M/S Laxmi Transmissions v. M/S Stelmec Ltd

132511

IN THE HIGH COURT FOR THE STATE OF TELANGANA

AT HYDERABAD MONDAY ,THE TWENTY THIRD DAY OF DECEMBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE K.SURENDER CIVIL REVISION PETITION NO | 3706 0F 2024 Petition filed under Article 227 of Constitution of lndia, agqrieved bv the Order and decree dated 14.08 2024 passed in t.A.No. ssg or i0)3-ii o.s ru": i'6t-zo:zs on the file of the Court of the I Additional District Judge, NizamabaO. - Between:

M/i. Laxmi Transmissions, $^ef bVits Managing partner V.Venugopal Reddy $/o V. Veera Reddy^Age 52 yrs,'Occ eusinels negisteieJ ofid;i ii;; rNo.6 New NGo's 'Coiony, Sloashnag-i -"oiony r.ri"=iraGJ, rltJ;g;;;_ . 503002 AND ...Revision petitioner 'l M/s. stelmec Ltd., Rep. by its Managing Director Hamza Arsiwara s/o Ismail Arsiwalarge 64 yrs, occ. Business,-co-rporate office. soolsoT, ss corpoiit" Avenue Sakhivahar Road, Andheri East, Mumbai-500072.

2. Hamza Harsiwara, s/o rsmair Arsiwara Age. 64 yrs, occ. Business, corporate 9ffice. 506/507, 55 Corporate AvenuS, Sakhivihar noaa, nnAneri-East, Mumbai-500072.

3 yjjey Kadhu, s/o not known Agq-lrqjol, Occ.Business O/o. Stelmec Ltd, Maheshwari Chambers 4th Ftoor;406 &'407, Somajiguoa, Hloeraui;. -- -*

...Respondents

IANO:1OF2 024 Petition under section 1 51 of cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to suspend the operation of the order dated 14_g_2o2i in l.A No.933/2023 in o.s.No 7t2023 dated 14-8-2024 on the fite of I Additionar District Judge, Nizamabad pending disposal of cMA in the interest of justice. Counsel for the Petitioner : Sri Venugopal Julakanti Counsel for Respondents : Sri S.K. Shabbeer Ahmed The Court made the following: ORDER i

THE HON'BLE SRI JUSTTCE K.SURENDER CTVIL REVISION PETITION No.37O6 of 2024 ORDER:

1. This Civil Revision Petition is hled by the petitioner/responclent/defendant No.3 against the orders in I.A.No.933 of 2023 in O.S.No.7 of 2023 dated 14.08.2024 passed by the I Additional District Judge, Nizamabad, wherein the petition hled under Section 8 of the Arbitration and Conciliation Act, 1996 (for short'ttre ActJ r/w Section 151 CPC seeking to refer the suit matter to Arbitrator was allowed.

2.

Briefly, the facts of the case are that summa-ry suit was frled for recovery of an amount of Rs.1,34,77,261 /- along with interest. The plaintills company was doing business in electrica-l installation and transmission lines. The plaintiff was providing technical and financial assistance to the defendant company in installation and transmission of lines.

3. The 2.d respondent/Defendant No.2 had approached ttre revls10n petitioner/plaintiff on behalf of the 1"t respondent company/defendant No.1 to hle tender works at Orissa Power Transmission Power Corporation Ltd (OPTCL) and requested the 1"t

defendant in frling bid for tenders at Orissa for technical and frnancialdocumentsforttrepurposeofqualifyingthetender.Inthe said process, the l"t defendant took assistance from plaintiff company and entered into memorand'um of understanding with defendant No.l company. As per the said MoU, tJle 1"t defendant company has to pay Rs.2,8O,OO,OOO/- inclusive of taxes and GST to the Revision Petitioner as royalty' At the time of securing tender' the 1"t defendant company issued post dated cheque vide cheque No.OO2619 drawn on Bank of Baroda, Bandra Branch for an amount of Rs.2,56,27 ,1|g /-. The l.t defendant company paid some of the amount in installments and an amount of Rs'65'42'36O1was due out of Rs.2,8O,OO,OOO/-' The 1"t d'efendant company issued several post dated cheques and frnally on 3O'09'2022 issued a cheque vide No.

OO2981 drawn on Bank of Baroda' Bandra Branch for an amount of Rs.65,45 ,360 l- and the said cheque got dishonoured as per tf-e instrucLions of respondents "pa5rment Stopped by the Drawer".

4.

The revision petitioner is the plaintiff in the suit OS No.7 of 2023 on the frle of I Additiona_l District Judge, Nizamabad. The defendants I an<l 2 filed petition under Section g of the Arbitration and conciliation Act r/w Section 151 cpc seeking to refer the suit matter to arbitrator and to dismiss the suit as not maintainable.

5. The said application under Section 8 of the Act was fiIed mainly on the ground that under clause 34 of the Agreement dated 3o.lo.2or7 ' it was specifically agreed that disputes sharl be subject to arbitration.

6. Learned District Judge passed the impugned order mainly on the basis of the clause No.34 in the Mou dated 30. lo.2olz and that the matter has to be referred to a-rbitration and not before the civil Court.

7.

Learned counsel appearing for the revision petitioner would submit that in view of clause 16, the plaintiff had liberty to frle civil suit.

8.

For the sake of convenience, clauses 16 and 34 are extracted hereunder:

" 16. In the euent SL faits to paA the RoAaltA Amount, Lanni agtees that there shalt be no criminal liabitity including u/s 138 r/ u't 14 of the Negotiable Instruments Act, 1881 to SL uith reference to the Seanri{g Cheque but this shall not preclude the right of Lanni to file a ciuit claim for the recouery of tle Rogaltg Amount-"

34. That in case of any di-spute or difference ari"sing betuteen tlrc Parties hereto or anA claim or thing herein contained or the construction tlrcreof or as to anA matter in ong tDdA connected u'tith or rrrising out of these presents or tlrc operotion thereof the rights' duties oi liabilities of either Portg th.ereof, then and in euery such utse the matter, differerrces and dispute slnll be decided mutuallg and in case tle sam.e is not decided as such will be essentiallg referred to a sole arbitrator in Mumbai being appointed/ nominated Ay Sl tn accordane rttith and subiect to tLLe prouisions of the irbitration and Conciliation Act, 1996, Rules there under and any other enactment or statutory modifications thereof for the time being in force.

Tle language of the Arbitration slr;,ll be English and the place of orbitrotion shatt be Mumbai. The decision of the arbitrator shall be final and binding upon both the Parties'" g. karned counsel submits that though there is an arbitration clause, however, plaintiff is not precluded from frling a civil suit. She relied on the judgment of the Hon'b1e Supreme court in the case of Venkataraman Krishnamurthy and another v' Lodha Crown Buildmart Private Limited t and argued that once the parties have committed themselves to a written agreement/contract, it would be binding on them. since two options a-re given, it is for the plaintiff to choose the option of frling a civil suit.

-.:*-V interpreted giving actual meaning and Court cannot come up with new contract terms, which are not mentioned in the clauses of agreement.

10. Learned counsel for the petitioner also relied on the judgment of the Hon'lcle Supreme Court in the case ol Emaar India Limited v. Tarun Aggarwal Projects LLP aad another2. The Honble Supreme Court u,hile dealing with a situation where there were two clauses one giving right to approach appropriate Court of law and the other arbitration clause, tJ:e Hon'ble Supreme Court held as follows:

'24. Applging t-he lau laid dotun by this Court in tle aforesaid decistons and ansideing Clauses 36 and 37 of tle ogreement and u-then a specif.c plea was taketl that the dispute falLs utithin Clause 36 and not und.er Clause 37 and therefore, the dApute A not arbitrable, the High Court ua,s at least required to lald a primary inquiry/ reuiew and pima facie come to utnclusion on uhetter the dispute folls under Clause 36 or not ond uhether the dtspute is arbitrable or not. Without holding such pimary inquiry and despite houing obserued that o partg d.oes houe a ight to seek enforcement of agreement before the @uft of laut as per Clause 36, thereafier, has appointed the arbitrators bg solelg obseruing thnt the sane does not bor selTlement of disputes tLvough tlrc Arbitration and Conciliation Act, 1996.

Hotueuer, tLe High Court ltas not appreciated and considered the fact that in case of disptte as mentioned in Clauses 3, 6 and 9 for enforcem,ent of the agreement, tle dispute is not arbitrable at all. In that uieu of the mnller, the impugned judgment on-d order pa.ssed by the High Court appointinll the arbitrators is un-sustainable and the same desen)es to be qtashed an-d set aside.

25. Houeuer, ot the same time, as tte High Court has not held ang preliminary inEtiry on uhetler the dispute is arbitrable or not and/ or wtrcther the dispute fall-s under Clause 36 or not, u)e deem it proper to ')2022 scc online sc 1328

remit tle matter to the Higlt Coult to hold a preliminory inquiry on te aforesai.d in light of the obseruations made bg this Court in Vidgo irolio [Vidga drolio- u. Durga Troding Corpn-, (2021) 2 SCC 1 : (2021) 1 SCC (Ciu) i+q ona in Indian Oil Corpn. [tndian Oil Corpn' Ltd' u' NCC Ltd., i2oi3) 2 sCC 53g : (2023) 1 SCC (ciu) 8al and the obseruations mnde hereinaboue and thereofier, pass an appropiate order."

11. On ttre other hand, learned counsel appearing for the respondents/defendants in the suit a.rgued that clauses 16 and 34 have to be read harmoniously. lt is not specifrcally stated in clause 16 that the parties can approach the civil Court'

12. Learned counsel relied on the judgment of the Hon'ble Supreme Court in the case of Sushma Shivkumar Daga v' Madhurkumar Ramkrishnaji Bajaj & otherss, wherein the Hon'ble supreme court while dealing with the situation where the trial court and the High court have referred the matter to arbitration held that the role of a 'Court' is now in any case, extremely lirnited in arbitration matters. The underl5ring principles of arbitration as contained in the Arbitration and conciliation Act,1996, was always to have as little interference as possible by a judicial authority. Further, the Honble supreme court held that the basic purpose for bringing an amendment in Section 8 was to minimize the scope of I Civil Appeal No.1854 of 2023 dated L5.72.2073

-7 judicial authority in matters of arbitration, except on the ground where pima facie, no valid arbitration agreement exists

13. A reading of clause 16 would go to show that the defendant No.1 company referred to as 'SL', fails to pay the Royalt_v amount, it shall not preclude the right of plaintiff to file civil claim for the recovery of the rovalty amount. Clause 16 confines to the paJ.ment of royalty €unount and right to frle civil claim for the recovery of the said amount. In the present case, the grievance of the plaintiff is that the defendants were due a sum of Rs.65,42,36O/- towards royalty and after r:alculating interest, suit was filed for recovery of Rs.1,34,77,261/-(Rupees One Crore Thirty Four Lakhs Sevenf5r Seven Thousand Two Hundred and Sixty One only) including interest and damages.

14. Clause 34 does not specifically refer to the royalty amount, but generally in case of any dispute that arises in between the parties, I I the parties have to approach an arbitrator.

I

15. Since the suit was specifically frled claiming the royalty amount covered under Clause 16, it cannot be said that the said

dispute would fall exclusively within Clause 34 only, to refer to an arbitrator and no separate suit can be Iiled. Under Clause 33, it v7a.5 agreed that the Courts at Mumbai shall have the exclusive jurisdiction in all the matters of disputes arising out of tJle agreement dated 30.1O.2017. Accordingly, though civil suit can be filed under Clause 16, however, the suit can only be frled in any of the Courts in Mumbai as per Clause 33.

16. To the extent of finding that a civil suit cannot be filed and it has to be referred only to the arbitrator is hereby set aside. However, in view of the above discussion, the suit can only be ftled before the civil Court in Mumbai.

17. Accordingly, Civil Revision Petition is ordered. There shall be no order as to costs. Consequently, miScellaleous applications, if any, shall stand dismissed.

sd/- A.V.S. P SAD ASSISTANT REGI TRAR //TRUE COPY// SECTION FFICER To,

1. The I Additional District Judge' Nizarnabad. Z. One CC to Sri Venugopal Julakanti, Advocate Lqly.C^l 5 on; cc to sri s.K. Sidbber Ahmed, Advocab [oPUCl

4. Two CD CoP'tes Njb/gh

HIGH COURT I J DATED:23112t2024 t t hE s h ,(- o ('(!i j"

31t,Et 2ru I,AIC * o

ORDER

CRP.No.3706 of 2024 ORDERING THE CRP WITHOUT COSTS w>\