Partly allowed

M/s. Linnhoff India Pvt. Ltd. v. Rcm Infrastructure Limited

Telangana HC9 Aug 2017CMA/823/2017

Case brief

AI extract

What is this about?

This court disposed of a civil miscellaneous appeal against an ex parte injunction restraining bank guarantee invocation. It directed the trial court to hear the interlocutory application and the arbitration petition on merits expeditiously to ensure fair adjudication.

What did the court decide?

The appeal was disposed of with directions to the trial court to hear and dispose of the interlocutory application and the Section 8 arbitration application on merits expeditiously, preferably before

M/s. Linnhoff India Pvt. Ltd. Vs Rcm… — Contract and Commercial Disputes | Telangana HC (2017)

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THE HON’BLE SRI JUSTI CE M.SEETHARAMA MURTI CI VI L MI SCELLANEOUS APPEAL No.8 2 3 of 2 0 1 7

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JUDGMENT:

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This Civil Miscellaneous Appeal, under Order XLIII Rule 1(R) of the Code of Civil Procedure, 1908, (‘the Code’, for brevity), by the appellant/ 1^st respondent, is directed against the docket order, dated 18.07.2017, of the learned X Additional Chief Judge, City Civil Court, Hyderabad, passed in I.A.No.654 of 2017 in O.S.No.662 of 2017.

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2 . I have heard the submissions of Sri A.Venkatesh, learned counsel for the appellant/ 1^st respondent. I have perused the material record.

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3 . The facts of the case, which are necessary to stated as a prelude to this judgment, in brief, are as follows: -

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The 1^st respondent herein/ plaintiff (hereinafter, ‘plaintiff’) brought the suit against the appellant herein/ 1^st defendant (hereinafter, ‘1^st defendant’) for a perpetual injunction restraining the 1^st defendant from invoking the suit subject bank guarantee for an amount of Rs.75,00,000/ - and to direct the 2^nd defendant-Bank not to honour the bank guarantee and make payments under the said bank guarantee in respect of any claim that may be made by the 1^st defendant. In the said suit, the plaintiff filed the aforestated interlocutory application under Order XXXIX Rules 1 and 2 read with Section 151 of the Code and sought a temporary injunction. The Court below, by the order impugned in this appeal,

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MSRM, J CMA No.8 2 3 of 2 0 1 7

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granted an ex parte interim order of injunction. The operative

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portion of the said order reads as under: -

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“ Hav in g r egar d t o t h e fact s an d cir cu m st an ces of t h e case an d in v iew of t h e su bm ission s m ade by t h e pet it ion er cou n sel an d in view of t h e pleadin gs an d m at er ial docu m en t s, I fou n d t h at at t h is st ag e t h e pet it ion er h as got pr im a-facie case n view of t h e alleged play in g fr au d by r espon den t No.1 u pon t h e pet it ion er . Hen ce, issu e adin t er im in j u n ct ion again st t h e r espon den t No.1 fr om in v ok in g ban k gu ar an t ee No.0 5 0 5 1 6 1 GFI N0 0 0 8 dt .1 6 -0 8 -2 0 1 6 an d t h e secon d r espon den t fr om h on ou r in g t h e ban k gu ar an t ee t ill 0 8 .0 8 .2 0 1 7 . I ssu e Or der su bj ect t o com plian ce of Or der 3 9 Ru le 3 CPC. I ssu e u r gen t n ot ice t o t h e r espon den t s 1 an d 2 t h r ou gh Cou r t an d speed post ack n ow ledgem en t du e by t h e dat e.”

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Aggrieved thereof, the 1^st defendant preferred this appeal.

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4 . The learned counsel for the appellant/ 1^st defendant would submit as follows: -

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‘The order impugned is an unreasoned and not a speaking order. The Court below failed to follow the mandatory requirements of Order XXXIX Rule 3 of the Code. The impugned order, which is contrary to the provisions as well as the precedential guidance in the decision of the Supreme Court in Sh iv Ku m ar Ch adh a Vs. Mu n icipal Cor por at ion of Delh i an d ot h er s¹ , is liable to be vacated. The 1^st defendant had also filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, requesting to refer the parties to Arbitration. The civil Court is not having jurisdiction to entertain the suit. A counter has already been filed in the present interlocutory application, however, without prejudice to the rights and contentions of the 1^st defendant in the application filed under Section 8 of the Arbitration and Conciliation Act.’

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5 . I have given earnest and thoughtful consideration to the facts and submissions.

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1 (1993) 3 Supreme Court Cases 161

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MSRM, J CMA No.8 2 3 of 2 0 1 7

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6 . The order impugned is an ex parte order of injunction. By the said order, the appellant herein/ 1^st defendant was restrained from invoking the bank guarantee and the 2^nd defendant-Bank was simultaneously restrained from honouring the said bank guarantee till 08.08.2017. It is brought to the notice of this Court that the said order was extended till 05.09.2017. The order impugned reflects that the plaintiff pleaded that the 1^st defendant played fraud upon the plaintiff and made an illegal claim for more than Rs.92,62,400/ - and that the entire amount, except Rs.6,00,000/ - has been paid. No doubt, injunctions restraining encashment of the bank guarantee would be granted in the rarest of the rare cases, provided the facts of the case warrant granting of such an order as per the settled legal position. The immediate remedy that is available to the 1^st defendant in the instant case, where the trial Court issued a temporary injunction without issuing notice, is to either file a counter and make a request to the trial Court to hear and dispose of the application on its merit or to file an application under the provision of Order XXXIX Rule 4 of the Code, which enables the trial Court to vary or set aside or discharge the ex parte order. Be that as it may.

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7 . Apart from the grounds which are raised for consideration in the appeal, the 1^st defendant has also raised certain other grounds on various factual aspects in the counter filed before the Court below. All such contentions raised by the 1^st defendant require detailed examination at the time of disposal of the interlocutory application filed by the plaintiff, on merits. Since the order impugned in this appeal is an ex parte order and not a final order

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MSRM, J CMA No.8 2 3 of 2 0 1 7

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passed on merits of the matter, the scope of this appeal is circumscribed by limitations. Hence, this Court is of the considered view that it is apposite to allow the trial Court to dispose of the interlocutory application on its merit. Further, during the pendency of the interlocutory application before the Court below, if this Civil Miscellaneous Appeal is entertained and an interim order is granted and the bank guarantee gets encashed pursuant thereto, the above said pending interlocutory application filed by the plaintiff becomes infructuous. Further, in view of the contentions of the plaintiff that fraud has been played by the 1^st defendant and that the claim of the 1^st defendant is not legal, in the well considered view of this Court, it is essential that the trial Court shall dispose of the interlocutory application on its merit by taking into consideration all the contentions of both the parties.

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8 . On the above analysis, this Court finds that this appeal can be disposed of with appropriate directions to the Court below.

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9 . Accordingly, this Civil Miscellaneous Appeal is disposed of directing the trial Court to hear and dispose of I.A.No.654 of 2017 in O.S.No.662 of 2017 and also the application said to have been filed by the 1^st defendant under Section 8 of the Arbitration and Conciliation Act, 1996, on merits, and in strict accordance with the procedure established by law. Considering the nature of the relief claimed in the interlocutory application by the plaintiff, the trial Court shall endeavour to pass appropriate orders in both the applications as expeditiously as possible and preferably before 05.09.2017.

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There shall be no order as to costs.

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MSRM, J CMA No.8 2 3 of 2 0 1 7

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Pending miscellaneous petitions, if any, shall stand closed.

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_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ M.Seet h ar am a Mu r t i, J

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09^th August, 2017

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