Allowed

Rekha SEBI v. Mrs.Rosalind John

Kerala HC16 Dec 2022AR/34/2022

Case brief

AI extract

What is this about?

The High Court at Ernakulam allowed an Arbitration Request regarding partnership disputes. It held that a pending partition suit for family properties did not constitute waiver of the right to arbitration for partnership issues. The court rejected defenses based on vague claims or limitation, appointing a sole arbitrator.

What did the court decide?

Appointment of Smt. Sally Thomas Chacko as the sole Arbitrator to adjudicate disputes arising out of the Partnership Deed.

Rekha SEBI Vs Mrs.Rosalind John — Arbitration | Kerala HC (2022)

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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 N.NAGARESH

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FRIDAY, THE 16^TH DAY OF DECEMBER 2022 / 25TH AGRAHAYANA, 1944 AR NO. 34 OF 2022

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PETITIONER:

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REKHA SEBI W/O. SEBI PAUL, KIZHAKKEDATH HOUSE, H.NO.30/13, MRRA - 126, VAZHAKKALA SOUTH, KAKKANAD – 30.

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BY ADVS. PARVATHI VENUGOPAL T.J.MARIA GORETTI

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RESPONDENTS:

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1 ROSALIND JOHN W/O. LATE V.P.JOHN, VADASSERY HOUSE, H.NO.96, LOURDES HOSPITAL ROAD, PACHALAM - 682 012.

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2 TISSIA THOMAS BALUMMEL HOUSE, H.NO.30/14, MRRA 126A, VAZHAKKALA SOUTH, KAKKANAD - 682 030.

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BY ADV B.K.GOPALAKRISHNAN FOR R1 AND R2

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THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 16.12.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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N. NAGARESH, J.

Arbitration Request No.34 of 2022

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Dated this the 16^th day of December, 2022

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O R D E R

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~ ~ ~ ~ ~ ~

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Petitioner is a party to Annexure-A1 Partnership

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Deed. Respondents 1 and 2 are signatories to the Partnership Deed.

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The petitioner states that the respondents have not furnished Financial Statement in respect of the Partnership after the year 2016. No share of income was paid to the petitioner.

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The petitioner would state that in view of Annexure-A1 Partnership Deed, the petitioner sought appointment of an Arbitrator as per Annexure-A4 notice, which was issued on 03.01.2022. The respondents have

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not responded to the notice. Therefore, an Arbitrator may be

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appointed by this Court under the provisions of the Arbitration and Conciliation Act, 1994.

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The respondents entered appearance and resisted the Arbitration Request. The respondents submitted that Section 4 of the Arbitration and Conciliation Act, 1994 deals with waiver of the right for arbitration. It is settled law that a party commencing litigation before Civil Court may be deemed to have been refrained from resorting to arbitration agreement. In the present case, the petitioner has filed O.S. No.999 of 2021 before the Munsiff’s Court, Ernakulam and the same is pending.

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The respondents would further submit that it is the 1^st respondent and her husband, who were running the family business. The petitioner and her husband has misappropriated funds of the partnership.

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The counsel for the respondents argued that the disputes pointed out in Annexure-A3 notice are vague and hence are not arbitrable. The claim is barred by limitation as the cause of action arose from the year 2016 onwards.

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There are allegations of inducement and fraud and hence the issues are non-arbitrable. The counsel relied on the judgment of the Hon’ble Apex Court in Booz Allen and Hamilton Inc. [(2011) 5 SCC 532]. The dispute requires detailed investigations and production of elaborate evidence and hence the issues must be tried by a Court, argued the counsel for the respondents, relying on the judgment of the Apex Court in Radhakrishnan N. v. M/s. Maestro Engineers and others [(2010) 1 SCC 72].

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After considering the pleadings in the Arbitration Request and hearing the arguments raised, this Court finds that there is an agreement of partnership signed by the petitioner and respondents 1 and 2 as evidenced by Annexure-A1. Clause 17 of Annexure-A1 agreement provides that any dispute or difference of opinion between the parties concerning any matter connected with the partnership shall be settled by resort to arbitration. The petitioner has sent Annexure-A3 notice seeking appointment of arbitrator. Annexure-A3 notice has not been responded to

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by the respondents.

The defence of the respondents is that the petitioner has waived her right to resort to arbitration proceedings by filing O.S. No.999 of 2021 before the Munisiff’s Court, Ernakulam and the same is pending. Therefore, the petitioner should be deemed to have waived her right for resorting to arbitration.

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The counsel for the petitioner, on the other hand, submits that the Original Suit pending before the Civil Court is purely a suit for partition of family properties. The suit does not have anything to do with the dispute raised by the petitioner, in respect of the Statement of Account and Settlement of Account of the partnership in question.

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As the pending litigation relates to family properties and the dispute involved in this Arbitration Request relates to issues arising out of a partnership agreement, I find that the pending suit cannot be a bar in resorting to arbitration intended to resolve issues out of partnership agreement. Therefore, filing of O.S. No.999 of

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2021 by the petitioner would not amount to waiver of right to resolve partnership disputes through arbitration.

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The further defence of the respondents is that the disputes raised in Annexure-A3 notice are vague. A reading of paragraphs 1 to 8 of Annexure-A3 notice would reveal that the petitioner has indicated the disputes with sufficient clarity. As regards the question of limitation, this is an issue which can be considered by the Arbitrator, based on the materials which would be made available in the Arbitration proceedings. Similarly, the allegation raised by the respondents about inducement and fraud is not supported by any prima facie material. A request for arbitration cannot be rejected merely because one of the parties alleges inducement or fraud.

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In the circumstance, this Court finds that the petitioner cannot be said to have waived her right to arbitration by filing a partition suit in the Civil Court.

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The Arbitration Request is therefore ordered as follows:

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(i) Smt. Sally Thomas Chacko, Advocate, Tharakan Veedu, Elenjeril Lane, K.P. Vallon Road, Kadavanthra PO, Kochi – 682 020 is appointed as the sole Arbitrator, to arbitrate upon the disputes that have arisen between the applicant and the respondent arising out of Annexure-A1.

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(ii) The learned Arbitrator is at liberty to rule on his own jurisdiction, if the parties raise such a dispute.

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(iii) The Registry is directed to communicate a copy of this order to the learned Arbitrator within a period of ten days from today and to obtain a Statement of Disclosure from the learned Arbitrator as provided under Section 11(8) read with Section12(1) of the Act.

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(iv) Once the Disclosure Statement is obtained from the learned Arbitrator, the Registry shall issue the certified copy of this order to the learned Arbitrator, with a copy of the said statement appended to it, retaining the original of the same by this Court.

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(v) The fees of the learned Arbitrator shall be governed by the Fourth Schedule of the Act.

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(vi) The learned Arbitrator shall decide the manner in which the fees and expenses of the arbitration proceeding has to be paid by the parties.

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(vii) The parties will appear before the learned Arbitrator on such date and place as decided by the learned Arbitrator.

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(viii) All contentions of the parties are left open to be raised before the learned Arbitrator.

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Sd/-

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N. NAGARESH, JUDGE

aks/15.12.2022

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APPENDIX OF AR 34/2022

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PETITIONER’S ANNEXURES

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Annexure A1 TRUE COPY OF THE PARTNERSHIP DEED DATED 7TH JULY 1999 EXECUTED BETWEEN THE PETITIONER AND THE RESPONDENTS. Annexure A2 TRUE COPY OF THE FINANCIAL STATEMENT OF THE FIRM. Annexure A3 TRUE COPY OF THE LEGAL NOTICE OF REQUEST TO APPOINT ARBITRATOR SENT BY THE PETITIONER'S LAWYERS DATED 13/12/2022. Annexure A4 TRUE COPY OF REPLY LETTER OF OBJECTION SENT BY THE RESPONDENT'S LAWYERS DATED 3/01/2022. Annexure A5 TRUE COPY OF THE ARBITRATION CLAUSE/AGREEMENT IN PARTNERSHIP DEED.

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RESPONDENTS’ ANNEXURES : NIL

Rekha SEBI v. Mrs.Rosalind John

Case brief

What is this about?

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Rekha SEBI v. Mrs.Rosalind John

Case brief

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