Madras High Court
No.15 vs N.Jayamurugan on 29 August, 2022
Author: M.Duraiswamy
Bench: M.Duraiswamy
O.S.A.(CAD)No.123 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 24.08.2022
PRONOUNCED ON : 29.08.2022
CORAM
THE HON'BLE Mr.JUSTICE M.DURAISWAMY
AND
THE HON'BLE Mr.JUSTICE SUNDER MOHAN
O.S.A.(CAD)No.123 of 2021
M/S.Saravana Global Holding Ltd.,
(Formerly known as Saravana Foundations Ltd.)
No.15, New Giri Road,
T.Nagar, Chennai-600 017
... Appellant
Versus
N.Jayamurugan ... Respondent
1/17
https://www.mhc.tn.gov.in/judis
O.S.A.(CAD)No.123 of 2021
PRAYER: Original Side Appeal filed under Section 13(1A) of the
Commercial Courts Act 2015 r/w Section 37 of the Arbitration and
Conciliation Act 1996, to allow the O.S.Appeal and set aside the order in
application No.2419 of 2021 in O.P.No.595 of 2019 dated 25.10.2021 on
the file of this Court.
For Appellant : Mr.K.Subramanian, Senior Counsel
For S.Punniyakotti
For Respondent : : Mr.A.R.L.Sundaresan, Senior counsel
For Ms.A.L.Gandhimathi
JUDGEMENT
SUNDER MOHAN,J.
Challenging the order dated 25.10.2021 made in Application No. 2419 of 2019, under Section 34 (4) of the Arbitration Act, the Appellant has preferred the above Original Side Appeal.
2.The dispute between the Appellant and the Respondent was 2/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 referred to Arbitration and the Appellant suffered an award directing them to pay a sum of Rs.6,48,35,500/-(Rupees Six Crore, Forty Eight lakhs, Thirty five thousand and five hundred only) together with interest to the Respondent. The Appellant filed O.P.No.595 of 2019 under Section 34 of Arbitration Act for setting aside the award. They filed an application in the said O.P under Section 34(4) of the Arbitration Act stating that the learned Arbitrator had not taken into consideration certain vital materials, the award suffers from gaps in the reasoning which could be cured and hence, prayed for adjournment in O.P.No.595 of 2019 so as to give the learned Arbitrator an opportunity to resume the Arbitral proceedings, to take such action, to eliminate the ground for setting aside the arbitral award.
3.The learned Single Judge dismissed the said application by observing that the learned Arbitrator had considered all the issues on merits, rejected all the contentions raised by the Appellant, and the award did not suffer for want of reasoning warranting the Court to pass an order as prayed for.
3/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021
4.When the appeal was taken up for hearing, Mr.A.R.L.Sundaresan, learned senior counsel for the Respondent raised an objection stating that the intra-court appeal before this Court is not maintainable, as Section 37 of the Arbitration and Conciliation Act does not provide for an appeal remedy against an order passed under Section 34(4) of the Arbitration Act.
5.In view of the said submission, we thought it fit to decide the preliminary issue with regard to the maintainability of the appeal without adverting to the merits of the above appeal.
6.Mr.K.Subramanian, learned senior counsel for the Appellant, submitted that the intra-court appeal is maintainable against the order passed by the learned Single Judge, sitting in the Commercial Division of this Court under Section 13 of the Commercial Courts Act, 2015. The learned senior counsel further submitted that the proviso to Section 13 (1A) states that the appeal shall lie from orders enumerated under Order XLIII of CPC, 1908, and Section 37 of the Arbitration and Conciliation Act, 1996 does not preclude appeals being filed from any other order of 4/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 the Commercial Division of this Court to the Commercial Appellate Division of that High Court. The learned senior counsel submitted that the proviso is complementary and is in addition to the main provision and does not restrict the nature of orders that can be appealed against, provided under the main provision. The learned senior counsel relied upon a judgement of the Apex Court in the case of Dyna Technologies Pvt. Ltd., vs Crompton Graves Ltd., reported in 2019 20 SCC 1, to impress upon us the legislative intention of adding Section 34(4) in the Arbitration and Conciliation Act. The learned senior counsel also relied upon the judgement of the Division Bench of this Court in Hindustan Unilever Ltd., Vs. S.Shanthi reported in 2021 SCC online Mad 5428 and an unreported judgement of the Division Bench of the Delhi High Court in D & H India Ltd., vs Superson Schweisstechnik India, dated 16.03.2020, wherein the Delhi High Court has held as follows:
''21.On a plain reading, the proviso to Section 13(1A) of the Commercial Courts Act is an enabling, rather than a disabling, provision. There is nothing, in the said proviso, which would seem to indicate that it dilutes the effect of sub-section (1A) of Section 13. If 5/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 we were to read the said proviso as excluding, from the jurisdiction of the appellate Court, all orders, passed by a Commercial Court, save and except those which find specific enumeration in Order XLIII of CPC, it may amount to rewriting the proviso to read “Provided that no appeal shall lie, except from such orders passed by a Commercial by a Commercial Divison or the Commercial Court as are specifically enumerated under Order XLIII of the Code of Civil Procedure, 1908 (5 of 1908) as amended by this Act and section 37 of the Arbitration and Conciliation Act, 1996 (26 of 1996). “We are not convinced that the province of our jurisdiction in the present case, allows us to so legislate. To our mind, therefore, sub- section (1A) of Section 13 of the Commercial Courts Act allows appeals to be preferred against all judgements and orders of the Commercial Division of the High Court, to the Commercial Appellate Division thereof, and the proviso, to the said sub-section merely clarifies that, in the case of orders specifically enumerated in Order XLIII of the CPC, such appeals shall lie.'' Thus, the learned senior counsel contended that the proviso to Section 6/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 13(1A) of the Commercial Courts Act is only an enabling provision, and it only clarifies that the appeals provided under Order XLIII of CPC and Section 37 of the Arbitration and Conciliation Act shall lie and does not bar appeals against all other orders passed by the Commercial Division of this Court to the Commercial Appellate Division. Therefore, the learned senior counsel submitted that the order passed under Section 34(4) is an appealable order under Section 13(1A) of the Commercial Courts Act.
7.Mr. A.R.L.Sundaresan, learned senior counsel appearing for the Respondent, submitted that the Hon'ble Supreme Court and the Division Bench of this Court had held that, under Section 13(1A) of the Commercial Courts Act, no appeal from any order other than those enumerated in Order XLIII of CPC and provided for either in Section 37 of the Arbitration and Conciliation Act or in any other provisions of the Act shall lie to the Commercial Appellate Division of this Court; and that an appeal is a statutory right, and one cannot assume such a right unless the statute confers explicitly that right. The learned Senior counsel submitted that, under Section 37 of the Arbitration and Conciliation Act, 7/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 the appeal shall lie from the orders mentioned in the section and from no others. The provision restricts the appellate remedy to the orders mentioned therein. The learned senior counsel relied upon the following judgments in support of his submissions:
(a)Kandla Export Corporation and anothers vs. OCI Corporation and another reported in 2018 14 SCC 715
(b) Noy Vallesina Engineering SPA vs. Jindal Drugs Limited and others reported in (2021) 1 SCC 382
(c) Hindustan Unilever Limited Ponds House vs S.Shanthi reported in 2021 SCC online Mad 5428
8. We have given our anxious consideration to the submissions made by the learned senior counsels for the Appellant and the Respondent. We find that, under Section 37 of the Arbitration and Conciliation Act, an appeal to the Court authorised by law to hear appeals from the original decrees of the Court passing the order shall lie only as against the orders mentioned therein. Section 37 of the Arbitration and Conciliation Act is extracted here for facility: 8/17
https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 ''37. Appealable orders.
(1) 2[Notwithstanding anything contained in any other law for the time being in force, an appeal] shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:— [(a) refusing to refer the parties to arbitration under section 8;
(b) granting or refusing to grant any measure under section 9;
(c) setting aside or refusing to set aside an arbitral award under section 34.] (2) Appeal shall also lie to a court from an order of the arbitral tribunal—
(a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or
(b) granting or refusing to grant an interim measure under section 17.
(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.'' 9/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021
9.The above Section not only enumerates the orders against which an appeal would lie, but, clearly specifies that no appeal shall lie from any other order. Thus, an order passed under Section 34(4) of the Arbitration Act, is not appealable under Section 37 of the Arbitration and Conciliation Act.
10. The next question would be whether the order passed under Section 34(4) by the Commercial Division of this Court is appealable by virtue of Section 13(1A) of the Commercial Courts Act. The Apex court, in the judgement of Kandla Export Corporation and anothers vs. OCI Corporation and another reported in 2018 14 SCC 715, while interpreting the scope of Section 13(1A) of the Commercial Courts Act with specific reference to orders passed under Arbitration Act, held as follows:
''14. The proviso goes on to state that an appeal shall lie from such orders passed by the Commercial Division of the High Court that are specifically enumerated Under Order XLIII of the Code of Civil 10/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 Procedure, 1908, and Section 37 of the Arbitration Act. It will at once be noticed that orders that are not specifically enumerated Under Order XLIII of the Code of Civil Procedure would, therefore, not be appealable, and appeals that are mentioned in Section 37 of the Arbitration Act alone are appeals that can be made to the Commercial Appellate Division of a High Court.
........
21. However, the question still arises as to why Section 37 of the Arbitration Act was expressly included in the proviso to Section 13(1) of the Commercial Courts Act, which is equally a special provision of appeal contained in a self-contained code, which in any case would be outside Section 13(1) of the Commercial Courts Act. One answer is that this was done ex abundanti cautela. Another answer may be that as Section 37 itself was amended by the Arbitration Amendment Act, 2015, which came into force on the same day as the Commercial Courts Act, Parliament thought, in its wisdom, that it was necessary to emphasise that the amended Section 37 would have precedence over the general provision 11/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 contained in Section 13(1) of the Commercial Courts Act. Incidentally, the amendment of 2015 introduced one more category into the category of appealable orders in the Arbitration Act, namely, a category where an order is made Under Section 8 refusing to refer parties to arbitration. Parliament may have found it necessary to emphasize the fact that an order referring parties to arbitration Under Section 8 is not appealable Under Section 37(1)(a) and would, therefore, not be appealable Under Section 13(1) of the Commercial Courts Act. Whatever may be the ultimate reason for including Section 37 of the Arbitration Act in the proviso to Section 13(1), the ratio decidendi of the judgment in Fuerst Day Lawson (supra) would apply, and this being so, appeals filed Under Section 50 of the Arbitration Act would have to follow the drill of Section 50 alone.
22. This, in fact, follows from the language of Section 50 itself. In all arbitration cases of enforcement of foreign awards, it is Section 50 alone that provides an appeal. Having provided for an appeal, the forum of appeal is left "to the Court 12/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 authorized by law to hear appeals from such orders".
Section 50 properly read would, therefore, mean that if an appeal lies under the said provision, then alone would Section 13(1) of the Commercial Courts Act be attracted as laying down the forum which will hear and decide such an appeal.'' Thus, we find that the Apex Court held that the Parliament added only to emphasize the proviso to Section 13(1A) that the amended Section 37 would have precedence over the general provisions contained in Section 13(1) of the Commercial Courts Act. The Apex Court, in Noy Vallesina Engineering SPA vs. Jindal Drugs Limited and others reported in (2021) 1 SCC 382, quoted with approval, the observations made by the Apex court in Kandla Export Corporation cited supra.
11. A Division Bench of this Court, in the case of Hindustan Unilever Limited Ponds House vs S.Shanthi reported in 2021 SCC online Mad 5428, held as follows:
13/17
https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 ''94.Thus, even if restrictive words like “only” or expressions like “and no other” are not read into or introduced in the relevant proviso, in the light of the constriction in the right of appeal as structured by sub-section (2) of Section 13 of the said Act, the restrictive words or expressions are necessarily implied in such proviso. In fine, therefore, a meaningful reading of the entirety of the appeal provision in Section 13 of the said Act would imply that no appeal from any order other than those enumerated in Order XLIII of the Code and those provided for in Section 37 of the Act of 1996 would lie under the said Act in respect of civil suits involving commercial disputes of specified value as defined therein. At any rate, if the submission of the Appellants were to be accepted and the expression “judgment or order” were to be seen to be of the widest import and the proviso to sub-sections (1) and (1A) of Section 13 of the said Act not understood to imply any restriction on the right of appeal, it would lead to an absurd construction which would go against the spirit of the statute, the expedition in the processes that it has introduced and even the letter of the provision contained in Section 8 of the 14/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 said Act. If the expression “judgment or order” is read as the Appellants suggest, it would imply that even an order of adjournment may be appellable. That would fly in the face of the statute, particularly the intention expressly conveyed by Section 8 of the said Act.'':
From the above judgements, we find that, unless either the Arbitration Act or the CPC provides for an appeal, no appeal shall lie under Section 13 of the Commercial Courts Act. Any other interpretation would lead to an absurd construction, where notwithstanding the statutory limitation under CPC and the Arbitration Act, any order can be appealed against.
12.Thus, in the light of the above settled position of law, we have no hesitation in concluding that an intra-court appeal under Section 13(1A) of the Commercial Courts Act would lie only as against the orders mentioned in Order XLIII of CPC, under Section 37 and any other provision which provides for an appeal under the Arbitration and Conciliation Act. The judgement of the Delhi High Court runs contrary to the judgement of the Apex Court and the decision of the Division 15/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 Bench of this Court, and hence, the view taken therein cannot be accepted.
13. We are, therefore, of the view that no intra-court appeal would lie against the order passed under Section 34(4) of the Arbitration Act by the Commercial Division of this Court. Hence, the above Original Side Appeal deserves to be dismissed as not maintainable.
14.In the result, the Original Side Appeal is dismissed. No cost.
[M.D.J] [S.M.J] 29.08.2022 Index : Yes/No Internet : Yes Speaking/Non-Speaking orders vsn 16/17 https://www.mhc.tn.gov.in/judis O.S.A.(CAD)No.123 of 2021 M.DURAISWAMY. J, and SUNDER MOHAN J, vsn Pre-delivery Judgement made in O.S.A.(CAD)No. 123 of 2021 29.08.2022 17/17 https://www.mhc.tn.gov.in/judis