Karnataka High Court
M/S. Mysore Managanese Co (P) Ltd vs M/S. Prakash Natural Resources Ltd on 4 February, 2016
Author: R.B Budihal
Bench: R.B Budihal
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 04TH DAY OF FEBRUARY 2016
BEFORE
THE HON'BLE MR.JUSTICE BUDIHAL R.B.
WRIT PETITION NOS.28156-28158 OF 2014(GM-CPC)
BETWEEN:
1. M/s Mysore Manganese Co. (P) Ltd.,
(A Private Limited Company
Incorporated under the Companies
Act), No.4, 1st Main, 60 Feet Road
Amarajyothi Layout, Sanjay Nagar
Bangalore-560 094.
By its Directors - Petitioners - 2 & 3)
2. K Raghu
S/o Sri Keshava Raju
Major, No.4, 1st Main, 60 Feet Road
Amarajyothi Layout
Sanjay Nagar
Bangalore-560 094.
3. Poornima Raghu
W/o Sri K Raghu
Major, No.4, 1st Main, 60 Feet Road
Amarajyothi Layout
Sanjay Nagar
Bangalore-560 094. ... PETITIONERS
(By Sri S G Bhagavan, Adv)
AND:
M/s Prakash Natural Resources Ltd.
(A Public Limited Company incorporated
2
Under the Companies Act), Srivan
Bijwasan, New Delhi-110 061
By its Authorised Representative
Sri Satnam Singh. ....RESPONDENT
(By Sri Ashok Haranahalli, Sr. Adv.
for Sri Unni Krishnan, Adv.)
These Writ Petitions are filed under Articles 226 &
227 of the Constitution of India praying to quash the
orders dated 25.02.2014 passed by the Court of the XIX
Additional City Civil and Sessions Judge, Bangalore in
Ex.Case.No.136/2013 on its file holding that it is
maintainable as Annex-J.
These Writ Petitions having been heard and
reserved for orders, coming on for pronouncement of
order this day, the Court made the following:
ORDER
Petitioners in these petitions are seeking a writ in the nature of certiorari or any other writ or direction to quash the order dated 25.2.2014 passed by the XIX Addl. City Civil and Sessions Judge, Bangalore in Execution case No.136/2013 holding that it is maintainable, which is produced as per Annexure 'J' and also sought to dismiss the petition in Execution Case No.136/2013.
3
2. The brief facts of the petitioners case as pleaded in the petitions is that the respondent herein filed an Arbitration Application No.343/2008 under Section 9 of the Arbitration and Conciliation Act, 1996 before the learned trial Judge against the petitioners praying to restrain them from selling or in any manner creating any third party rights in respect of the properties mentioned in schedules "A" and "B" to the said petition till the disposal of the arbitration proceedings between the parties. According to the petitioners, as on that date, there were no arbitration proceedings pending. During the pendency of the said petition, respondent herein filed a memo seeking to restrain the petitioners till the repayment of the amount. But, no amount is stated. Petitioners filed their statement of objections to the memo requesting the Court to dispose of the petition leaving open for the parties to work out their remedy as and when the cause, if any, arose. The learned trial Judge by order dated 11.1.2010 disposed of the said petition directing the respondents i.e., petitioners herein 4 to pay a sum of Rs.13 crores within a period of six months from 14.12.2009. As against the said order, respondent herein filed an appeal before this Court in M.F.A.No.1101/2011 contending that it had paid Rs.15 crores to the petitioners, but the trial Court while passing the order on 11.1.2010 has ordered to refund an amount of Rs.13 crores instead of Rs.15 crores. This Court, by its order dated 5.9.2012 disposed of the said appeal and observed that the appellant can raise dispute with regard to the disputed amount for adjudication. In the meantime, respondent herein filed a petition under Section 11(5) of the Arbitration and Conciliation Act, 1996 before this Court in CMP No.120/2008 seeking for appointment of an arbitrator to arbitrate the dispute between the parties. By order dated 7.4.2010, this Court dismissed the petition holding that respondent herein can seek appointment of an arbitrator only after the expiry of six months from 14.12.2009. When the matter stood thus, respondent herein filed Execution petition in E.C.No.136/2013 5 seeking to execute the order dated 11.1.2010 passed in Arbitration Application No.343/2008. As observed by this Court in the order dated 7.4.2010 passed in CMP No.120/2008, the respondent has not raised any dispute nor has sought for appointment of arbitrator to adjudicate the disputes after expiry of six months from 14.12.2009 or even to this date. After service of notice in the said execution proceedings, petitioners herein appeared before the trial Court through their advocate and filed statement of objections contending that the execution petition is not maintainable as there is no executable decree/order and the petition is not maintainable being misconceived. The respondent herein filed his reply to the statement of objections filed by the petitioners. The learned trial Judge, after hearing both parties to the said proceedings, by order dated 25.2.2014 held that the order in Arbitration Application No.343/2008 is executable order and execution petition is maintainable. The petitioners have challenged the said order in these writ petitions. 6
3. Heard the arguments of the learned counsel appearing for the petitioners and also the learned senior counsel appearing on behalf of counsel on record for respondent.
4. Learned counsel for the petitioners submitted that there is no decree or executable order and hence, the execution petition itself is not maintainable. He further submitted that the order passed under Section 9 of the Arbitration and Conciliation Act, 1996 is not in the nature of decree or executable order. He has also submitted that the Court below has wrongly applied the provisions of CPC to the proceedings under Section 9 of the Arbitration and Conciliation Act, 1996. Hence, the whole proceedings are vitiated. He has also submitted that no dispute is raised to have it settled through arbitration. The trial Court has not at all looked into these legal aspects and even if it is assumed that the order can be executed, the amount admitted is only Rs.13 crores, whereas the respondent has claimed 7 Rs.15 crores. The learned counsel has drawn the attention of this Court to Sections 11 and 36 of the Arbitration and Conciliation Act and submitted that in view of the said provisions, decisions relied upon by the other side are not applicable to the case on hand. In support of his contention, learned counsel has relied upon the relevant paragraphs 13, 14 and 15 of the decision of Delhi High Court decided on 30.11.2012 rendered in FAO(OS)484/2012 reported in LAWS(DLH)- 2012-11-263 and submitted that in view of the principle in the said decision also, the order of the trial Court is liable to be set aside.
5. Per-contra, learned senior counsel appearing for respondent during the course of his arguments submitted that there is a dispute between the parties. The trial Court has rightly appreciated the materials placed on record by both sides and held that the execution petition is maintainable and the order passed on the Memo can be executable. It is also submitted 8 that the provisions of CPC applies while dealing with the case filed under Section 9 of the Arbitration and Conciliation Act, 1996. In this regard, he has drawn the attention of the Court to Section 36 of CPC. Learned senior counsel submitted that the petitioners gave an undertaking before the trial Court as well as this Court admitting their liability to the extent of Rs.13 crores. When such undertakings are made before the Courts, they are to be respected by the parties, as otherwise, there will be no sanctity for the Court orders passed, based on the undertakings given by the parties. It is submitted that the Court orders are to be interpreted in a broader sense to do substantial justice to the parties and Court cannot be too technical in dealing with the matters. He has submitted that the trial Court has rightly passed the order and there is no illegality to interfere with the same and that the decision relied upon by counsel for the petitioners cannot be made applicable to the case on hand. The learned senior counsel for the respondent, in support of his 9 arguments, has relied upon the following decisions as per the Memo filed dated 14.12.2015:
1. (2007) 6 Supreme Court Cases 798 Arvind Constructions Company Pvt. Ltd., Vs. Kalinga Mining Corporation and others.
2. (2002) 5 Supreme Court Cases 510 ITI Ltd., Vs. Siemens Public Communications Network Ltd.,
3. (2003) 2 Supreme Court Cases 412 State of Karnataka Vs. Vishwa Bharathi House Building Co-op Ltd.,
4. AIR 1999 SC 565
5. AIR 1986 SC 984 Savithri Vs. Govind Singh Rawat
6. (2015) 2 Supreme Court Cases 682 Rajini Rani and another Vs. Kairarkilal
7. LAWS(DLH)-2014-5-pg.180
6. I have perused the grounds urged in the writ petitions, the order passed by the Executing Court which is challenged in these writ petitions, the decisions relied upon by both sides, so also, the other documents produced by the petitioners along with the petitions. 10
7. The main grievance of the petitioners herein is, the order passed under Section 9 of the Arbitration and Conciliation Act, 1996 is not a decree nor it is an executable order. Hence, the executing Court ought not to have directed the petitioners to pay the amount. In this connection, I have perused the decision relied upon by learned counsel for the petitioners, referred to above, wherein in paragraphs 13, 14, 15 and 16 of the said decision of Delhi High Court reported in LAWS(DLH)- 2012-11-263 it is held as under:
"13. THE short question which arises before us is whether, given the nature and scope of the proceedings under Section 9, could the learned Single Judge have properly directed the appellant to pay the amount of USD 4.38 m to the respondent?
14. THE respondent-JV had sought an injunction against the appellant before the learned Single Judge for (a) restraining the appellant from enforcing the PBGs; (b) restraining the SBI from making payment to the appellant under the PBGs and (c) directing the appellant to accept the reduced PBG to the extent of 10% of the balance 2% work remaining to be executed by the JV. It was only in the course of the proceedings before the learned Single Judge that the issue of payment of USD 4.38 m had cropped up, when the letter dated 22-3- 11 2012 written by the appellant in reply to the letter dated 19-3-2012 written by the JV had come up for consideration; in that letter the appellant had undisputedly agreed to the request of the JV for reimbursement of additional costs due to time acceleration and price escalation amounting to USD 4.38 m, and had even bound itself to pay the amount within seven days of submission of the approved invoice by the JV. Later, the only objection raised by the appellant in the course of the proceedings was that it had not received the original invoice from the JV so that payment could be made under the alleged settlement dated 22-3-2012. It is only considering this objection that the learned Single Judge had directed the payment of USD 4.38 m to be made by the appellant to the JV, at the same time also noting that the foremost concern at that stage was the keeping alive of the PBGs. It was in this context that the learned Single Judge directed the payment of the actual bank-related charges in respect of the PBGs (both INR & USD) as an interim measure, upon condition that if the payment is made the JV will keep the PBGs alive till 30-11- 2012. The direction was to remain in effect till an order is passed on any application that may be filed by either party before the learned arbitrator (once he is appointed) under Section 17 of the Act.
It will be seen from the above that the payment of the actual bank-related charges was linked to the extension of the PBGs. The injunction application filed by the JV under section 9 had thus worked itself out once the learned Single Judge issued the above 12 directions vide paragraph 21 of the impugned order.
15. WHAT followed in paragraph 22 of the impugned order is the direction for payment of the USD 4.38 m which is under challenge before us as being without jurisdiction and outside the provision of section 9. The point that weighs in favour of the respondent-JV is that the appellant had agreed before the learned single Judge for the above payment and thus in equity it cannot resile from it. But the precise point that arises for consideration is whether that can enlarge the scope and content of the nature of the proceedings under the section.
16. THE object of section 9 which enables the court to pass interim orders for the protection of the parties is to support the arbitration proceedings and to render "more effective the decision at which the arbitrators will ultimately arrive on the substance of the dispute" (Lord Mustill in Channel Tunnel Group Ltd. v Balfour Beatty Construction Ltd. (1993) All ER 664 HL), provided that "this and no more is what such measures aim to do" and there is nothing in the orders contrary to the spirit of arbitration. The contention of the appellant that there was no dispute regarding the payment of the price escalation and acceleration charge/costs there was nothing arbitrable and therefore section 9 would not apply seems to us to be not without force, if we are to hold that section 9 can be set in motion only when there is a dispute. Even granting that the section can be invoked before the arbitral proceedings, it seems to us that the existence of a dispute between the parties 13 before the filing of an injunction application under Section 9 on the point for which interim relief is sought is essential. Sub- clause (b) of clause (ii) of the section permits a party to approach the court for interim relief for "securing the amount in dispute in the arbitration". Admittedly there is no pre- existing dispute between the parties in the present case with reference to the price escalation and additional costs for acceleration; as rightly pointed out on behalf of the appellant, there is no mention of any such dispute in the affidavit filed by the JV before the learned Single Judge nor did the JV make any such prayer in the interim application. The powers of the court under the said sub-clause could not have therefore been invoked. It would actually amount to recovering sums in advance of the hearing before the arbitrator. The power can be exercised only when an identified fund is in dispute. There was no such identification by the JV of any fund that was in dispute when it approached the court under Section 9. The affidavit and the prayers made therein bear this out.
The position with regard to bank guarantees may now be noticed as the whole purport of the proceedings before the learned Single Judge was the protection sought by the JV against the enforcement of the PBGs. A contract relating to bank guarantee is independent of, and altogether different from, the contract out of which the requirement for giving the guarantee arose. It was apparently on this basis that the appellant sought to encash the PBGs against which the JV had sought protection under Section 9. The court undoubtedly had the 14 power to grant the injunction subject to fulfillment of the usual criteria, such as existence of genuine hardship, balance of convenience, existence of special equities between the parties, prevention of injustice, existence of a prima facie case and so on and so forth. But the power to intervene and pass orders granting interim protection does not, with respect, extend to the contract between the parties which existed independently of the contact relating to the bank guarantee."
Based on the principle enunciated in the said decision, learned counsel for the petitioners herein submitted that the order passed by the Executing Court is illegal and it cannot be executed as against the petitioners.
8. As against this, learned senior counsel for the respondent submitted that in the subsequent decision before the Delhi High Court itself, the matter was considered in FAO(OS)No.141/2014 on 28.5.2014. Paragraph Nos.9 and 10 of the said decision reads as under:
"13. SECTION 9 of the Arbitration Act uses the expression "interim measure of protection" as distinct from the expression "temporary injunction" used in Order XXXIX 15 Rules 1 and 2 of the CPC. Rather, "interim injunction" in Section 9 (ii)(d) is only of the matters prescribed in Section 9(ii)(a) to (e) qua which a party to an Arbitration Agreement is entitled to apply for "interim measure of protection. Section 9(ii)(e) is a residuary power empowering the Court to issue/direct other interim measures of protection as may appear to the Court to be just and convenient. Section 9 further clarifies that the Court, when its jurisdiction is invoked thereunder "shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it".
14. THE question which thus arises is that if the dispute as aforesaid had been brought before this Court by way of a suit, whether this Court could have, during the pendency of the suit, granted the relief as has been granted in the impugned order. Order XXXIX Rule 10 of the CPC empowers the Court to direct deposit/ payment of admitted amounts. The appellant, as aforesaid does not controvert that it continued to be the tenant of office unit B -1 and had not terminated the tenancy with respect thereto. There is thus an admission by the appellant of the liability for rent at least of office unit B -1. The appellant, if had been a defendant in a suit, could have thus been directed by an interim order in the suit to make such payment to the respondent. Order XV -A added to the CPC as applicable to Delhi and which was added, as held by us in judgment dated 15th may, 2014 in FAO(OS)597/2013 titled Raghubir Rai Vs. Prem Lata, to empower The Court to direct payment during The pendency of The suit at 16 a rate Other Than admitted rate also, empowers The Civil Court to direct payment which is apparently wrongfully disputed. The denial by the appellant of The entire rent as agreed, on The ground of having determined The tenancy of one of The two office units taken on rent, is clearly vexatious, as in law The appellant as a tenant could not determine tenancy of part of The premises taken on rent. It is not The case of The appellant That it was entitled to do so as part of terms of its tenancy. In That view of The matter, The appellant could under Order XV -A of The CPC have been directed to pay The rent of The entire premises notwithstanding having given notice of termination of tenancy of part Thereof. We are Therefore satisfied That The impugned order satisfies The test of being in exercise of The same power for making orders as The Court has for The purpose of a Civil Suit and is Thus within The ambit of Section 9 of The Arbitration Act.
15. Mention may however be made of The judgment of The Division Bench of This Court in Ratnagiri Gas and Power Pvt. Ltd. vs Joint Venture Of Whessoe Oil & Gas Ltd. 199 (2013) DLT 212 where in appeal, The directions given by The learned Single Judge in exercise of powers under Section 9 of The Arbitration Act for some payments, were set aside and while doing so, it was interalia observed That Order XXXIX Rule 10 specifically clothes the Court with the power to direct the litigant to deposit the amounts and no such power is conferred upon the Court under Section 9 of the Arbitration Act. Reference was also made to Section 19 of The Arbitration Act to hold That The 17 Provisions of The CPC are not applicable. The said observations however came to be made after The Court held That The direction issued by The Single Judge for payment was not only beyond The ambit of The reliefs claimed in The petition under Section 9 but also beyond The disputes between The parties. Also, it was not noticed That Section 9 expressly provide That The Court while exercising power Thereunder shall have The same power as it has in relation to any proceedings before it and which in our opinion as aforesaid would include The powers under Order XXXIX Rule 10 and under Order XV-A of The CPC.
Moreover, Section 19, to which reference was made is wiTh respect to The powers of The Arbitral Tribunal and not of The Court exercising jurisdiction under Section 9. We are Therefore of The view That The said observations are obiter. We may also mention That SLP (CIVIL) No.5757/2013 preferred Thereagainst is pending consideration. In fact another Division Bench of This Court Simplex Infrastructures Ltd. Vs. National Highways AuThority of India 177 (2011) DLT 248, in exercise of powers under Section 9, passed an order directing payment of certain monies, The payment whereof was considered to be just and due."
It is submitted that in the subsequent decision, referred to above, the Division Bench of Delhi High Court, taking into consideration the earlier decision rendered by the said Court in Ratnagiri Gas and Power Pvt. Ltd., Vs. 18 Joint Venture of Whessoe Oil and Gas Limited, held that the proposition laid down in the said judgment is not the correct position of law and that Section 9 expressly provides that the Court while exercising power thereunder shall have the same power as it has in relation to any proceedings before it, which in their Lordships' opinion as aforesaid would include the powers under Order 39 Rule 10 of CPC and also under Order XV-A of CPC. Moreover, Section 19, to which reference was made is with respect to the powers of the Arbitral Tribunal and not of the Court exercising jurisdiction under Section 9. In the said judgment it has also referred to the Division Bench judgment of the Delhi High Court in Simplex Infrastructures Ltd., Vs. National Highways Authority of India reported in 177(2011) DLT 248 wherein in exercise of powers under Section 9, an order was passed directing payment of certain monies, the payment whereof was considered to be just and due.
19
9. In view of the said decision relied upon by the learned senior counsel for the respondent, the decision relied upon by learned counsel for the petitioners cannot be considered. Apart from that in the decision relied upon by learned counsel for the petitioners the dispute was with regard to enforcement of bank guarantee, which is independent of the contract between the parties. But here in the case on hand, it is not so. Here the dispute between the parties is with regard to enforcement of the agreement entered into between the petitioners and the respondent.
10. So far as the factual aspect is concerned, the petitioners have admitted before the Court about the liability to pay Rs.13 crores to the respondent as it is evident from the document Annexure 'B', the statement of objections filed by the petitioners herein to the memo filed by the respondent in arbitration application No.343/2008. In paragraph No.8 of the said objection statement the petitioners herein who were the 20 respondent in the arbitration application contended as under:
"8. The respondent Nos.1 to 3 submits that under the above narrated circumstances the claim of the petitioner that the respondent Nos.1 to 3 have to pay interest on the said advance amount does not arise. The respondent Nos.1 to 3 further submit that petitioner herein has also produced documents to the effect that the petitioner has paid an advance amount of Rs.13 crores only under the agreement dated 28.3.2008. Under the said circumstances, no interest shall carry on the said amount until six months from the date of notifying the intention of the petitioner to take back the advance monies."
The trial Court in the last paragraph of its order dated 11.1.2010 has observed as under:
"The said memo is dated 14.12.2009. Hence, as per the said clause, petitioner is not entitled to interest on the amount already paid viz Rs.13 crores. He is only entitled for the return of the said amount. Sri.K.V.M. submits that he return the same as per the above clause within six months from 14.12.2009. Sri.U.K. is agreeable to the said submission made by Sri.K.V.M. Hence, with their consent, petition is disposed of directing the respondent to pay the above said amount of Rs.13 crores within six months from 14.12.2009 to the petitioner."21
I have also perused the judgment passed by Division Bench of this Court in M.F.A.No.1101/2011 dated 5.9.2012 wherein in paragraph No.4 of the judgment it is observed as under:
"4. Learned counsel for the appellant submits that the appellant has paid Rs.15 corres to respondent Nos.1 to 3, but the trial court while passing order on 11.1.2010 ordered to refund the amount of Rs.13 crores instead of Rs.15 crores. He further submits that as per Annexure 'D', the appellant has paid Rs.15 cores to the respondent Nos.1 to 3, but the Court below erred in not directing respondent Nos.1 to 3 to refund Rs.15 crores."
In paragraph No.5 of the said judgment it is stated that learned counsel for respondent Nos.1 to 3 submits that they have not challenged the order dated 11.1.2010 and according to them they have to repay only Rs.13 crores and not Rs.15 crores.
In paragraph No.6 of the judgment the Division Bench further observed that respondent Nos.1 to 3 have admitted the receipt of Rs.13 crores from the appellant. Under such circumstances, Court below is justified in directing respondents 1 to 3 to refund Rs.13 crores to the appellant.
11. Looking to these materials on record, it is seen that the petitioners herein have admitted before the trial Court as well as before this Court about receipt of Rs.13 22 crores from the respondent herein and they have also submitted that they will repay Rs.13 crores. Therefore, there is an undertaking by the petitioners herein for the repayment of Rs.13 crores. When that is the case, now they cannot contend that the order passed by the Executing Court is illegal, as it is not a decree and it is not an executable order. When there is undertaking before the trial Court as well as before this Court, the Courts are having the power to take action in respect of such undertakings and to pass appropriate orders, as otherwise, there will be no meaning for the undertakings given by the parties before the Court and subsequently contending that they are not liable to pay as per the said undertaking. Therefore, the contention of the learned counsel for the petitioners that the petitioners are not liable to pay the amount at least to an extent of Rs.13 crores cannot be accepted at all.
12. With regard to the contention of the learned counsel for the petitioners that Arbitration Act is a 23 special enactment and the provisions of Civil Procedure Code cannot be made applicable is concerned, I have perused the decisions relied upon by learned senior counsel for the respondent, referred to above. In paragraph No.15 of the decision reported in (2007)6 SCC 798 in the case of Arvind Constructions Co. (P) Ltd., Vs. Kalinga Mining Corporation and others, the Hon'ble Apex Court has held as under:
"15. The argument that the power under Section 9 of the Act is independent of the Specific Relief Act or that the restrictions placed by the Specific Relief Act cannot control the exercise of power under Section 9 of the Act cannot prima facie be accepted. The reliance placed on Firm Ashok Traders V. Gurumukh Das Saluja in that behalf does not also help much, since this Court in that case did not answer that question finally but prima facie felt that the objection based on Section 69(3) of the Partnership Act may not stand in the way of a party to an arbitration agreement moving the Court under Section 9 of the Act. The power under Section 9 is conferred on the District Court. No special procedure is prescribed by the Act in that behalf. It is also clarified that the court entertaining an application under Section 9 of the Act shall have the same power for making orders as it has for the purpose and in relation to any proceedings before it. Prima facie, it appears that the general rules that governed the court while considering 24 the grant of an interim injunction at the threshold are attracted even while dealing with an application under Section 9 of the Act. There is also the principle that when a power is conferred under a special statute and it is conferred on an ordinary court of the land, without laying down any special condition for exercise of that power, the general rules of procedure of that court would apply. The Act does not prima facie purport to keep out the provisions of the Specific Relief Act from consideration. No doubt, a view that exercise of power under Section 9 of the Act is not controlled by the Specific Relief Act has been taken by the Madhya Pradesh High Court. The power under Section 9 of the Act is not controlled by Order 18 Rule 5 of the Code of Civil Procedure is a view taken by the High Court of Bombay. But, how far these decisions are correct, requires to be considered in an appropriate case. Suffice it to say that on the basis of the submissions made in this case, we are not inclined to answer that question finally. But, we may indicate that we are prima facie inclined to the view that exercise of power under Section 9 of the Act must be based on well-recognised principles governing the grant of interim injunctions and other orders of interim protection or the appointment of a Receiver."
I have also perused the decision reported in (2002)5 SCC 510 in the case of ITI Ltd., Vs. Siemens Public Communications Network Ltd., wherein paragraph Nos.10, 11 and 12 of the said decision reads as under: 25
"10. We do not agree with this submission of the learned counsel. It is true in the present Act application of the Code is not specifically provided for but what is to be noted is: is there an express prohibition against the application of the Code to a proceeding arising out of the act before a civil court? We find no such specific exclusion of the Code in the present Act. When there is no express exclusion, we cannot by inference hold that the Code is not applicable.
11. It has been held by this Court in more than one case that the jurisdiction of the civil court to which a right to decide a lis between the parties has been conferred can only be taken by a statute in specific terms and such exclusion of right cannot be easily inferred because there is always a strong presumption that the civil courts have the jurisdiction to decide all questions of civil nature, therefore, if at all there has to be an inference the same should be in favour of the jurisdiction of the court rather than the exclusion of such jurisdiction and there being no such exclusion of the Code in specific terms except to the extent stated in Section 37(2), we cannot draw an inference that merely because the Act has not provided CPC to be applicable, by inference it should be held that the Code is inapplicable. This general principle apart, this issue is now settled by the judgment of a three-Judge Bench of this Court in the case of Bhatia International Vs. Bulk Trading S.A. wherein while dealing with a similar argument arising out of the present Act, this Court held: (SCC p.116, para 15) 26 "While examining a particular provision of a statute to find out whether the jurisdiction of a court is ousted or not, the principle of universal application is that ordinarily the jurisdiction may not be ousted unless the very statutory provision explicitly indicates or even by inferential conclusion the court arrives at the same when such a conclusion is the only conclusion."
12. In the said view of the matter, we are in respectful agreement with the view expressed by this Court in the case of Nirma Ltd., and reject the argument of Mr.Parasaran on this question."
13. Considering these decisions and the principles enunciated in the said decisions, I am of the opinion that the learned senior counsel for the respondent is right in his submission that the provisions of Civil Procedure Code are also made applicable to the arbitration proceedings. Hence, I am of the opinion that the order passed by the Court below can be executed against the petitioners. However, since the undertaking given by the petitioners before the Court below as well as before this Court is only to the extent of Rs.13 crores, the Court can execute the order as against the petitioners for recovery of Rs.13 crores only. So far as 27 the claim of the respondent that it has paid Rs.15 crores and also entitled for interest, it has to raise the dispute with regard to remaining Rs.2 crores and interest if any, in the arbitration proceedings.
With these observations, writ petitions are disposed of.
Sd/-
JUDGE bkp CT-SG