S.105 Of AP Reorganisation Act Contemplates Only One-Way Transfer Of Pending Cases From Andhra Pradesh To Telangana: High Court

The Telangana High Court has clarified that Section 105 of the Andhra Pradesh Reorganisation Act, 2014 only contemplates a one-way transfer of pending proceedings from the erstwhile state of Andhra Pradesh to the newly formed state of Telangana, and not vice versa.

In doing so, the high court dismissed an appeal challenging the jurisdiction of a Commercial Court in Hyderabad to hear a suit for recovery of dues. The Court rejected the appellant's contention that the case should have been transferred to Andhra Pradesh due to the dispute having originated in Kadapa, which fell within the territorial jurisdiction of AP following the bifurcation.

A division bench comprising Justice Moushumi Bhattacharya and Justice Nagesh Bheemapaka in its order said,"Second, the transfer of proceedings contemplated under section 105 of The Reorganisation Act, 2014, pertains to proceedings from the erstwhile State of Andhra Pradesh to the State of Telangana provided the subject matter exclusively falls within the State of Telangana. This would be clear also from section 105(1) of the 2014 Act. Therefore, the transfer is only in one direction, i.e., from the State of Andhra Pradesh to the State of Telangana, if falling under section 105(1) and not the other way around. Thus, the appellant's contention that the Suit should have been transferred from the State of Telangana to the State of Andhra Pradesh (in the reverse direction) is not within the contemplation of section 105(1) of the 2014 Act and is therefore without basis....Section 105 of the 2014 Act would not apply to the Suit filed by the respondent for the above reasons". 

The high court was hearing an appeal challenging a judgment of a Commercial Court in Hyderabad filed for seeking recovery of over Rs. 38 crore along with interest.

Background

On September 24, 2008, the appellant (defendant) and the respondent (plaintiff) entered into an agreement for the execution of a drinking water project at Kadapa, Andhra Pradesh. The project, valued at Rs. 99,99,67,736, faced issues when the appellant delayed payments for work completed by the respondent. Despite raising multiple Running Account (RA) bills between December 2008 and February 2010, the respondent received only partial payments. In February 2013, the appellant informed the respondent that the project would be closed due to a lack of funds from the Andhra Pradesh government. Subsequently, the respondent filed a suit for recovery in 2016.

The Commercial Court in Hyderabad decreed the suit in favour of the respondent, directing the appellant to pay Rs. 38,90,99,890 with 15% per annum interest 'pendente lite' (pending the litigation) and 6% per annum interest until realisation of the debt. Against this decision the appellant moved the high court. 

The appellant argued that the suit should have been transferred to an appropriate court in Andhra Pradesh as per Section 105 of the Andhra Pradesh Reorganisation Act, 2014. They further contended that the Commercial Court lacked jurisdiction as the project was executed in Kadapa, Andhra Pradesh. Lastly, the appellant claimed that the award of 15% per annum pendente lite interest was unreasonable and outside the purview of Section 34 of the Code of Civil Procedure.

The respondent countered these arguments by asserting that the suit was filed in 2016, after the "appointed day" mentioned in the Reorganisation Act, making Section 105 inapplicable. They also pointed out that the appellant's registered office was in Hyderabad at the time of filing the suit and continues to be so, satisfying the requirements of Section 20 of the Code of Civil Procedure for territorial jurisdiction. Furthermore, the respondent argued that the interest awarded was reasonable given the commercial nature of the contract.

Findings

The bench noted that Section 105 of the Reorganisation Act applies only to proceedings pending on the "appointed day" i.e. June 2, 2014. Since the suit was filed in 2016, it did not fall under the purview of this section, it said. 

It said, "Appointed day, is defined under section 2(a) of The Reorganisation Act, 2014 as the day on which the Central Government notifies the same in the Official Gazette. The Central Government issued the Notification on. 02.06.2014. Hence, the appointed day is 02.06.2014. The respondent/plaintiff filed the COS in 2016 which is hence after the "appointed day"...Therefore, since COS.No.38 of 2016 was not pending on the "appointed day" there was no question of transfer of COS under section 105 of The Reorganisation Act, 2014". 

The court further emphasised that the transfer contemplated in Section 105 is unidirectional - from Andhra Pradesh to Telangana - and not the other way around. Therefore, the appellant's argument for transferring the case from Telangana to Andhra Pradesh had no legal basis.

The High Court also found that the Commercial Court in Hyderabad had territorial jurisdiction under Section 20 of the Code of Civil Procedure, as the appellant's registered office was in Hyderabad both at the time of filing the suit and during the appeal. Moreover, the cause of action arose partly in Hyderabad, as the contract was executed there, and various communications were sent from the appellant's Hyderabad office, it noted. 

The court further noted that the appellant did not raise the jurisdiction issue under the Reorganisation Act before the Commercial Court, making it a new plea in the appeal. Regarding the interest rate, the High Court deemed it reasonable considering the commercial nature of the transaction and the long delay in payment.

Thus, the High Court dismissed the appeal, upholding the Commercial Court's judgement in its entirety.

COMCA 1 OF 2022

Counsel for petitioners: Sr. Counsel Kishor Rai Sohni

Counsel for respondent: Sr. counsel Avinash Desai

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