Kerala High Court
Shriram Transport Finance Company Ltd vs Nil on 5 September, 2012
Author: V.Chitambaresh
Bench: V.Chitambaresh
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE V.CHITAMBARESH
WEDNESDAY, THE 5TH DAY OF SEPTEMBER 2012/14TH BHADRA 1934
OP(C).No. 86 of 2011 (O)
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OS.244/2009 of MUNSIFF COURT, PALA
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PETITIONER:
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SHRIRAM TRANSPORT FINANCE COMPANY LTD.,
MYLAPUR, CHENNAI, REP. BY ITS AUTHORISED SIGNATORY
RAJU THOMAS.
BY ADVS.SRI.C.HARIKUMAR
SMT.MOLLY KOSHY
RESPONDENT
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K.B.SURESH,
S/O.BALA KRISHNAN NAIR, KALLEKKULATH,
POOVARANY P.O.,
POOVARANY KARA, POOVARANY VILLAGE
MEENACHIL TALUK - 686577, PALA.
BY ADVS.SRI.V.K.SUNIL
SMT.NIMA JACOB
THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 05-09-2012,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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OP(C).No. 86 of 2011 (O)
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APPENDIX
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PETITIONER'S EXHIBITS
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EXT.P1. COPY OF THE PLAINT IN O.S. 244/09
EXT.P2. COPY OF THE PETITION FILED BY THE PETITIONER IN I.A. 1370/2010
ON O.S.244/09 BEFORE HON'BLE MUNSIFFS COURT, PALA DT. 7/09/09
EXT.P3. COPY OF THE LOAN CUM HYPOTHECATION AGREEMENT.
EXT.P4. COPY OF THE MEMO FILED FOR PRODUCING THE AGREEMENT
EXT.P5. COPY OF THE OBJECTION IN I.A. 1370/2010
EXT.P6. COPY OF THE ORDER IN I.A. NO.1370/2010 IN O.S.244/09 DT.
10.12.2010.
RESPONDENT'S EXHIBITS : NIL
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/ TRUE COPY /
P.A. TO JUDGE
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VK
V.CHITAMBARESH,J.
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O.P(C) No. 86 of 2011
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Dated this the 5th day of September, 2012
J U D G M E N T
The application put in by the defendant under Section 8 (1) of the Arbitration and Conciliation Act, 1996 to refer the parties to arbitration has been dismissed by the order impugned by the court below. This is for the reason that the plaintiff has alleged fraud and has contended that the agreement containing the arbitration clause is not supported by consideration
2. The court below has in so doing not rendered any finding as to whether the hypothication agreement containing the arbitration clause is bad for any vitiating circumstance. Such a finding is absolutely essential before deciding as to whether the parties have to be referred to arbitration under Section 8(1) of the Arbitration and Conciliation Act. A reference in this connection to the decision in Prakash.K. vs. M/s.Sairam Transport Finance Company Ltd. (2008 (2) KLJ 989) is apposite.
2. The prayer in the suit is not only for a declaration that the hypothication agreement is null and void but also for a O.P(C) No. 86 of 2011 2 decree of prohibitory injunction restraining the defendants and their men from trespassing into the property of the plaintiff and threatening them. The issue arises out of a hire purchase transaction and the validity of the agreement has to be considered as a preliminary issue. The court below was not justified in dismissing the application under Section 8(1) of the Arbitration and Conciliation Act merely for the reason that one of the executants to the hypothication agreement has disputed the validity of the agreement alleging vitiating circumstances.
3. The impugned order is set aside and I.A No.1370/2010 in O.S No.244/2009 on the file of the Court of the Munsiff of Pala is remanded for fresh consideration. The court below shall permit the parties to lead evidence and render a finding as to whether the hypothication agreement is bad for any reason. The parties shall be refered to arbitration only if the court finds that the hypothication agreement is not bad for any vitiating circumstance.
The Original Petition(Civil) is allowed. No costs.
V.CHITAMBARESH.
JUDGE smm O.P(C) No. 86 of 2011 3 O.P(C) No. 86 of 2011 4