High Court · 2025

THE HON'BLE SMT. JUSTICE MOUSHUMI BHATTACHARYA AND THE HoN'BLE JUSrlcE nleox0SrionAN RAo BoBBlLl RAMAIAH COURT APPE AL No: 5of 2025 COMME RCIAL Appeal filed under Section 37 of Arbitration and Conciliation Act 1996 r/w Section 13 of the Commercial Court Act 2O'1 5 to set aside the ex-parte Order daled 24-01-202 5 in COP No 10 ol 2025 on the file of the Court of the Principal Special Court in The Cadre of District Judge for Trial and Disposal of Commercial Disputes at HYderabad ' Beween: 61:**;nfr $5ffi4ifr 55trfr il,ltr5f,e4$ij:l1',#tr Represented by its Authorts "AppellanuRespondent AND I Z uf r#$?*\f*rffi Telangana State. -jf ;*'Jd$fi:q+lfit g,6,.,,g,;g$ffi $pgr5$pg-,ut"lu"',.:"-""*=:e $[$;:i"tri::?Tflir[ ...Respondents/petitioners ' - .F- j?F-;?' ./ lA NO: 2 OF 2025 Petition under f]ectron 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant an interim stay of the operation and effect of the ex-parte Order dated 24- 01-2025 in COP No. 10 of 2025, passed by the Ld. Principal Special Court in The Cadre of District Judge for Trial and Disposal of Commercial Disputes at Hyderabad, pending final disposal ofthe present appeal. Counsel for the Appellant: Mr.Vikram Pooserla, Senior Counsel representing Mr. Malipeddi Abhinay Reddy Counsel for the Respondents: Mr. L. Venkateshwar Rao The Court delivered the following: JUDGMENT THE HON'BLE SMT. TIUSTICE MOUSIIUMI BIIATTACIIARYA AND THE HON'BLE SRI JUSTICE MADIIUSUDHAN RAO BOBBILI RAMAIAH COMMERCIAL COURT APPEAL NO.s 0F 2025 Ivtr. Vikram Pooserla, Iearned Senior counsel rcpresenting Mr. Malipeddi Abhinay Reddy, learned counsel appearing for the appellant Mr. L Venkateshwar Rao, learned counsel appearing for Lhe respondents JUDGMENT The Appeal arises out of an order passed by the learned Principal Special Court in the Cadre of District Judge for Trial and Disposal of Commercial Disputes at Hyderabad on 24.01 2025 on an Appiication made by the respondents under seclion 9 of The Arbitration and Conciliation Act, 1996 (1996 Act) for interim measures'

2. The Trial Court passed al ex porte order and granted interim measures in respect of prayers (a) and (d) of the Application pending further hearing.

3. The Trial Court passed an order restraining the appellant from removing the equipment and machinery involved in the manufacture of the products for the respondents and also restrained the appellant from surrendering the Test License dated 1 l 'O7 '2024 pertaining to its facility. The appellant (the respondent before the Trial Court) is before us. Learned Senior Counsel appearing for the appellant complains

4. that the impugned orcler was passed contrary to the 1aw as stipulated i : not only under tl)e 1996 Act but also under The Specihc Relief Act, a. :: 1963 (1963 Act).

5. Counsel submits that the parties had entered into a second Agreement dated 1 5 . 1l .2024 called the "Termination an d Release Agreement to [hc Commercial Manufacturing and Supply Agreement dated 04.O5.2023". Counsel places the relevant pzrragral>hs of the section 9 petition of the 1996 Act to urge that the respon,:lents have quanlificd the iosr; caused by the appellant's annulment of the contract at Rs.S crores arrd that the effect of the ex parte ordcr wculd be to compel the appelllnt to perform the Agreement.

6. Lcarned cc,unsel appearing for the respondents, on whose Application the impugned order was passed, places the facts leading to the impugned order. Counsel submits that the respon<lents have already parted rvith Rs.3.8 crores + 2O lakhs in terrns of the Agreements ente red into with the appellant and that unless the appellant is restraLined, the respondents would suffer serious prejudice.

7. We have considered the submissions made on belralf of the partics in the con[ext of the impugned order dated 24.O1.2O2a5.

8. Admittedh,, the order was passed ex pafte u.ithout irearing the appellant. It is r:lear from the effect of the impugned ord,:r that the appellant ,",",ould bc compelled to continue with the termir-rated Agreement since the appellant has been restrained from sr.trrendering l i i I I i I I I I I I I i the License pertaining to the Agreement with the respondent No'1 and also from removing the respondent No.1's machinery and equipment from the site. g. Prima facie, it is clear that the Agreement dated 04 05'2023 was determinable in nature as reinforced by the second Agreement daled 15.11.2024. This would hence attract section 1a(d) of the 1963 Act which stipulates that determinable contracts cannot be speciltcally enforced. Further, the respondents' quantihcation of damages/loss amounting to Rs.5 crores would fali under section 38(3)(c) of the 1963 Act where a Court should hesitate in granting an injunction in favour of a party who claims damages in respect of section 3s(3)(c) of the 1963 Act which contemplates grant of perpetual injunction where money would not afford adequate relief Section 9 of the 1996 Act ca1ls for interim measures for the purpose of the preservation of lhe subject matter of arbitration. 10 The impugned order in the present case does not satisfy the interim relief in favour of one terms on which the Court maY Pass an 1 \ party in the absence of the other'

11. In view of the reasons stated above, we are constrained to set aside the impugned order dated 24 Ol '2025 ' We however permit the appellant to frle its counter and an appropriate application before the Court to hear the matter prior to the scheduled date The Court shall ::lj'- consider the matter on the completed pleadings and pass :rders within a reasonable pcriod of time.

12. It is made clear that none of the parties shall tal<e any steps before the court adjudicates and passes orders, so as to make the section 9 petition ol- the 1996 Act or the present Appeal, inriuctuous. It is also made clear that the restraint on the appeltant shall be rcstricted only to the Agrer:ments entered into with the respondents.

13. On the specific prayer made on behalf of the appella nt, the Trial Cour[ shall take up the matter for hearing as soon as the a])pellant files its advancement petition. It is made clear that we have not expressed any opinion on the merits of the matter. The Trial Court shall hear the mattcr afresh. 74 COMCA.NO.5 of 2025, along with a1l connected apptications, is accordingly dispc,sed of Interim orcrers, if any, shall stand vacated. There :;hall be no order as to costs //TRUE COPY// Sd/- K. SRINIVASA RAO JOINT REGISTRAR /1\ #cr ION OFFICER To,

1. The Principal Special Court in The Cadre of District Judge for Trial and Disposal of Commercial Disputes at Hyderabad. (with records, if any)

2. One CC to Mr. It/lalipeddi Abhinay Reddy, Advocate [OPUC] 3. One CC to t\,4 r. l-. Venkateshwar Rao, Advocate [OPUC] 4. Two CD Copies kam/gh \a- 'J' { :l .--. i A l-i- \o v C).\ +i. t- Sl itB ?ffi l).r:1.i1,, HIGH COURT DATED:31 10112025 JUDGMENT COMCA.N o.5 of 2025 DISPOSING OF THE COMMERCIAL COURT APPEAL G .oC4 W*^ -il"to I I I I t I i i ! I I t : I { I I