Case Note & Summary
The writ petition was filed under Article 226 of the Constitution of India seeking a writ of prohibition to restrain the LXXXV Additional City Civil and Sessions Judge, Commercial Court, Bengaluru, from proceeding in Commercial Miscellaneous Appeal No.1 of 2023. The petitioner, Sanjay Kumar, was employed by Elior India Food Services LLP under an employment agreement dated 26-10-2016, which included a long-term incentive plan. Following certain alleged omissions and commissions, the firm issued a charge sheet and later terminated the petitioner's employment on 17-05-2021. Anticipating termination, the petitioner had earlier on 13-05-2021 filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Commercial Court seeking interim measures. That application was dismissed on 17-06-2021, and the petitioner's appeal was dismissed by a Division Bench of the High Court on 22-10-2021, which became final. The petitioner also invoked arbitration under Section 21 on 08-06-2021. A three-member Arbitral Tribunal was constituted, and the petitioner filed an application under Section 17 seeking to secure his claim of Rs.42.90 crores. On 15-12-2022, the Tribunal passed an order directing the firm not to alienate its assets and to furnish a bank guarantee of Rs.9 crores. The respondent firm challenged this order before the Commercial Court through Commercial M.A. No.1 of 2023. The petitioner objected, contending that the Commercial Court lacked jurisdiction as the dispute was not a commercial dispute under the Commercial Courts Act, 2015. On 30-01-2023, the Commercial Court directed that arguments would be heard on both jurisdiction and merits on 01-02-2023. The petitioner then filed the present writ petition, arguing that the Commercial Court had no jurisdiction and should first decide the jurisdictional issue. The respondent contended that the petitioner having himself invoked the Commercial Court's jurisdiction earlier under Section 9 was estopped from challenging it, and that the dispute was indeed commercial. The court analyzed the definition of 'commercial dispute' under Section 2(1)(c) of the Commercial Courts Act, 2015, noting that the employment agreement involved management and consultancy services (sub-clause x) and provision of services (sub-clause xviii), and related to ordinary transactions of merchants (sub-clause i). It held that the dispute was undoubtedly commercial and the Commercial Court had jurisdiction. The court further held that the petitioner, having approached the same Commercial Court under Section 9 and having failed in appeal, could not now turn around and challenge its jurisdiction, applying the principle of approbate and reprobate. The court also found no flaw in the Commercial Court's order to hear arguments on jurisdiction and merits together, as it assured both issues would be considered. Accordingly, the writ petition was dismissed, affirming the Commercial Court's jurisdiction and directing it to proceed with the matter.
Headnote
A) Commercial Courts Act, 2015 - Definition of Commercial Dispute - Section 2(1)(c)(i), (x), (xviii) - Whether dispute arising from employment agreement with management services and long-term incentive plan qualifies as commercial dispute - The agreement involved management and consultancy services, falling under Section 2(1)(c)(x), and provision of services under Section 2(1)(c)(xviii), also relating to ordinary transactions of merchants and traders under Section 2(1)(c)(i) - Held that the dispute is commercial and the Commercial Court has jurisdiction (Paras 11-13). B) Arbitration and Conciliation Act, 1996 - Interim Measures - Section 17 - Challenge to Arbitral Tribunal's Order - Jurisdiction - Section 2(1)(c) Commercial Courts Act, 2015 - The Commercial Court has jurisdiction to entertain an appeal against an order of the Arbitral Tribunal under Section 17 in a commercial dispute, as the dispute falls within the definition of commercial dispute - Held that the filing of Commercial Miscellaneous Appeal was proper and the Commercial Court could proceed (Paras 11-13). C) Civil Procedure Code, 1908 - Objection to Jurisdiction - Order 7 Rule 10 - Principle of Approbate and Reprobate - Estoppel - A party who voluntarily invoked the jurisdiction of a court in earlier proceedings cannot later challenge the same court's jurisdiction when the opposite party invokes it in related proceedings; the court applied the principle that a party cannot blow hot and cold - Held that the petitioner having filed an application under Section 9 before the Commercial Court and pursued it up to appeal is estopped from challenging jurisdiction (Paras 14). D) Civil Procedure Code, 1908 - Procedure - Jurisdiction and Merits - Commercial Court's order to hear both together - The Commercial Court's decision to post the matter for arguments on both maintainability/jurisdiction and merits on the same date was not flawed; the court was entitled to consider both issues, and the petitioner could raise all contentions - Held that the writ petition lacked merit and was dismissed (Paras 15-16).
Issue of Consideration
Whether the Commercial Court had jurisdiction to entertain the Commercial Miscellaneous Appeal filed by the respondent challenging the Arbitral Tribunal's order under Section 17 of the Arbitration and Conciliation Act, 1996, and whether the petitioner could challenge jurisdiction after having earlier invoked the same court.
Final Decision
The High Court dismissed the writ petition, holding that the Commercial Court had jurisdiction as the dispute was a commercial dispute under Section 2(1)(c) of the Commercial Courts Act, 2015. The petitioner, having earlier approached the same Commercial Court under Section 9, was estopped from challenging its jurisdiction. The Commercial Court's order to hear arguments on jurisdiction and merits together was upheld, and the Commercial Court was directed to proceed further.
Law Points
- Commercial dispute definition under Section 2(1)(c) of Commercial Courts Act
- 2015
- includes management and consultancy agreements and agreements for provision of services
- principle of estoppel and approbate and reprobate applies when a party invokes jurisdiction and later challenges it
