Spandanasphoorty Financial ... vs Iq Technologies And Another
2022 Latest Caselaw 1559 Tel

    THE HON'BLE THE CHIEF JUSTICE SATISH CHANDRA SHARMA
                             AND
       THE HON'BLE SRI JUSTICE ABHINAND KUMAR SHAVILI

                     COMMERCIAL COURT APPEAL No.6 of 2022

JUDGMENT: (Per the Hon'ble the Chief Justice Satish Chandra Sharma)

        The present appeal is arising out of an order, dated

10.03.2022 passed in C.O.P.No.12 of 2022 by the Principal Special

Court in the cadre of District Judge for Trial and Disposal of

Commercial Disputes at Hyderabad, on an application preferred

under Section 9 of the Arbitration and Conciliation Act, 1996.


        The facts of the case reveal that I.Q.Technologies, petitioner

before the trial Court, has entered into an agreement on 16.08.2021

with M/s.Spandana Sphoorty Financial Limited, appellant herein

and it is a services agreement. The terms and conditions of the

aforesaid agreement for rendering the services are reproduced as

under:-

         (i)     Services       pertaining      to    functionality     enhancements,
                 maintenance, hosting of application and database, server
                 and storage architecture, networking, security, platform
                 management, disaster recovery, MIS including pay roll,
                 business       intelligence,        advanced    data     visualization,
                 application and data base;
         (ii)    Build     an    ERP/Application         for    the    benefit   of    the
                 respondents;

(iii) Maintenance of the application and data for the respondents to ensure the smooth functioning of the business of the respondents.

The IQ Technologies/petitioner has agreed to provide all

services under the same services agreement to M/s.Criss Financial

Limited/respondent No.2 herein, the wholly owned subsidiary of

M/s.Spandana Sphoorty Financial Limited/appellant herein on

similar terms as provided under the Services Agreement.

The petitioner, as stated in the petition under Section 9 of the

Arbitration and Conciliation Act, 1996, is required to provide

multiple services pertaining to loan restructuring, excess interest

calculation, interest capitalization and collection module

restructuring apart from building new functionalities and to

complete some incomplete modules of M/s.Spandana Sphoorty

Financial Limited/appellant herein. A serious dispute arose between

the parties and the agreement between the parties provides for

dispute resolution mechanism.

Clause 16 of the aforesaid agreement between the parties is

reproduced as under:-

"16. Dispute Resolution

a. Any dispute(s) arising out of this Agreement shall, as far as possible, be settled amicably between the Parties hereto failing which the following shall apply:

b. Any dispute under this Agreement shall be referred to arbitration by a sole arbitrator to be appointed jointly by the Parties.

c. The Arbitration Proceedings shall be held in Hyderabad in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory re-enactment or modification thereof for the time being in force.

d. The Parties agree that the arbitration award shall be final and may be enforced as a decree. e. The Parties further agree that subject to the above only the competent courts at Hyderabad shall have jurisdiction in all matters arising hereunder. f. The Parties further agree to keep the arbitration proceedings and arbitral award confidential."

The petitioner has raised various invoices from time to time

and as the amount was not being paid to the petitioner, legal notice

was served on 07.01.2022 and the petitioner came to know that

M/s.Spandana Sphoorty Financial Limited/appellant herein have

started looking out for other vendors. As per the petition, an

amount of Rs.6,89,42,680/- (Rupees six crore eighty nine lakh forty

two thousand six hundred and eighty only) was outstanding by

M/s.Spandana Sphoorty Financial Limited/appellant herein and a

prayer was made for attachment of two bank accounts, one with the

State Bank of India and another with the Kotak Mahindra Bank.

The application was preferred under Section 9 of the Arbitration and

Conciliation Act, 1996 and the trial Court in order to safeguard the

interest of the petitioner has attached only one bank account till

24.03.2002, which is with the State Bank of India. The order passed

by the Court below is an ex parte order and a notice was also issued

returnable by 24.03.2022. The M/s.Spandana Sphoorty Financial

Limited/appellant herein instead of filing a reply to the application

filed under Section 9 of the Arbitration and Conciliation Act, 1996

or filing an application for vacating the stay has rushed to this court

and the fact remains that the trial Court has granted only an

ex parte interim order. It is certainly open for M/s.Spandana

Sphoorty Financial Limited/appellant herein to raise all the grounds

raised in the present appeal before the trial Court. At this juncture,

it has been brought to the notice of this Court that the appellant

has already marked its presence before the trial Court and the

matter has to be heard.

In the considered opinion of this Court, as the matter has to

be heard on merits by the trial Court, this Court is refraining itself

from passing any order on merits and the present appeal stands

disposed of giving liberty to the parties to approach this Court after

an order is passed in the matter by the trial Court. At this juncture,

this Court does not find any reason to interfere with the order

passed by the trial Court. The trial Court is directed to hear both

the parties and to pass an order as expeditiously as possible

preferably within a period of thirty (30) days from the date of receipt

of a certified copy of this order.

The Commercial Court Appeal is accordingly disposed of.

Pending miscellaneous applications, if any, shall stand closed.

There shall be no order as to costs.

________________________ SATISH CHANDRA SHARMA, CJ

_______________________ ABHINAND KUMAR SHAVILI, J 28.03.2022 pln