Dismissed

Cholamandalam Dbs Finance Limited v. K.H. Abdulla

Kerala HC4 Jul 2008CRP/1109/2007

Case brief

AI extract

What is this about?

This single judge ruled that a revision petition challenging a Munsiff's order dismissing a Section 8 application was dismissed. The court held that while a notarised copy may suffice for arbitration reference, the specific relief sought (declaration on a certificate) fell outside the arbitration agreement's scope and could not be split. The order is regular on merits.

What did the court decide?

The revision petition challenging the dismissal of the Section 8 petition was dismissed as there was no illegality or irregularity warranting interference.

Cholamandalam Dbs Finance Limited Vs K.H. Abdulla — Arbitration | Kerala HC (2008)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT :

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THE HONOURABLE MR. JUSTICE M.SASIDHARAN NAMBIAR

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FRIDAY, THE 4TH JULY 2008 / 13TH ASHADHA 1930

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CRP.No. 1109 of 2007() ---------------------I,.A.NO.522/2007 in OS.1441/2006 of PRL.MUNSIFF COURT.,ERNAKULAM

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REVN. PETITIONER: DEFENDANT.

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CHOLAMANDALAM DBS FINANCE LIMITED, (FORMERLY KNOWN AS CHOLAMANDALM INVESTMENT AND FINANCE CO. LTD.), 2ND FLOOR, BETHSEDA TOWERS, PALARIVATTOM, ERNAKULAM REPRESENTED BY ITS MANAGER - LEGAL SUDHAKAR S.SHENOY.

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BY ADV. SRI.PHILIP T.VARGHESE

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SRI.THOMAS T.VARGHESE

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RESPONDENTS: PLAINTIFF.

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K.H.ABDULLA, S/O. HASSAN, KONNAKUDY HOUSE, PERUMBAVOOR, ERNAKULAM.

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P.A.ISHA, W/O. K.H.ABDULLA, KONNAKUDY HOUSE, PERUMBAVOOR, ERNAKULAM.

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BY ADV. SRI.VARGHESE C.KURIAKOSE FOR R.2

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SRI.PRAVEEN K. JOY

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THIS CIVIL REVISION PETITION HAVING BEEN FINALLY HEARD ON 04/07/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

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ORDER IN I.A.No.3167/2007 in CRP.NO.1109/2007

DISMISSED

4.7.2008

SD/=

(M.SASIDHARAN NAMBIAR, JUDGE)

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//TRUE COPY//

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P.A. TO JUDGE.

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M.SASIDHARAN NAMBIAR, J.

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C.R.P.No.1109 of 2007

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Dated this the 4^th July, 2008.

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O R D E R

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Original sole defendant in O.S.No.1441 of 2006, on the file of Munsiff Court, Ernakulam, is the petitioner. Respondents are the plaintiffs. The suit was instituted for a declaration that the certificate issued by Additional Registering Authority is valid and subsisting, and that the finance with the defendant has been cancelled with effect from 31.12.2003 as shown in the certificate, and also for a permanent prohibitory injunction restraining defendant from proceeding against the vehicle. When petitioner, the sole defendant, filed a petition under Section 8 of Arbitration and Conciliation Act, 1996 (for short 'the Act'), contending that there is an arbitration clause in the agreement entered into by the petitioner and respondents, respondents got impleaded the registering authority as well as State of Kerala as additional defendants. In the written statement filed subsequently, petitioner contended that they re-possessed the vehicle as per the terms of the agreement on 11.7.2002 and thereafter sold the vehicle to one Mammooty for Rs.2,15,000/= and as he paid that amount, form No.35

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CRP.No.1109 of 2007

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declaration was issued to him to enable him to cancel the endorsement in the registration certificate of the vehicle, and thereafter respondents purchased the vehicle from the said Mammooty and they obtained cancellation of the endorsement from Regional Transport Officer and registering authority and the State are not necessary parties to the suit. Learned Munsiff, under order dated 25.10.2007 dismissed I.A.No.522/2007, the petition filed under Section 8(1) of the Act. This revision petition is filed challenging that order.

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The learned counsel appearing for the petitioner and learned counsel appearing for the respondents were heard.

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Under the impugned order, learned Munsiff dismissed the petition on three grounds. Firstly, it was found that the original agreement between petitioner and respondents was not produced, and what was produced is only a notorised copy, which is not a duly certified copy or the original of the agreement, as provided under Section 8 of the Act. Secondly, it was found that as the agreement was not produced before the court at all and therefore Section 8 of the Act cannot be applied. Thirdly, it was found that the contract between the petitioner and respondents was cancelled, and,

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CRP.No.1109 of 2007

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therefore, the arbitration clause cannot be invoked. Finally, it was found that in the suit, additional defendants 2 and 3 are also parties, and they are not parties to the agreement contained in the arbitration clause, and the relief sought for in the suit is for a declaration with regard to the certificate issued by the second defendant, and the cause of action as against them cannot be split up and the suit referred to arbitration.

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Section 8(1) of the Act provides that a judicial

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authority before which an action is brought in a matter which is the subject of an arbitration agreement, and a party applies not later than submitting his first statement on the substance of the dispute, has to refer the parties to arbitration. Under sub-section (2), the application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. Petitioner did not produce the original agreement. The original agreement was not produced before the court by the plaintiffs also. What was produced was only a notorised copy. It is for that reason learned Munsiff held that it is not a duly certified copy. True, a notorised copy cannot be a duly certified copy. But question is whether a notorised copy of the agreement will suffice for a reference

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CRP.No.1109 of 2007

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as provided under Section 8(1) of the Act.

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A learned Single Judge of this Court in N.I.I.T v. Manoharan (2005 (3) KLT 1025) considered a similar question. In that case, the original document was available in the court though not produced by the party who filed the petition. The question whether a copy of the agreement would suffice was considered by the learned Single Judge in the light of the decision of Calcutta High Court in ITC Classic Finance Ltd. v. Grapco Mining & Co. Ltd. (AIR 1997 CALCUTTA 397). It was held that production of the original agreement or duly certified copy is to find out whether there is an arbitration clause in the agreement and when the original agreement is before the court or when existence of the agreement and the arbitration clause therein is not disputed, failure to produce the original agreement or duly certified copy is not fatal. That view was followed by another Single Judge of this Court in Natarajan v General Manager, Southern Railways (2006(2) klt 390). Considering the object of Section 8, I am in agreement with the views expressed by the learned Judges in those cases. When there is no case for the respondents that the notorised copy of the agreement produced is not the original agreement, learned Munsiff should not have held that the

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CRP.No.1109 of 2007

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application is not maintainable for the non production of the original agreement or the duly certified copy thereof.

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But question is when the relief sought for in the suit is a declaration with regard to the certificate issued by the second defendant, whether that relief could be split up or whether it is a dispute which could be settled by the arbitration as provided in the agreement. Clause 23 of the agreement in the case defenitely provides for arbitration under that clause, all disputes, differences and claims arising out of the agreement during the subsistence of the agreement, as well as thereafter, is covered by the said arbitration clause. But when the subject matter of the suit is not the dispute covered by the agreement, there cannot be a reference of that dispute to the Arbitrator as sought for by the petitioner. Even according to

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the petitioner, vehicle was re-possessed from the possession of respondents and was sold to one Mammooty. When that vehicle was sold for Rs.2,15,000/= to Mammooty, the hire purchase agreement which was existing till then will cease to subsist thereafter, because as far as Mammooty is concerned, he has purchased the vehicle from the financier and the vehicle was sold in favour of Mammooty for realisation of the amount due under the finance transaction.

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CRP.No.1109 of 2007

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Therefore, the registering authority certified that the finance originally available to the vehicle is not subsisting. The declaration sought for in the suit is only with regard to that certificate. The declaration is not that the liability of the respondents under the agreement is either satisfied or closed. As the relief sought for is limited to the extent of the certificate issued by second defendant, it cannot be said that that is a dispute to be referred to arbitration invoking the arbitration clause in the agreement.

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The question whether when the reliefs sought for in the suit and the subject matter of the suit are overlaping and the subject matter could be split up and arbitration clause could be made applicable to one part alone and whether the suit could be referred to arbitration in such a case, under Section 8 of the Act, was considered by the Apex Court in India Household and Healthcare Ltd. v. LG Household and Healthcare Ltd. (2007 (5) SCC 510). Following the earlier decision in Sukanya Holdings (P) Ltd. v. Jayesh H.Pandya (2003 (5) SCC 531) it was held:-

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“21. The said prayers fall outside the arbitration agreement since LG logo belongs to LG Corporation which is the owner of the trade mark.

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CRP.No.1109 of 2007

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It is not a party to the arbitration agreement. It allegedly has filed a separate suit. In a case of this nature, a Division Bench of this Court in Sukanya Holdings (P) Ltd. v. Jayesh H.Pandya held:(SCC p.535, para 13)

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“13. Secondly, there is no provision in the Act that when the subject matter of the suit includes subject matter of the arbitration agreement as well as other disputes, the matter is required to be referred to arbitration. There is also no provision for splitting the cause or parties and referring the subject matter of the suit to the arbitrators.”

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It was further stated: (SCC p.536, paras 16-17)

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“16. The next question which requires consideration is-even if there is no provision for partly referring the dispute to arbitration, whether such a course is possible under Section 8 of the Act. In our view, it would be difficult to give an interpretation to Section 8 under which bifurcation of the cause of action, that is to say, the subject matter of the suit or in some cases bifurcation of the suit between parties who are parties to the arbitration agreement and others is not possible. This would be laying down a totally new procedure not contemplated under the Act. If bifurcation of the subject matter of a suit was contemplated, the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it follows that bifurcation of the

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CRP.No.1109 of 2007

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subject matter of an action brought before a judicial authority is not allowed.

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Secondly, such bifurcation of suit in two parts, one to be decided by the Arbitral Tribunal and the other to be decided by the civil court would inevitably delay the proceedings. The whole purpose of speedy disposal of dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums.”

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We, are, however, not oblivious of the fact that Sukanya Holdings has been distinguished in Rashtriya Ispat Nigam Ltd. v. Verma Transport Co. The present case, however, is covered by Sukanya Holdings.

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In the light of the law as settled, I do not find any illegality of irregularity warranting interference in the impugned order. Revision Petition is dismissed.

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M.SASIDHARAN NAMBIAR, JUDGE

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nj.

Cholamandalam Dbs Finance Limited v. K.H. Abdulla

Case brief

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Cholamandalam Dbs Finance Limited v. K.H. Abdulla

Case brief

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