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HIGH COURT OF DELHI
FAO (COMM) 52/2021 & CM No.24437/2021(for placing order dated 22nd July, 2021 on record)
GLIMPSE ELECTRONICS PRIVATE LIMITED ..... Appellant
Through: Ms. Sudhershani, Advocate.
Through: None for R-1.
Mr. Prashant Kumar, Advocate for R- 2/Punjab National Bank.
HON'BLE MR. JUSTICE AMIT BANSAL O R D E R 05.08.2021
[VIA VIDEO CONFERENCING]
CM No.24438/2021(for exemption)
JUDGMENT
1. Allowed, subject to just exceptions and as per extant Rules.
2. The application is disposed of.
3. The appellant is aggrieved from dismissal of its application, being OMP (I) (COMM) No.129/2020, under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Arbitration Act”) vide order dated 27th June, 2020 of the District Judge (Commercial)-01, South- East, Saket Courts, New Delhi.
4. The appellant filed the application aforesaid under Section 9 of the Arbitration Act, pleading (i) that the respondent no.2 Punjab National Bank had entered into a contract with the respondent no.1 Vector Projects (India) 2021:DHC:2353-DB Private Limited for renovation of premises of the respondent no.2 Bank; (ii) that the respondent no.1 had appointed the appellant as a sub-contractor for the said works; and, (iii) that an amount of Rs.1,20,45,603/- was due from the respondent no.1 to the appellant, which the respondent no.1 was not paying inspite of the respondent no.2 bank having released payments under the contract aforesaid to the respondent no.1. Interim measure, of freezing of the amount of Rs.1,20,45,603/- lying in the account of the respondent no.1 with the respondent no.2 bank, was sought.
5. The District Judge (Commercial)-01 vide the impugned judgment, giving detailed reasons, dismissed the application under Section 9 of the Arbitration Act supra preferred by the appellant, inter alia reasoning that the Courts at Delhi did not have jurisdiction and the Courts at Mumbai had the jurisdiction to entertain applications under the Arbitration Act.
6. Aggrieved therefrom, the present appeal was filed and came up before the Single Judge of this Court first on 9th July, 2020, when, while issuing notice thereof, recording the statement of the counsel for the respondent no.2 Bank (i) that a sum of Rs.1,73,76,000/- was lying in the account of the respondent no.1 with the respondent no.2 Bank; (ii) that vide order in another case titled Harcomp Airflex Pvt. Ltd. Vs. Vector Project (I) Pvt. Ltd. of the Court at Saket, a sum of Rs.85,93,325/- out of the total sum of Rs.1,73,76,000/-, already stood frozen, the Single Judge of this Court restrained the respondent no.2 Bank from disbursing to the respondent no.1 or to any other party the remaining amount of Rs.87,83,000/- in the said account of the respondent no.1, after adjusting the amount of Rs.85,93,325/which had already been frozen vide interim order in another suit. The said interim order is continuing till now. Vide order dated 23rd February, 2021 of the Single Judge, this appeal, in view of the Section 13(1A) of the Commercial Courts Act, 2015 requiring the appeals to be heard by a Commercial Appellate Division, was directed to be listed before the Commercial Appellate Division.
7. The appeal so came up before us first on 26th February, 2021, when recording as under: “2. The counsel for the appellant, on enquiry as to how Courts at Delhi have territorial jurisdiction, inasmuch as the respondent No.1, with whom the appellant has an arbitration agreement, is at Mumbai and the works which the appellant had agreed to undertake as a sub-contractor of the respondent No.1 were also to be executed at Mumbai, draws our attention to Section 18(4) of the Micro, Small and Medium Enterprises Development Act, 2006 and contends that the appellant being at Delhi, has approached the Micro and Small Enterprises Facilitation Council at Delhi for arbitration and the said request of the appellant is pending consideration.
3. On enquiry, how the Courts at Delhi would qualify as 'Court' within the meaning of Section 2(1)(e) of the Arbitration Act, the counsel for the appellant has no answer. Moreover the admitted agreement between the parties also provides for exclusive jurisdiction of the Courts at Mumbai.
4. We have informed the counsel for the appellant that merely to examine the legal question we may issue notice but in the interregnum the interim measure sought by the appellant, if not already infructuous, would become infructuous.
5. We have also informed the counsel for the appellant that since the respondent No.1 is at Mumbai, the appellant if fails, will have to bear the litigation costs of the respondents.
6. The counsel for the appellant agrees.”, the notice of the appeal was issued and the respondents directed to be served electronically.
8. The counsel for the respondent no.2 Bank appears and informs that the entire amount of Rs. 1,73,76,000/- in the account of the respondent no.1 is lying in a fixed deposit, subject to orders in the other suit as well as in this appeal.
9. However none appears for the respondent no.1.
10. The counsel for the appellant informs, (i) that the respondent no.1 has been served; (ii) that an affidavit of service has been filed; and, (iii) that the Micro and Small Enterprises Facilitation Council (MSEFC) under the Micro Small and Medium Enterprises Development Act, 2006, has already referred the matter for arbitration at Delhi.
11. We have no reason to disbelieve the statement of the counsel for the appellant that the respondent no.1 has been served.
12. In the circumstances, it is not deemed to be in the interest of the parties to adjudicate the legal question qua territorial jurisdiction of this Court. The very purport of the Arbitration Act and the Commercial Courts Act, 2015 is to expedite resolution of disputes and if this Court, for the sake of technicalities were to entertain and decide proceedings under the Arbitration Act, the same it is felt would not be in the interest of the parties and put the parties to unnecessary expense and come in the way of resolution of the disputes. Now that the arbitration proceedings have been ordered to be held at Delhi, we are of the view that the respondent no.1, even though at Mumbai, would be participating in the arbitration proceedings at Delhi.
13. Moreover, the rights of the respondent no.1 on merits, with respect to the amount, can be protected by making the order passed by this Court in these proceedings, variable at the instance of the parties before the Arbitral Tribunal, under Section 17 of the Arbitration Act.
14. We are however of the view that once the appellant has sought interim measure with respect to Rs.1,20,45,603/-, the interim measure should not be confined to Rs.87,83,000/- only, as done vide order dated 23rd July, 2020 of the Single Judge who did not have jurisdiction to hear the appeal. The interim measure should be with respect to the entire amount of Rs.1,20,45,603/-, with the order for amount in excess of Rs.87,83,000/being subject to attachment vide order in the suit supra instituted by Harcomp Airflex Private Limited.
15. We accordingly dispose of this appeal with the following directions:-
(i) Respondent no.2 Bank to, out of the monies lying in the account of the respondent no.1 with the respondent no.2 Bank, attach an amount of Rs.1,20,45,603/- and not allow the same to be withdrawn in any manner whatsoever; however the aforesaid attachment is subject to the earlier attachment in the suit supra filed by Harcomp Airflex Private Limited;
(ii) The parties, including the respondent no.1 shall be entitled to seek variance/vacation of this order before the Arbitral Tribunal which is stated to have been constituted and upon the respondent no.1 or the petitioner so applying, the Arbitral Tribunal shall decide the said application without being influenced in any manner whatsoever with the attachment ordered by this Court;
(iii) It is made clear that if pursuant to the attachment in the suit supra by Harcomp Airflex Private Limited, the sum of Rs.85,93,325/- or any other amount is paid to Harcomp Airflex Private Limited, the claim of the appellant herein would be for the balance amount only;
(iv) The amounts lying in the account of the respondent no.1 be kept in a maximum interest bearing account; and,
(v) This Court having not adjudicated the appeal on merits, this order shall not be deemed to be an order/proceedings under Section 42 of Arbitration Act.
16. The appeal is disposed of.
RAJIV SAHAI ENDLAW, J AMIT BANSAL, J AUGUST 5, 2021 ak