Kerala High Court
Krishnan vs Hindustan Petroleum Corporation on 22 February, 2022
Author: V.G.Arun
Bench: V.G.Arun
OP(C).1500/15 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE V.G.ARUN
TUESDAY, THE 22ND DAY OF FEBRUARY 2022 / 3RD PHALGUNA, 1943
OP(C) NO. 1500 OF 2015
AGAINST THE ORDER/JUDGMENT IN OS 293/2013 OF PRINCIPAL SUB
COURT, ERNAKULAM
PETITIONER/S:
KRISHNAN
AGED 52 YEARS
S/O K.W. MURALEEDHARA MARAR, RESIDING AT NEDIUM
VEEDU, H.NO. 39/1276, KALATHI PARAMBIL ROAD,
ERNAKULAM , KOCHI-682 016- REPRESENTED BY POWER
OF ATTORNEY HOLDER M.P. SAMPATH KUMAR, S/O M.N.
PRAKASH, MUKKUTTIYIL, VENGALLOOR PO, THODUPUZHA
685 584
BY ADVS.
SRI.G.BAIJURAJ
SARITHA THOMAS
ALEX.M.SCARIA
A.J.RIYAS
RESPONDENT/S:
1 HINDUSTAN PETROLEUM CORPORATION
LIMITED HAVING ITS REGISTERED OFFICE AT 17TH
JAMASHEDJI TATA ROAD, MUMBAI- 400 020
2 HINDUSTAN PETROLEUM CORPORTATION LIMITED
HAVING ITS REGIONAL OFFICE AT TATAPURAM PO,
KOCHI-682 014
3 K.C. ANILKUMAR
S/O P.K.C NAIR KANDAVATH HOUSE, ADAM PILLIKAM
ROAD, N.F. GATE, THIRIPUNITHURA, ERNAKULAM
DISTRICT 685 588
OP(C).1500/15 2
R1 AND R2 BY ADVS.
SRI.P.BENNY THOMAS
SRI.M.GOPIKRISHNAN NAMBIAR
S.SREEKUMAR (SR.)
SMT.C.DEVIKA RANI KAIMAL
SRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.V.R.KESAVA KAIMAL
SRI.KURYAN THOMAS
SRI.CHETHAN KRISHNA R.
SMT.C.DEVIKA RANI KAIMAL
R3 BY ADV.
M/S.P.MARTIN JOSE
P.PRIJITH
THOMAS P.KURUVILLA
AJAY BEN JOSE
MANJUNATH MENON
SACHIN JACOB AMBAT
R.GITHESH
HANI P.NAIR
ANNA LINDA V.J &
HARIKRISHNAN S.
THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON
26.11.2021, THE COURT ON 22.2.2022 DELIVERED THE
FOLLOWING:
OP(C).1500/15 3
'C.R'
V.G.ARUN, J.
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O.P(C).No. 1500 of 2015
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Dated this the 22nd day of February, 2022
JUDGMENT
The petitioner had filed O.S.No.293 of 2013 before the Principal Sub Court, Ernakulam based on the following averments;
Petitioner is the absolute owner of the plaint schedule property having an extent of 39.620 cents of land comprised in Sy.No.931/1 of Nadama Village in Ernakulam District. The property originally belonged to the petitioner's mother, Lakshmi Marar, who expired on 29.9.2010. During her life time, Lakshmi Marar had executed registered Document No.599 of 1969 of Sub Registrar's Office, Tripunithura leasing out the plaint schedule property to respondents 1 and 2 for conducting a petroleum retail outlet. The 3rd respondent is conducting the outlet, on the strength of a licence granted by respondents 1 OP(C).1500/15 4 and 2. The lease agreement was renewed from time to time and thus, Exhibit P4 lease deed was executed on 23.12.1994, renewing the lease by 20 years from 1.4.1992. The period covered by Exhibit P4 expired on 31.3.2012. Thereupon, the petitioner, who by that time had become the owner of the property, caused a lawyer's notice to be issued to respondents 1 and 2, demanding vacant possession of the property after removing all structures and movables therein. The respondents sent a reply referring to Clause 2(c) of Exhibit P4 agreement to point out that the lease is renewable for a further term of 20 years and requesting the petitioner to renew the lease agreement. As petitioner was not amenable for such course of action the suit was filed, seeking the following reliefs;
"i. grant a decree of recovery of possession of the plaint schedule property.
ii. grant a decree of mandatory injunction directing the defendants to remove the structures and other equipments installed in the plaint schedule property. (Item No.2).
Iii. grant a decree of relief of arrears of rent amounting to 29,500/- together with interest at the rate of 12% from 31.3.2012 till realisation."OP(C).1500/15 5
2. On being served with notice in the suit, respondents 1 and 2 entered appearance and filed Exhibit P1 application (I.A.No.4670 of 2013), referring to the arbitration clause in Exhibit P4 agreement and seeking to refer the dispute to arbitration, as mandated under Section 8 of the Arbitration Act, 1996. Petitioner opposed the prayer in the application, contending that there is no privity of contract between the petitioner and the 3rd defendant, who is conducting the petroleum outlet as per the licence agreement entered with the defendants. That apart, the 3rd defendant not being a party to the lease deed, the suit cannot be referred to arbitration. By Exhibit P3 order, the learned Sub Judge allowed the interlocutory application, relying on the decision of the Honourable Supreme Court in Hindustan Petroleum Corpn Ltd. v. Pinkcity Midway Petroleums [2003 6 SCC 503]. After referring the dispute to arbitration, the original suit was dismissed.
3. Advocate Alex M. Scaria, learned Counsel for the petitioner, assailed Exhibit P3 order on the following grounds;
The agreement period having expired on 31.3.2012, the OP(C).1500/15 6 lease stood determined with effect from that date. The court below could not have referred the parties to arbitration based on the arbitration clause in a non-existent agreement. Further, since the lease stood determined, the status of the respondents are that of tenants at sufferance and as such, they figure as mere trespassers. The reliefs in the suit are founded on the provisions in the Specific Relief Act and Transfer of Property Act which can be adjudicated only in a civil court. Even if it is accepted that the arbitration clause is in subsistence, the relief of recovery of possession cannot be decided or decreed by the arbitrator. As held in Sukanya Holdings (P) Ltd. v. Jayesh H Pandya and Another [(2003) 5 SCC 531], Section 8 of the Act cannot be made applicable if the suit is with respect to a matter which lies outside the purview of the arbitration agreement, nor can the subject matter of the suit be bifurcated, by one portion being decided by the civil court and the other, relegated to the Arbitrator. As the lease agreement is only between the petitioner and respondents 1 and 2, the lower court went wrong in referring the parties, including the 3rd defendant, to arbitration. The arbitration is also barred by limitation, since the respondents did not seek reference within three years of expiry of the lease agreement. The lease being a commercial lease, OP(C).1500/15 7 Section 106 of the Kerala Land Reforms Act, 1963 would come into play. That being a Special Statute, the dispute cannot be decided by the arbitral tribunal. The arbitration clause is worded very vaguely and is hence hit by Section 29 of the Contract Act. The Chairman-cum-Managing Director of the 1st respondent named as the sole Arbitrator, stands disqualified after the introduction of Section 12(5), by the Arbitration and Conciliation (Amendment) Act, 2016.
4. Advocate Chethan Krishna R., learned counsel for respondents 1 and 2, contended that the respondents were unaware of the death of Lakshmi Marar, the predecessor-in- interest of the petitioner. They came to know about the lessor's death for the first time on receiving notice from the petitioner. Immediately, a reply was sent referring to Clause 2(c) of the agreement, which stipulates that the lease of the demised premises shall be renewed for a further term of 20 years from the expiration of the present term. The petitioner was requested to renew the agreement accordingly. Even now the respondents are willing to attorn to the petitioner. Even otherwise, respondents are having the status of tenants holding over. The position that, an arbitration clause is to be treated as an OP(C).1500/15 8 agreement independent of the other terms of the contract which would survive the agreement itself, is now well settled. Disputes with respect to tenancy and eviction covered by the provisions of the Transfer of Property Act and the relief of injunction under the Specific Relief Act can be decided and granted by the arbitral tribunal. Moreover, questions relating to jurisdiction of the Tribunal and arbitrability of the dispute as well as the subject matter are to be decided by the arbitral tribunal and not by the court.
5. Senior Advocate Sri.S.Sreekumar appearing for the 3rd respondent contended that the 3rd respondent being a licencee under the 1st respondent is an inextricable part of the dispute and hence, the challenge on the ground that the 3rd respondent is not a party to the agreement is unsustainable. Further, applying the 'group of companies' doctrine, the 3rd respondent can be referred to arbitration even if he is not a party to the agreement.
6. Before commencing the discussion I give credit to the Counsel for citing the decisions referred in this judgment. OP(C).1500/15 9
7. The arbitration clause, which is the basis for the reference under Section 8 of the Act, reads as under;
"Clause 3(e). Any dispute or difference of any nature whatsoever or regarding any rights, liability, act, omission or account of any of the parties hereto arising out of or in relation to agreement/shall be referred to the sole arbitration of the Chairman and Managing Director/Director (M) of the Corporation or some Officer of the Corporation who may be nominated by them. The lessor will not be entitled to raise any objection to the appointment of such officer of the Corporation as the sole arbitrator on the ground that the said Officer is an officer of the Corporation or that he/she has to deal or dealt with the matter to which the contract relates or that in the course of his duties/as an officer of the Corporation he/she has/had expressed views on all or any of the matters in dispute or difference. In the event of the arbitrator to whom the matter is originally referred is being transferred or vacating his/her office or being unable to act for any reasons, the Chairman and Managing Director/Director (M) as aforesaid shall designate another officer to act as arbitrator. Such officer shall be entitled to proceed with the reference from the point at which it was left by his predecessor. It is also a term of this contract that no person other that the Chairman and Managing Director/Director (M) or a person nominated by Chairman and Managing Director/Director (M) of the Corporation as aforesaid shall not an arbitrator."
8. The first contention is that the period of agreement OP(C).1500/15 10 having expired, the lease stood determined and hence the arbitration clause cannot be invoked. To answer the contention, it would be apposite to read Section 8 of the Act extracted below;
"8. Power to refer parties to arbitration where there is an arbitration agreement.
1. A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refger the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.
2. The application referred to in sub-section (1) shall nt be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof:
PROVIDED that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such OP(C).1500/15 11 application along with a copy of the arbitration agreement and a partition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certrified copy before that Court.
3. Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made."
9. Going by the plain meaning of Section 8(1), there has to be a reference, if the action brought before the judicial authority is the subject matter of a valid arbitration agreement, except when such authority finds that prima facie no valid agreement exists. In Branch Manager, Magma Leasing and Finance Limited And Another v. Potluri Madhavilata and Another [2009 10 SCC 103] the question whether the arbitration agreement will survive for the purpose of resolution of disputes arising under or in connection with the contract, even if performance of the contract has come to an end on account of termination due to breach, had arisen for consideration. After extensive reference to decisions of English Courts and careful analysis of Section 8, the Apex Court held that, merely because the contract has come to an end by its termination due to OP(C).1500/15 12 breach, the arbitration clause does not get perished nor is rendered inoperative; rather it survives for resolution of disputes arising 'in respect of' or 'with regard to' or 'under' the contract. The position has been reiterated in many precedents, including N.N.Global Mercantile Private Limited v. Indo Unique Flame Limited and others [(2021)4 SCC 379]. Therein one of the questions considered was whether an arbitration agreement would be enforceable and called upon, even if the underlying substantive contract is unstamped and unenforceable under the Stamp Act. The question was answered in clear cut terms. The contextually relevant discussion in the judgment, as to the autonomy of arbitration agreement based on the twin concepts of separability and kompetenz-kompetenz, is extracted hereunder;
"4.1. The autonomy of the arbitration agreement is based on the twin concepts of separability and kompetenz-kompetenz. The doctrines of separability and kompetenz-kompetenz though inter-related, are distinct, and play an important role in promoting the autonomy of the arbitral process.
4.2. The doctrine of separability of the arbitration agreement connotes that the invalidity, ineffectiveness, or termination of the substantive commercial contract, would not OP(C).1500/15 13 affect the validity of the arbitration agreement, except if the arbitration agreement itself is directly impeached on the ground that the arbitration agreement is void ab initio.
4.3. The doctrine of kompetenz-kompetenz implies that the Arbitral Tribunal has the competence to determine and rule on its own jurisdiction, including objections with respect to the existence, validity, and scope of the arbitration agreement, in the first instance, which is subject to judicial scrutiny by the courts at a later stage of the proceedings. Under the Arbitration Act, the challenge before the Court is maintainable only after the final award is passed as provided by sub-section (6) of Section 16. The stage at which the order of the tribunal regarding its jurisdiction is amenable to judicial review, varies from jurisdiction to jurisdiction. The doctrine of kompetenz- kompetenz has evolved to minimise judicial intervention at the pre-reference stage, and reduce unmeritorious challenges raised on the issue of jurisdiction of the Arbitral Tribunal.
4.4. The doctrine of separability was expounded in the judgment of Heyman v. Darwins Ltd. [Heyman v. Darwins Ltd., 1942 AC 356 (HL)] by the House of Lords wherein it was held that English common law had been evolving towards the recognition of an arbitration clause as a separate contract which survives the termination of the main contract. Lord Wright in his opinion stated that : (AC p. 377) "... an arbitration agreement is collateral to the substantial stipulations of the contract. It is merely procedural and ancillary, it is a mode of settling disputes, though the agreement to do so is itself subject to the discretion of the court."OP(C).1500/15 14
Lord MacMillan in his opinion stated that : (Heyman case [Heyman v. Darwins Ltd., 1942 AC 356 (HL)] , AC p. 374) "... It survives for the purpose of measuring the claims arising out of the breach, and the arbitration clause survives for determining the mode of their settlement. The purposes of the contract have failed, but the arbitration clause is not one of the purposes of the contract."
xx xx xx
29. We hold that since the arbitration agreement is an independent agreement between the parties, and is not chargeable to payment of stamp duty, the non-payment of stamp duty on the commercial contract, would not invalidate the arbitration clause, or render it unenforceable, since it has an independent existence of its own. The view taken by the Court on the issue of separability of the arbitration clause on the registration of the substantive contract, ought to have been followed even with respect to the Stamp Act. The non- payment of stamp duty on the substantive contract would not invalidate even the main contract. It is a deficiency which is curable on the payment of the requisite stamp duty." The legal position being thus settled, the contention that the arbitration clause was rendered inoperative on expiry of the period of lease agreement, is liable to be rejected. Therefore, this Court need not venture into the question whether the status of the respondents are that of 'tenants at sufferance' or OP(C).1500/15 15 'tenants holding over', in spite of the distinction having been demonstrated with the distinction between the terms with the aid of the decision in C Albert Morris v. K Chandrasekharan and Others [(2006) 1 SCC 228]. For the same reason, the Division Bench decision of this Court in Chandroth Vennalakath Ibrahim and Others v. M/s.'Twinkle' [2019 (1) ILR (Ker) 382], holding that the self working clause in an agreement providing extension for a term exceeding one year would become redundant in the absence of execution of a fresh registered lease deed, cannot be pressed into service.
10. Alternatively it is contended that, if at all the arbitration agreement is in subsistence, reference based on the agreement can only be with respect to the tenancy covered by the agreement, since the relief of recovery of possession can be granted byt a civil court alone and that, the subject matter of a suit cannot be bifurcated by a portion of the dispute being adjudicated by the civil court and the other referred to arbitration. Support for the argument is drawn from the decision in Sukanya Holdings Pvt.Ltd. (supra), wherein it is held that there is no provision in the Act for making a reference to arbitration when the subject matter of the suit includes subject OP(C).1500/15 16 matter of the arbitration agreement as well as other disputes. Further, there cannot be bifurcation of the suit in two parts, one to be decided by the arbitral tribunal and other by the civil court, since such procedure would frustrate the whole purpose of speedy disposal of disputes and reduction in the cause of litigation. Here, the parties had entered into a tenancy agreement, voluntarily incorporating a term for resolution of disputes arising out of the contract through arbitration. In Suresh Shah v. Hipad Technology India Private Limited [(2021) 1 SCC 529], the Apex Court has held that, if the parties in the contract of lease have agreed upon the alternate mode of dispute resolution through arbitration, the landlord would be entitled to invoke the arbitration clause. The position stands clarified by the scholarly exposition in Vidya Drolia and Others v. Durga Trading Corporation [(2021) 2 SCC 1]. At paragraph 48 of the judgment the Apex Court has held that the landlord-tenant disputes governed by the Transfer of Property Act are arbitrable as they are not actions in rem, but subordinate rights in personam that arise from rights in rem and an award deciding landlord-tenant disputes can be executed and enforced like a decree of the civil court. In Olympus Superstructures Private Ltd. v. Meena Vijay Khetan and OP(C).1500/15 17 Others [(1999) 5 SCC 651], it is held that an arbitrator can grant specific performance as there is no such prohibition in the Specific Relif Act. In Booz Allen and Hamilton Inc. v. SBI Home Finance Limited and Others [(2011)5 SC 532], examples of non-arbitrable disputes were illustrated as under;
"36. The well-recognised examples of non-
arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes."
Subsequently, in A.Ayyasamy v. A.Paramasivam [AIR 2016 SC 4675], the following observations were made after referring to Booz Allen (supra);
"35. Ordinarily every civil or commercial dispute whether based on contract or otherwise which is capable of being decided by a civil court is in principle capable of OP(C).1500/15 18 being adjudicated upon and resolved by arbitration "subject to the dispute being governed by the arbitration agreement" unless the jurisdiction of the Arbitral Tribunal is excluded either expressly or by necessary implication. In Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. [Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 : (2011) 2 SCC (Civ) 781] , this Court held that (at SCC p. 546, para 35) adjudication of certain categories of proceedings is reserved by the legislature exclusively for public fora as a matter of public policy.
Certain other categories of cases, though not exclusively reserved for adjudication by courts and tribunals may by necessary implication stand excluded from the purview of private fora. This Court set down certain examples of non- arbitrable disputes such as: (SCC pp. 546-47, para 36)
1. (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences;
2. (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights and child custody;
3. (iii) matters of guardianship;
4. (iv) insolvency and winding up;
5. (v) testamentary matters, such as the grant of probate, letters of administration and succession certificates; and
6. (vi) eviction or tenancy matters governed by special statutes where a tenant enjoys special protection against eviction and specific courts are conferred with the exclusive jurisdiction to deal with the dispute.
7. This Court held that this class of actions operates in OP(C).1500/15 19 rem, which is a right exercisable against the world at large as contrasted with a right in personam which is an interest protected against specified individuals. All disputes relating to rights in personam are considered to be amenable to arbitration while rights in rem are required to be adjudicated by courts and public tribunals. The enforcement of a mortgage has been held to be a right in rem for which proceedings in arbitration would not be maintainable. In Vimal Kishor Shah v. Jayesh Dinesh Shah [Vimal Kishor Shah v. Jayesh Dinesh Shah, (2016) 8 SCC 788 : (2016) 4 SCC (Civ) 303] , this Court added a seventh category of cases to the six non-arbitrable categories set out in Booz Allen [Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 : (2011) 2 SCC (Civ) 781] , namely, disputes relating to trusts, trustees and beneficiaries arising out of a trust deed and the Trust Act.
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38. Hence, in addition to various classes of disputes which are generally considered by the courts as appropriate for decision by public fora, there are classes of disputes which fall within the exclusive domain of special fora under legislation which confers exclusive jurisdiction to the exclusion of an ordinary civil court. That such disputes are not arbitrable dovetails with the general principle that a dispute which is capable of adjudication by an ordinary civil court is also capable of being resolved by arbitration. However, if the jurisdiction of an ordinary civil court is excluded by the conferment of exclusive OP(C).1500/15 20 jurisdiction on a specified court or tribunal as a matter of public policy such a dispute would not then be capable of resolution by arbitration."
The precedents aforementioned compels me to reject the contention of the learned counsel for the petitioner that prima facie no valid agreement exists.
11. Now we come to the crucial question whether the arbitrability of a dispute is to be decided by the civil court when faced with an application under Section 8 of the Act or by the arbitral tribunal as provided under Section 16(1) of the Act. From the decision in P.Anand Gajapathi Raju & Others v. P.V.G.Raju (Dead) & Others [(2000)4 SCC 539] onwards it has been consistently held that the language of Section 8 is peremptory in nature. This legal position is no more re integra in the light of the explicit and erudite findings in Vidya Drolia (Supra). Therein, after careful examination of the principles of separability and competence-competence, the Supreme Court held that the principle of separation authorises an arbitral tribunal to rule and decide on the existence, validity or rescission of the underlined contract, without an earlier adjudication of the questions by the referal court. Section 16(1) OP(C).1500/15 21 of the Arbitration Act accepts and empowers the arbitral tribunal to rule on its own jurisdiction including a ruling on the objections with respect to all aspects of non-arbitrability, which would take in the validity of the arbitration agreement also. Even though the courts at the referal stage do not perform mere ministerial functions, but exercise judicial functions when they decide objections in terms of Sections 8 and 11 of the Act, prima facie examination at the stage of Section 8 is not full review but primary first review to weed out manifestly and ex facie non-existent and invalid arbitration agreements and non- arbitrable disputes. Only when the court is certain that no valid arbitration agreement exists or the dispute/subject matter is not arbitrable, the application under Section 8 would be rejected. Even when the prima facie review is inconclusive and require detailed examination, the matter should be left for final determination by the arbitral tribunal. The Apex Court crystalised its findings under the head 'who decides arbitrability?', as under;
"154. Discussion under the heading "Who Decides Arbitrability?" can be crystallised as under:
154.1. Ratio of the decision in Patel Engg. Ltd. [SBP & OP(C).1500/15 22 Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] on the scope of judicial review by the court while deciding an application under Sections 8 or 11 of the Arbitration Act, post the amendments by Act 3 of 2016 (with retrospective effect from 23-10-2015) and even post the amendments vide Act 33 of 2019 (with effect from 9-8-2019), is no longer applicable.
154.2. Scope of judicial review and jurisdiction of the court under Sections 8 and 11 of the Arbitration Act is identical but extremely limited and restricted.
154.3. The general rule and principle, in view of the legislative mandate clear from Act 3 of 2016 and Act 33 of 2019, and the principle of severability and competence-
competence, is that the Arbitral Tribunal is the preferred first authority to determine and decide all questions of non- arbitrability. The court has been conferred power of "second look" on aspects of non-arbitrability post the award in terms of sub-clauses (i), (ii) or (iv) of Section 34(2)(a) or sub-clause
(i) of Section 34(2)(b) of the Arbitration Act.
154.4. Rarely as a demurrer the court may interfere at Section 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are non-arbitrable, though the nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny. The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably "non-arbitrable" and to cut off the deadwood. The court by default would refer the matter when OP(C).1500/15 23 contentions relating to non-arbitrability are plainly arguable; when consideration in summary proceedings would be insufficient and inconclusive; when facts are contested; when the party opposing arbitration adopts delaying tactics or impairs conduct of arbitration proceedings. This is not the stage for the court to enter into a mini trial or elaborate review so as to usurp the jurisdiction of the Arbitral Tribunal but to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism." In the light of the above authoritative pronouncement, the contention regarding vagueness of the arbitration clause, lack of jurisdiction of the arbitral tribunal to decide disputes falling under the Specific Relief Act and Transfer of Property Act, non- arbitrability of the dispute etc. are to be decided by the arbitral tribunal under Section 16(1) of the Act. This being the finding of the court below also, I find no reason to interfere with the impugned order.
12. Having held so, I find merit in the contention that the Chairman-cum-Managing Director of the 1st respondent cannot function as the arbitral tribunal in view of Section 12(5) inserted by the Arbitration and Conciliation (Amendment) Act, 2015. A similar situation was considered by the Apex Court in TRF Limited v. Energo Engineering Projects Limited [(2017) 8 OP(C).1500/15 24 SCC 377]. Therein it was held that the Managing Director named as the sole arbitrator having become ineligible by operation of Section 12(5), cannot nominate another arbitrator. In this regard, it would be profitable to refer to a contextually relevant judgment of the Apex Court in Jaipur Zila Sugdh Utpadak Sahkari Sangh Ltd. v. Ajay Sales and Supplies [AIR 2021 SC 4869], wherein, after initiation of proceedings by the arbitrator/the Chairman of the petitioner Sangh, the respondent approached the High Court, contending that the sole arbitrator stood disqualified. The respondent, therefore sought appointment of an arbitrator by the Court under Section 11 of the Act. The application was allowed by the High Court, taking into account Sub-Section (5) of Section 12 read with Seventh Schedule of the Act and the Court appointed a former District Judge as the Arbitraror. The challenge mounted by the petitioner against that order was repelled by the Apex Court, finding the High Court to have committed no error in appointing the Arbitrator in exercise of the power under Section 11.
13. The legal position being explicit, I hold the Chairman and Managing Director of the 1st respondent to be disqualified to function as the sole arbitrator and reserve the liberty of the OP(C).1500/15 25 parties to approach the High Court under Section 11 of the Act, seeking appointment of Arbitrator.
The original petition is dismissed accordingly.
Sd/-
V.G.ARUN, JUDGE vgs OP(C).1500/15 26 APPENDIX OF OP(C) 1500/2015 PETITIONER EXHIBITS EXT.P1: THE TRUE COPY OF THE I.A.NO.
4670/2013 IN THE COURT OF SUB-JUDGE, ERNAKULAM EXT.P2: THE TRUE COPY OF THE OBJECTIONS FILED BY THE PETITIONER IN I.A.NO.4670/13 EXT.P3: THE TRUE COPY OF THE ORDER DATED 28/5/2015 IN I.A.NO.4670/13 IN O.S.NO 293/13 IUN THE COURT OF SUB JUDGE ERNAKULAM EXT.P4: THE TRUE COPY OF THE LEASE AGREEMENT DATED 1/4/1994.
EXT.P5: COPY OF PLAINT IN O.P.293/2013 ON THE FILES OF THE HONOURABLE SUB COURT, ERNAKULAM.
EXT.P6: COPY OF THE WRITTEN STATEMENT FILED BY DEFENDANT NO.4 - 3RD RESPONDENT.
EXT.P7: REPLY NOTICE DATED 22.6.2012 BEARING NO.CRO/VKK/RET ISSUED BY THE 1ST RESPONDENT TO THE COUNSEL FOR THE PETITIONER.
EXT.P8: COPY OF NOTICE DATED 30.3.2013.
EXT.P9: TRUE PRINT OUT OF THE EMAIL FORWARDED FROM THE SALES MANAGER OF RESPONDENTS 1 AND 2 SHOWING THAT THE RENEWAL WAS TO BE PROCESSED.
EXT.P10: COPY OF ORDER DATED 28.5.2015 IN OS.293/2013.
OP(C).1500/15 27