R. Raghavan vs Dr. R. Venkitapathy, Partner, Dinamalar and Others

M. Jaichandren, J.—This Original Side Appeal has been filed against the order of the learned Single Judge of this Court, dated 31.1.2013,

made in Application No. 99 of 2013, in C.S. No. 748 of 2012. Application No. 99 of 2013, had been filed, under Order 14, Rule 8 of the

Original Side Rules, read with Order 7, Rule 11 of the Code of Civil Procedure, to reject the Plaint, in C.S. No. 748 of 2012, stating that it is

barred under the provisions of the Arbitration and Conciliation Act, 1996.

The Suit, in C.S. No. 748 of 2012, had been filed for a declaration, to declare the order of the Defendants 5 to 7 therein, the Arbitral Tribunal,

dated 23.7.2012, as illegal and invalid in the eye of law. A consequential relief had also been prayed for, to declare the additional claim submitted

by the Defendants 1 to 4 therein, as void, as they are ultra vires the provisions of the Arbitration and Conciliation Act, 1996. The Plaintiff had also

prayed for an order of permanent injunction restraining the Defendants 5 to 7 from proceedings with the enquiry, pursuant to the order, dated

23.7.2012. Certain other reliefs had also been prayed for, by the Plaintiff in the said Suit.

The First Defendant in the Suit had filed an Application, in Application No. 99 of 2013, raising the issue relating to the maintainability of the Suit,

stating that it is barred u/s 5 of the Arbitration and Conciliation Act, 1996.

It had been stated, on behalf of the Plaintiff, that a number of Civil Suits had been filed by the parties concerned raising various issues. In such

circumstances, the parties concerned had agreed to refer the disputes for adjudication, by way of Arbitration proceedings. In none of the Suits, in

C.S. No. 689 of 2001, C.S. No. 711 of 2002, C.S. No. 640 of 2005, C.S. No. 22 of 2005, C.S. No. 737 of 2004, and C.S. No. 119 of 2005,

an issue relating to the dissolution of the partnership had been raised. As such, it was not open to the Arbitral Tribunal to adjudicate upon the issue

relating to the dissolution of the partnership.

It had been further stated that, when the Arbitral Tribunal goes beyond the scope of reference, it would be open to the Plaintiff to challenge the

same, by way of a Civil Suit. Therefore, the Civil Suit filed by the Plaintiff, in C.S. No. 748 of 2012, cannot be said to be barred under law, as per

Order 7, Rule 11 of the Code of Civil Procedure.

The learned Single Judge had held, in his order, dated 31.1.2013, that the disputes, which were existing amongst the parties concerned, had

been referred to the Arbitral Tribunal, for adjudication. Whether the issue relating to the dissolution of the partnership would form a part of the

reference before the Arbitral Tribunal, for adjudicating the same, is under dispute, amongst the parties concerned. As such, it would not be open to

this Court to render a decision, with regard to the said dispute, in the Civil Suit, in C.S. No. 748 of 2012.

It had also been held that the controversy that had arisen amongst the parties concerned, with regard to the dissolution of the partnership, had

been raised as an issue before the Arbitral Tribunal. It is for the said Arbitral Tribunal to adjudicate upon the said issue and to pass an appropriate

award, u/s 34 of the Arbitration and Conciliation Act, 1996. The Plaintiff in the Suit, in C.S. No. 748 of 2012, who is the Appellant in the present

Original Side Appeal, could raise all the grounds available to him, while challenging the award passed by the Arbitral Tribunal, u/s 34 of the

Arbitration and Conciliation Act, 1996.

The learned Single Judge had also held that even an interim award could be challenged only by following such a procedure. Accordingly, it had

been held that the Civil Suit filed by the Plaintiff, in C.S. No. 748 of 2012, is barred u/s 5 of the Arbitration and Conciliation Act, 1996, and

therefore, the Plaint is liable to be rejected, under Order 7, Rule 11 of the code of Civil Procedure. The learned Judge had relied on the decision of

the Supreme Court, in C.D.C. Financial Services (Mauritius) v. BPL Communication Ltd. and others, 2003 (12) SCC 140, to arrive at such a

conclusion. However, liberty had been granted to the Plaintiff in the Civil Suit, in C.S. No. 748 of 2012, to raise all the points raised in the said

Suit, while challenging the award of the Arbitral Tribunal, u/s 34 of the Arbitration and Conciliation Act, 1996.

Challenging the award passed by the learned Single Judge of this Court, the Plaintiff in the Suit, in C.S. No. 748 of 2012, had filed the present

Original Side Appeal, in O.S.A. No. 103 of 2013, raising several grounds.

Mr. T.R. Rajagopalan, the learned Senior Counsel appearing on behalf of the Appellant, in the present Original Side Appeal, had submitted

that the learned Single Judge ought to have dismissed the Application, in Application No. 99 of 2013, filed for the rejection of the Plaint in the Suit,

in C.S. No. 748 of 2012, under Order 7, Rule 11 of the Code of Civil Procedure.

He had further submitted that the learned Single Judge of this Court ought to have held that the Civil Suit filed by the Appellant was

maintainable, as the Arbitral Tribunal had no jurisdiction or power to call upon the parties to submit a particular claim or counter claim, as per the

order, dated 23.7.2012. He had further submitted that the Arbitral Tribunal had no authority or power to adjudicate upon an issue, which had not

been referred to it, by the parties concerned. The dissolution of the partnership was not an issue which had been referred to the Arbitral Tribunal.

Hence, the Arbitral Tribunal had travelled beyond its jurisdiction in framing the issue relating to the dissolution of the partnership, for its

consideration.

He had further submitted that there were nearly 80 hearings in the Arbitration proceedings, before the Arbitral Tribunal. Evidence had been

taken and arguments were over. At such a belated stage, the Arbitral Tribunal had entertained the issue relating to the dissolution of the

partnership, without having the jurisdiction to do so. The issue relating to the dissolution of the partnership is not referrable to any one of the issues

referred for adjudication before the Arbitral Tribunal.

He had further contended that the decision of the Supreme Court, in C.D.C. Financial Services (Mauritius) v. BPL Communication Ltd. and

others, 2003 (12) SCC 140, relied on by the learned Single Judge of this Court, in arriving at his conclusions, is not applicable to the facts and

circumstances of the present case.

He had further submitted that the Suit filed by the Appellant, in C.S. No. 748 of 2012, would not be barred u/s 5 of the Arbitration and

Conciliation Act, 1996. Therefore, it would not be open to the First Respondent in the Appeal, who had filed the Application, in Application No.

99 of 2013, to pray for the rejection of the Plaint by invoking order 7, Rule 11 of the Code of Civil Procedure. Further, Section 16 of the

Arbitration and Conciliation Act, 1996, would not be applicable to the present case. Therefore, the order, dated 31.1.2013, passed by the learned

Single Judge of this Court, in Application No. 99 of 2013, is liable to be set aside, enabling the Appellant to seek his reliefs, as prayed for by him,

in C.S. No. 748 of 2012.

Per contra, Mr. Vijayanarayanan, the learned Senior Counsel, appearing on behalf of the Respondents 1 to 4, had submitted that Section 5 of

the Arbitration and Conciliation Act, 1996, would act as a complete bar against the filing of a Civil Suit during the proceedings of the Arbitral

Tribunal. As such, the applicant in Application No. 99 of 2013, had rightly invoked Order 7, Rule 11 of the CPC for the rejection of the Plaint in

the Civil Suit, in C.S. No. 748 of 2012.

He had further pointed out that the Civil Court can interfere during the pendency of the Arbitral proceedings only under certain limited

circumstances, as per Sections 9, 11, 34 & 37 of the Arbitration and Conciliation Act, 1996. He had further submitted that the only remedy

available to the Appellant, at this stage, is u/s 16 of the Arbitration and Conciliation Act, 1996. When a plea is raised, with regard to its

jurisdiction, the Arbitral Tribunal would have the competence to rule on its own jurisdiction, as per the provisions of Section 16 of the Arbitration

and Conciliation Act, 1996.

He had further submitted that the issue relating to the dissolution of the Partnership would also be one of the issues covered by the reference,

for being adjudicated upon by the Arbitral Tribunal. He had referred to the joint Memo, dated 18.1.2007, filed by the claimants 1 to 5, in O.S.A.

Nos. 282 & 285 of 2006, agreeing to refer all the disputes and differences arising amongst them, for arbitration.

He had further submitted that the decision of the Supreme Court, in C.D.C. Financial Services (Mauritius) v. BPL Communication Ltd., and

others, 2003 (12) SCC 140, is squarely applicable to the facts and circumstances of the present case. As such, the present Original Side Appeal

filed by the Appellant, in O.S.A. No. 103 of 2013, is devoid of merits and therefore, it is liable to be dismissed.

In view of the submissions made by the learned Counsels appearing for the parties concerned and on a perusal of the records available and in

view of the decision cited supra, we are of the considered view that there are no merits in the present Original Side Appeal, filed by the Appellant.

It is clear, from the records available, that all the disputes, which had arisen amongst the parties concerned, had been referred to the Arbitral

Tribunal, consisting of the Respondents 5 to 7, for adjudication. It is for the Arbitral Tribunal concerned to decide as to whether it has the

jurisdiction to adjudicate upon the issue relating to the dissolution of the Partnership. However, it would not be open to the Appellant to dispute the

jurisdiction of the Arbitral Tribunal, with regard to the said issue, by filing a Civil Suit, as it is barred u/s 5 of the Arbitration and Conciliation Act,

1996. In fact, it would be open to the Appellant to challenge the award passed by the Arbitral Tribunal, u/s 34 of the Arbitration and Conciliation

Act, 1996, by raising all the grounds available to him, as per law. In such circumstances, we are of the considered view that any interference in the

proceedings of the Arbitral Tribunal, at this stage, would be contrary to the object and spirit of the Arbitration and Conciliation Act, 1996, which is

to avoid unnecessary and unwanted delay in the settlement of the disputes, amongst the parties concerned. As such, the contentions raised on

behalf of the Appellant, in the present Appeal, cannot be countenanced. The Appellant has not shown sufficient cause or reason for this Court to

interfere with the order passed by the learned Single Judge of this Court, dated 31.1.2013, made in Application No. 99 of 2013, in C.S. No. 748

of 2012. Therefore, the present Original Side Appeal filed by the Appellant is liable to be dismissed. Accordingly, it stands dismissed. No costs.

Connected M.P. No. 1 of 2013 is closed.