TMI Blog2019 (2) TMI 1939X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial irregularity - HELD THAT:- The impugned order would not reveal that what was the submission of the appellant before the court below. The appellant had raised the issue of locus of the respondent herein to bring the case. Appellant had raised the issue of jurisdiction of the court below to pass the order but nothing has been discussed in the impugned order - There is no dispute that every judicial order should contain objective reasons supported by material on the record and should also depict that there is no violation of natural justice. The impugned order suffers from aforesaid infirmity, hence, the same is not sustainable on this ground also. Whether the respondent had no locus to bring the case for arbitration or to file application under Section 9 of the Arbitration and Conciliation Act, 1996? - HELD THAT:- Submission of the appellant is that M/s. SPML Infra Limited was the real party and the respondent herein was a proforma party as per the agreement for the reason that only a successful bidder could have been appointed as distribution franchisee and successful bidder was M/s. SPML Infra Limited and M/s. SPML Infra Limited had undertaken its liability under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Purpose Vehicle known as Bhagalpur Electricity Distribution Company Private Limited (respondent herein). The agreement dated 19th July, 2013 between the appellant and M/s. SPML Infra Limited was a distribution franchisee agreement. M/s. SPML Infra Limited furnished bank guarantee as well as performance guarantee in favour of the appellant. Some dispute arose out of the aforesaid agreement and the respondent-Bhagalpur Electricity Distribution Company Private Limited took the matter before the Arbitrator on 14.05.2016 in terms of agreement between the parties vide Arbitration No. 106 of 2016. Since no award was made within one year, the arbitration proceeding expired on 14.05.2017 in terms of Section 29A of the Arbitration and Conciliation Act, 1996. However, time was extended by the Tribunal with consent of the parties for three months by order dated 20.05.2017. The appellant contends that already dead arbitration proceeding could not revive on 20.05.2017 unless the order specifically mentions that it would have retrospective operation. 4. The respondent filed a petition on 13/16 November, 2017 vide Misc. Arbitration Case No. 02 of 2017 under Section 9 of the Arbitration and C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... local jurisdiction was also decided by the same notification. 7. Section 3 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (in brief 2015) relates to constitution of the Commercial Courts which reads as follows:- 3(1) The State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act: Provided that no Commercial Court shall be constituted for the territory over which the High Court has ordinary original civil jurisdiction. (2) The State Government shall, after consultation with the concerned High Court specify, by notification, the local limits of the area to which the jurisdiction of a Commercial Court shall extend and may, from time to time, increase, reduce or alter such limits. (3) The State Government shall, with the concurrence of the Chief Justice of the High Court appoint one or more persons having experience in dealing with commercial disputes to be the Judge or Judges, of a Commercial Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or Commercial Court under sub-section (1) or subsection (2), the provisions of this Act shall apply to those procedures that were not complete at the time of transfer. 4. The Commercial Division or Commercial Court, as the case may be, may hold case management hearings in respect of such transferred suit or application in order to prescribe new timelines or issued such further directions as may be necessary for a speedy and efficacious disposal of such suit or application in accordance with Order XIV-A of the Code of Civil Procedure, 1908 (5 of 1908): Provided that the proviso to sub-rule (1) of Rule 1 of Order V of the Code of Civil Procedure, 1908 (5 of 1908) shall not apply to such transferred suit or application and the court may, in its discretion, prescribe a new time period within which the written statement shall be filed. 5. In the event that such suit or application is not transferred in the manner specified in subsection (1), sub-section (2) or sub-section (3), the Commercial Appellate Division of the High Court may, on the application of any of the parties to the suit, withdraw such suit or application from the Court before which it is pending and transfer th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised the issue of locus of the respondent herein to bring the case. Appellant had raised the issue of jurisdiction of the court below to pass the order but nothing has been discussed in the impugned order. 14. There is no dispute that every judicial order should contain objective reasons supported by material on the record and should also depict that there is no violation of natural justice. The impugned order suffers from aforesaid infirmity, hence, the same is not sustainable on this ground also. 15. Third issue raised in this appeal is that M/s. SPML Infra Limited was selected by the appellant as successful bidder and it had submitted the bank guarantee and performance guarantee and the respondent was simply a Special Purpose Vehicle to perform the responsibility of M/s. SPML Infra Limited. Therefore, the respondent had no locus to bring the case for arbitration or to file application under Section 9 of the Arbitration and Conciliation Act, 1996. 16. Learned counsel for the appellant submits that when the appellant raised before the court below that M/s. SPML Infra Limited is not a party nor the State Bank of India is a party, hence, no relief can be granted in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uccessful bidder may also incorporate a Special Purpose Vehicle. In case of Special Purpose Vehicle, a tripartite Distribution Franchisee Agreement shall be executed between the M/s. SPML Infra Limited, Special Purpose Vehicle and the respective Distribution Licensee. 20. In pursuance of that, M/s. SPML Infra Limited submitted bank guarantee vide Annexure A/7 dated 8th May, 2013 and thereafter agreement dated 19th July, 2013, a copy at Annexure A/8 was signed between the parties whereas second party M/s. Bhagalpur Electricity Distribution Company Private Limited, Kolkata, a company incorporated by the Successful Bidder (i.e. M/s. SPML Infra Limited) under the provisions of the Companies Act, 1956 and having its Registered Office at the referred address at Kolkata was shown as Distribution Franchisee. M/s. SPML Infra Limited signed as 3rd party. Thus, the document is in the nature a tripartite agreement. Condition 'E' and 'G' of the agreement are noticeable:- E. The Successful Bidder has since promoted and incorporated the Distribution Franchisee as a limited liability company under the Companies Act, 1956, and has requested the SBPDCL to accept the Distributi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had no locus to bring the matter before the Arbitrator or the Court for redressal of his grievance. 24. Learned counsel relied on the judgment of the Hon'ble Supreme Court in Gangotri Enterprises Limited Versus Union of India Others reported in 2016(11) SCC 720 wherein the Hon'ble Supreme Court noticed the earlier judgment in Union of India v. Raman Iron Foundry reported in 1974(2) SCC 231 wherein following observations in Iron and Hardware (India) Co. v. Shamlal and Bros. reported in AIR 1954 Bom. 423 was accepted. ...... In my opinion it would not be true to say that a person who commits a breach of the contract incurs any pecuniary liability, nor would it be true to say that the other party to the contract who complains of the breach has any amount due to him from the other party. As already stated, the only right which he has is the right to go to a court of law and recover damages. Now, damages are the compensation which a court of law gives to a party for the injury which he has sustained. But, and this is most important to note, he does not get damages or compensation by reason of any existing obligation on the part of the person who has committed the breach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid condition is fulfilled in this case in favour of the respondent, to permit, to prosecute the matter alone. 27. Learned counsel for the appellant has relied on the observations of the Hon'ble Supreme Court in Sasan Power Limited Versus North American Coal Corporation (India) Private Limited reported in 2016(10) SCC 813 wherein in para 20 of the judgment the Hon'ble Supreme Court observed as follows:- 20. It is settled law that there can only be an assignment of rights arising under a contract but not the burden of a contract . In Tolhurst v. Associated Portland Cement Manufacturers (1900) Ltd., Collins MR held as follows: (KB p. 668) It is, I think, quite clear that neither at law nor in equity could the burden of a contract be shifted off the shoulders of a contractor on to those of another without the consent of the contractee... this can only be brought about by the consent of all three, and involves the release of the original debtor... it is equally clear that the benefit of a contract can be assigned... The Court of Appeal further laid down- (i) Assignment of the benefit of the contract IS PERMISSIBLE where the consideration has been execute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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