissa, there was no reason to transfer the appeal under Section 37 (1) (a) of the Arbitration Act to the Commercial Court.
6.3 He also relied upon the case law in the case of M/s Beta Exim Logistics (P) Ltd. Vs. M/s Central Rail side Warehouse Co. Ltd., reported in 2023 SCC OnLine 1392, wherein Kerala High Court, while dealing with an order passed by the District Judge in transferring the Execution Case to the Commercial Court, held that the execution petition cannot be included within the ambit of word
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
'application' under Section 15 of the CC Act. Further, the appeal has been valued at Rs.55,000/-. As such, the valuation being less than Rs.3.00 lakh, the subject matter cannot be a commercial dispute under Section 2(1) (i) of the CC Act. Learned District Judge, without considering all these legal aspects, transferred the appeal to the Commercial Court and in turn, the Commercial Court without applying its mind, rejected the petition vide order under Annexure-2 by a cryptic and non-speaking order. Hence, the impugned orders under Annexures-1 and 2 are not sustainable and are liable to be set aside.
7. Mr. Baug, learned counsel for the contesting Opposite Party No.1 submitted that the argument advanced by Mr. Roy, learned counsel for the Petitioner is contrary to the principles of law. It is his submission that in view of the clear and unambiguous language of Section 10 (1) of the CC Act, the Commercial Court has the jurisdiction to entertain the appeal transferred to it by learned District Judge, Khurda under Annexure-1. He further submitted that law has already been elaborately discussed in the case of M/s M.G. Mohanty (supra) and Jaycee Housing Private Limited (supra). Thus, there can be no iota of doubt or confusion with regard to maintainability of the appeal (ARBP No.2 of 2021) in the Commercial Court. He, therefore, prays for dismissal of the CMP.
8. Learned counsel for the parties were heard at length.
Perused the materials on record placed before me. Also
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
gone through the relevant provisions of the Arbitration Act and CC Act and the case laws cited. Section 37 of the Arbitration Act deals with 'appealable orders'. By virtue of Amendment Act, 2015 Clause (a) to Sub-section (1) of Section 37 was substituted by incorporating order refusing to refer the parties to arbitration under Section 8 of the said Act as an appealable order. Thus, an appeal lies against an order refusing to refer to the parties to arbitration under Section 8 of the Arbitration Act. Accordingly, the Opposite Parties filed appeal (ARBP No.2 of 2021) in the Court of learned District Judge. By virtue of notification dated 13th November, 2020, Government of Odisha established four numbers of Courts of Civil Judge (Senior Division) at different places mentioned in the said notification and designated the same to be Commercial Courts. One such Court has been established at Bhubaneswar in the judgeship of Khurda and designated as Senior Civil Judge (Commercial Court), Bhubaneswar. The said Court was made functional with effect from 3rd May, 2021. Pursuant to direction of this Court, the records pertaining to commercial disputes under the CC Act in the judgeship of Khurda were transferred to the Commercial Court. Accordingly, the case record in ARBP No.2 of 2021 pending in the Court of learned District Judge, Khurda at Bhubaneswar was transferred to the Commercial Court vide District Court's order No. 146/2021 dated 19th July, 2021. Thereafter, the Petitioner filed an application challenging the jurisdiction of the Commercial Court to
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
entertain the appeal (ARBP No.2 of 2021) and prayed for returning the case record to the Court of District and Sessions Judge, Khurda at Bhubaneswar.
9. Contention of Mr. Roy, learned counsel for the Petitioner was that Section 10 of the CC Act does not include an appeal under Section 37 (1)(a) of the Arbitration Act. It was submitted that in view of Section 13 of the CC Act, the appeal should have been entertained and adjudicated by learned District and Sessions Judge, Khurda at Bhubaneswar, which has been designated as Commercial Appellate Court within the meaning of Section 2 (1)(a) of CC Act. It is more so in view of the provision under Section 15 (2) of the CC Act, which deals with transfer of pending cases. Section 15 (2) of the CC Act reads as under:-
"15. Transfer of pending cases;
(1) xx xx xx (2) All suits and applications, including applications under the Arbitration and Conciliation Act, 1996 (26 of 1996), relating to a commercial dispute of a Specified Value pending in any civil court in any district or area in respect of which a Commercial Court has been constituted, shall be transferred to such Commercial Court:
Provided that no suit or application where the final judgment has been reserved by the Court prior to the constitution of the Commercial Division or the Commercial Court shall be transferred either under sub-section (1) or sub-section (2)."
Section 10 of the CC Act deals with jurisdiction of a Commercial Court in respect of arbitration matters. Sub- section (3) of Section 10 provides as under:-
"10. Jurisdiction in respect of arbitration matters.
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
Where the subject-matter of an arbitration is a commercial dispute of a Specified Value and--
(1) xx xx xx
(2) xx xx xx
(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."
A close reading of Sub-section (3) as above, would make it clear that all applications or appeals (other than the international commercial arbitration) arising out of arbitration in a commercial dispute of a specified value, which would ordinarily lie before principal Civil Court of the original jurisdiction in a district (not being a High Court), shall be filed in and heard and disposed of by Commercial Court exercising territorial jurisdiction over such arbitration where such Commercial Courts have been established. It thus makes clear that after establishment of Commercial Court, appeal under Section 37 (1)(a) of Arbitration Act arising out of an arbitration shall be filed before the Commercial Court having territorial jurisdiction over such arbitration. As the instant appeal was filed before establishment of the Commercial Court, Principal Civil Court, namely, District Judge, Khurda at Bhubaneswar was competent to entertain the same. After establishment of the Commercial Courts, the Court of learned District Judge, Khurda lacked jurisdiction to entertain such an appeal
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
more particularly in view of the provision of Section 10 of the CC Act. Although Section 15 of the CC Act does not specifically spell out transfer of appeals, but a harmonious reading of Sections 10 and 15 of the CC Act makes it abundantly clear that an appeal pending in the Court of Principal Civil Court of the District shall also be transferred to the Commercial Court having territorial jurisdiction over it. The Hon'ble Supreme Court in the case of New India Assurance Company Limited Vs. Smt. Shanti Mishra, reported in (1975) 2 SCC 840 held that a procedural law has retrospective application. Although right of the parties to litigation to an appeal/revision/review etc. gets crystallized on the date of launching of the litigation, but the party does not have any vested right with regard to the forum as provided in the statute under which parties are litigating, as it is procedural in nature. In the instant case, the Opposite Parties have a right of appeal under Section 37 (1)(a) of the Arbitration Act against an order refusing the prayer under Section 8 of the said Act. But neither of the parties have a choice of forum of appeal. Since the procedural law operates retrospectively the person aggrieved has to go to the new forum even if its cause of action or right of action arose prior to change of forum. In the case of Gaurang Mangesh Suctancar (supra), Bombay High Court held as under:-
"92. Evidently, the Commercial Courts Act is a later enactment, but it does not work at cross purpose with the Arbitration Act. In fact, both aim at speedy adjudication.
The Commercial Courts Act covers all the commercial
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
disputes, whereas the Arbitration Act covers only those disputes that involve arbitration. As Kandla Export Corporation has held, both the enactments call for a harmonious interpretation. If at all there is any conflict, as to the substantive provisions, the Arbitration Act prevails; but it has left the procedural niceties to the Commercial Courts Act."
(underlined for emphasis)
Considering the above, this Court in M/s M.G. Mohanty (supra) at para-50, held as under:-
"50. The Court finds merit in the contention on behalf of the Opposite Parties that the A&C Act must yield to the CC Act and not vice versa given that the objective of both enactments is the speedy disposal of the cases and the CC Act was a later enactment. There is no apparent conflict between the A&C Act and the CC Act for being resolved. The objective of both is the speedy resolution of the disputes. As far as challenge to the vires of Section 10 of the CC Act is concerned, indeed no ground has been made out before this Court to show how Section 10 of the CC Act is ultra vires the legislative powers of the Parliament or how it is 'manifestly arbitrary'. The identification of commercial disputes as distinct from ordinary civil disputes is based on an intelligible differentia and subjecting them to a special expedited procedure can neither be considered to be arbitrary nor ultra vires the A&C Act. That prayer, therefore, has to be rejected."
It has been further made clear in the case of Jaycee Housing Private Limited (supra) in which, Hon'ble Supreme Court, after discussing different provisions of the CC Act, more particularly Sections 3, 10, 15 and 21 together with Section 2(1)(c) of the Arbitration Act including 253rd report of the Law Commission held that Sections 3 and 10 of the CC Act, 2015 shall prevail and all 'applications or appeals' arising out of arbitration under the provisions of the Arbitration Act (other than international commercial arbitration), shall be filed in and heard and disposed of by the Commercial Court exercising
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
jurisdiction over such arbitration where such Commercial Courts have been established. It is further held that if two fora in respect of different commercial disputes would be allowed to prevail, it would frustrate the object and purpose of enactment of the CC Act. Law Commission in its 253rd report made the following recommendation qua arbitration matters involving commercial disputes.
"3.24.4 Second, in the case of domestic arbitrations concerning a commercial dispute of more than Rupees One Crore, applications or appeals may lie either to the High Court or a Civil Court (not being a High Court) depending upon the pecuniary jurisdiction. It is recommended that all applications or appeals arising out of such arbitrations under the A& C Act, that have been filed on the original side of the High Court shall be heard by the Commercial Division of the High Court where such Commercial Division is constituted in the High Court. However, in the absence of a Commercial Division being constituted, the regular Bench of the High Court will hear such applications or appeals arising out of domestic arbitration. If the application or appeal in such domestic arbitration is not within the jurisdiction of the High Court and would ordinarily lie before a Civil Court (not being a High Court) and there is a Commercial Court exercising territorial jurisdiction in respect of such arbitration, then such application or appeal shall be filed in and heard by such Commercial Court."
Thus, the procedure provided under the CC Act shall undisputedly prevail over the Arbitration Act. Resultantly, applications or appeals filed under the Arbitration Act including an appeal under Section 37 (1)(a) of the Arbitration Act filed before commencement of CC Act shall stand transferred and be entertained and adjudicated by the designated Commercial Court having jurisdiction over the arbitration in which the Commercial Court has been established. The case law in the case of M/s Beta Exim Logistics (P) Ltd.(supra) has no application to the
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
case at hand as it deals with an execution proceeding and hence is of no assistance to the case of the Petitioner.
10. A further argument was advanced by Mr. Roy, learned counsel for the Petitioner to the effect that when the suit has been valued at Rs.55,000/- and the valuation being less than Rs.3.00 lakh, i.e., the 'Specified Value' as envisaged under Section 2(1)(i) of the CC Act, it cannot be treated to be a commercial dispute to be adjudicated under the CC Act. Such an argument has no substance, as Section 2(1)(i) deals with a commercial dispute in respect of a suit as determined in accordance with Section 12 of the CC Act. Section 12 (1)(c) read with 12 (2) of the CC Act, which read thus:-
"12. Determination of Specified Value-
(1) The Specified Value of the subject-matter of the commercial dispute in a suit, appeal or application shall be determined in the following manner:--
(a) xx xx xx
(b) xx xx xx
(c) where the relief sought in a suit, appeal or application relates to immovable property or to a right therein, the market value of the immovable property, as on the date of filing of the suit, appeal or application, as the case may be, shall be taken into account for determining Specified Value; [and]
(d) xx xx xx (2) The aggregate value of the claim and counterclaim, if any as set out in the statement of claim and the counterclaim, if any, in an arbitration of a commercial dispute shall be the basis for determining whether such arbitration is subject to the jurisdiction of a Commercial Division, Commercial Appellate Division or Commercial Court, as the case may be.
(3) xx xx xx "
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Location: HIGH COURT OF ORISSA CUTTACK Date: 30-May-2023 17:50:23
10.1. The Plaintiff-Petitioner at para- 8 of the plaint has stated that his parents had paid the full consideration of Rs.77,64,730/- of 'A' schedule property and Rs.60,37,932/- of 'B' schedule property. Thus, the market value of the suit schedule property, as stated by the Petitioner, was well above Rs.3.00 lakh.
10.2. Commercial Court has the jurisdiction to entertain all arbitration proceedings involving commercial dispute of Specified Value, as provided under Section 10 (2) of the CC Act. It is more so, in view of the ratio decided in the case of Jaycee Housing Private Limited (supra) and M/s M.G. Mohanty (supra). Hence, the submission of Mr. Roy, learned counsel for the Petitioner to the effect that the subject matter of the case is not a commercial dispute of specified value is also not sustainable.
11. Accordingly, the CMP being devoid of any merit stands dismissed, but in the facts and circumstances, there shall be no order as to costs.
Issue urgent certified copy of the judgment on proper application.
(KRUSHNA RAM MOHAPATRA) JUDGE s.s.satapthy High Court of Orissa, Cuttack 30th May, 2023
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