Telangana High Court
M/S. Gland Pharma Limited, vs M/S. Vlb Plasma Private Limited, on 31 January, 2025
THE HON'BLE SMT. JUSTICE MOUSHUMI BHATTACHARYA
AND
THE HON'BLE SRI JUSTICE MADHUSUDHAN RAO BOBBILI RAMAIAH
COMMERCIAL COURT APPEAL NO.5 OF 2025
Mr. Vikram Pooserla, learned Senior Counsel representing Mr. Malipeddi Abhinay Reddy,
learned counsel appearing for the appellant.
Mr. L Venkateshwar Rao, learned counsel appearing for the respondents.
JUDGMENT:
The Appeal arises out of an order passed by the learned Principal Special Court in the Cadre of District Judge for Trial and Disposal of Commercial Disputes at Hyderabad on 24.01.2025 on an Application made by the respondents under section 9 of The Arbitration and Conciliation Act, 1996 (1996 Act) for interim measures.
2. The Trial Court passed an ex parte order and granted interim measures in respect of prayers (a) and (d) of the Application pending further hearing.
3. The Trial Court passed an order restraining the appellant from removing the equipment and machinery involved in the manufacture of the products for the respondents and also restrained the appellant from surrendering the Test License dated 11.07.2024 pertaining to its facility. The appellant (the respondent before the Trial Court) is before us.
4. Learned Senior Counsel appearing for the appellant complains that the impugned order was passed contrary to the law as stipulated not only under the 1996 Act but also under The Specific Relief Act, 1963 (1963 Act).
5. Counsel submits that the parties had entered into a second Agreement dated 15.11.2024 called the "Termination and Release Agreement to the Commercial Manufacturing and Supply Agreement dated 04.05.2023". Counsel places the relevant paragraphs of the section 9 petition of the 1996 Act to urge that the respondents have quantified the loss caused by the appellant's annulment of the contract at Rs.5 crores and that the effect of the ex parte order would be to compel the appellant to perform the Agreement.
6. Learned counsel appearing for the respondents, on whose Application the impugned order was passed, places the facts leading to the impugned order. Counsel submits that the respondents have already parted with Rs.3.8 crores + 20 lakhs in terms of the Agreements entered into with the appellant and that unless the appellant is restrained, the respondents would suffer serious prejudice.
7. We have considered the submissions made on behalf of the parties in the context of the impugned order dated 24.01.2025.
8. Admittedly, the order was passed ex parte without hearing the appellant. It is clear from the effect of the impugned order that the appellant would be compelled to continue with the terminated Agreement since the appellant has been restrained from surrendering the License pertaining to the Agreement with the respondent No.1 and also from removing the respondent No.1's machinery and equipment from the site.
9. Prima facie, it is clear that the Agreement dated 04.05.2023 was determinable in nature as reinforced by the second Agreement dated 15.11.2024. This would hence attract section 14(d) of the 1963 Act which stipulates that determinable contracts cannot be specifically enforced. Further, the respondents' quantification of damages/loss amounting to Rs.5 crores would fall under section 38(3)(c) of the 1963 Act where a Court should hesitate in granting an injunction in favour of a party who claims damages in respect of section 38(3)(c) of the 1963 Act which contemplates grant of perpetual injunction where money would not afford adequate relief. Section 9 of the 1996 Act calls for interim measures for the purpose of the preservation of the subject matter of arbitration.
10. The impugned order in the present case does not satisfy the terms on which the Court may pass an interim relief in favour of one party in the absence of the other.
11. In view of the reasons stated above, we are constrained to set aside the impugned order dated 24.01.2025. We however permit the appellant to file its counter and an appropriate application before the Court to hear the matter prior to the scheduled date. The Court shall consider the matter on the completed pleadings and pass orders within a reasonable period of time.
12. It is made clear that none of the parties shall take any steps before the Court adjudicates and passes orders, so as to make the section 9 petition of the 1996 Act or the present Appeal, infructuous. It is also made clear that the restraint on the appellant shall be restricted only to the Agreements entered into with the respondents.
13. On the specific prayer made on behalf of the appellant, the Trial Court shall take up the matter for hearing as soon as the appellant files its advancement petition. It is made clear that we have not expressed any opinion on the merits of the matter. The Trial Court shall hear the matter afresh.
14. COMCA.NO.5 of 2025, along with all connected applications, is accordingly disposed of.
Interim orders, if any, shall stand vacated. There shall be no order as to costs.
__________________________________ MOUSHUMI BHATTACHARYA, J ______________________________________________ MADHUSUDHAN RAO BOBBILI RAMAIAH, J Date: 31.01.2025 NDS