Kerala High Court: Whether an order passed under Section 9 of the Arbitration & Conciliation Act, 1996 is appealable under Section 13(1) of the Commercial Courts Act, 2015

In the captioned judgment the issue which fell for consideration before the Kerala High Court was whether an order passed under Section 9 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) by a commercial court would be appealable under Section 13 (1) of the Commercial Courts Act, 2015 (“the Act”). Facts in brief The first and the second respondents had preferred and application under Section 9 of the Arbitration Act before the District Court, Ernakulam praying for certain orders of injunction. The application was subsequently transferred to the commercial court, Ernakulam and the commercial court was pleased to grant the order of injunction against the petitioners. The instant petition was filed by the petitioners under Article 227 of the Constitution of India challenging the legality and propriety. Key submissions of the parties The respondents raised a preliminary objection in relation to the maintainability of the petition filed under Article 227 of the Constitution of India in view of the fact that an alternative and efficacious remedy was available under Section 13 (1) of the Act. The petitioners countered it by stating that an appeal under Section 13 (1) of the Act is maintainable only against a decree or final judgment passed by a commercial court and also that availability of an alternative and efficacious remedy is not a bar to entertain applications under Article 227 of the Constitution of India. Judgment and analysis The court observed that there was no merit in the contention of the petitioners as if such contention was accepted then the word “order” in Section 13 (1) of the Act would be “would be a surplusage and that word would become otiose or redundant.” (Para 15) The court also considered the matter from another angle and observed that the impugned order is an order of injunction and is appealable under order XVLIII of the Code of Civil Procedure, 1908. It is also an order under Section 9 of the Arbitration Act and is appealable under Section 37 of the Arbitration Act. The court went on to observe that “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.” (Para 20) Further, the court observed that if the contention of the petitioners was to be accepted then the proviso to Section 13 (1A) which restricts the right of appeal from orders that are specifically enumerated under Order XLIII of the Code of Civil Procedure, 1908 and Section 37 of the Arbitration Act would be meaningless. (Para 21) Furthermore, the court observed that Section 13 (1) of the Act does not provide a right to appeal but merely provides a forum of filing appeals and the right to appeal against an order under section 9 of the Arbitration Act flows from section 37 (1)(b) of the Arbitration Act. Therefore, the impugned order being an order section 9 of the Arbitration Act is appealable under section 37 of the Arbitration Act and since the impugned order is passed by a commercial court below the level of a district judge the same is appealable under section 13 (1) of the Act. (Para 23-25) The petitioners had also made a submission that in view of the provision of Section 8 of the 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. The court observed that such a contention is misconceived as what is barred under Section 8 of the 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 Act that the said provision is subject to the remedy of appeal provided under Section 13 of the Act. (Para 31) The petition was dismissed on the ground that the petitioners were unable to justify as to why the alternate remedy was not availed by them. Please find attached a copy of the judgment. This update has been contributed by Pooja Chakrabarti (Partner) and Prithwish Roy Chowdhury (Associate). Download Pdf