M/S Ncc Limited vs Indian Council Of Arbitration
2023 Latest Caselaw 1577 Tel

Citation : 2023 Latest Caselaw 1577 Tel
Judgement Date : 11 April, 2023

Telangana High Court

M/S Ncc Limited vs Indian Council Of Arbitration on 11 April, 2023

Bench: P Naveen Rao, Nagesh Bheemapaka

            THE HON'BLE SRI JUSTICE P.NAVEEN RAO
                             AND
         THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA

             CIVIL REVISION PETITION No.1073 OF 2023

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


      Heard learned senior counsel Sri Avinash Desai on behalf of

learned counsel Sri M.Pranav for petitioner.


2.    The petitioner and respondent No.2 entered into contract for

undertaking works related to boilers. Later, differences arose between

them leading to respondent No.2 approaching the Indian Council of

Arbitration seeking appointment of Arbitrator. Petitioner instituted

COS(SR).No.1363 of 2023 before the Principal Special Court in the

Cadre of District Judge for Trial and Disposal of Commercial Disputes,

at Hyderabad, praying to declare the action of defendant No.1 in not

rejecting the request of defendant No.2 to constitute the Arbitrary

Tribunal, as illegal and not in consonance with the law including the

Arbitration and Conciliation Act, 1996 (for short 'Act, 1996'), read with

the Indian Council for Arbitration Rules, 2022 (for short 'ICA Rules').

The Commercial Court held that the dispute raised by the petitioner is

not a commercial dispute and therefore, it has no jurisdiction and

accordingly, returned the plaint by order dated 24.03.2023. However,

while rejecting the plaint, the Commercial Court has also gone into the

merits of pleas raised by the petitioner in the plaint and has discussed

extensively the scope of provisions of ICA Rules and several other

aspects.

3. This revision is preferred aggrieved by the orders of the

Commercial Court dated 24.03.2023 while rejecting the plaint and

making observations on merits of the dispute raised by the petitioner.

4. Learned senior counsel for petitioner contends that while

returning the plaint, the Commercial Court ought not to have gone into

merits of the case and record observations on the contentions urged by

petitioner and the same is contrary to law. These observations

prejudice the claim of petitioner in the Civil Court. In support of the

said contention, he relied upon the judgment of the Hon'ble Supreme

Court in Athmanathaswami Devasthanam Vs. K.Gopalaswami

Ayyangar1 and the decision of the learned single Judge of this Court in

Ayesha Begum Vs. Venkataswamy2.

5. We have gone through the order passed by the Commercial

Court dated 24.03.2023. As rightly contended by learned senior

counsel for petitioner, the Commercial Court has extensively discussed

various provisions of Act, 1996, Civil Procedure Code and ICA Rules,

and made observations touching upon the merits of the claim set up

by petitioner. The Commercial Court erred in making such

AIR 1965 SC 338

Second Appeal No.656 of 1988 dated 19.03.1997

observations when it was convinced that the dispute is not a

commercial dispute and it has no jurisdiction.

6. In Athmanathaswami (supra) the Hon'ble Supreme Court dealt

with the issue of observations made on merits when the case was

dismissed on the ground of lack of jurisdiction. Paragraph No.14 of the

judgment reads as under:

"14. The last point urged is that when the civil court had no

jurisdiction over the suit, the High Court could not have dealt

with the cross-objection filed by the appellant with respect to

the adjustment of certain amount paid by the respondent. This

contention is correct. When the Court had no jurisdiction over

the subject-matter of the suit it cannot decide any question on

merits. It can simply decide on the question of jurisdiction and

coming to the conclusion that it had no jurisdiction over the

matter had to return the plaint".

7. In Ayesha Begum (supra) the learned single Judge has also

taken similar view. Paragraph No.7 of the judgment reads as under:

"7. In the light of the above discussion, I hold on the question

that the Court cannot decide the issues involved on merits,

after holding that it has no jurisdiction over the subject-matter

of the suit. It has to return the plaint for presentation to the

proper Court".

8. Having regard to the facts noted above, the Civil Revision Petition

is allowed and the observations made by the Commercial Court on

merits in order dated 24.03.2023 are set aside. It is made clear that if

petitioner seeks to present the suit before the Civil Court, the Civil

Court shall consider the pleas of the petitioner objectively and

un-influenced by the observations made by the Commercial Court in

order dated 24.03.2023. We also make it clear that there is no

expression of opinion on merits and the pleas of respondents on all

issues that may arise in a civil suit are preserved and as defendants

they are entitled to raise all pleas as available in law, including on

issues considered by the Commercial Court in the order impugned.

Miscellaneous petitions, pending if any, shall stand closed.