Calcutta High Court
M/S. Indusind Bank Ltd vs Sk. Idrish Ali & Anr on 7 April, 2016
Author: Harish Tandon
Bench: Harish Tandon
ORDER
EC No.815 of 2015
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
IN THE MATTER OF:-
M/S. INDUSIND BANK LTD.
Versus
SK. IDRISH ALI & ANR.
BEFORE:
The Hon'ble JUSTICE HARISH TANDON
Date : 7th April, 2016.
Appearance:
Mr. Swatarup Banerjee, Advocate Mr. Aasif Hossain, Advocate.
The Court:-Despite service, there is no representation on behalf of the judgment debtors.
At the time of moving the execution application, it was pointed out to the court that an application under Section 9 of the Arbitration and Conciliation Act, 1996 was taken out before the learned City Civil Court wherein a receiver was appointed to take possession of such asset and a direction was sought upon the receiver to take steps to sell the said asset in question. The Court directed the receiver to take steps to sell the asset in question by public auction. Copies of the said order as well as the execution application are served upon the judgment debtors. 2 The judgment debtors however have not appeared in the execution application.
Pursuant to the said order, the receiver advertised the sale notice and received five offers from different intending purchasers ranging between Rs. 1,40,000/- to Rs. 2,07,000/-. In the report filed by the Receiver, it transpired that two other offers have been received by him in sealed cover which he has not opened as yet. Those sealed cover offers are opened in court today. One Mr. Balaram Singh has offered for the said asset at Rs. 2,25,000/- and further agreed to parking charges. Another offer is from Dilip Kumar Sah who offered a sum of Rs. 2,09,000/- without parking charges.
Subsequently, the receiver received a further offer from one Sankar Chakraborty who offered to purchase the said vehicle in question at Rs.4,25,000/- in addition to the payment of the garage rent. The aforesaid offers received by the receiver had been communicated to the Judgement-debtors. The affidavit of service in this regard is filed today which is kept on record. There is no other offer received by the receiver pursuant to the advertisements nor the Judgement-debtors have intimated the receiver any offer higher than the best offer. While proceeding to confirm the sale, this Court notice that once on an earlier occasion the parties have approached the City Civil Court, Calcutta whether an execution application is maintainable before 3 this Court in view of the mandate given under Section 42 of the Arbitration and Conciliation Act, 1996. It is not in dispute that an application under Section 9 of the Arbitration and Conciliation Act was filed before the City Civil Court, Calcutta at a relevant point of time when both the City Civil Court, Calcutta as well as Original Side of this Court exercises concurrent jurisdiction on a pecuniary dimension. It is not brought to the notice of this Court that the subject matter of the dispute under Section 9 of the said Act was below Rs.10 lakhs so that the City Civil Court, Calcutta can exercise an exclusive jurisdiction to the exclusion of the Original Side of the High Court. When two Courts, namely, the District Court as well as the High Court in exercise of ordinary original civil jurisdiction exercises concurrent jurisdiction, the High Court being the superior Court is the competent Court to entertain an application under the said Act in view of the definition of the Court grafted under Section 2(1)(e) of the Act. On the above proposition, the support can be lend to the Judgement of the Supreme Court in the case of State of Maharashtra through Executive Engineer, Road Development Division No.111, Panvel & Anr. Vs. Atlanta Limited. reported in AIR (2014) 11 SCC 619. On the identical facts where the District Judge of Greater Bombay and the High Court in ordinary original Civil jurisdiction were exercising the concurrent jurisdiction. The challenge was made to an award under Section 34 before the High Court of judicature of 4 Bombay by Atlanta Limited and the another application under Section 34 of the Act was filed by the State of Maharashtra before the District Judge Thana (greater Bombay). The matter ultimately reached to the Supreme Court for determination as to which Court shall be the Court within the meaning of Section 2(1)(e) of the Act. An argument was advanced that if two courts are exercising concurrent jurisdiction the choice is left to the parties to choose any of such forum. Negating the aforesaid submissions the Apex Court held :
"27. Shorn of the aforesaid determination, our only understanding of the submission advanced at the hands of the learned counsel for the appellants would be, that as a matter of "natural choice", as a matter of "suitable choice", as also, as a matter of "more appropriate choice", the controversies raised by the rival parties ought to be collectively determined by the District Court, Thane, and not by the High Court of Bombay( in exercise of its "ordinary original civil jurisdiction"). In order to supplement the aforesaid contention, the learned counsel for the appellant had depicted the quantum of filing of similar petitions before the High Court, as also, before the district Court, Thane, and the time likely to be taken for the disposal of such matters by the courts under reference. There is no statutory 5 provision to our knowledge wherein the determination of jurisdiction is based on such considerations. No such provision was brought to our notice by the learned counsel."
Ultimately it was held that if the District Judge in a district and the High Court in exercising of ordinary original civil jurisdiction are having concurrent jurisdiction, it is a superior Court which will be the Court within the meaning of the said Act and not the District Court which is inferior in grade to the High Court. It would be relevant to quote paragraph 32 of the said report which runs thus:
"32 All the same, it is imperative for us to determine, which of the above two courts which have been approached by the rival parties, should be the one to adjudicate upon the disputes raised. For an answer to the controversy in hand, recourse ought to be made first of all to the provisions of the Arbitration Act. On the failure to reach a positive conclusion, other principles of law may have to be relied upon. Having given out rightful answer can be determined from Section 2(1)(e) of the Arbitration Act, which defines the term "Court". We shall endeavour to determine this issue, be examining how litigation is divided between a High Court exercising 6 "ordinary original civil jurisdiction", and the "Principal Civil Court of Original Jurisdiction" in a district. What needs to b kept in mind is, that the High Court of Bombay is vested with "ordinary original civil jurisdiction" over the same area, over which jurisdiction is also exercised by the "Principal Civil Court of Original Jurisdiction" for the District of Greater Mumbai(i.e.the Principal District Judge, Greater Mumbai). The jurisdiction of the above two courts on the "ördinary original civil side" is over the area of Greater Mumbai. Whilst examining the submissions advanced by the learned counsel for the appellants under Section 15 of the Code of Civil Procedure, we have already concluded, that in the above situation, jurisdiction will vest with the High Court and not with the District Judge. The aforesaid choice of jurisdiction has been expressed in Section 2(1)(e) of the Arbitration Act, without any fetters whatsoever."
While holding so it was further observed in paragraph 33 of the said report that the position would have been different if the jurisdiction is exclusively given on a pecuniary dimension. The ratio which could be culled out from the judgment in Atlanta Limited (supra) is that in case where the District Court as well as the High 7 Court in its Original Side have concurrent jurisdiction over the subject matter, it is the High Court which would come within the ambit of the definition of the "Court" given under Section 2(1)(e) of the Act and not the District Court. However, the position would have been different, when jurisdiction is divided on a pecuniary limits then the Original side of the High Court can not entertain a suit below such pecuniary limit the other Court which has been given an exclusive jurisdiction shall be a principal Civil Court in a District to entertain an application under the said Act. The aforesaid proposition can be fortified from the Division Bench judgement of this Court in the case of Sri Sushanta Malik @ Susanta Malik Vs. Srei Equipment Finance Limited & Anr. reported in AIR 2015, Calcutta in the following :-
"It is true that there is a difference between the definition of Court in Section 2(1)(e) of the 1996 Act and the definition of Court in Section 2(c) of the Arbitration Act, 1940. Under the Arbitration Act, 1940 an application could be filed in any civil Court having jurisdiction over the subject matter of the arbitration, if the same had been the subject matter of a suit. However, under the 1996 Act it is the principal Court having jurisdiction to decide the questions forming the subject matter of arbitration, if the same had been the subject matter of a suit. Jurisdiction to adjudicate the subject matter of a suit includes, territorial 8 jurisdiction, pecuniary jurisdiction and jurisdiction in respect of the subject matter. Where the highest Court has jurisdiction territorial, pecuniary and in respect of the subject matter, it is that Court alone which is competent to decide matters under the 1996 Act."
The conclusion which could be derived from the aforesaid decision is that the District Court being inferior in grade to the High Court, if exercises a concurrent jurisdiction, is denuded of jurisdiction to entertain an application under the said Act and it is the High Court in exercise ordinary original civil jurisdiction shall be the only Court to entertain such applications.
The question still begging an answer in this case is if an approach had already been made to the City Civil Court, Calcutta which otherwise lacks inherent jurisdiction to entertain the said application and having decided the said application on merit whether any of the parties are statutorily bound to approach the said Court at all subsequent stages in view of the provisions contained under Section 42 of the said Act. There is no dispute to the proposition of law that a decision of the Court lacking inherent jurisdiction is not an order in the eye of law but a nullity. Even if an approach is made to a Court which lacks inherent jurisdiction, a preliminary objection is raised and decided by the said Court upholding the same, it would not be construed that because of such approach all subsequent 9 applications should be filed before the said Court in view of Section 42 of the Act. Section 42 can be activated and pressed into action, the moment the Court having jurisdiction to entertain the application has, in fact, decided on merit and not otherwise. Section 42 cannot be applied rigorously if it is subsequently found that an earlier approach to a Court who although decided the same on merit but was lacking inherent jurisdiction. The support can be lend from the observations of the Supreme Court in case of State of West Bengal & Ors. Vs. Associated Contractors reported in (2015) 1 Supreme Court Cases 32 wherein it is held:
"24. If an application were to be preferred to a court which is not a Principal Civil Court of original jurisdiction in a district or a High Court exercising original jurisdiction to decide questions forming the subject matter of an arbitration if the same had been the subject matter of a suit, then obviously such application would be outside the four corners of Section 42. If, for example, an application were to be filed in a court inferior to a Principal Civil Court, or to a High Court which has no original jurisdiction, or if an application were to be made to a court which has no subject-matter jurisdiction, such application would be outside Section 42 and would not debar subsequent applications from being filed in a court other than such court."10
What emerges from the aforesaid discussion is that if even the parties approached the City Civil Court, Calcutta at an earlier point of time but the said Court lacks inherent jurisdiction to entertain the said application, the embargo under Section 42 of the Act cannot apply.
There is no hesitation in my mind that this Court is competent to entertain the execution application despite the approach being made in an earlier occasion to the City Civil Court, Calcutta, which lacks inherent jurisdiction.
Reverting back to the merit, since the best offer is received by the receiver from one Sankar Chakraborty S/o-Late Banamali Chakraborty of Village-Naigachi, P.O.- Gobardanga(Ichapur), P.S.-Gaighata, Dist.-North 24 Pgs.,Pin- 743252, West Bengal, the sale is confirmed in his favour. The said intending offerer is directed to pay the entire consideration money to the receiver through the demand draft in favour of the decree-holder of any nationalised bank within two weeks from date. After receiving the entire consideration money, the receiver shall hand over the possession of the assets in question to the intending offerer and shall also hand over the demand draft to the decree-holder or its authorised representatives upon valid receipt. After the aforesaid exercise is over the receiver shall automatically stand discharged. A further remuneration of the receiver is fixed at 400 GMs to be paid by the decree-holder. 11
Let the execution application be listed after three weeks.
(HARISH TANDON, J.) S.Kumar/nm