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2020 DIGILAW 517 (TS)

Uma Shankar Stake Rice Industry v. G. Ramesh

2020-06-29

M.S.RAMACHANDRA RAO, T.AMARNATH GOUD

body2020
JUDGMENT 1. This Civil Miscellaneous Appeal is filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act') challenging the order dt.20.02.2020 in I.A.No.78 of 2020 in Arbitration O.P.No.75 of 2019 of the Special Judge for Fast-Tracking of Cases relating to atrocities against women-cum-VIII Additional District Judge, Fast Track Court, at Warangal. 2. The appellant had filed the above Arbitration O.P. before the said Court invoking Section 9 of the Arbitration and Conciliation Act, 1996 seeking a temporary injunction restraining respondents from causing objection in any way or manner to the trade and business of the appellant-Firm and also from undertaking the custom milling provided by the Government till the disposal of the dispute by elders, arbitrators; and also sought for a temporary injunction restraining the respondents from alienating in any manner, leasing or otherwise transferring their rights in the O.P. Schedule property till the dispute is resolved by the arbitrators. 3. No counter-affidavit was filed by the respondents in the said Arbitration O.P. 4. However, respondent nos.1 and 2 filed I.A.N.78 of 2020 invoking Order VII Rule 11(d) of Civil Procedure Code, 1908 and requesting the Court below to dismiss the Arbitration O.P.No.75 of 2019 on its file. 5. They contended that in the Arbitration O.P. the appellant had stated that an Arbitral Tribunal was already constituted and proceedings were in progress, and so the Civil Court is precluded from entertaining any application or proceeding under Section 9(1) of the above Act unless it finds that there exists circumstances which may not render the remedy available under Section 17 of the Act efficacious. 6. Counter-Affidavit was filed by the appellant opposing the said application contending that Order VII Rule 11 C.P.C. has no application to the proceedings under Section 9 of the Act; that even number of Arbitrators had been appointed, and under Section 10(1) of the Act there cannot be even number of arbitrators, and so the fact that arbitrators are appointed does not in any way preclude the Civil Court from entertaining the application under Section 9 of the Act. Reliance is also placed on a status quo order granted on 24.12.2019 in I.A.No.591 of 2019, and it is contended that the provisions of Section 17 of the Act is not a bar. Reliance is also placed on a status quo order granted on 24.12.2019 in I.A.No.591 of 2019, and it is contended that the provisions of Section 17 of the Act is not a bar. It is further contended that in view of Section 9(3) of the Act, the Civil court can entertain the application under Sec.9 of the Act and that circumstances exist for intervention of the Court though the Arbitral Tribunal might have been constituted. 7. By order dt.20.02.2020, the Court below allowed I.A.No.78 of 2020 and dismissed Arbitration O.P.No.75 of 2019 primarily on the ground that the Arbitral Tribunal had already been constituted, and under Sec.17 of the Act, it can grant interim measures sought by the appellant; and that under Section 9(3) of the Act, the Civil Court cannot entertain an application under Sub-Section (1) of Section 9 of the Act. 8. It also referred to the contention of respondent nos.1 and 2 that the appellant had not denied reference to the dispute to the arbitrators and that proceedings were pending before the said arbitrators as on the date of filing of O.P.No.75 of 2019; that the appellant did not mention why the arbitral tribunal did not have ability or capability for passing orders under Section 17 of the Act; and that there is a bar contained in Section 9(3) of the Act for the Court to entertain an application under Section 9(1) of the Act in the absence of circumstances mentioned therein. 9. Assailing the same, the present Civil Miscellaneous Appeal is filed. 10. Heard Sri S. Ravi, learned Senior Counsel appearing for appellant; and Sri Hari Sridhar, learned counsel appearing for respondent nos.1 and 2. 11. In the light of the stand taken by the respective parties, the question which has to be first decided is whether an application under Order VII Rule 11 of Civil Procedure Code, 1908 is maintainable seeking rejection of application under Section 9 of the Act. 12. We are of the considered opinion that the provisions of Order VII Rule 11 pertain only to suits where plaints are filed and the said provision permits a plaint to be rejected if it does not disclose a cause of action or where relief claimed is not properly valued or if the suit is barred by any law or if the plaint is insufficiently stamped. 13. 13. By no stretch of imagination, in our opinion, an application filed under Section 9 of the Act can be equated to a suit particularly when such application is filed only for seeking interim measures and it is not a proceeding which is substantive in nature like a suit. 14. We are fortified in our view by the decision of the Delhi High Court in Plaza Garments vs. Textile Apparels, [MANU/DE/0498/2002] DT.26.04.2002 in I.A.NO.59 of 1999 in OMP.No.75/1997. 15. Therefore, the provisions of Order VII Rule 11 of Civil Procedure Code, 1908 could not have been applied by the Court below. 16. More importantly, the pleading of the appellant in O.P.No.75 of 2019 was that there are four arbitrators who are considering the dispute between the appellant and the respondents. Under Section 10(1) of the Act, though parties are free to determine the number of arbitrators, such number shall not be an even number. 17. Assuming for the sake of argument without conceding that Order VII R.11 CPC were to apply, still while deciding an application under Order VII Rule 11, the Court below can only look into the averments made in the application filed by the appellant under Section 9 of Civil Procedure Code, 1908. 18. If in the said application under Section 9 of Civil Procedure Code, 1908 the appellant had said that there were four arbitrators, and since under Sec.10(1) of the Act, the court below ought to have seen whether such a tribunal was validly constituted in law. When appointment of even number of arbitrators is prohibited by the Act, any interim measures likely to be granted under Sec.17 of the Act might not be held to be valid because the constitution of the arbitral tribunal would be coram non judice. So it has to be said that circumstances exist which would render the remedy provided under Section 17 not efficacious. 19. So, notwithstanding the alleged appointment of arbitrators, the Civil Court would have jurisdiction to entertain the application filed by the appellant under Section 9(1) of the Act and the bar under Sub-Section (3) of Section 9 thereof would not apply in the facts and circumstances of the case. 20. Therefore, the Civil Miscellaneous Appeal is allowed. 19. So, notwithstanding the alleged appointment of arbitrators, the Civil Court would have jurisdiction to entertain the application filed by the appellant under Section 9(1) of the Act and the bar under Sub-Section (3) of Section 9 thereof would not apply in the facts and circumstances of the case. 20. Therefore, the Civil Miscellaneous Appeal is allowed. The order dt.20.02.2020 passed in I.A.No.78 of 2020 in Arbitration O.P.No.75 of 2019 on the file of the VIII Additional District Judge, F.T.C., Warangal is set aside and I.A.No.78 of 2020 in Arbitration O.P.No.75 of 2019 is dismissed. 21. The respondents are granted one (01) week time from the date of receipt of copy of the order to file counter-affidavit in Arbitration O.P.No.75 of 2019 on merits; and the Court below is directed to decide the said O.P. within three (03) weeks from the date of receipt of copy of the order after hearing both sides in accordance with law, uninfluenced by its observations in the impugned order. 22. It is made clear that this Court has not expressed any opinion on the merits of the contentions of both sides. 23. Accordingly, the Civil Miscellaneous Appeal is allowed as above. No order as to costs. 24. As a sequel, miscellaneous petitions pending if any in this Appeal, shall stand closed.