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2021 Supreme(Online)(KER) 47640
HIGH COURT OF KERALA
OOMMEN THOMAS PANICKER, – Appellant
Versus
MONICA CONSTRUCTIONS, – Respondent
FAO 44 2021
The court clarified that an application to refer parties to arbitration is not maintainable if it involves a case that ought to be transferred to a Commercial Court due to monetary limits imposed by the Commercial Courts Act.
Headnote:
Arbitration - Arbitration and Conciliation Act, 1996; Section 8(1), Commercial Courts Act, 2015; Section 15 - The court held that an application to refer parties to arbitration under the Arbitration and Conciliation Act is not maintainable when the amount exceeds jurisdiction limits set by the Commercial Courts Act, necessitating transfer to the appropriate court.
Fact of the Case:
The appellant, a defendant in a suit seeking recovery of funds from a construction contract, filed an application for arbitration which was dismissed by the lower court on jurisdiction grounds, stating the case needed to be transferred to the Commercial Court due to the amount involved.
Finding of the Court:
The court analyzed the maintainability of the appeal under relevant sections of the Arbitration and Conciliation Act alongside the Commercial Courts Act, concluding that the lower court's dismissal was not appealable since it did not involve a refusal of arbitration based on the merits of the arbitration agreement.
Issues: Whether the appeal regarding the dismissal of the arbitration application is maintainable given the provisions of the Arbitration and Conciliation Act and the Commercial Courts Act.
Ratio Decidendi: An order dismissing an application under Section 8(1) of the Arbitration and Conciliation Act as not maintainable does not constitute a refusal to refer parties to arbitration under Section 37(1)(a), thus being non-appealable.
Final Decision: The appeal is dismissed as not maintainable.
JUDGMENT
Anil K. Narendran, J.
The appellant is the 1st defendant in O.S.No.202 of 2018 on the file of the First Additional Subordinate Judge's Court, Thiruvananthapuram, a suit filed by the 1st respondent-plaintiff against the appellant and the 2nd respondent to realise a sum of Rs.85,80,203/- towards balance cost on works undertaken by the 1st defendant in a construction contract. The plaintiff has also sought for a declaration that termination of the said contract by the 1st defendant is illegal. In O.S.No.202 of 2018, the 1st defendant filed I.A.No.2 of 2020, an application under Section 8 (1) of the Arbitration and Conciliation Act, 1996 , to refer the parties to arbitration. The plaintiff filed objections. After considering the rival contentions, the court below, by the order dated 01.03.2021, dismissed that application as not maintainable, on the ground that, since the amount sought to be recovered is in excess of Rs.85,00,000/-, in the dispute arising out of a construction and infrastructure contract, O.S.No.202 of 2018 is liable to be transferred to the Commercial Court, Thiruvananthapuram, in view of the provisions under Section 15 of the Commercial Courts Act, 2015 . Challenging the said order, the appellant has filed this appeal before this Court, under Section 104 (1) of the Code of Civil Procedure, 1908 and Section 37 (1) of the .
2. Initially, Registry has not numbered this appeal raising certain doubts as to its maintainability. On 08.07.2021, when the unnumbered appeal came up for consideration, after hearing preliminary arguments of the learned counsel for the appellant, we found that the question of maintainability of the appeal requires detailed consideration with notice to the respondents. Therefore, Registry was directed to number the appeal, subject to the condition that the question of maintainability will be decided with notice to the respondents. Thereafter, on the same day, this Court issued urgent notice by speed post to the respondents, along with a copy of the order dated 08.07.2021, returnable within ten days.
3. Heard the learned counsel for the appellant-
1stdefendant and also the learned counsel for the 1st respondent-plaintiff on the question of maintainability of this appeal. The 2nd defendant in O.S.No.202 of 2018, who is arrayed as the 2nd respondent herein, is the Arbitrator as per the contract.
4. On the question of maintainability of this appeal, the learned counsel for the appellant-1st defendant contended that, the impugned order of the court below, dismissing an application filed under Section 8 (1) of the Arbitration and Conciliation Act, as not maintainable, is appealable under Section 104 (1) of the Code of Civil Procedure and Section 37 (1) (a) of the Arbitration and Conciliation Act. Per contra, the learned counsel for the 1st respondent-plaintiff contended that, the impugned order of the court below dismissing an application filed under (1) of the Arbitration and Conciliation Act as not maintainable, in view of the provisions under Section 15 of the Commercial Courts Act, is not an order of the court below refusing to refer parties to arbitration under (1) of the Arbitration and Conciliation Act, which alone is appealable under (1)(a) of the said Act. In view of the prohibition contained in (1) of the Arbitration and Conciliation Act, such an order is not appealable.
5. As already noticed, O.S.No.202 of 2018 is one filed by the plaintiff seeking a decree to realise a sum of Rs.85,80,203/- from the 1st defendant towards alleged balance cost of the work done under a construction contract. In that suit, the 1st defendant filed I.A.No.2 of 2020 seeking an order to refer the dispute to arbitration, under Section 8 (1) of the Arbitration and Conciliation Act, 1996 .
6. The Arbitration and Conciliation Act, 1996 was enacted by the Parliament to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral aw
