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OMP (I) (COMM.) 55/2015

Simplex Infrastructure Ltd. v. Energo Engineering Projects Ltd.

2017 SCC OnLine Del 9122

In the High Court of Delhi at New Delhi

(BEFORE S. MURALIDHAR AND SANJEEV SACHDEVA, JJ.)

Simplex Infrastructure Ltd. .…. Petitioner

Mr. Darpan Wadhwa, Senior Advocate with Mr. Ajay Bhargava, Mr. Jeevan B. Panda
and Ms. Chandni Anand, Advocates.
v.
Energo Engineering Projects Ltd. & Anr. .…. Respondents
Ms. Reena Choudhary, Advocate.
OMP (I) (COMM.) 55/2015
Decided on July 14, 2017
Arbitration — Arbitration and Conciliation Act, 1996 — S. 9 — Review — Held that Division
Bench lacked jurisdiction to entertain application under Section 9 — Such application by
virtue of Section 3(1) read with Section 10(2) of Commercial Courts Act had to be heard
first by learned Single Judge of this Court — Review petition allowed and disposed of
accordingly — Paras 18 to 21
ORDER
S. MURALIDHAR, J.
Review Petition No. 81/2016
1. This is a review petition filed by the Applicant/Petitioner, Simplex Infrastructure
Limited, seeking review of the order dated 10th December 2015 passed by this Court in
OMP (I) (Comm) No. 55 of 2015.
2. The background to this review application is that the Petitioner filed the
aforementioned petition under Section 9 of the Arbitration & Conciliation Act, 1996
(‘A&C Act’) seeking certain interim reliefs against Respondent No. 1, Energo
Engineering Projects Limited. However, the said petition was dismissed on 10th
December 2015 on merits holding that there is no valid arbitration agreement between
the parties. In the said order it was held as under:
“Consequently, we are of the view that the said Clause 7 of the Deed of Joint
Undertaking is not an arbitration clause between the Petitioner and the Respondent
No. 1. As such, this petition under Section 9 of the Arbitration and Conciliation Act,
1996 is not maintainable. The same is dismissed. The Petitioner is at liberty to take
recourse to other proceedings to which it may be entitled in accordance with law.”
3. The ground on which the review is sought in the said order is that at the time
when the Court passed the said order it did not have jurisdiction to entertain and hear
the petition under Section 9 of the A&C Act. Therefore, there is an error apparent on
the face of record.
4. Mr. Darpan Wadhwa, learned Senior counsel appearing for the Review Petitioner
explains that the said petition under Section 9 of the A&C Act was filed on 7th
December 2015, after the promulgation on 23rd October 2015 of the Commercial
Courts, Commercial Division and Commercial Appellate Division of High Courts
Ordinance 2015 (‘2015 Ordinance’). The 2015 Ordinance provided for constitution of
Commercial Courts, Commercial Division and Commercial Appellate Division for
dealing with commercial dispute of a specified value. The cases arising under the A&C
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Act were also covered by the 2015 Ordinance.

5. Under Section 10 (2) of the 2015 Ordinance it was mandated that all applications
or appeals arising out of such arbitration under the provisions of A&C Act, and “that
have been filed on the original side of the High Court, shall be heard and disposed of
by the Commercial Appellate Division where such Commercial Appellate Division has
been constituted in such High Court.” In view of the above provision, the Review
Petitioner's petition under Section 9 of the A&C Act was placed for hearing before the
Division Bench (‘DB’) of this Court which ultimately passed the order dated 10th
December 2015 which is sought to be reviewed.
6. Mr. Wadhwa states that on 30th December 2015 another DB of this Court passed
an order in OMP (Comm) No. 1 of 2015 (Roger Shashoua v. Mukesh Sharma)
observing that there was inherent inconsistency in the reading of Section 10 (2) of the
2015 Ordinance inasmuch as it took away the statutory right of filing an appeal under
Section 37 of the A&C Act.
7. Thereafter a DB of this Court on 10th December 2015, which incidentally is the
same date on which the order under review was passed, rendered a judgment in OMP
(Comm) No. 16 of 2015 (Ascot Estates Pvt. Ltd. v. Bon Vivant Life Style Limited)
holding that all applications under the A&C Act of a specified value have to be
adjudicated by a learned Single, i.e. Commercial Division of this Court and not the
Commercial Appellate Division, i.e., DB of this Court.
8. On 31st December 2015 the Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred to as the
‘Commercial Courts Act’) was enacted replacing the 2015 Ordinance. Section 10 (2) of
the Commercial Courts Act reads as under:
“10. Where the subject matter of an arbitration is a commercial dispute of a
Specified Value and-
(1) …
(2) If such arbitration is other than an international commercial arbitration, all
applications or appeals arising out of such arbitration under the provisions of
the Arbitration and Conciliation Act, 1996 that have been filed on the original
side of the High Court, shall be heard and disposed of by the Commercial
Division where such Commercial Division has been constituted in such High
Court.”
9. Consequently, under Section 10 (2) of the Act of the Commercial Courts Act, all
applications under Section 9 of the A&C Act are to be heard by a learned Single Judge,
i.e., the Commercial Division and not by the DB i.e. the Commercial Appellate Division.
Further, the Commercial Courts Act was retrospective with effect from 23rd October
2015, i.e., the date on which the 2015 Ordinance was promulgated.
10. Mr. Wadhwa accordingly submitted that the effect of Commercial Courts Act
read with Section 13 thereof is that from 23rd October 2015 itself the DB of this Court
lacked the jurisdiction to directly entertain an application under Section 9 of the A&C
Act. Such an application had to be placed first before a learned Single Judge of this
Court. Mr. Wadhwa submitted that under Section 23 (2) of the Commercial Courts Act
anything done or any action taken under the 2015 Ordinance shall be deemed to have
been done or taken under the “Commercial Courts Act”. However, that did not apply to
judicial orders passed under the 2015 Ordinance by a Court which lacked jurisdiction
to pass such an order. Mr. Wadhwa referred to the decision in Raja Shatrunji v.
Mohammad Azmat Azim Khan (1971) 2 SCC 200 which was followed in VIP Industries
v. Commissioner of Customs & Central Excise, Aurangabad (2003) 5 SCC 507.
11. Mr. Wadhwa further submitted that subsequent interpretation of law affecting
the jurisdiction of this Court would constitute a valid ground for review under Order
XLVII Rule 1 of the Code of Civil Procedure 1908 (‘CPC’). Reliance was placed in
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support of this proposition on the decision in Union of India v. Sube Ram (1997) 9
SCC 69. Mr. Wadhwa pointed out that although the Petitioner in the first instance did
not raise a ground objecting the jurisdiction of the Court which heard the matter on
10th December 2015, the Petitioner could not precluded from raising such a ground
regarding lack of jurisdiction at any stage. He placed reliance on the decision in Zuari
Cement Limited v. Regional Director, Employees' State Insurance Corporation,
Hyderabad (2015) 7 SCC 690.
12. Resisting the above submissions, Ms. Reena Choudhary, learned counsel for the
Respondent/non-Applicant first submitted that under Section 23 (2) of the
Commercial Courts Act anything contained or any action taken under the 2015
Ordinance “shall be deemed to have been done or taken under the corresponding
provisions” of the Commercial Courts Act. Therefore, she submitted that the order
dated 10th December 2015 should be taken to have been validly passed under the
Commercial Courts Act itself.
13. Additionally, Ms. Choudhary referred to Section 6 of the General Clauses Act,
1897 which saved an action taken under a previous enactment even after the
amended statute become operative. Reliance was placed on the decisions in
Bishambhar Nath Kohli v. State of Utter Pradesh AIR 1966 SC 573 and Gurdit Singh v.
State of Punjab (1974) 2 SCC 260.
14. Learned counsel for the Respondent/non-Applicant additionally pointed out that
in any event the prayer in the main petition under Section 9 of the A&C Act by the
Petitioner had been rendered infructuous. The Petitioner has been seeking to restrain
the Respondent from encashing the bank guarantee (‘BG’). The said BG had already
been encashed. She submitted that in any event there was no arbitration agreement
between the parties and therefore, the application Section 9 of the A&C Act was itself
was not maintainable.
15. In reply to the last submission, Mr. Wadhwa submitted that the observation of
this Court that there was no arbitration agreement between the parties was prejudicial
to the Petitioner and therefore, notwithstanding the fact that the BG may have been
encashed, the Petitioner is keen on demonstrating there is an arbitration agreement
between the parties.
16. The above submissions have been considered. Mr. Wadhwa is right in his
submissions that the declaration of law by the DB of this Court in Ascot Estates Pvt.
Ltd. v. Bon Vivant Life Style Limited (supra) that the application under the A&C Act
had to be heard in the first instance only by a learned Single Judge of this Court
meant that this was the position of law from the very beginning, i.e., 23rd October
2015. Section 1 (3) of the Commercial Courts Act makes it plain that the date of
coming into force of the Commercial Courts Act is deemed to be 23rd October 2015,
i.e., the date on which the 2015 Ordinance was promulgated. Under Section 23 (2) of
the Commercial Courts Act, what is saved is “anything done or any action taken”
under the 2015 Ordinance. This obviously cannot include a judgment or order
rendered by this Court which lacks jurisdiction to deal with such matters.
17.1 In Raja Shatrunji v. Mohammad Azmat Azim Khan (supra) the Supreme Court
explained that Amendment Act, 1961 by which the U.P. Zamindar's Debt Reduction
Act, 1952 was amended, was meant to have effect as if the Amendment Act had been
in force from the beginning. In that case, the suit filed by the creditor was decreed
under the UP Encumbered Estates Act, 1934.
17.2 The Judgement Debtor's legal representative applied for deduction of decretal
amount under the U.P. Zamindar's' Debt Reduction Act, 1952. This was rejected by a
Special Judge holding that until the decree charged the mortgaged property no
reduction of debt could be ordered under the U.P. Zamindar's' Debt Reduction Act,
1952. This order of the Special Judge was upheld by a Full Bench of the High Court.
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17.3 Shortly, thereafter an amendment to the U.P. Zamindar's' Reduction
(Amendment) Act was passed and it received the assent of the President on 27th
November 1962 which happened to be the date on which the High Court dismissed the
revision petition. An amendment was published in the Gazette on 4th December 1962
and came into force on that date. The JD filed an application seeking review of the
order of the Full Bench. This review petition was allowed and the order of the Special
Judge rejecting the JD's application was set aside.
17.4 The creditor went in appeal before the Supreme Court. One of the questions
was whether Section 4 of the U.P. Zamindar's' Debt Reduction Act, 1952 could have
been invoked by the JD. It is in this context that the Supreme Court held that an
amendment was deemed to have been given effect from the very beginning of the Act.
The Supreme Court explained that this is not instance of subsequent change of law. It
is the law which all along was there from 1952. It observed: “The legal position is fully
effective and operative as from May 25, 1953 when the 1952 Act came into force.” The
Court explained that the failure by the Special Judge to exercise jurisdiction was an
“error on the fact of the record.”
18. Applying the aforesaid decision to the present case, it has to be held that the
DB of this Court lacked jurisdiction to entertain the application under Section 9 of the
A&C Act. Such an application under the A&C Act had, by virtue of Section 3 (1) read
with Section 10 (2) of the Commercial Courts Act had to be heard first by a learned
Single Judge of this Court.
19. The decision in Bishambhar Nath Kohli v. State of Utter Pradesh (supra) turned
on its own facts. It did not involve passing of an order by a Court which lacked
inherent jurisdiction. There was no question of a judicial order being saved by a repeal
and savings clause of the statute. Likewise Gurdit Singh v. State of Punjab (supra)
involved an order passed by the Collector. It was not by a Court which lacked
jurisdiction to entertain the petition.
20. Consequently, the Court is satisfied that when the DB passed the order dated
10th December 2015 in the Petitioner's application under Section 9 of the A&C Act it
lacked the jurisdiction to entertain such an application.
21. The review petition is allowed and the order dated 10th December 2015 passed
by this Court in OMP (I) (Comm) No. 55 of 2015 is recalled and reviewed. OMP (I)
(Comm) No. 55 of 2015 is restored to file. The review petition is disposed of in the
above terms.
IA No. 2182/2016 (for delay)
22. For the reasons stated therein, this application is allowed. The delay of 29 days
in filing the review petition is condoned.
OMP (I) (COMM) 55/2015
23. List before the Roster Bench on 1st August 2017, subject to the orders of the
Hon'ble the Judge-in-Charge (Original Side).
———
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