Wednesday, 25 November 2020

Whether Order Of Commercial Court U/Sec 9 Of Arbitration & Conciliation Act is Appealable?


Is an order passed under Section 9 of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as 'the Arbitration

Act') by a Commercial Court appealable under Section 13(1) of

the Commercial Courts Act, 2015 (hereinafter referred to as 'the

Commercial Courts Act')? This question essentially falls for

consideration in the instant case.

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.


21. 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.

22. The scope of the proviso to the unamended Section

13(1) of the Commercial Courts Act, which now stands as the

proviso to Section 13(1A) of the Act, was considered by the

Supreme Court in Kandla Export Corporation v. M/s OCI

Corporation : (2018) 14 SCC 715 and it was held as follows:

“Section 13(1) of the Commercial Courts Act,

with which we are immediately concerned in

these appeals, is in two parts. The main provision

is, as has been correctly submitted by Shri Giri, a

provision which provides for appeals from

judgments, orders and decrees of the

Commercial Division of the High Court. To this

main provision, an exception is carved out by the

proviso. ..... The proviso goes on to state that an

appeal shall lie from such orders passed by the

Commercial Division of the High Court that are

specifically enumerated under Order XLIII of the

Code of Civil Procedure Code, 1908, and Section

37 of the Arbitration Act. It will at once be

noticed that orders that are not specifically

enumerated under Order XLIII of the CPC would,

therefore, not be appealable, and appeals that

are mentioned in Section 37 of the Arbitration

Act alone are appeals that can be made to the

Commercial Appellate Division of a High Court”.

23. Moreover, in order to find out whether an appeal

against an order passed under Section 9 of the Arbitration Act is

maintainable or not, the provisions of the said Act have to be

looked into. 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 (See BGS SGS Soma JV v. NHPC  Limited : (2020) 4 SCC 234).

24. The question whether the proviso in Section 13 of the

Commercial Courts Act applies only to Section 13(1A) or whether

it applies to Section 13(1) also, does not arise for consideration

in the instant case. The reason is that, the order impugned in this

original petition, is an order passed under Section 9 of the

Arbitration Act and therefore, appealable under Section 37 of the

said Act, which is specifically mentioned in the proviso.

25. The discussion above leads to the conclusion that an

order under Section 9 of the Arbitration and Conciliation Act,

1996 passed by a Commercial Court below the level of a District

Judge is appealable under Section 13(1) of the Commercial

Courts Act.

 IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT

 OP(C).No.1467 OF 2020

 PRANATHMAKA AYURVEDICS PVT LTD. Vs COCOSATH HEALTH PRODUCTS


Coram: MR. JUSTICE R. NARAYANA PISHARADI

Dated this the 24th day of November, 2020


Is an order passed under Section 9 of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as 'the Arbitration

Act') by a Commercial Court appealable under Section 13(1) of

the Commercial Courts Act, 2015 (hereinafter referred to as 'the

Commercial Courts Act')? This question essentially falls for

consideration in the instant case.

2. The first petitioner is a company. The second

petitioner is the Chief Executive Officer and the third petitioner is

one of the directors of the first petitioner company. The first

respondent is a partnership firm. The second respondent is the

Managing Partner of the first respondent firm.


3. The first and the second respondents filed an

application under Section 9 of the Arbitration Act in the District

Court, Ernakulam against the petitioners. This application

(Ext.P8) was transferred to the Commercial Court, Ernakulam

(the Principal Sub Court, Ernakulam) and numbered as CMA

(Arb) No.8/2020.

4. The reliefs prayed for in Ext.P8 application are the

following:

“a. Issue a Decree of Interim Injunction

restraining the Respondent No.1 and the

Respondents No.2 to 10 or their men, officers and

agents, from appointing any persons and/or

business establishments as the Exclusive Global

Marketer and Distributor or Marketer or Distributor

for the distribution, marketing or sales of the

products as defined in the Agreement dated

26.06.2017;

b. Issue a Decree of Interim Injunction

restraining the Respondents No.1 to 10 or their

men, officers and agents, from transferring to any

person or entity, the Product know-how or

confidential information of the 'Products' as defined

in the Agreement dated 26.06.2017;


c. Pass such other interim measure of

protection as may appear to the Court to be just

and convenient.”

5. As per Ext.P9 judgment dated 14.09.2020, the

Commercial Court, Ernakulam allowed Ext.P8 application. The

operative portion of Ext.P9 judgment reads as follows:

“In the result, the Civil Miscellaneous

Application is allowed. 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.”

6. This original petition is filed under Article 227 of the

Constitution of India challenging the legality and propriety of

Ext.P9 judgment.

7. Heard learned counsel for the petitioners and also the

first and the second respondents.


8. Learned counsel for the respondents raised a

preliminary objection regarding the maintainability of this original

petition filed under Article 227 of the Constitution of India. He

invited the attention of this Court to Section 13(1) of the

Commercial Courts Act which provides for appeal against the

orders passed by a Commercial Court below the level of a District

Judge. Learned counsel contended that, in view of the

alternative and efficacious remedy available to the petitioners as

provided under Section 13(1) of the Commercial Courts Act, the

original petition filed by them under Article 227 of the

Constitution of India is not maintainable.

9. Learned counsel for the petitioners contended that an

appeal under Section 13(1) of Commercial Courts Act is

maintainable only against a decree or final judgment passed by a

Commercial Court. He would also contend that, an alternative

and efficacious statutory remedy available to a person against an

order passed by a subordinate court, is not an absolute bar to

entertain an application under Article 227 of the Constitution of

India.


10. The Commercial Courts, Commercial Division and

Commercial Appellate Division of High Courts Act, 2015 came

into force on 23.10.2015, in terms of the deeming provision

under Section 1(3) thereof. The provisions of this statute were

amended and the name of this Act was changed as 'the

Commercial Courts Act' by virtue of Act 28 of 2018 which came

into force on 03.05.2018.

11. Section 13 of the Act of 2015, as it stood originally,

read as follows:

“13. Appeals from decrees of Commercial Courts

and Commercial Divisions.--(1) Any person

aggrieved by the decision of the Commercial Court

or Commercial Division of a High Court may

appeal to the Commercial Appellate Division of

that High Court within a period of sixty days from

the date of judgment or order, as the case may

be:

Provided that an appeal shall lie from such

orders passed by a Commercial Division or a

Commercial Court that are specifically

enumerated under Order XLIII of the Code of Civil

Procedure, 1908 (5 of 1908) as amended by this

Act and section 37 of the Arbitration and


Conciliation Act, 1996 (26 of 1996).

(2) Notwithstanding anything contained in any

other law for the time being in force or Letters

Patent of a High Court, no appeal shall lie from

any order or decree of a Commercial Division or

Commercial Court otherwise than in accordance

with the provisions of this Act.”

12. As per Section 12 of the Amendment Act of 2018,

Section 13 of the Act of 2015 was substituted as follows:

"13. Appeals from decrees of Commercial

Courts and Commercial Divisions.- (1) Any

person aggrieved by the judgment or order of a

Commercial Court below the level of a District

Judge may appeal to the Commercial Appellate

Court within a period of sixty days from the date

of judgment or order.

(1A) Any person aggrieved by the judgment or

order of a Commercial Court at the level of

District Judge exercising original civil jurisdiction

or, as the case may be, Commercial Division of a

High Court may appeal to the Commercial

Appellate Division of that High Court within a

period of sixty days from the date of the

judgment or order:


Provided that an appeal shall lie from such

orders passed by a Commercial Division or a

Commercial Court that are specifically

enumerated under Order XLIII of the Code of Civil

Procedure, 1908 as amended by this Act and

section 37 of the Arbitration and Conciliation Act,

1996 (26 of 1996).

(2) Notwithstanding anything contained in any

other law for the time being in force or Letters

Patent of a High Court, no appeal shall lie from

any order or decree of a Commercial Division or

Commercial Court otherwise than in accordance

with the provisions of this Act."

13. On a plain reading of the provision in the amended

Section 13(1) of the Commercial Courts Act, it is evident that the

judgment or order of a Commercial Court below the level of a

District Judge is appealable. The provision is plain and clear. The

right of appeal under Section 13(1) of the Commercial Courts Act

is not restricted to the parties to the litigation. Any person

aggrieved by the judgment or order of a Commercial Court below

the level of a District Judge may appeal to the Commercial

Appellate Court.

14. Learned counsel for the petitioners submitted that the

heading of Section 13 of the 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.

15. There is no merit in the above contention. If the above

contention of the learned counsel is accepted, the word ”order” in

Section 13(1) of the Commercial Courts Act would be a

surplasage and that word would become otiose or redundant.

16. 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.

17. There is no justification for restricting the section by the

marginal note nor does the marginal note control the meaning of

the body of the section if the language employed therein is clear

and spells out its own meaning (See Karnataka Rare Earth v.

Senior Geologist : AIR 2004 SC 2915). Heading or title of a

section has only a limited role to play in the construction of

statutes. They may be taken as very broad and general indicators

of the nature of the subject-matter dealt with thereunder. The

heading or title may also be taken as a condensed name

assigned to indicate collectively the characteristics of the subjectmatter

dealt with by the enactment. In case of conflict between

the plain language of the provision and the meaning of the

heading or title, the heading or title would not control the

meaning which is clearly and plainly discernible from the

language of the provision thereunder (See Raichurmatham

Prabhakar v. Rawatmal Dugar: AIR 2004 SC 3625). 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 (See Union of India v.

National Federation of the Blind : (2013) 10 SCC 772).

18. 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 (See Maqbool v. State of U.P : AIR 2018 SC

5101).


19. Section 13(2) of the Commercial Courts Act has

restricted the scope of filing appeals by stating that,

notwithstanding anything contained in any other law for the time

being in force, no appeal shall lie from any order or decree of a

Commercial Division or Commercial Court otherwise than in

accordance with the provisions of the Act. This provision also

indicates that appeals lie from orders of the Commercial Courts

as provided in Section 13(1) of the Act.

20. The matter can be considered from another angle. 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.


21. 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.

22. The scope of the proviso to the unamended Section

13(1) of the Commercial Courts Act, which now stands as the

proviso to Section 13(1A) of the Act, was considered by the

Supreme Court in Kandla Export Corporation v. M/s OCI

Corporation : (2018) 14 SCC 715 and it was held as follows:

“Section 13(1) of the Commercial Courts Act,

with which we are immediately concerned in

these appeals, is in two parts. The main provision

is, as has been correctly submitted by Shri Giri, a


provision which provides for appeals from

judgments, orders and decrees of the

Commercial Division of the High Court. To this

main provision, an exception is carved out by the

proviso. ..... The proviso goes on to state that an

appeal shall lie from such orders passed by the

Commercial Division of the High Court that are

specifically enumerated under Order XLIII of the

Code of Civil Procedure Code, 1908, and Section

37 of the Arbitration Act. It will at once be

noticed that orders that are not specifically

enumerated under Order XLIII of the CPC would,

therefore, not be appealable, and appeals that

are mentioned in Section 37 of the Arbitration

Act alone are appeals that can be made to the

Commercial Appellate Division of a High Court”.

23. Moreover, in order to find out whether an appeal

against an order passed under Section 9 of the Arbitration Act is

maintainable or not, the provisions of the said Act have to be

looked into. 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 (See BGS SGS Soma JV v. NHPC

Limited : (2020) 4 SCC 234).

24. The question whether the proviso in Section 13 of the

Commercial Courts Act applies only to Section 13(1A) or whether

it applies to Section 13(1) also, does not arise for consideration

in the instant case. The reason is that, the order impugned in this

original petition, is an order passed under Section 9 of the

Arbitration Act and therefore, appealable under Section 37 of the

said Act, which is specifically mentioned in the proviso.

25. The discussion above leads to the conclusion that an

order under Section 9 of the Arbitration and Conciliation Act,

1996 passed by a Commercial Court below the level of a District

Judge is appealable under Section 13(1) of the Commercial

Courts Act.


26. However, the contention of the learned counsel for the

respondents that, the remedy of appeal against an order

provided under a statute is an absolute bar in entertaining an

application or petition under Article 227 of the Constitution of

India, cannot be accepted.

27. The power vested in the High Court to exercise judicial

superintendence over the decisions of all Courts and Tribunals

within its respective jurisdiction is part of the basic structure of

the Constitution, forming its integral and essential feature, which

cannot be tampered with much less taken away even by

constitutional amendment, not to speak of a parliamentary

legislation (See Chandra Kumar v. Union of India : AIR 1997

SC 1125).

28. The High Court in exercise of its jurisdiction of

superintendence can interfere in order to keep the tribunals and

the Courts subordinate to it 'within the bounds of their authority'.

The High Court can interfere in exercise of its power of

superintendence when there has been a patent perversity in the

orders of tribunals and Courts subordinate to it or where there


has been a gross and manifest failure of justice or the basic

principles of natural justice have been flouted. The power may be

exercised in cases occasioning grave injustice or failure of justice

such as when (i) the Court or tribunal has assumed a jurisdiction

which it does not have, (ii) has failed to exercise a jurisdiction

which it does have, such failure occasioning a failure of justice,

and (iii) the jurisdiction though available is being exercised in a

manner which tantamounts to overstepping the limits of

jurisdiction.

29. However, 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 (See

V.H.N.D.P.Sabai v. Tuticorin Educational Society : (2019) 9

SCC 538).

30. Learned counsel for the petitioners contended that, in

view of the provision contained in Section 8 of the Commercial

Courts Act, no appeal would lie against an interlocutory order

passed by a Commercial Court and the petitioners would be able

to challenge such an order only in an appeal filed against the

decree or a final judgment.

31. The above contention is misconceived. Section 8 of

the Commercial Courts Act states that, notwithstanding anything

contained in any other law for the time being in force, no civil

revision application or petition shall be entertained against any

interlocutory order of a Commercial Court, including an order on

the issue of jurisdiction, and any such challenge, subject to the

provisions of Section 13, shall be raised only in an appeal against

the decree of the Commercial Court. What is barred under

Section 8 of the Commercial Courts Act is Civil Revision

Application or petition against an interlocutory order passed by a

Commercial Court. An appeal against an order passed by a

Commercial Court is not barred under Section 8 of the said Act.

It is specifically provided under Section 8 of the Commercial

Courts Act that the said provision is subject to the remedy of

appeal provided under Section 13 of the Act.


32. In the instant case, the petitioners have not shown

any reason for not availing the remedy of appeal against the

order impugned in this original petition. In such circumstances,

this Court is not inclined to interfere with the impugned order by

invoking the power under Article 227 of the Constitution of India.

33. Consequently, the original petition is dismissed. It is

made clear that this Court has not considered the merits of the

order impugned in this original petition. The dismissal of this

original petition will not preclude the petitioners from availing the

remedy of appeal provided under law. If the period prescribed by

the statute for filing the appeal is over, the petitioners may bring

to the notice of the appellate court concerned the fact that the

original petition filed by them was pending before this Court for

the period from 29.09.2020 till this date and seek from that court

appropriate relief, if any, available under law.

(sd/-)

R.NARAYANA PISHARADI, JUDGE



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