Madras High Court
R.Ramaswamy Charitable Trust vs Koki'O Spaces Private Ltd on 30 July, 2018
Author: Pushpa Sathyanarayana
Bench: Pushpa Sathyanarayana
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30.07.2018 CORAM THE HONOURABLE MRS.JUSTICE PUSHPA SATHYANARAYANA O.P.No.4 of 2018 R.Ramaswamy Charitable Trust represented by its Trustee Mr.D.V.Muralidharan, Office at No.93, Old No.50, Chamiers Road, Chennai-600 028. .. Petitioner Vs. Koki'o Spaces Private Ltd., represented by its Managing Director Mr.M.Shyam Kumar registered office at A3, Darshan Apartments, No.2, II Main Road, Gandhi Nagar, Adyar, Chennai-600 021. .. Respondent * * * Prayer : Petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, praying to appoint a Sole Arbitrator to adjudicate upon the disputes that have arisen between the petitioner and the respondent. * * * For Petitioner : Mr.M.S.Krishnan, Senior Counsel for M/s/Sarvabhauman Associates For Respondent : Mr.N.V.Srinivasan for M/s.NVS Associates O R D E R
This Original Petition is filed seeking for appointment of an Arbitrator to adjudicate upon the disputes between the petitioner and the respondent.
2. The petitioner is a Public Charitable Trust created by late R.Ramasamy with the noble object of extending medical relief to the poor through well-established hospitals and nursing homes. The Trustees of the petitioner were given responsibility to ensure the fulfillment of the above said objects. As the Trust has only one property, which is the subject matter, in order to augment the income of the Trust, Memorandum of Agreement dated 12.07.2013 was entered into with the respondent for sale of the said property on the Chamiers Road. The respondent had offered Rs.8 crores per ground as the sale consideration for the sale of the available area of 5.065 grounds amounting to a total agreed value of Rs.40,52,00,000/- and an advance of Rs.1,00,000/- was also paid by the respondent to the petitioner trust. After obtaining a letter of administration in the year 2015, the respondent had not showed any interest in purchasing the property. All the reminders sent by the petitioner were replied by the respondent by only seeking extension of time for the completion of the sale. As the respondent was delaying the purchase of the property, the petitioner had cancelled the memorandum of agreement of sale dated 12.07.2013 and also returned the advance of Rs.1,00,000/-, which was received by them on 23.07.2016. However, the said cancellation letter and the cheque was returned by the respondent stating that it is an unilateral action. The memorandum of agreement also contains an arbitration clause, which says that the parties can invoke it in the event of any dispute.
3. While so, the respondent filed O.S.No.4052 of 2016 in the City Civil Court, Chennai, seeking to declare the termination of the memorandum of agreement dated 12.07.2013 as illegal and for other reliefs and also obtained an order of injunction restraining the petitioner from alienating the subject property to any third party other than the respondent. It is contended that as there was an arbitration clause in the memorandum of agreement, the suit is not maintainable. Hence, the petitioner Trust filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (in short 1996 Act), in I.A.No.10803 of 2016 to refer the dispute to arbitration and to dismiss the suit.
4. The petitioner Trust also had issued a notice on 22.08.2016 invoking the arbitration clause suggesting the names of the arbitrators. Though the said notice was duly received by the respondent on 22.08.2016, there is no response for that.
5. On the other hand, the respondent contested the application filed under Section 8 of the 1996 Act in the suit.
6. The petitioner Trust also filed a petition under Section 11(6) of the 1996 Act before this Court seeking appointment of an arbitrator to go into the dispute that had arisen between the parties, which was numbered as O.P.No.834 of 2016. The said petition was disposed of with liberty to the petitioner to file a fresh petition under Section 11(6) of the 1996 Act, after the disposal of the application filed under Section 8 of the 1996 Act, which was pending before the City Civil Court, Chennai.
7. In the meanwhile, on 20.10.2017, A.No.10803 of 2001 filed under Section 8 of the 1996 Act was allowed and the suit was dismissed. It is also stated that aggrieved by the said order, a Civil Revision Petition is filed before this Court with a condonation of delay petition and the same is said to be still pending. As the Section 8 application is already disposed of, the present Original Petition has been filed by the petitioner Trust.
8. Learned Senior Counsel for the petitioner relied on the judgment of the Apex Court in Duro Felguera, S.A. V. Gangavaram Port Limited, 2017 (9) SCC 729.
9. Learned counsel appearing for the respondent would contend that the revision filed against them is yet to be numbered and the same is pending in the delay condonation stage. However, it was expressed by him that the respondent is willing to purchase the property and he is taking efforts for the same, but only sought for further time.
10. Heard both sides.
11. The petitioner is a Public Charitable Trust and the property is belonging to the Trust created by virtue of a Will. While so, the Court is the custodian of the property. No sale of immovable property belonging to a public trust is valid without the previous sanction of the Court. Admittedly, no sanction of the Court has been obtained before entering into the memorandum of agreement of sale with the respondent. It is stated by the learned counsel for the petitioner that as the Trust has no income, only with the noble cause of fulfilling the objects of the Trust, for which, it was created, it was decided to sell the property. However, as the sale could not come through, it had to invoke the arbitration clause as per the agreement. Learned Senior Counsel submitted that the petitioner is also ready to complete the transaction with the respondent provided it is willing to continue the sale for the amount already agreed.
12. Learned counsel for the respondent only wanted to negotiate further before completing the sale. However, he did not oppose much for the appointment of the Arbitrator in the meantime.
13. It is to be noted that the property, being a property belonging to a Public Trust, whether the sale can be entered into with a private party.
14. However, it is pointed out that after the 2015 amendment, as per Section 11(6-A) of the 1996 Act, all that the Courts need to see is whether an arbitration agreement exists - nothing more, nothing less.
15. In Duro Felguera, S.A. V. Gangavaram Port Limited, 2017 (9) SCC 729, it has been held by the Apex Court as follows :
48. From a reading of Section 11(6A), the intention of the legislature is crystal clear i.e. the Court should and need only look into one aspect- the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple - it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement.
59.The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. V. Patel Engineering Ltd., 2005 (5) CTC 302 (SC) and National Insurance Co. Ltd. V. Boghara Polyfab Private Limited, 2009 (4) CTC 854. This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an arbitration agreement exists - nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Courts intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected.
16. Section 16(1)(a) of the 1996 Act says that an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. Section 16(1)(b) of the 1996 Act is to the effect that a decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
17. The 1996 Act does not make any specific provision excluding any category of disputes terming them to be non-arbitrable. There is a catena of cases laying down that in cases where there is an arbitration clause, the scope of judicial intervention would be very limited and minimal. Though the learned counsel for the respondent stated that the Civil Revision Petition is pending against the order passed in Section 8 application, there is no inherent risk of prejudice to any party in referring the matter to arbitration. If the matter is not referred to arbitration and await the result of the Civil Revision Petition, in the event of dismissal of the Civil Revision Petition, there would be an undesirable delay in arbitration. Therefore, it would be appropriate to let the Arbitral Tribunal examine all the issues that may be raised by the parties.
18. Accordingly, upon consent of both sides, this Court appoints Hon'ble Mr.Justice R.S.Ramanathan, Parijatham, Old No.4B, New No.15, Rajagopalan Street, Valmiki Nagar, Thiruvanmiyur, Chennai-600 041 (Mobile No.94450 22424), as the Sole Arbitrator to enter upon reference and adjudicate the disputes inter se the parties. The learned Arbitrator may, after issuing notice to the parties and upon hearing them, pass an award as expeditiously as possible, preferably within a period of six months from the date of receipt of the order. The learned Arbitrator is at liberty to fix his remuneration and other incidental expenses. The proceedings may be conducted under the aegis of the Madras High Court Arbitration Centre and in accordance with the Madras High Court Arbitration Rules.
19. The Original Petition is, accordingly, allowed, leaving the parties to bear their own costs.
30.07.2018 gg PUSHPA SATHYANARAYANA, J.
gg O.P.No.4 of 2018 30.07.2018