M/S. Janset Labs Pvt. Ltd., vs M/S. Sudha Analyticals
2022 Latest Caselaw 4025 Tel

IN THE HIGH COURT FOR THE STATE OF TELANGANA

                             ********

CIVIL REVISION PETITION No.293 of 2022

Between:

M/s. Janset Labs Pvt. Ltd., A Company Incorporated Under the Companies Act, 1956, Regd. Office at Sy.No. 342, Plot No.135B, ALEAP Industrial Estate, Gajularamaram Village, Qutubullapur Mandal, Medchal Malkajgiri District, Rep. by its Director Rama Krishna Goulikar, S/o Ashok Kumar, Aged about 35 yrs.

....Petitioner/petitioner/ respondent And

M/s. Sudha Analyticals, Regd. Office at Plot No.18 Part, Sy.No. 118, Industrial Park, Balanagar VIL, IDPL, Kukatpally Circle, Hyderabad, Rep. by its Proprietor GL Sreenivas, S/o Sudhakar Rao, Aged about 47 yrs.

                                         ...Respondent/respondent/
                                                        Petitioner

JUDGMENT PRONOUNCED ON                   : 03-08-2022


                HON'BLE SRI JUSTICE P.NAVEEN RAO
                                &
                HON'BLE DR. JUSTICE G.RADHA RANI

1.   Whether Reporters of Local Newspapers may       :   YES
     be allowed to see the Judgments ?               :

2.   Whether the copies of judgment may be marked :      YES
     to Law Reporters/Journals                    :

3.   Whether Their Ladyship/Lordship wish to         :   No
     see fair Copy of the Judgment ?                 :
                                                              PNR,J & Dr.GRR,J
                                                           CRP No.293 OF 2022




                   * HON'BLE SRI JUSTICE P.NAVEEN RAO
                                   &
                    HON'BLE DR. JUSTICE G.RADHA RANI

+ CIVIL REVISION PETITION No.293 of 2022

%03-07-2022

# M/s. Janset Labs Pvt. Ltd.,

A Company Incorporated Under the Companies Act, 1956, Regd. Office at Sy.No. 342, Plot No.135B, ALEAP Industrial Estate, Gajularamaram Village, Qutubullapur Mandal, Medchal Malkajgiri District, Rep. by its Director Rama Krishna Goulikar, S/o Ashok Kumar, Aged about 35 yrs.

....Petitioner/petitioner/ respondent Vs.

$ M/s. Sudha Analyticals, Regd. Office at Plot No.18 Part, Sy.No. 118, Industrial Park, Balanagar VIL, IDPL, Kukatpally Circle, Hyderabad, Rep. by its Proprietor GL Sreenivas, S/o Sudhakar Rao, Aged about 47 yrs.

...Respondent/respondent/ Petitioner

!Counsel for the petitioner : Sri Sharad Sanghi

Counsel for the Respondent: Sri Sriram Polali

<Gist :

>Head Note:

? Cases referred:

(1955) 1 SCR 117 2015 (5) ALD 446 (FB) MANU/TL0020/2022 (2019) 8 SCC 112 PNR,J & Dr.GRR,J CRP No.293 OF 2022

HON'BLE SRI JUSTICE P.NAVEEN RAO & HON'BLE DR. JUSTICE G.RADHA RANI

CIVIL REVISION PETITION No.293 of 2022

ORDER: (Per Hon'ble Sri Justice P Naveen Rao)

Petitioner is proprietary concern engaged in the business of

leasing imported hi-tech/advance technology machineries to various

enterprises for their activities. The petitioner has approached the

respondent to import "SCIEX QTRAP4500 SYSTEM" an enhanced

high performance hybrid triple quadrupole/linear ion trap LC-

MS/MS Spectrometer to be installed in their premises to meet their

commercial demands for their business activities. Based on the said

request respondent imported said machine from Singapore vide

invoice dated 28.9.2020 and installed the same in the premises of

the petitioner. In terms of the agreement, petitioner is liable to pay

Rs.13,74,740/- each month as lease amount excluding GST/other

statutory taxes and on remittance of 12 months lease amount, the

ownership rights get transferred to the petitioner company. While

so, disputes arose on the issue of remittance of monthly lease

amount. As on 25.10.2021 respondent claimed Rs.1,19,17,928/-

from the petitioner. Contending that in spite of repeated requests,

the amount is not remitted, respondent sought to invoke Arbitration

clause incorporated in the lease agreement and in the process to

protect his interests in the interregnum period, he filed C.O.P No. 20 PNR,J & Dr.GRR,J CRP No.293 OF 2022

of 2021 in the Special Court for Trial and Disposal of Commercial

Disputes, Ranga Reddy District at L B Nagar. In the said C.O.P.,

petitioner filed I A No. 2 of 2022 taking recourse to Order VII Rule 11

read with Section 151 of CPC praying the Court to reject the main

petition as barred under law.

2. It was contended that specified value of the dispute

involved is less than Rs.1 crore, therefore, Commercial Court has no

jurisdiction to deal with the application filed under Section 9 of the

Arbitration and Conciliation Act, 1996. According to petitioner, he

has paid Rs.87,15,720/- and balance amount to be paid is

Rs.97,39,243/-, therefore, the amount involved is less than Rs.1

crore and Commercial Court has no jurisdiction. The Court below,

rejected the said application by order dated 10.2.2022. Hence, this

Revision.

3. Heard learned counsel for petitioner Sri Sharad Sanghi

and learned counsel for respondent Sri Sriram Polali.

4. Learned counsel for petitioner contended that petitioner

is liable to pay Rs.97,39,243/- thus, the specified value of dispute is

less than Rs.1 crore and Commercial Court has no jurisdiction to

deal with application filed under Section 9 of Act, 1996 and party has

to go before the civil Court. In support of his contention, learned

counsel referred to the statement of accounts shown in tabulated PNR,J & Dr.GRR,J CRP No.293 OF 2022

form in I.A. No. 2 of 2022. According to learned counsel, the total

amount required to be paid is Rs.1,19,17,928/- out of which

petitioner paid an amount of Rs.97,39,243, leaving the balance

amount required to be paid as Rs.97,33,158/- and this is the

amount which is required to be considered for the purpose of

assessment of specified value. Unless specified value of dispute is

more than Rs.1 crore, the Commercial Court has no jurisdiction to

deal with application filed under Section 9 of Act, 1996 application.

5. Learned counsel referred to Section 21 of the Act, 1996

to contend that arbitral proceedings must commence for a person to

have a grievance and to seek interlocutory protection under Section 9

of the Act, 1996, whereas, arbitral proceedings did not commence by

the time application was filed by the respondent and even now no

proceedings have commenced, therefore, the entire process is vitiated

on that ground alone.

6. He further contended that as per lease agreement

disputes have to be resolved within the territorial limits of Hyderabad

District, whereas, the application under Section 9 of the Act, 1996

was filed in the Commercial Court at Ranga Reddy, therefore, the

application is not maintainable. However, learned counsel fairly

admits that this contention was not urged before the Commercial

Court.

PNR,J & Dr.GRR,J CRP No.293 OF 2022

7. Learned counsel by referring to judgment of Supreme

Court in Kiran Singh and others Vs Chaman Paswan and others1 and

judgments of this Court in East India Udyog Limited Vs Maytas Infra

Limited2, K Srimannarayana Murthy and others Vs. V Agastya Sagar

and others3 also contended that the arbitral proceedings are

erroneously initiated and filed before the Commercial Court when the

value of the dispute is less than Rs.1 crore.

8. Per contra, learned counsel for respondent contend that

above said contention is stated to be rejected for the following

reasons. Firstly, this plea was not raised in I.A.No.2 of 2022 filed by

the petitioner wherein petitioner sought for amendment by filing

I.A.No.62 of 2022 seeking to raise the plea of territorial jurisdiction

and the said I.A.No.62 of 2022 was dismissed and said order has

become final as no appeal was filed against dismissal of I.A.No.62 of

2022 and it is no more open to the petitioner to raise same plea

before this Court in a revision petition arising against an order

passed dismissing interlocutory application filed under Order VII

Rule 11 of CPC. Further, if a plea is not raised before the trial Court,

it is not permissible to raise the same plea before the appellate Court.

Further, Order VII Rule 11 does not envisage raising objection on

territorial jurisdiction. Further, the objection of territorial jurisdiction

cannot be raised for the first time at the appellate stage.

(1955) 1 SCR 117

2015 (5) ALD 446 (FB)

MANU/TL0020/2022 PNR,J & Dr.GRR,J CRP No.293 OF 2022

9. Since we have noticed that petitioner has raised issue of

territorial jurisdiction before the Court below by filing I.A.No.62 of

2022 and said application was dismissed by Court below and same

was not challenged and has become final, we are not expressing any

opinion on the plea of territorial jurisdiction of Commercial Court at

Ranga Reddy district in this case.

10. The submissions are based on the premise that whole

gamut of Civil Procedure Code is applicable to arbitral proceedings

including to an application filed under Section 9 of the Act. This

issue was considered on more than one occasion by Hon'ble Supreme

Court.

10.1. In Pam Developments Private Limited vs. State of West

Bengal4, opposing application filed under Section 36 of the Act to

enforce arbitral award and order of attachment it was urged for the

State of West Bengal that application under Section 34 is pending

and in view of provision in Order XXVII Rule 8-A of CPC the State

need not be compelled to pre-deposit as a condition precedent to avail

the remedy of appeal/application and, therefore, order of attachment

was illegal. To answer the said plea, the Hon'ble Supreme Court

considered the issue of applicability of CPC to proceedings arising out

of Act, 1996.

(2019) 8 SCC 112 PNR,J & Dr.GRR,J CRP No.293 OF 2022

10.2. Hon'ble Supreme Court held as under:

"20. In our view, in the present context, the phrase used is "having regard to" the provisions of CPC and not "in accordance with" the provisions of CPC. In the latter case, it would have been mandatory, but in the form as mentioned in Rule 36(3) of the Arbitration Act, it would only be directory or as a guiding factor. Mere reference to CPC in the said Section 36 cannot be construed in such a manner that it takes away the power conferred in the main statute (i.e. the Arbitration Act) itself. It is to be taken as a general guideline, which will not make the main provision of the Arbitration Act inapplicable. The provisions of CPC are to be followed as a guidance, whereas the provisions of the Arbitration Act are essentially to be first applied. Since, the Arbitration Act is a self-contained Act, the provisions of CPC will apply only insofar as the same are not inconsistent with the spirit and provisions of the Arbitration Act.

xxxx

26. Arbitration proceedings are essentially alternate dispute redressal system meant for early/quick resolution of disputes and in case a money decree -- award as passed by the arbitrator against the Government is allowed to be automatically stayed, the very purpose of quick resolution of dispute through arbitration would be defeated as the decree-holder would be fully deprived of the fruits of the award on mere filing of objection under Section 34 of the Arbitration Act. The Arbitration Act is a special Act which provides for quick resolution of disputes between the parties and Section 18 of the Act makes it clear that the parties shall be treated with equality. Once the Act mandates so, there cannot be any special treatment given to the Government as a party. As such, under the scheme of the Arbitration Act, no distinction is made nor any differential treatment is to be given to the Government, while considering an application for grant of stay of a money decree in proceedings under Section 34 of the Arbitration Act. As we have already mentioned above, the reference to CPC in Section 36 of the Arbitration Act is only to guide the court as to what conditions can be imposed, and the same have to be consistent with the provisions of the Arbitration Act." (Emphasis supplied)

11. From the above extracts, it is seen that Hon'ble Supreme

Court held that 'the provisions of CPC are to be followed as a

guidance', and that 'CPC will apply only insofar as the same are not PNR,J & Dr.GRR,J CRP No.293 OF 2022

inconsistent with the spirit and provisions of the Arbitration Act'

(paragraph-20). In this context, when we look at Section 9 of the Act,

1996, it only envisages that 'the Court shall have the same power for

making orders as it has for the purpose of, and in relation to, any

proceeding before it'. It has not mandated application of entire gamut

of CPC.

12. From Rule 12 of the Rules, 2000, it is apparent that

whole gamut of CPC is not extended to arbitral proceedings, but only

selective provisions are made applicable. One of the provisions

conspicuously excluded is Order VII.

13. Reading of Rule 12(2) of the Rules makes the scheme

very clear. It vests complete discretion in the Court to suitably

modify the requirements of provisions of CPC adopted by Sub-Rule

(1) or to ignore them and proceed otherwise. Only requirement to

proceed otherwise is Court must assign reasons. Further, the party

complaining of lack of notice and opportunity and that procedural

formalities were not observed by the opposite party/by the lower

Court, must satisfy the Court how prejudice is caused to him. It is

not automatic to set aside an order made under Section 9 of the Act

only on the ground that documents were not supplied unless the

petitioner shows prejudice caused to him. Thus, the scheme of the

Act and the Rules make it apparent that the Act is self-contained

Code; that they comprehensively deal with all aspects of arbitration;

PNR,J & Dr.GRR,J CRP No.293 OF 2022

that the Act and the Rules do not envisage application of whole

gamut of CPC; that CPC is applicable only to a limited extent as

provided in Rule 12 of the Rules; and that CPC can only guide the

Court in dealing with Section 9 applications with complete discretion

to adopt its own procedure.

14. Remedy under Section 9, perforce is interlocutory in

nature pending initiation of arbitral proceedings, during the arbitral

proceedings and after, subject to determination of rights and

liabilities in arbitral proceedings and their enforcement. What is

prescribed under Section 9 of the Act is only an application to grant

interlocutory measures to the applicant. The claims are made before

the arbitral Tribunal once arbitral proceedings are set in motion.

Very scheme of the Act could not have envisaged rejection of such

petition on the grounds mentioned in Order VII Rule 11 of CPC.

Further, on a close reading of Order VII Rule 11 of CPC, it is apparent

that what is envisaged therein is rejection of plaint in a suit and not a

petition/ application in a suit. It is based on sound public policy to

remove the suits which are on the face of it not maintainable and no

useful purpose would be served by entertaining them and keeping

them pending and conducting trial. The same yardstick can not be

applied to an application filed under Section 9 of the Act. Further,

order VII Rule 11 is not one of the provisions mentioned in Rule 12 of

the 2000 Rules.

PNR,J & Dr.GRR,J CRP No.293 OF 2022

15. Thus, submissions urged by the learned counsel for

petitioner are liable to be rejected on the sole ground that Order VII

Rule 11 has no application to the applications filed under Section 9 of

the Act.

16. Even otherwise, the specified value is required to be seen

based on the claim made by the applicant who filed application under

Section 9 of Act 1996. Before the Commercial Court in C.O.P.No.20

of 2021, applicant claimed an amount of Rs.1,19,17,928/- as due

from the respondent, which alone is required to be considered. At the

stage of consideration of application Under Section 9, the Court

cannot go into the aspect as to whether respondent has paid certain

amounts and is required to pay lesser amount than what is claimed

by the petitioner, for the Court to hold that what is required to be

paid by the respondent is less than Rs.1 crore and to hold that the

Commercial Court jurisdiction is ousted. The issue of what is the

amount claimed, amount due and payable are matters for

consideration in Section 9 application only to a limited extent of

considering to grant interlocutory measures pending commencement

of arbitral proceedings. All the aspects of inter se disputes have to be

gone into in the arbitral proceedings. The trial Court cannot go into

those aspects in the application filed under Order VII Rule 11 of CPC.

PNR,J & Dr.GRR,J CRP No.293 OF 2022

17. For the aforesaid reasons, we see no error in the decision

of the Court below warranting our interference. Civil Revision Petition

is dismissed. Pending miscellaneous applications, if any, stand

closed.

_______________________ P.NAVEEN RAO,J

______________________ Dr. G.RADHA RANI,J

Date:03.08.2022 TVK/KKM PNR,J & Dr.GRR,J CRP No.293 OF 2022

HON'BLE SRI JUSTICE P. NAVEEN RAO & HON'BLE Dr JUSTICE G.RADHA RANI

CIVIL REVISION PETITION No.293 of 2022

Date :03.08.2022

TVK/KKM