Madras High Court
Srividya Krishna vs Lakshmi Mukilan on 31 July, 2018
Author: Pushpa Sathyanarayana
Bench: Pushpa Sathyanarayana
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 31.07.2018 CORAM THE HONOURABLE MRS.JUSTICE PUSHPA SATHYANARAYANA O.P.No.279 of 2018 Srividya Krishna .. Petitioner Vs. Lakshmi Mukilan .. Respondent * * * Prayer : Petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, praying to appoint an Arbitrator to commence the arbitration in the matter of disputes of the partnership firm "Events Fest" dated 25.10.2013 and dissolved with effect from 31.12.2017 between the petitioner and the respondent. * * * For Petitioners : Mr.R.Ramasubramanian Raja For Respondents : Mr.S.Raghavan O R D E R
This Original Petition is filed seeking appointment of an Arbitrator in the matter of disputes of the partnership firm "Events Fest" constituted by the petitioner and the respondent based on partnership deed 25.10.2013, which was dissolved on 31.12.2017.
2. Heard both sides.
3. The partnership firm was constituted by the petitioner and the respondent by a registered partnership deed dated 25.10.2013 for the purpose of carrying on, consulting and outsourcing work for marriages and organizing such other functions for its clients. In short, it is an Event Management Company. The parties also entered into an amendment deed dated 14.09.2017.
4. It is stated that since there were differences of opinion and incompatibility between the petitioner and the respondent, it was decided to dissolve the partnership firm with effect from 31.12.2017 and accordingly, a deed of dissolution was also executed on that date. After the execution of the dissolution deed, the respondent sent a legal notice dated 08.01.2018 to the petitioner demanding a sum of Rs.50,00,000/- (Rupees fifty lakhs only). The said notice was also replied on 20.01.2018 by the petitioner.
5. It is to be noted that even after a short period of starting the partnership firm, the partners could not see eye-to-eye and were working for the clients on parallel tracks. The petitioner had enlisted the short-comings of the respondent, which are purely subjective. The deed of dissolution dated 31.12.2017 between the petitioner and the respondent clearly mentions that the movable assets on the date of dissolution after payment of all expenses and liabilities outstanding will be shared among the partners equally. Any other liabilities and expenses that would arise after the dissolution will be shared by the partners equally in their individual capacity. Therefore, it has to be presumed that as on the date of the execution of the dissolution deed, there seems to be no mutual claims, which were reduced into writing. However, subsequent to that within a week a notice was issued by the respondent claiming Rs.50,00,000/- (Rupees fifty lakhs only), which was replied by the petitioner. There was yet another exchange of notice between the parties. A notice was issued on 13.02.2018 on behalf of the respondent to furnish complete audited accounts. An appropriate reply was sent for that by the petitioner. Admittedly, the petitioner had not named any Arbitrator for the resolution of the disputes. While so, for the first time, the original petition has been filed for appointment of an Arbitrator.
6. Be that as it may, in the original petition as well as in the typed set of documents furnished by the petitioner, there is a statement of claim made by the petitioner from the respondent as on 01.03.2018. The first claim relate to amount of loss caused by the respondent on account of lack of timely response in interaction with the customers and poor service quality and attitude. The second claims is "undue pressure and mental agony in resolving the accounts of the partnership of Events Fest. Thirdly, loss of Goodwill amongst existing customers for displaying their photographs without their prior permission and finally, damages for making defamatory statement in the legal notices. Though specific amounts are claimed under each of the heads mentioned above, the same can be substantiated only by oral and documentary evidence as they are only subjective claims, in a full fledged trial.
7. To be noted a sum of Rs.3,00,000/- is claimed for making defamatory statements. It is settled proposition that the claim for defamation is not arbitrable.
8. Clause 19 of the Partnership Deed refers to Arbitration Clause.
"19. If any dispute or difference shall arise between the parties hereto touching the business of the firm or interpretation of any provision hereof of otherwise, howsoever relating to the firm and its business, the same shall be referred to an Arbitrator agreed upon, failing which to two or more arbitrators one to be appointed by each party to the dispute and the arbitration shall be governed by the Arbitration Act for the time being in force."
9. The jurisdiction clause provides for disputes to be resolved by arbitration. The jurisdiction clause should be sufficiently widely drafted to allow the Courts or Arbitral Tribunal to hear even non-contractual disputes as well as contractual disputes. Section 499 and 500 of I.P.C provide for defamation and the punishment. The claim quantified as mentioned in the petition is tortious in nature. The law applicable to torts has traditionally been ignored in the negotiating process. Tort claims do not normally arise from prior contractual relationship. Though even in the instant case, the jurisdiction clause refers "if any dispute", whether such a clause covers a torts claim. Tort claims are similar to unlawful act claims. Every unlawful act that causes loss to another person has to be compensated by the wrongdoer. The personnel injury claim is not outside the scope of the contract.
10. As mentioned supra, it is only matters relating to contract or the breach thereof that are to be referred to arbitration. Any act of tort resulting in a claim for compensation by one party cannot be referred to arbitration. The partnership deed did not contemplate a claim for defamation by one party be referred to arbitration, instead of being tried before a Court of law. The claim for mental agony and damages for making defamatory statements, as has been claimed in the original petition is totally different from the question of performance of contract as agreed in the partnership deed. Therefore, the claim of compensation based on torts is totally distinct from the contractual disputes arising between the parties. In fact, the partnership deed dated 25.10.2013 did not impose an obligation on the partners to observe due diligence in discharge of the contract and that any negligence or lack of timely response in interacting with the customers and poor service quality and attitude amounted to a breach of the terms of contract.
11. In the light of the above, the claim of compensation for the alleged defamation does not fall within the purview of the arbitration clause. This petition is dismissed, leaving the parties to bear their own costs.
31.07.2018 gg PUSHPA SATHYANARAYANA, J.
gg O.P.No.279 of 2018 31.07.2018