High Court of KeralaSingle Judge2020-10-06Original Petition dismissed

KAIRALI AVIATION PVT. LTD. and KAIRALI AVIATION, AERONAUTICAL ENGINEERING PVT. LTD. v. COCHIN INTERNATIONAL AIRPORT LTD. and COCHIN INTERNATIONAL AVIATION SERVICES LTD. (OP(C) No.961 of 2020)

Case / Petition Number:OP(C) No.961 of 2020

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: The Hon. Mr. Justice Ashok Menon
Judgment Date: 2020-10-06
Court Decision / Holding: The Original Petition fails and is, accordingly, dismissed.
Final Disposition: Original Petition dismissed

Parties to the Case

Appellants / Petitioners

M/S KAIRALI AVIATION PVT. LTD.
M/S KAIRALI AVIATION, AERONAUTICAL ENGINEERING PVT. LTD.

Respondents

M/S COCHIN INTERNATIONAL AIRPORT LTD
M/S COCHIN INTERNATIONAL AVIATION SERVICES LTD.

Legal Representation & Advocates

Counsels for Petitioners

• Dr. S. Gopakumaran Nair (Sr.)
• Sri S. Santhosh Kumar
• Smt. Anjana S. Santhosh

Counsels for Respondents

• M. Gopikrishnan Nambiar
• K. John Mathai
• Joson Manavalalan
• Kuryan Thomas
• Paulose C. Abraham
• Raja Kannan

Case Synopsis & Summary

This is an intra-court challenge in the Kerala High Court by the applicants KAIRALI Aviation Pvt. Ltd. and KAIRALI Aviation, Aeronautical Engineering Pvt. Ltd. (petitioners in OP C 961/2020) to an order transferring Arbitration OP 498/2016 from the Second Additional District Court, Ernakulam to the Commercial Court, Ernakulam, and renumbering the matter as OS 118/2020. The underlying dispute relates to a 2009 agreement for setting up and running an Aircraft Maintenance Engineering Institute; the sole arbitrator, Justice K. Sukumaran, awarded Rs 13,39,24,004 with future interest for breach of contract, while the respondents’ counter-claim was dismissed. The arbitration petition under Section 34 of the Arbitration Act was heard through 2019 and 2020, but on 26 May 2020 the matter was transferred to the designated Commercial Court after Kerala government notifications designated Commercial Courts under the Commercial Courts Act, 2015. The petitioners contend that the transfer was improper since by the notification date the Commercial Court had not started functioning, and that Section 15(2) of the Act bars transfer when final judgments are reserved. The respondents argue that once the Commercial Court is constituted, the original court loses jurisdiction and the case must be transferred. The court, led by Justice Ashok Menon, ultimately dismisses the petition, holding that the transfer to the Commercial Court was proper and within the statute. The petition is therefore dismissed.

Provisions of Law Cited

Arbitration and Conciliation Act, 1996, Section 34Commercial Courts Act, 2015, Section 3(1)Commercial Courts Act, 2015, Section 15(2)Commercial Courts Act, 2015, proviso to Section 15(2)Constitution of India, Article 227Narcotic Drugs and Psychotropic Substances Act, 1985, Section 36A(1)(a)Narcotic Drugs and Psychotropic Substances Act, 1985, Section 36D

Legal Doctrines & Maxims

Non-obstante clause
Transitional provision

Submissions & Arguments

Contentions of Appellants / Petitioners

The applicants contend that Ext P5 transferring Arbitration OP 498/2016 to the Commercial Court is improper because no Commercial Court had begun functioning in Kerala as of 05 Mar 2020, and the final judgment had not been reserved prior to the constitution of the Commercial Court; under Section 15(2) and the proviso, matters with reserved judgments should not be transferred. They argue that the district court retains jurisdiction until the Commercial Court actually commences functioning; they rely on a Supreme Court decision regarding the formation of a Special Court when a court has already taken cognizance, to urge Article 227 jurisdiction to intervene and call back the records; they also challenge Ext P6 notification on the grounds that it did not guarantee immediate functioning. They seek to call back records from the Commercial Court and have the District Court render final judgment. The petitioners emphasize due process and statutory constraints under the Arbitration Act and the Commercial Courts Act.

Contentions of Respondents

The respondents maintain that once the Commercial Court notification came into effect, the designated Commercial Court acquired jurisdiction and the District Court loses jurisdiction. They rely on Section 3(1) and Section 15(2) of the Commercial Courts Act, including the proviso, to argue that suits and applications involving commercial disputes must be transferred to the Commercial Court and that the judgment was not reserved before the Commercial Court’s constitution. They cite the Kerala Gazette notification Ext P6 as effective from 05 Mar 2020 and contend that the transfer was proper and the petition should be dismissed. They also rely on case law such as Munnalal Lacchiram for commencement principles and distinguish the Supreme Court decision cited by the petitioners as non-applicable to the present facts.

Cited Precedents (3)

Case Name	Citation	Treatment	Explanation
Supreme Court legal aid committee Representing Undertrial Prisoners v. Union of India and Others	1994 (6) SCC 731	Distinguished	The court finds that this decision is not applicable to the present case as it concerns the NDPS Act and transitional provisions, not the transfer of arbitration matters under the Commercial Courts Act.
Munnalal Lacchiram v. Manekchand	AIR (1950) Madhya Bharat 119	Positive	Argued by respondents to show commencement from the date of publication; the court discusses this concept to interpret Ext P6 and notes the date of commencement as 05.03.2020, applying the logic in the notification.
In Re Court	AIR 1924 Madras 257	Mentioned Only	Cited by respondents to support arguments about commencement rules, but not relied upon for the final decision.

Diagnostic Tool

Beta

Does this judgment govern your specific facts?

Don't risk relying on a distinguishable precedent. Enter your facts or proposition below. We will test it against KAIRALI AVIATION PVT. LTD. and KAIRALI AVIATION, AERONAUTICAL ENGINEERING PVT. LTD. v. COCHIN INTERNATIONAL AIRPORT LTD. and COCHIN INTERNATIONAL AVIATION SERVICES LTD. (OP(C) No.961 of 2020) and instantly map out authorities that support, challenge, or govern your position.

Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ASHOK MENON** ## **TUESDAY, THE 06TH DAY OF OCTOBER 2020 / 14TH ASWINA, 1942** ## **OP(C).No.961 OF 2020** **AGAINST ORDER DATED 26.5.2020 IN OP(ARB)NO.498/2016 OF THE II ADDITIONAL DISTRICT COURT, ERNAKULAM RENUMBERED AS OS 118/2020 ON THE FILE OF COMMERCIAL COURT (PRINCIPAL SUB COURT,ERNAKULAM)** ## **- PETITIONERS/RESPONDENTS CLAIMANTS:** **1 M/S. KAIRALI AVIATION PVT. LTD., REGISTERED OFFICE AT 55, 2ND FLOOR, ABOVE NILGIRIS, KAMAANNAHALLI MAIN ROAD, ST. THOMAS TOWN POST, BANGALORE-560084, REPRESENTED BY ITS DIRECTOR RTD. COL. K.R. SASIKUMAR. 2 M/S. KAIRALI AVIATION, AERONAUTICAL ENGINEERING PVT. LTD., GEETHA BHAVAN, SHANTHAPURAM P.O., KALARCODE, ALAPPUZHA-686003, REPRESENTED BY ITS DIRECTOR, K. BALACHANDRAN NAIR.** **BY ADVS. DR.S.GOPAKUMARAN NAIR (SR.) SRI.S.SANTHOSH KUMAR SMT.ANJANA.S.SANTHOSH** ## **- RESPONDENTS/PETITIONERS RESPONDENTS:** - **1 M/S. COCHIN INTERNATIONAL AIRPORT LTD,, KOCHI AIRPORT P.O., ERNAKULAM-683111, REPRESENTED BY ITS CHIEF FINANCIAL OFFICER AND AUTHORIZED SIGNATORY SUNIL CHACKO.** **2 COCHIN INTERNATIONAL AVIATION SERVICES LTD., COCHIN INTERNATIONAL AIRPORT, KOCHI AIRPORT P.O., ERNAKULAM-683111, REPRESENTED BY ITS MANAGING DIRECTOR IN CHARGE A C K NAIR.** **R1-2 BY ADV. SRI.M.GOPIKRISHNAN NAMBIAR R1-2 BY ADV. SRI.K.JOHN MATHAI R1-2 BY ADV. SRI.JOSON MANAVALAN R1-2 BY ADV. SRI.KURYAN THOMAS R1-2 BY ADV. SRI.PAULOSE C. ABRAHAM R1-2 BY ADV. SRI.RAJA KANNAN** **THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 29-06-2020, THE COURT ON 06-10-2020 DELIVERED THE FOLLOWING:** OP(C) 961/2020 2 ## **ASHOK MENON, J. -----------------------------------OP(C) No.961 of 2020** ------------------------------------- **Dated this the 6[th] day of October, 2020** ## **J U D G M E N T** The petitioners herein are the respondents in OP (ARB) No.498/2016 before the Second Additional District Court, Ernakulam filed under Section 34 of the Arbitration and Conciliation Act, 1996 filed by the respondents herein. The petitioners were claimants before the sole Arbitrator, Justice K.Sukumaran, former Judge of the Kerala and Bombay High Courts. A dispute had arisen with regard to an agreement between the petitioners and the respondents which was entered into between them on 12.03.2009 with regard to setting up and running an Aircraft Maintenance Engineering (AME) Institute. The sole Arbitrator passed an award on 21.03.2016 awarding a total compensation of 13,39,24,004/- with future interest on the basis₹ that the respondents had committed a breach of contract. The counter claim preferred by the respondents was dismissed. The respondents challenged the award by filing the aforesaid petition at Ext.P1 before the District Court, Ernakulam on 19.05.2016 under Section 34 of the Arbitration and Conciliation Act. The petitioners had filed an objection to the aforesaid Arbitration OP which is, Ext.P2. After the entire proceedings were over, oral arguments OP(C) 961/2020 3 commenced on 19.06.2019 which continued on various dates and concluded on 26.11.2019. Written argument notes were also filed by both sides. The respondents sought adjournment for further hearing and the Arbitration OP was posted on several dates till 18.02.2020. The 2[nd] petitioner herein approached this Court by filing OP(C) No.540/2020 seeking a time bound disposal and vide judgement dated 25/02/2020 this Court directed the learned District Judge to dispose the Arbitration OP within 2 months, vide Ext. P3 judgment. After further hearing on several dates, the case was ultimately posted for the judgement on 28.03.2020 as can be seen from Ext.P4. Following the lockdown declared due to the pandemic COVID 19, the Arbitration OP was notified for judgement on 21.05.2020. Thereafter, the matter was posted on 26[th] May 2020, and on that day orders were passed for transferring the Arbitration OP No.498/2016 to the Designated Commercial Court (Principal Sub Court), Ernakulam, vide Ext.P5. 2. In the opinion of the Additional District Court, the Kerala Government had vide notification dated 24.02.2020 published in the Kerala Gazette (extraordinary) dated 05.03.2020 designated the Principal Sub Court, Ernakulam as the Commercial Court having jurisdiction over the commercial matters within the District of Ernakulam in terms of the provision of Section 15(2) of the Commercial Courts Act, 2015. Accordingly, the case was renumbered as OS No.118/2020 and stands posted to 02.07.2020. 3. According to the petitioners, the transfer of the OP(C) 961/2020 4 Arbitration OP to the Commercial Court in accordance with Ext.P6, SRO No.175/2020, is improper and irregular. It is stated that though the Government had by notification constituted the Subordinate Courts in the 14 Districts of the State as Commercial Courts, on the date of publication of the notification, i.e. on 05.03.2020, no Commercial Court started actual functioning in the State to exercise jurisdiction and powers of the Commercial Courts. According to the petitioners, in view of the clear stipulation in sub-Section (2) to Section 15 of the Commercial Courts Act, any suit or application where the final judgement has been reserved, shall not be transferred to the Commercial Courts. There is no legal necessity in the instant case for transferring the case of the Commercial Court. Even after the coming of the Gazette notification constituting a Commercial Court, when a matter is taken up for judgement, the District Court does not lose jurisdiction. Hence, the impugned order at Ext.P5 is not justified. 4. Aggrieved by that order of transfer, the petitioners have approached this Court seeking to exercise its jurisdiction under Article 227 of the Constitution to set aside Ext.P5 order and to direct the Second Additional District Judge to pass a final judgement in OP(ARB) No.498/2016 after calling back the records from the Commercial Court, Ernakulam. 5. Heard the learned counsel appearing for the petitioners and the learned counsel appearing for the respondents. Records perused. OP(C) 961/2020 5 6. Relying on the decision in _**Supreme Court legal aid committee Representing Undertrial Prisoners**_ v. _**Union of India and Others [1994 (6) SCC 731]**_ , the learned counsel appearing for the petitioners submits that the Constitution of a special Court is complete and effective only after the appointment of a Judge to man that Court. The Hon'ble Supreme Court was considering the jurisdiction of the Sessions Court which had taken cognisance of an offence committed under the NDPS Act, at a time when the Special Court for trial of cases under the said Act was not in existence. Such a case will not be required to be transferred to the Special Court subsequently constituted and the same would have to be heard and disposed of by the Court of Sessions. Clause (a) of sub-Section (1) of Section 36A provides for cases coming under the NDPS Act to be tried by the Special Court constituted for the area specified. The amendment was brought about on 29.05.1989. It is observed that the legislature was aware that there may be a time gap between the coming into force of the provisions contained in Sections 36 and 36A and the constitution of the Special Court for the concerned area. Relying on this finding of the Hon'ble Supreme Court, the learned counsel argues that once the District Court has heard the matter and reserved it for judgment, subsequent notification regarding constitution of a Commercial Court would not take away the jurisdiction of the District Court to pronounce judgement. 7. _Per contra,_ the respondents would contend that once OP(C) 961/2020 6 the notification regarding constitution of a Commercial Court comes into effect, the Court in which the matter was filed initially, loses jurisdiction and the matter should be transferred to the Commercial Court duly constituted under the provisions of the Commercial Courts Act, 2015. In the instant case, the Government of Kerala had in accordance with Section 3 (1) of the Commercial Courts Act, published Ext.P6 notification dated 24.02.2020 in the official Gazette on 05.03.2020. Hence, the impugned order of the District Judge transferring the matter to the Commercial Court is not erroneous. The learned counsel for the respondents would rely on the decision in _**Munnalal Lacchiram**_ v. _**Manekchand [AIR (37) 1950 Madhya Bharat 119**_ ] to argue that when no date of commencement is mentioned in the Gazette notification regarding the date of commencement, it would deemed to have commenced from the date of publication. In the instant case, the date of Ext.P6 notification is on 24.02.2020 and it was published on 05.03.2020 and hence, it should be deemed to have come into effect from 05.03.2020. The learned counsel also relies on the decision of the Madras High Court reported in, _**In Re Court AIR 1924 Madras 257**_ in support of his argument regarding when the notification would come into effect. 8. The only question that arises for consideration in this OP(C) is whether the Second Additional District Court, Ernakulam loses its jurisdiction to pronounce judgement in the Arbitration OP after the constitution of the Commercial Court in accordance with OP(C) 961/2020 7 the notification at Ext.P6. 9. The relevant portion of Section 3 of the Commercial Courts Act reads thus:- “ (1A) Notwithstanding anything contained in this Act, the State Government may, after consultation with the concerned High Court, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary. (2) The State Government shall, after consultation with the concerned High Court specify, by notification, the local limits of the area to which the jurisdiction of a Commercial Court shall extend and may, from time to time, increase, reduce or alter such limits. (3) The State Government may, with the concurrence of the Chief Justice of the High Court appoint one or more persons having experience in dealing with commercial disputes to be the Judge or Judges, of a Commercial Court either at the level of District Judge or a Court below the level of a District Judge.” 10. From Ext.P4 history of case hearing of the District and Sessions Court, Ernakulam in the Arbitration OP, it is seen that the hearing got over only on 05.03.2020 and the matter was posted for judgement/order on 28.03.2020. 11. Going by the notification at Ext.P6, the Commercial Courts are deemed to have come into force on 05.03.2020. Hence, it was incumbent upon the District Court to have transferred the OP(C) 961/2020 8 matter to the Commercial Court on the day the Special Court came into existence. 12. Section 15 (2) of the Commercial Courts Act reads thus:- “ All suits and applications, including applications under the Arbitration and Conciliation Act, 1996 (26 of 1996), relating to a commercial dispute of a Specified Value pending in any Civil Court in any district or area in respect of which a Commercial Court has been constituted, shall be transferred to such Commercial Court: Provided that no suit or application where the final judgment has been reserved by the Court prior to the constitution of the Commercial Division or the Commercial Court shall be transferred either under sub-section (1) or sub-section (2).” 13. The decision relied upon by the learned counsel for the petitioners in _**Supreme Court legal aid committee, Representing Undertrial Prisoners**_ is not applicable to the case in hand because in that decision the Hon'ble Supreme Court refers to Section 36 A (1) (a) of the NDPS Act wherein there is a nonobstante clause and Section 36D deals with the transitional provision which states that any offence committed under the NDPS Act on or after the commencement of the NDPS (Amendment) Act, 1988, until a Special Court is constituted under Section 36, shall be tried by the Court of Session. In that case, cognizance was already taken by the Court of Session and therefore, there was no need for a transfer to the Special Court. An analogy cannot be drawn in the instant case based on the aforesaid decision. Section OP(C) 961/2020 9 15 which deals with the transfer of pending matters referred to above, specifically states that the suits and applications relating to commercial disputes of a specific value pending in any Civil Court shall be transferred to the Commercial Court which has been constituted for the district. The proviso to that further says that only those matters which has been reserved for final judgement by the Court _prior to the Constitution of the Commercial Court_ shall not be transferred. In the instant case the judgement was not reserved _prior to the Constitution of the Commercial Court_ but on the date the Commercial Court came into existence, and hence, there is no doubt that the matter ought to have been transferred. The argument of the learned counsel for the petitioners regarding posting of juge to man the court being essential, cannot be accepted. It is true that in certain other notifications relied upon by the learned counsel, the judges appointed to man the courts have been named. The notification of the Kerala Government does not name the judges, but have stated that the Principal Sub Judge's Court shall be the designated court. That would suffice. It cannot be said that the courts had no judges to man them. The petitioners have also not challenged Ext. P6 notification. I find there is nothing wrong in the impugned order of the learned District Judge at Ext.P5. The Original Petition fails and is, accordingly, dismissed. **Sd/ASHOK MENON JUDGE** jg OP(C) 961/2020 10 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1** **TRUE COPY OF APPLICATION DATED 185/05/2016 IN AOP 498/2016 OF 2ND ADDITIONAL DISTRICT COURT, ERNAKULAM.** **EXHIBIT P2** - **TRUE COPY OF OBJECTION DATED 26/09/2016 FILED IN OP(ARB) NO.498/2016 OF 2ND ADDITIONAL DISTRICT COURT, ERNAKULAM.** **EXHIBIT P3** - **TRUE COPY OF JUDGMENT DATED 25/02/2020 IN OP(C) 540/2020.** - **EXHIBIT P4 TRUE COPY OF HISTORY OF THE CASE HEARING IN OP(ARB) NO.498/2016 OF 2ND ADDITIONAL DISTRICT COURT, ERNAKULAM PRINTED FROM ECOURTS INDIA SERVICES.** - **EXHIBIT P5 TRUE COPY OF ORDER DATED 26/05/2020 PASSED BY THE 2ND ADDITIONAL DISTRICT COURT, ERNAKULAM IN OP(ARB) NO.498/2016.** **EXHIBIT P6** **TRUE COPY OF GO(MS) NO.51/2020/HOME DATED 24/02/2020 PUBLISHED IN KERALA GAZETTE (EXTRAORDINARY) NO.783 DATED 05/03/2020.**