Orissa High Court · 2008
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-May-2025 18:34:56 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.17320 of 2023 (In the matter of an application under Articles 226 and 227of the Constitution of India, 1950). UCO Bank, Represented through the Deputy General Manager, Zonal Office, Sambalpur …. Petitioner(s) -versus- Sangram Keshari Khuntia …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: For Petitioner(s) For Opposite Party (s) : : Mr.Subrat Mishra, Adv. Mr. D. Mohapatra, Sr. Adv. along with Mr. M.R. Pradhan, Adv. CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-01.05.2025 DATE OF JUDGMENT:-16.05.2025 Dr. S.K. Panigrahi, J. 1. The Petitioner, in the present writ petition, challenges the orders dated 19.05.2022, 25.08.2022 and 06.02.2023 passed by the District Judge, Sambalpur, in Execution Proceeding No. 28 of 2011. I. FACTUAL MATRIX OF THE CASE:
Legal Reasoning
2. The brief facts of the case are as follows: Page 1 of 10 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-May-2025 18:34:56 (i) UCO Bank issued a tender for major repair works of its Staff Quarters located at Sector 21 Colony, Rourkela. The Respondent emerged as the successful bidder for certain civil works at the said premises. (ii) During the execution of the contract, the Premises Maintenance Committee, constituted in accordance with the terms of the contract, identified certain defects which the Respondent was obligated to rectify. However, the Respondent failed to address these defects and proceeded to submit the final bill through the architect, claiming a sum of ₹66,54,197.46. (iii) Subsequently, on 27 February 2008 and again on 7 April 2008, the Respondent invoked Clause 49 of the General Conditions of Contract arising from Work Order No. SAMR/GAD/Premises/686/04.05 dated 28 June 2004, pertaining to the repair work at Sector 21, Rourkela, and sought reference to arbitration under Section 21 of the Arbitration and Conciliation Act, 1996. (iv) On 16 May 2008, the Respondent requested the appointment of Late Justice D.M. Pattnaik as the sole arbitrator, and he was duly appointed to adjudicate the dispute. The solearbitrator passed an award on 11
Legal Reasoning
August 2010, allowing the Respondent’s claims. (v) The Petitioner challenged the arbitral award before the District Judge, Sundergarh, by filing ARBP No. 13 of 2010 under Section 34 of the Arbitration and Conciliation Act, 1996.The District Judge, Sundergarh, dismissed ARBP No. 13 of 2010 on 31 March 2022, upholding the arbitral award on merits. Page 2 of 10 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-May-2025 18:34:56 (vi) The Petitioner challenged the District Judge’s order dated 31 March 2022 before this Court by filing ARBA No. 29 of 2022 under Section 37 of the Arbitration and Conciliation Act, 1996. This Court, by order dated 27 June 2022, set aside the judgment of the District Judge. (vii) Meanwhile, in Execution Case No. 28 of 2011, the District Judge, Sambalpur, by order dated 19 May 2022, directed the Petitioner to deposit a sum of ₹5 lakhs as a condition for staying further proceedings. (viii) Subsequently, on 2 August 2022, the respondent petitioned for withdrawal of the ₹5 lakhs deposited by the petitioner. The petitioner opposed the release, citing the pendency of Arbitration Case No. 15 of 2022 under Section 34 of the Arbitration and Conciliation Act. (ix) On 22 August 2022, the Petitioner filed an application seeking transfer of the Section 34 petition and Execution Case to the Court of the Civil Judge (Senior Division), Commercial Court, Sambalpur. (x) By order dated 25 August 2022, the District Judge, Sambalpur, stayed the execution proceedings, subject to the Petitioner depositing a sum of ₹5 lakhs as security, with liberty to the Respondent to seek release of the amount on grounds of restitution. (xi) The said order was challenged by the Petitioner before this Court in W.P.(C) No. 26104 of 2022. By order dated 11 October 2022, operation of the impugned order was stayed. Subsequently, by order dated 20 January 2023, this Court permitted withdrawal of the writ petition with liberty to file a fresh petition. Page 3 of 10 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-May-2025 18:34:56 (xii) Thereafter, by order dated 6 February 2023, the District Judge, Sambalpur, permitted release of the amount of ₹5 lakhs to the respondent. (xiii) The Petitioner, by petition dated 3 March 2023, opposed the respondent’s application for withdrawal of the deposited amount and sought dismissal of the execution case on the ground of maintainability. (xiv) By order dated 3 March 2023, the District Judge allowed the petitioner’s petition dated 22 August 2022, on the ground of lack of jurisdiction, and directed the parties to appear before the Senior Civil Judge, Commercial Court, Sambalpur. (xv) Consequently, the petitioner challenges the orders dated 19 May 2022, 25 August 2022, and 6 February 2023 by filing the present writ petition, seeking quashing of the said orders. II. SUBMISSIONS ON BEHALF OF THE PETITIONER: 3. (i) Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: The Petitioner submitted that the District Judge, Sambalpur, committed grave error of facts and law in passing the orders dated 25.08.2022 and 06.02.2023 in Execution Case No. 28 of 2011, which are nullities as the Court did not deal with the Petitioner’s objections regarding jurisdiction raised by the petition dated 22.08.2022 under Section 15(2) of the Commercial Courts Act, 2015. Page 4 of 10 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-May-2025 18:34:56 (ii) The Petitioner submitted that the Court acknowledged lack of jurisdiction belatedly by order dated 03.03.2023, after the Petitioner filed another petition on maintainability the same day, and only after allowing disbursement of ₹5 lakhs by the order dated 06.02.2023 pursuant to the earlier invalid orders. (iii) The Petitioner contended that the District Judge, Sambalpur, had no jurisdiction to entertain matters arising under the Arbitration and Conciliation Act, 1996 in view of Section 15(2) of the Commercial Courts Act, 2015, and the notification dated 13.11.2020 issued by the Law Department, Government of Odisha.This notification was challenged in M/sM G Mohanty v. State of Odisha1and upheld by this Court by judgment dated 08.04.2022. Although the matter was subsequently challenged before the Supreme Court, resulting in bona fide confusion regarding the forum’s jurisdiction, the Supreme Court in Jaycee Housing Pvt. Ltd v. Registrar General, Orissa High Court & Ors2clarified that Commercial Courts have exclusive jurisdiction over disputes arising under the Arbitration and Conciliation Act. Therefore, the District Judge, Sambalpur, lacked jurisdiction to pass the impugned orders and ought to have either dismissed Execution Case No. 28 of 2011 as not maintainable or forthwith transferred the same to the Senior Judge, Commercial Court, Sambalpur, upon receipt of the Petitioner’s transfer petition dated 22.08.2022. Failure to do so resulted 1W.P.(C) Nos. 3523, 5491 & 5494 of 2022 and W.P.(C) Nos. 28644 & 30554 of 2021. 2(2023) 1 SCC 549. Page 5 of 10 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-May-2025 18:34:56 in the passing of the impugned orders, which have caused serious prejudice to the Petitioner. (iv) The Petitioner submitted that the orders dated 25.08.2022 and 06.02.2023 passed by the District Judge, Sambalpur, in Execution Case No. 28 of 2011 are illegal and arbitrary, particularly in so far as they grant relief of restitution to the Petitioner by way of the direction issued in the order dated 25.08.2022. (v) The Petitioner further submitted that the ground of restitution relied upon by the Court to permit withdrawal of ₹5 lakhs by the Opposite Party was wholly untenable, as the appeal was initially pending as Arbitration Case No. 15 of 2022, and the present Appeal No. 1 of 2025, challenging the award and the order dated 03.02.2025 under Section 34 of the Arbitration and Conciliation Act, 1996, is still sub judice. III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTY: 4. (i) The Learned Counsel for the Opposite Party earnestly made the following submissions in support of his contentions: The Petitioner has repeatedly submitted to the jurisdiction of the District Judge, Sambalpur, until the filing of an application dated 14.02.2023 for transfer/withdrawal of Arbitration Case No. 15 of 2022. This application was primarily on the ground that the Petitioner was uncertain about the Court’s jurisdiction to hear the case. (ii) It was only after the pronouncement of the judgment by the Supreme Court in Jaycee Housing Private Limited (supra), that the Petitioner became certain regarding the lack of jurisdiction. This is clearly Page 6 of 10 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-May-2025 18:34:56 evident from their petition dated 14.02.2023 filed before the District Judge, Sambalpur in ARBP No. 15 of 2022. (iii) By no stretch of imagination can it be construed that until the pronouncement of the judgment in Jaycee Housing Private Limited (supra), the District Judge, Sambalpur, should have refrained from passing orders or dealing with the series of applications filed by the present Petitioner and Respondent from time to time. (iv) Moreover, the petitioner, having availed the benefit of stay of execution orders granted by the District Judge, Sambalpur, and having complied with the conditional orders of stay after withdrawal of W.P.(C) No. 26104 of 2022 on 20.01.2023, cannot possibly challenge year-old orders after accepting the ratio of the judgment pronounced by the Supreme Court reported in Jaycee Housing Private Limited(supra). IV. COURT’S REASONING AND ANALYSIS: 5. 6. Heard the learned counsel for the parties and perused the materials placed on record. The primary issue in the instant matter is whether the District Judge, Sambalpur, acted without jurisdiction in entertaining and passing the impugned orders dated19 May 2022, 25 August 2022 and 6 February 2023 in Execution Proceeding No. 28 of 2011, and whether such orders are sustainable in light of the statutory mandate under the Commercial Courts Act, 2015. Page 7 of 10 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-May-2025 18:34:56 7. The notification dated 13 November 2020 issued by the Law Department, Government of Odisha, designated the Commercial Courts for specified districts, in terms of Section 3 of the Commercial Courts Act, 2015. This notification, upheld by this Court in M/sM G Mohanty (supra)by judgment dated 8 April 2022, vested exclusive jurisdiction over commercial matters, including those arising under the Arbitration and Conciliation Act, 1996, with the designated Commercial Courts. 8. The Supreme Court inJaycee Housing Private Limited (supra)clarified that the Commercial Courts Act, 2015, being a later and special statute, prevails over the Arbitration Act with respect to commercial disputes of specified value. Sections 15 and 21 of the Commercial Courts Act mandate transfer of pending cases and grant overriding effect to the Act, respectively, requiring all such cases to be adjudicated by the designated Commercial Courts. 9. In the present case, the petitioner filed a petition dated 22 August 2022 seeking transfer of Execution Case No. 28 of 2011 to the competent Commercial Court. Despite the pendency of this petition, the District Judge passed the impugned orders on 25 August 2022 and 6 February 2023.Although the District Judge later, by order dated 3 March 2023, acknowledged the commercial nature of the dispute and directed transfer of the proceedings, this was belated and followed disbursement of ₹5 lakhs under the earlier impugned orders. Page 8 of 10 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-May-2025 18:34:56 10. The District Judge’s failure to comply with the binding statutory mandate and authoritative pronouncement of the Supreme Court raises serious jurisdictional concerns. The District Judge lacked inherent jurisdiction to entertain and decide Execution Case No. 28 of 2011 in view of the exclusive jurisdiction vested in the Commercial Courts and the binding notification dated 13 November 2020. Therefore, the impugned orders passed despite the pending transfer petition and objections are legally unsustainable and liable to be set aside. 11. The nature of the execution proceedings and relief sought fall squarely within the exclusive jurisdiction of the designated Commercial Court post the 2020 notification and Supreme Court decision in Jaycee Housing Private Limited (supra). The continuation of the execution by a non-competent forum vitiates the proceedings. V. 12. CONCLUSION: In view of the foregoing analysis, this Court is of the considered opinion that the impugned orders dated 25 August 2022 and 6 February 2023 passed by the District Judge, Sambalpur, in Execution Case No. 28 of 2011, were without jurisdiction, having been passed in violation of the provisions of the Commercial Courts Act, 2015 and the Government notification dated 13 November 2020. Accordingly, the said orders are hereby quashed and set aside. Page 9 of 10 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-May-2025 18:34:56 13. Since the Section 34 petition and Execution Case No. 28 of 2011 have already been transferred to the Commercial Court, Sambalpur, which alone is vested with the jurisdiction to entertain and decide such matters, no further directions in that regard are required. The Commercial Court shall now proceed in accordance with law from the stage at which the proceedings stood prior to the impugned orders. 14. 15.
Decision
Accordingly, the Writ Petition is allowed. Interim orders, if any, passed earlier stands vacated. (Dr.S.K. Panigrahi) Judge Orissa High Court, Cuttack, Dated the16th May, 2025 Page 10 of 10