Supreme Court Clarifies Procedure for Injunction Violations in Arbitration Cases: RK Arora vs. M/S Ace Enterprises (2018)

LEGAL ISSUE: Procedure for addressing violations of injunction orders in the context of arbitration proceedings.

CASE TYPE: Civil, Arbitration

Case Name: R K Arora General Manager & Anr. vs. M/S Ace Enterprises

Judgment Date: 7 February 2018

Date of the Judgment: 7 February 2018

Citation: (2018) INSC 110

Judges: Kurian Joseph, J., Mohan M. Shantanagoudar, J.

Can a court treat a contempt application as one for violation of an injunction order? The Supreme Court recently addressed this question in a case involving a dispute over an arbitration proceeding. The core issue was whether a lower court could initiate contempt proceedings for an alleged violation of its injunction order, or if the matter should be treated as a violation of the injunction under Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure. The Supreme Court clarified the correct procedure, emphasizing the distinction between contempt proceedings and actions for violation of injunction orders. The judgment was delivered by a bench comprising Justice Kurian Joseph and Justice Mohan M. Shantanagoudar, with Justice Kurian Joseph authoring the opinion.

Case Background

The case originated from a dispute where the Court of Small Causes, Srinagar, had issued an injunction order on June 22, 2011, staying arbitration proceedings between M/S ACE Enterprises and the Union of India. M/S ACE Enterprises then filed an application alleging violation of this order, seeking contempt proceedings and a stay on the arbitrator’s revival order. The Court of Small Causes, without citing any specific provision, treated this application as one for contempt and eventually dismissed it on November 6, 2013, finding no contempt or violation of its order. The court noted that the arbitration proceedings were an independent statutory remedy under the Jammu and Kashmir Arbitration Act, 2002, and that the actions of the parties did not constitute a willful violation of the court’s order.

Timeline:

Course of Proceedings

The High Court of Jammu & Kashmir, on December 16, 2015, set aside the order of the Court of Small Causes. The High Court held that subordinate courts do not have the jurisdiction to initiate contempt proceedings against themselves under the Jammu and Kashmir Contempt of Courts Act, 1997 and that only the High Court has the power to punish for contempt of subordinate courts. The High Court also noted that the arbitrator had concluded the proceedings and passed a final award against the interests of the petitioner, and stayed the final award pending a decision on the contempt petition. The Supreme Court, on April 18, 2016, issued notice and stayed the High Court’s order, observing that the High Court had not considered that there were two separate proceedings under different contracts.

Legal Framework

The judgment references the Jammu and Kashmir Contempt of Courts Act, 1997, specifically Section 10, which vests the High Court with the power to punish contempt of subordinate courts. Section 10 of the Jammu and Kashmir Contempt of Courts Act, 1997 states that “the High Court shall have and exercise the same jurisdiction, powers and authority in accordance with the same procedure and practice, in respect of contempts of courts subordinate to it as it has and exercises in respect of contempts of itself; provided that the High Court shall not take congnizance of a contempt alleged to have been committed in respect of a court subordinate to it where such contempt is an offence punishable under the Ranbir Penal Code, 1989.” The judgment also refers to Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure, 1977, which deals with the consequences of disobedience or breach of an injunction.

Arguments

The respondent (M/S Ace Enterprises) argued that the appellants had violated the injunction order passed by the Court of Small Causes by continuing with the arbitration proceedings. They contended that the arbitrator’s actions and the subsequent award were in violation of the court’s order and sought contempt proceedings against the appellants. The respondent also argued that the High Court was correct in staying the final award passed by the arbitrator.

The appellants (R K Arora General Manager & Anr.) argued that there were two separate proceedings under different contracts and that the High Court had not taken this into account. They also contended that the trial court did not have the jurisdiction to initiate contempt proceedings under the Jammu and Kashmir Contempt of Courts Act, 1997. The appellants also argued that they had a pending application under Section 8 of the Jammu and Kashmir Arbitration Act.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in the judgment. However, the primary issue before the court was:

• Whether the application filed by the respondent for initiating contempt should be treated as an application for taking action under Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The judgment does not cite any specific cases or books. However, it does refer to the following legal provisions:

• Section 10 of the Jammu and Kashmir Contempt of Courts Act, 1997: This section vests the High Court with the power to punish contempt of subordinate courts.
• Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure, 1977: This rule deals with the consequences of disobedience or breach of an injunction.

Judgment

How each authority was viewed by the Court:

• The Court used Section 10 of the Jammu and Kashmir Contempt of Courts Act, 1997 to emphasize that the trial court lacked jurisdiction to initiate contempt proceedings.
• The Court held that the application should be treated under Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure, 1977, as it is the appropriate provision for addressing violations of injunction orders.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to correctly apply the law and ensure that the proper procedure was followed. The Court emphasized that the application was essentially for violation of an injunction order and not for contempt of court. The Court also considered the fact that the trial court did not have the jurisdiction to initiate contempt proceedings under the Jammu and Kashmir Contempt of Courts Act, 1997. The Court also took into account the fact that the High Court had not considered that there were two separate proceedings under different contracts.

Fact:Law Ratio

The Court stated, “Though an application for contempt was filed before the trial court, it was, in fact, a petition for taking action under Order XXXIX Rule 2A of Jammu and Kashmir Code of Civil Procedure Act, 1977. It is not a case for initiating contempt on the face of it. These are two different jurisdictions.”

The court further clarified, “The trial court shall first see whether there is any disobedience of the order of injunction and in case the court enters a finding of disobedience, the rest under Order XXXIX Rule 2A alone shall follow.”

The court also stated, “The submission made by the appellants regarding separate contracts and pending application under Section 8 of the Jammu and Kashmir Arbitration Act etc. are open to the appellants to canvas before the trial court at the appropriate stage.”

There were no dissenting opinions.

Key Takeaways

• An application alleging violation of an injunction order should be treated as an application under Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure, not as a contempt proceeding.
• Subordinate courts do not have the jurisdiction to initiate contempt proceedings against themselves under the Jammu and Kashmir Contempt of Courts Act, 1997.
• Trial courts must first determine if there is disobedience of the injunction order before taking action under Order XXXIX Rule 2A.
• Issues regarding separate contracts and pending applications under the Jammu and Kashmir Arbitration Act should be considered by the trial court at the appropriate stage.

Directions

The Supreme Court gave the following directions:

1. The application filed by the respondent for initiating contempt shall be treated as an application for taking action under Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure and shall be renumbered accordingly.
2. The trial court shall first see whether there is any disobedience of the order of injunction and in case the court enters a finding of disobedience, the rest under Order XXXIX Rule 2A alone shall follow.
3. The trial court was directed to take a decision on the application expeditiously, preferably within a period of three months from the date of receipt of a copy of the Judgment.

Development of Law

The ratio decidendi of this case is that an application alleging violation of an injunction order should be treated as an application under Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure, and not as a contempt proceeding. This clarifies the distinction between the two types of proceedings and ensures that the correct procedure is followed in such cases. There is no change in the previous position of the law, but it clarifies the procedure to be followed.

Conclusion

The Supreme Court’s judgment in R K Arora vs. M/S Ace Enterprises clarifies the procedure for dealing with violations of injunction orders in the context of arbitration. The Court held that an application for contempt should be treated as an application under Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure, and not as a contempt proceeding. This decision ensures that the correct legal framework is applied in such cases, emphasizing the distinction between contempt proceedings and actions for violation of injunction orders. The trial court was directed to first determine if there is any disobedience of the order of injunction and if so, proceed under Order XXXIX Rule 2A.

Category:

• Civil Law
  • Injunction
  • Order XXXIX Rule 2A, Jammu and Kashmir Code of Civil Procedure, 1977
• Arbitration Law
  • Jammu and Kashmir Arbitration Act, 2002
• Contempt of Court
  • Jammu and Kashmir Contempt of Courts Act, 1997
  • Section 10, Jammu and Kashmir Contempt of Courts Act, 1997

FAQ

Q: What is the main issue in the R K Arora vs. M/S Ace Enterprises case?

A: The main issue was whether an application alleging violation of an injunction order should be treated as a contempt proceeding or as an application under Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure.

Q: What did the Supreme Court decide regarding the application?

A: The Supreme Court decided that the application should be treated as an application under Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure, which deals with violations of injunction orders, and not as a contempt proceeding.

Q: Can a trial court initiate contempt proceedings for violation of its own order in Jammu and Kashmir?

A: No, according to the Jammu and Kashmir Contempt of Courts Act, 1997, only the High Court has the power to punish for contempt of subordinate courts.

Q: What is Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure?

A: Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure deals with the consequences of disobedience or breach of an injunction.

Q: What should a trial court do when faced with an application alleging violation of an injunction order?

A: The trial court should first determine whether there has been any disobedience of the injunction order. If disobedience is found, the court should proceed under Order XXXIX Rule 2A of the Jammu and Kashmir Code of Civil Procedure.