M/S Carnival Facility Services Private Limited v M/S Heera Life Style Private Limited

1 OP(C) No.2564 of 2022 ## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR.JUSTICE C.S.DIAS ``` ``` TUESDAY, THE 17[TH] DAY OF JANUARY 2023 / 27TH POUSHA, 1944 OP(C) NO. 2564 OF 2022 ``` ``` AGAINST THE ORDER IN IA 1/2022 IN CMA(Arb) 533/2022 OF THE COMMERCIAL COURT/III ADDITIONAL SUB COURT, ERNAKULAM ``` ## **`PETITIONER/PETITIONER:`** ``` M/S. CARNIVAL FACILITY SERVICES PRIVATE LIMITED REGISTERED OFFICE AT FM -18 , MANASAROVARCOMPLEX,7 NO STOP, SHIVAJI NAGAR, BHOPAL, MADHYA PRADESH- 462 016, REPRESENTED BY ITS DIRECTOR, SHRI.MANOJNAIR , AGED 55YEARS,S/O KUNNATHRAMAN MENON, RESIDING AT DOOR NO VI 342 A -11, FLAT NO.C3 , DOCTORS DIAMOND HILL,SNDP JUNCTION. P.O., PARAKKADAVU,ERNAKULAM, PIN - 683572 BY ADVS. RAMEEZ NOOH MILLU DANDAPANI THOMAS C.ABRAHAM FATHIMA K. RONIT ZACHARIAH ``` ## **`RESPONDENT/RESPONDENT:`** ``` M/S HEERA LIFE STYLE PRIVATE LIMITED HAVING REGISTERED OFFICE AT HEERA PARK, M.P APPANROAD ,VAZHUTHACAUD P.O, THIRUVANANTHAPURAM. REPRESENTED BY ITS MANAGING DIRECTOR, SRI ABDUL RASHEED., PIN - 695014 BY ADV HARIKRISHNAN S. ``` ``` THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 17.01.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` 2 OP(C) No.2564 of 2022 ## **C.S DIAS, J.** **--------------------------OP(C) No.2564 of 2022 ----------------------------Dated this the 17[th] day of January, 2023.** ## **JUDGMENT** Aggrieved by Ext P5 order passed in IA No.1/2022 in CMA (Arb) No.533/2022 by the Commercial Court, Ernakulam, the respondent in the said petition has filed the original petition. The respondent in this original petition is the petitioner before the Commercial Court. 2. The concise case of the petitioner in this original petition, leading to Ext P5 order, is that, the respondent has filed CMA (Arb) No.533/2022(Ext.P1) under Sec.9 of the Arbitration and Conciliation Act, 1996 ( in short, ‘Act’), inter-alia, to attach the immovable property of the petitioner. The petitioner entered appearance in the above petition and filed IA No.1/2022 (Ext P3), inter alia, contending that the Commercial Court has no territorial jurisdiction to entertain the petition because as per Ext P2 agreement the seat of arbitration is in Mumbai. The respondent opposed 3 OP(C) No.2564 of 2022 Ext.P3 application through Ext P4 written objection. The Commercial Court, by Ext P5 order, rejected Ext P3 application and has held it has jurisdiction to entertain the petition. Even though the petitioner challenged Ext P5 order before the Commercial Appellate Court, by filing Arbitration Appeal No.3/2022, the appeal was dismissed by Ext.P6 judgment, on the finding that Ext.P5 is only an interim order and not one passed under Sec.9 of the Act. Ext P5 order is palpably wrong, erroneous and unsustainable in law. Hence, the original petition 3. Heard; Sri.Millu Dandapani, the learned Counsel appearing for the petitioner and Sri.S Sreekumar, the learned Senior Counsel appearing for the respondent. 4. The respondent has filed Ext P1 petition under Sec.9 of the Act, inter alia, to attach the property belonging to the petitioner scheduled in the petition. 5. The petitioner appeared and filed Ext P3 application to hear the maintainability of Ext.P1 4 OP(C) No.2564 of 2022 petition on the ground that the Commercial Court has no territorial jurisdiction to entertain Ext P1 in view of clause 22 in Ext P2 agreement, wherein the seat of arbitration is agreed as Mumbai. 6. The Commercial Court passed a conditional order of attachment and issued notice to the petitioner. The Commercial Court, without considering Ext P1 petition, went on to consider Ext P3 application and has rendered Ext P5 order holding that it has the territorial jurisdiction to entertain Ext P1 petition. 7. The question is, is the procedure adopted by the Commercial Court correct or not? 8. Sec.9 of the Arbitration and Conciliation Act, 1996, reads as follows: “9. Interim measures, etc. by Court.—(1) A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court— (i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or (ii) for an interim measure of protection in respect of any of the following matters, namely:— (a) the preservation, interim custody or sale of any goods which are the subjectmatter of the arbitration agreement; (b) securing the amount in dispute in the arbitration; 5 OP(C) No.2564 of 2022 (c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; (d) interim injunction or the appointment of a receiver; (e) such other interim measure of protection as may appear to the court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it. (2) Where, before the commencement of the arbitral proceedings, a Court passes an order for any interim measure of protection under sub-section (1), the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the Court may determine. (3) Once the arbitral tribunal has been constituted, the Court shall not entertain an application under sub-section (1), unless the Court finds that circumstances exist which may not render the remedy provided under Sec.17 efficacious”. 9. A reading of the above quoted provision demonstrates that the power is conferred on the designated Courts to pass an order for interim measures as enumerated above, before, during and before the enforcement of the arbitral award for a period of 90 days or such other extended time period as determined by the Court. 10. In the case on hand, the respondent has sought an order of attachment of the petitioner’s property as an 6 OP(C) No.2564 of 2022 interim measure, and a conditional order of attachment was passed by Commercial Court on the date of filing of Ext.P1 petition itself. 11. On receipt of summons, the petitioner appeared before the Commercial Court and filed Ext P3 application, challenging the maintainability of Ext.P1 petition. The petitioner’s contention is that the Commercial Court does not have the territorial jurisdiction to entertain Ext P1 petition, in view of clause 22 in Ext P2 agreement, wherein the seat of arbitration is fixed in Mumbai. Nonetheless, the petitioner has not filed a counter affidavit to Ext.P1 petition. 12. Undisputedly, Ext P1 petition is still pending consideration. 13. On an analysis of the holistic scheme and the working of the Act, I find the course adopted by the court below is incorrect, wrong and irregular. I say this because the present course has left the petitioner high and dry, and remediless. If the Commercial Court felt it has the jurisdiction to consider Ext.P1 petition, it ought 7 OP(C) No.2564 of 2022 to have disposed of Ext.P1 petition itself, rather than only considering the preliminary issue of territorial jurisdiction and then adjourning Ext.P1 petition for further consideration. If the above course is followed, the parties will lose their indefeasible right to challenge an order passed under Section 9 of the Act by filing an appeal under Section 37 of the Act. The Act does not contemplate the disposal of Section 9 petition on a piece meal basis, especially when the order is to be passed for only interim measures that too with an outer validity period of ninety days. 14. In the above conspectus, I hold that there is an infraction of the scheme of the Act and the original petition falls within the category of cases of exceptional rarity as laid down in **Bhavan Constructions v. Sardar Sarovar Narmada Nigam Ltd** [(2022) 1 SCC 75] and **Deep Industries Ltd v. Oil and Natural Gas Corporation Ltd and another** [(2020) 15 SCC 706]. 15. The irregular and improper course adopted by the court below has definitely prejudiced the petitioner. 8 OP(C) No.2564 of 2022 Hence, I am inclined to interfere with the impugned Ext.P5 order by invoking the power of superintendence of this Court under Article 227 of the Constitution of India. Consequently, the Commercial Court is to be directed to take a final call on CMA (Arb) No.533/2022 itself. In the result, I allow the original petition in the following manner: - (i) Ext P5 order is set aside. (ii) The ad-interim order passed by the Commercial Court shall remain intact. (iii) The Commercial Court, Ernakulam, shall consider and dispose of CMA No.533/2022, in accordance with law, as expeditiously as possible, at any rate, within a period of one month, regardless of the fact the petitioner files his written objection to Ext.P1 petition. (iv) Ext P6 judgment passed by the Commercial Appellate Court will not stand in the way of the aggrieved party, if so advised, challenging the order 9 OP(C) No.2564 of 2022 to be passed in Ext.P1 petition under Sec.37 of the Act. - (v) The Commercial Court shall bear in mind the scope and purport of Sec.9 of the Act, while disposing Ext.P1 petition. Sks/17.1.2023 **Sd/- C.S.DIAS, JUDGE** 10 OP(C) No.2564 of 2022 ## **`APPENDIX OF OP(C) 2564/2022`** ``` PETITIONER EXHIBITS Exhibit- P1TRUE COPY OF THE SECTION 9 APPLICATION VIZ. CMA (ARB) NO. 533/2022 FILED BY THE RESPONDENT BEFORE THE HON'BLE COMMERCIAL COURT & 3RD ADDITIONAL SUB JUDGE, ERNAKULAM. Exhibit -P2TRUE COPY OF THE AGREEMENT DTD. 02.03.2018 ENTERED INTO BETWEEN THE PETITIONER AND THE RESPONDENT. Exhibit-P3TRUE COPY OF THE I.A NO. 1/2022 IN CMA (ARB) NO. 533/2022DTD. 19.05.2022 FILED BY THE PETITIONER BEFORE THE HON'BLE COMMERCIAL COURT & 3RD ADDITIONAL SUB JUDGE, ERNAKULAM. Exhibit-P4TRUE COPY OF THE OBJECTION DTD. 14.06.2022 FILED BY THE RESPONDENT IN I.A NO. 1/2022 IN CMA (ARB) NO. 533/2022 DTD. 19.05.2022 BEFORE THE HON'BLE COMMERCIAL COURT & 3RD ADDITIONAL SUB JUDGE, ERNAKULAM. Exhibit-P5CERTIFIED COPY OF THE ORDER DTD. 19.08.2022 IN I.A NO. 1/2022 IN CMA (ARB) NO. 533/2022 PASSED BY THE HON'BLE COMMERCIAL COURT & 3RD ADDITIONAL SUB JUDGE, ERNAKULAM. Exhibit-P6TRUE COPY OF THE JUDGMENT DTD. 16.11.2022 PASSED BY THE HON'BLE DISTRICT & SESSIONS COURT, ERNAKULAM IN ARBITRATION APPEAL NO. 3/2022. ```