Ker HC | Whether an order passed under Arbitration and Conciliation Act, 1996, by a Commercial Court, appealable under S.13(1) of Commercial Courts Act, 2015; HC determines

Kerala High Court: R.Narayana Pisharadi J., while allowing the statutory remedy of appeal, discussed the parallel application of provisions and the Court’s power of supervision under Article 227.

Background

Factual matrix of the present case states first petitioner as a Company, second petitioner as a Chief Executive Officer and third petitioner as a director of first petitioner Company. The first respondent is a partnership firm and the second respondent is a managing partner of the first respondent. The first and the second respondents filed an application under Section 9 of the Arbitration Act in the District Court, Ernakulam against the petitioners, which was transferred to the Commercial Court, Ernakulam. The application was allowed in the favour of the applicants, the operative portion of which stated; “The respondents are hereby restrained from appointing any persons and/or business establishments as the exclusive global marketer or distributor for the distribution, marketing or sale of the products of the 1st respondent company and from transferring to any 3rd parties the product know-how or confidential information of the products till Arbitration proceedings are commenced in the case. The parties shall bear their respective costs.”

The present original petition is moved under Article 227, challenging the legality and propriety of the aforementioned judgment.

 Observations

Court reproduced Section 13 of the Commercial Courts Act, 2015 (as it stood originally and as amended by the Act of 2018), to clarify that the contention raised by the petitioners that the heading of Section 13 of Commercial Courts Act states “Appeals from decrees of Commercial Courts and Commercial Divisions” and therefore, an appeal under Section 13(1) of the Act would lie only from a decree or a final judgment passed by a Commercial Court and no appeal will lie from an order, especially an interlocutory or interim order, passed by a Commercial Court, is devoid of any merits. Elaborating further, the Court observed, “The first and the primary rule of construction of a statutory provision is that the intention of the legislation must be found in the words used by the legislature itself. It is well settled that the heading given to a Section cannot control the plain words of the provision. The heading of a provision cannot be referred to for the purpose of construing the provision when the words and the language used in the provision are clear and unambiguous. Seeking assistance from the heading of a provision to interpret the provision can be resorted to only in case of ambiguity or doubt, that too, as an aid in construing the provision. The marginal heading cannot control the interpretation of the words of the section particularly when the language of the section is clear and unambiguous.”

Reliance was placed on the following cases;

Union of India v. National Federation of the Blind, (2013) 10 SCC 772; If the language of the relevant section gives a simple meaning and message, it should be interpreted in such a way and there is no need to give any weightage to headings.

Maqbool v. State of U.P., (2019) 11 SCC 395; The title to the provision need not invariably indicate the contents of the provision. If the provision is otherwise clear and unambiguous, the title pales into irrelevance. On the contrary, if the contents of the provision are otherwise ambiguous, an aid can be sought from the title so as to define the provision. In the event of a conflict between the plain expressions in the provision and the indicated title, the title cannot control the contents of the provision. Title is only a broad and general indication of the nature of the subject dealt under the provision.

Applying a diverse approach, the Court further said, “In the instant case, the impugned order is an order of injunction. It is appealable under Order XLIII of the Code of Civil Procedure, 1908. It is an order passed under Section 9 of the Arbitration Act. It is also appealable under Section 37 of the Arbitration Act. Section 37(1)(b) of the Arbitration Act states that an appeal shall lie from an order granting or refusing to grant any measure under Section 9 of the said Act. Right of appeal is the creature of a statute. It is well settled that right of appeal is a substantive right. Nothing contained in Section 13(1) or Section 13(2) of the Commercial Courts Act curtails this right of appeal. At this juncture, it is to be noted that the heading of the unamended Section 13 of the Commercial Courts Act also read as “Appeals from decrees of Commercial Courts and Commercial Divisions”. There was a proviso to unamended Section 13(1) of the Act which now stands as the proviso to Section 13(1A) of the Act. This proviso restricts the right of appeal from orders that are specifically enumerated under Order XLIII of the Code of Civil Procedure and Section 37 of the Arbitration Act. If the contention of the learned counsel for the petitioners is accepted, the proviso to Section 13(1A) of the Commercial Courts Act would be meaningless.”  The Court considered the case of Kandla Export Corporation v. OCI Corporation, (2018) 14 SCC 715, in this regard.

To answer whether an appeal against an order passed under Section 9 of the Arbitration Act is maintainable or not, the Court said, “There is no independent right of appeal provided under Section 13(1) of the Commercial Courts Act. It merely provides the forum of filing appeals. Section 37(1) (b) of the Arbitration Act creates the right to file an appeal against an order granting or refusing to grant any measure under Section 9 of the

said Act. It is the parameters of Section 37(1) of the Arbitration Act alone which have to be looked at in order to determine whether an appeal against an order under Section 9 of the said Act is maintainable or not.” (Case referred: BGS Soma v. NHPC Limited; (2020) 4 SCC 234.

Court also delved into an incidental issue of whether the remedy of appeal against an order provided under a statute is an absolute bar in entertaining an application or petition under Article 227, replying in negative. It further reiterated the observation in VHNDP Sabai v. Tuticorin Educational Society, (2019) 9 SCC 538, “when there is a remedy of appeal before a civil court available to an aggrieved person and such remedy is not availed of by him, it would deter the High Court, not merely as a measure of self-imposed restriction, but as a matter of discipline and prudence, from exercising its power of superintendence under Article 227 of the Constitution.”

 Decision

Clarifying the scope and application of Section 8 and Section 13 of the Commercial Courts Act, 2015, in addition to the above observations, the Court refrained from interfering through Article 227 and directed the petitioners to avail the remedy of appeal as provided under the Statute.[Pranathmaka Ayurvedics v. Cocosath Health Products, 2020 SCC OnLine Ker 5476, decided on 24-11-2020]


Sakshi Shukla, Editorial Assistant has put this story together

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