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2022 Supreme(Kar) 1288

IN THE HIGH COURT OF KARNATAKA
B.M.Shyam Prasad, J.
Mphasis Limited - Appellant
Versus
Strategic Outsourcing Services Private Limited - Respondent
Writ Petition No. 2522 of 2022 (GM-CPC)
Decided On : 19-10-2022

Advocates appeared:
Sanjay Krishna V., Advocate, E.Sushail Ahmed, Advocate, D.Kavitha, Advocate

The central legal point established in the judgment is the need to interpret and apply the provisions of the Commercial Courts Act, 2015 and the Arbitration and Conciliation Act, 1996 in a manner that ensures proper marking of documents and distinguishes between different causes for proceedings.

Headnote:

Commercial Court - Arbitration and Conciliation Act, 1996 - Sec. 34, Commercial Courts Act, 2015 - Sec. 16(2), Sec. 151 of the Code of Civil Procedure, 1908 - Order XI Rule 4 Sub Rule 6 - [Summary of Acts and Sections]

Fact of the Case:

The petitioner challenged the commercial Court's orders regarding the marking of documents and the clubbing of suits. The petitioner contended that the arbitral award was not admitted due to being unstamped, but later confirmed it was duly stamped. The first respondent's suit for damages was sought to be clubbed with proceedings under Sec. 34 of the Arbitration and Conciliation Act, 1996.

Finding of the Court:

The court found that the commercial Court had erred in not marking the arbitral award as the petitioner's document and in clubbing the suits. It held that the causes for proceedings under Sec. 34 of the Act, 1996 and for damages in the commercial suit were not the same, and therefore, the commercial Court's orders were modified and quashed.

Issues: The issues revolved around the marking of the arbitral award, the clubbing of suits, and the jurisdiction under Sec. 34 of the Act 1996.

Ratio Decidendi: The court's decision was influenced by the interpretation of the provisions of Order XI Rule 4 Sub Rule 6 of the Act, 2015, and the limited scope of jurisdiction under Sec. 34 of the Act 1996. It emphasized the need to examine the merits of the petitioner's grievance with the arbitral award and the distinct nature of the causes for proceedings under Sec. 34 and for damages in the commercial suit.

Final Decision: The writ petition in W.P.No.2522/2022 was allowed in part, modifying the commercial Court's order dtd. 23/12/2021, and the writ petition in W.P.No.4281/2021 was allowed, quashing the commercial Court's order dtd. 2/2/2021.

JUDGMENT

1. These petitions are by the first defendant in Com O.S.No.215/2019 on the file of the LXXXII Additional City Civil and Sessions Judge, Bengaluru (for short, 'the commercial Court'). The petitioner has impugned the commercial Court's orders dtd. 23/12/2021 and 02 02.2021. The commercial Court by the first order dtd. 23/12/2021, while marking the documents produced by the first respondent, has observed that the first respondent has not admitted a copy of the arbitral award dtd. 26/11/2019 in the arbitral proceedings between the petitioner and the first respondent and as such, one of the writ petitions. The commercial Court's observation is thus:

    "Though the Plaintiff has filed Statement of Admissions and Denials on 11/2/2020, he has not admitted any of the documents filed by the Defendants".

      The commercial Court by the next impugned order dtd. 2/2/2021 has allowed the first respondent's application (I.A.No.IV) under Sec. 16(2) of the Commercial Courts Act, 2015 (for short, 'the Act 2015') read with Sec. 151 of the Code of Civil Procedure, 1908 to club this suit in Com O.S.No.215/2019 for consideration along with Com.A.P.No.37/2020.

      2. Sri. Dhananjay Joshi, the learned Senior counsel for the petitioner and Sri. Sanjay Krishna V, the learned counsel, are heard for final disposal of the petitions, and they submit that if the arbitration award dtd. 26/11/2019 relates to the dispute inter se the petitioner and the first respondent over a settlement agreement, the first respondent's present suit is for damages. They submit that the copy of the arbitral award dtd. 26/11/2019 is not marked only because the first respondent has filed its Statement of Admission/Denial contending that this document is unstamped

      3. Sri. Dhananjay Joshi submits that commercial Court, given the provisions of Order XI Rule 4 Sub Rule 6 of the Act, 2015 as applicable to the commercial Courts, should have seen whether the petitioner has unduly refused to admit an indisputable document. He canvasses that it is incumbent, given the provisions of Order XI Rule 4 Sub Rule 6, that the commercial Courts must examine whether the refusal to admit a document is proper and if it could be persuaded to opine that it is improper, costs may have to be imposed. These provisions are to ensure that the dispute is identified in its core for a decision on whether there must be a summary trial under Order XIIIA of the Act, 2015 or a trial after Case Management Hearing under Order XVA of CPC.

      4. It is obvious that the commercial Court has lost track of the provisions of Order XI Rule 4 Sub Rule 6 of the Act, 2015[In the event that the Court holds that any party has unduly refused to admit a document under any of the above criteria,-costs (including exemplary costs) for deciding on admissibility of a document may be imposed by the Court on such party] in recording the first respondent's refusal to admit the award dated 26.11. 2019. When this is put to Sri. Sanjay Krishna V, the learned counsel for the first respondent, submits that if there can be a statement at the Bar even today that the award dtd. 26/11/2019 is duly stamped, the first respondent would waive the objection and the document could be marked. On instructions, Sri. Dhananjay Joshi submits that this award dtd. 26/11/2019 is duly stamped and the certificate of stamp is also filed before the commercial Court. In these circumstances, it would be necessary for this Court to interfere with the commercial Court's order dtd. 23/12/2021 and call upon the commercial Court to mark the copy of the award dtd. 26/11/2019 as the petitioner's document.

      5. The commercial Court by the next impugned order dtd. 2/2/2021, on the first respondent's application, has directed the commercial suit, which is essentially for the first respondent's vindication for damages not just from the petitioner but also from its directors, to be clubbed with the proceedings under Sec. 34 of the Arbitration and Conciliation Act, 1996 (for short, 'the A

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