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IN THE HIGH COURT OF JUDICATURE FOR THE STATE OF TELANGANA
P.NAVEEN RAO, P.SREE SUDHA, JJ.
K.Srimannarayana Murthy, s/o. K.Rosaiah - Petitioners
Vs.
V.Agastya Sagar, s/o. V.Vidya Sagar - Respondent
CIVIL REVISION PETITION NO.21 OF 2021
Decided On : 07-01-2022
Arbitration and Conciliation Act, 1996 - Sections 9, Section 36 - Clause (i) of Section 2 (1) and 11 - Commercial Courts Act, 2015 - Section 2 (1) (c), 12 and 9 - Whether the Civil Court erred in entertaining A.O.P No.40 of 2020 under Section 9 of the Act of 1996 - Grant injunction restraining petitioners/respondent - commercial dispute - Agreement LLP was formed by investing supplementary agreement was executed raising capital contribution of first respondent was total contribution of all partners - His share in profits/losses of LLP is pegged at 15 %. Differences arose among partners leading to 1st respondent Trial Court to seek protection of his interest pending commencement of arbitral proceedings - Respondent filed Court of IX Additional Chief Judge, City Civil Court at under Section 9 of the Arbitration and Conciliation Act, 1996 - Petitioners/respondent Nos.2 and 3 from taking action or exercising rights in connection with management changing the management of LLP and direct petitioners/respondent Nos.2 and 3 to keep petitioners informed about the operations and management of the LLP. The Trial Court granted ex-parte injunction and directions as prayed by 1st respondent - Commercial Court and not before a Civil Court - He would submit that deliberately the first respondent did not specify value when he first presented application under Section 9 of the Act, 1996 - facts are clear and as understood by first respondent in Arbitration Application filed before Court under Section 11 of Act, 1996.
Finding of the Court :
Respondent filed Arbitration Application with above claim was also noticed by the trial Court - Trial Court also failed to appreciate that there is a dispute inter-se partners of LLP and that dispute arises out of the terms of partnership agreement - Trial Court misdirected itself in observing that other agreements were independent of the LLP agreement. While considering the issue of jurisdiction of civil Court to entertain an application under section 9 of Act, 1996 in a dispute among partners of LLP, the Court need not go into the question whether the other agreements are independent of LLP agreement - Dispute among petitioners and respondents forming part of LLP arising out of partnership agreement - commercial dispute and the Commercial Court alone has jurisdiction to deal with application filed by the first respondent under section 9 of the Act, 1996.
Result: Petition is allowed
ORDER :
P.Naveen Rao, J.
Heard Sri M.R.K. Chakravarthy, learned counsel for the petitioners, and Sri Duvva Pavan Kumar, learned counsel for the respondents.
2. The 1st respondent filed A.O.P.No.40 of 2020 in the Court of IX Additional Chief Judge, City Civil Court at Hyderabad (the Trial Court), under Section 9 of the Arbitration and Conciliation Act, 1996 (the short, ‘the Act of 1996’) praying to grant injunction restraining petitioners/respondent Nos.2 and 3 from taking action or exercising the rights in connection with the management of M/s. Sagarasia Global LLP (the LLP), changing the management of the LLP and direct the petitioners/respondent Nos.2 and 3 to keep the petitioners informed about the operations and management of the LLP. The Trial Court granted ex-parte injunction and directions as prayed by the 1st respondent.
3. The Petitioners filed I.A.No.551 of 2020 under Order VII Rule 11(d) of the Code of Civil Procedure, praying the Trial Court to reject the A.O.P.No.40 of 2020. The petitioners contended that the subject matter of A.O.P., is a commercial dispute and therefore, only the Commercial Court has jurisdiction to entertain and consider the said application under Section 9 of the Act of 1996. Repelling their contentions, the I.A., was dismissed by order dated 09.11.2020. Challenging the said decision, this Civil Revision Petition is filed.
4. According to the learned counsel for petitioner, the first respondent holds 15 % stake in the LLP, which comes to Rupees fifteen lakhs and total contribution of all partners is Rupees one crore. There is an inter se dispute among the partners arising out of LLP and therefore the dispute is a commercial dispute and all applications under the Act, 1996 have to be moved only before a Commercial Court and not before a Civil Court. He would submit that deliberately the first respondent did not specify the value when he first presented application under Section 9 of the Act, 1996 before the Commercial Court. Further, as facts are clear and as understood by the first respondent, in Arbitration Application No.61 of 2020 filed before this Court under Section 11 of the Act, 1996 to appoint an Arbitrator and for allied reliefs what is urged in the A.O.P 40 of 2020 is a commercial dispute and Civil Court has no jurisdiction to deal with such application.
5. Per contra, according to learned counsel for the first respondent, the dispute is purely among the partners and is limited to the extent of failure of commitments and obligations under the LLP and by the time A.O.P No. 40 of 2020 was filed valuation was not quantified, as such, the Commercial Court has no jurisdiction. Therefore, the Civil Court alone has jurisdiction to decide the application under Section 9 of the Act, 1996.
6. The Trial Court held that the dispute is between the partners of LLP and other documents which relate to independent agreements are no way connected to the dispute among the partners on functioning of the LLP. The Trial Court also agreed with the contention of 1st respondent that as of now, the value is not quantified and therefore, the jurisdiction of the Commercial Court cannot be ascertained.
7. The issue for consideration is whether the Civil Court erred in entertaining A.O.P No.40 of 2020 under Section 9 of the Act of 1996.
8. To the extent relevant to decide the issue, the facts are as under:
Considering the issue of jurisdiction of civil Court to entertain an application under section 9 of the Act, 1996 in a dispute among the partners of LLP, the Court need not go into the question wheth....
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