Arbitration Request No. 15 of 2017, High Court of Kerala at Ernakulam

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR** **TUESDAY, THE 9TH DAY OF MAY 2017/19TH VAISAKHA, 1939** **AR.No. 15 of 2017 () ---------------------** **PETITIONER(S): -------------** **VINOD K.R., S/O.LATE N.R. MENON, KAROLLIL HOUSE, 41/2062, PONNURUNNI DESOM, THAMMANAM P.O., POONITHURA VILLAGE, KANAYANNUR TALUK,PIN 682032.** **BY ADVS.SRI.K.M.SATHYANATHA MENON SMT.KAVERY S THAMPI** **RESPONDENT(S): --------------** **1.KAROLLIL AUDITORIUM, THAMMANAM, PALARIVATTOM P.O, PIN 682025, POONITHURA VILLAGE, KANAYANNUR TALUK, REPRESENTED BY THE MANAGER, K.R. BALAKRISHNAN, AGED 64 YEARS, S/O.BHARGAVIAMMA RESIDING AT KAROLLIL HOUSE, PONNURUNNI DESOM, THAMMANAM P.O., POONITHURA VILLAGE, KANAYANNUR TALUK,PIN 682032. 2.K.R. BALAKRISHNAN, AGED 64 YEARS, S/O.BHARGAVIAMMA, RESIDING AT KAROLLIL HOUSE, PONNURUNNI DESOM, THAMMANAM P.O., POONITHURA VILLAGE, KANAYANNUR TALUK, PIN 682032. BY ADVS. SRI.BECHU KURIAN THOMAS (SR.) SRI.NAVEEN.T SRI.I.M.MANOJ** **THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 03.04.2017, THE COURT ON 09.05.2017 PASSED THE FOLLOWING:** **EL** ## **AR.No. 15 of 2017 () ---------------------** ## **APPENDIX** ## **PETITIONER(S)' ANNEXURES -----------------------** |**ANX.1**|**TRUE COPY OF THE RELEVANT PAGES OF PARTITION DEED NO.525**| |---|---| ||**OF 1951 OF SRO POONITHURA**| |**ANX.2**|**TRUE COPY OF THE AGREEMENT DATED 07.09.1991 REGISTERED**| ||**BEFOE THE SRO MARADU AS DOCUMENT NO.2920 OF 1991**| |**ANX.3**|**TRUE COPY OF THE NOTICE DATED 13.1.2017 ISSUED BY THE**| ||**PETITIONER TO THE RESPONDENTS**| |**ANX.4**|**TRUE COPY OF THE ACKNOWLEDGEMENT CARD IN RESPECT OF**| ||**RECEIPT OF ANNEXURE 3 BY THE 1ST RESPONDENT**| |**ANX.4(A)**|**TRUE COPY OF THE ACKNOWLEDGEMENT CARD IN RESPECT OF**| ||**RECEIPT OF ANNEXURE 3 BY THE 2ND RESPONDENT**| |**ANX.5**|**TRUE COPY OF THE REPLY NOTICE DATED 28.1.2017 ISSUED BY**| ||**THE RESPONDENTS TO THE PETITIONER**| |**ANX.6**|**TRUE COPY OF THE NOTICE DATED 13.2.2017 ISSUED BY THE**| ||**PETITIONER TO THE RESPONDENTS**| |**ANX.7**|**CERTIFIED COPY OF ANNEXURE 2 ARBITRATION AGREEMENT DATED**| ||**07.09.1991**| |**ANX.8**|**TRUE COPY OF THE REPLY FORWARDED BY RESPONDENTS DATED**| ||**5.9.2016 TO SRI. K.R. VALSALAN**| |**ANX.9**|**TRUE COPY OF THE COMMUNICATION DATED 18.08.2016 ISSUED BY**| ||**THE 1ST RESPONDENT TO SRI. K. SANKARAN**| |**ANX.10**|**TRUE COPY OF THE NOTICE DATED 08.04.2016 ISSUED TO THE**| ||**1ST RESPONDENT BY THE CORPORATION OF COCHIN**| |**ANX.10(A)**|**TRUE COPY OF THE NOTICE DATED 08.04.2016 ISSUED TO THE**| ||**1ST RESPONDENT BY THE CORPORATION OF COCHIN**| **RESPONDENT(S)' ANNEXURES -----------------------** **NIL** **TRUE COPY** **P.S. TO JUDGE** **EL** ## **P.B.SURESH KUMAR, J.** ## **----------------------------------------------Arbitration Request No.15 of 2017** ## **-----------------------------------------------** ## **Dated 9[th] May, 2017.** ## **O R D E R** The petitioner is a member of Karollil family. An item of property measuring 1 acre, wherein the temples of the family are situated has been set apart in common for the members of the family by virtue of the provisions contained in a family partition deed. Later, the members of the family constructed an auditorium in a portion of the said property. The second respondent is presently managing the auditorium on behalf of the members of the family. The petitioner has raised certain disputes concerning the management of the auditorium. Annexure-2 is the agreement entered into between the members of the family for the management of the auditorium. Annexure-2 contains an arbitration clause. As per the said arbitration clause, only a member of the family can be appointed as arbitrator to resolve the disputes between the A.R.15 of 2017 2 members concerning the affairs of the auditorium. According to the petitioner, members of the family cannot act as impartial arbitrators in matters relating to the affairs of the auditorium. It is alleged by the petitioner that he has, therefore, called upon the second respondent, who is the senior-most member of the family to resolve the disputes raised by him in relation to the affairs of the auditorium by appointing an independent and impartial arbitrator. It is stated that the respondents have not accepted the said course suggested by the petitioner for resolution of the disputes. The petitioner, therefore, seeks in this proceedings, appointment of an impartial and independent arbitrator to resolve the disputes relating to the auditorium, raised by him. 2. A counter affidavit has been filed by the second respondent in this arbitration request. The contention taken by the second respondent in the counter affidavit is that the petitioner cannot seek appointment of any person other than a member of the family as an arbitrator to resolve the disputes raised by him, in the light of the provisions contained in A.R.15 of 2017 3 Annexure-2 agreement. 3. Heard the learned counsel for the petitioner as also the learned Senior Counsel for the second respondent. 4. Annexure-3 is the notice issued by the petitioner to the respondents demanding resolution of the disputes raised by him by appointing an independent and impartial arbitrator. As per Annexure-3 notice, the petitioner wanted Sri.Sankaranunni, a retired District Judge, to be appointed as an arbitrator to resolve the disputes. Annexure-5 is the reply sent to Annexure-3 notice. Annexure-5 deals mainly with the merits of the disputes raised by the petitioner. As regards the arbitration, it is stated in Annexure-5 that the arbitrator suggested by the petitioner cannot be appointed. 5. Annexure-3 notice issued by the petitioner to the respondents would indicate that the petitioner, in fact, seeks a scheme for the management of the auditorium. Clause (15) of Annexure-2 agreement dealing with the arbitration reads thus : A.R.15 of 2017 4 “ µøÞùßæÜ ÈßÌtȵæ{ Ø¢ÌtßæºîÞ ³ÁßæxÞùßÏ¢ Ø¢ ÌtÎÞÏ §Äø Õß×ÏBæ{ µáùßçºîÞ ¥ÍßdÉÞÏ ÕcÄcÞØBç{Þ ÄVABç{Þ ©IÞÏÞW çµÞ¿ÄßæÏ ØÎàÉßAáKÄßÈá ÎáOÞÏßå1940 æÜ ¦VÌßçd¿×X ÈßÏÎÎÈáØøߺîí ¦VÌßçd¿×X ÕÝß ¥Jø¢ ÄVAB{ᢠ¦ÍßdÉÞÏÕcÄcÞØB{ᢠÉøßÙøßçAIÄÞµáKá. ÍßKÞÍßdÉÞÏB{ᢠÄVAB{ᢠ©U ¥¢ ·¹ZAí ³çøÞ ¦VÌßçd¿xVÎÞçø ÕàÄ¢ ÈßÏÎßAÞÕáKÄᢠ¥Õøáæ¿ ÄàøáÎÞÈ¢ ÕcÄcØñÎÞÏßøáKÞW ¦VÌßçd¿xVÎÞVAá ØbàµÞøcÈÞÏå²øá ¥OÏæù ÈßÏÎßAÞÕáKÄáÎÞµáKá. ¦ÕáKÄᢠËIßW ÄáµÎá¿AßÏ çÕÞGÕµÖÎáU ¥¢·B{ßW ÈßKí ÎÞdÄçÎ ¦VÌßçd¿xVÎÞçøÏᢠ¥OÏçùÏᢠæÄøæE¿áAáÕÞX ÉÞ¿áUá.” The disputes raised by the petitioner as regards the management of the auditorium would certainly come within the ambit of clause (15). As evident from the said clause, the agreement between the parties is to the effect that in the event of a dispute, the issue will have to be resolved through arbitration by the members of the family. The contention of the respondents is that Annexure-2 is a family arrangement; that Annexure-2 names arbitrator/arbitrators to be appointed and therefore, a person other than a member of the family cannot be appointed as arbitrator. The issue is whether a person A.R.15 of 2017 5 outside the family can be appointed as arbitrator, as required by the petitioner. 6. It is trite that even in a case where an arbitrator is named in the arbitration agreement, if circumstances exist giving rise to justifiable doubts as to the independence and impartiality of the named arbitrator or if circumstances warrant appointment of an independent and impartial arbitrator by ignoring the procedure prescribed, the court exercising the power under Section 11 of the Arbitration and Conciliation Act can certainly appoint an independent and impartial arbitrator to resolve the disputes between the parties. [See **Indian Oil Corporation Limited v. Raja Transport (P) Ltd.** [(2009) 8 SCC 520]. As far as the present case is concerned, the disputes relate to the administration of an auditorium. The clause in the agreement is to the effect that the arbitrator shall be a person who has invested money for the construction of the auditorium to the extent possible. A person who has invested money for the construction of the auditorium, cannot be considered as an independent and impartial person to take a A.R.15 of 2017 6 decision concerning the affairs of the auditorium. That apart, it is seen that in the light of the 176[th] report of the Law Commission, sweeping amendments have been brought into the Arbitration and Conciliation Act, 1996 by virtue of the Arbitration and Conciliation (Amendment) Act, 2015. The scheme and object of the said amendments is that only neutral persons shall be appointed as arbitrators. In order to achieve the said objective, sub-section (5) of Section 12 of the Arbitration and Conciliation Act lays down that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the subject matter of the dispute, falls under any of the categories specified in the Seventh Schedule, he shall be ineligible to be appointed as an arbitrator. It is, therefore, clear that if the arbitration clause finds foul with the amended provisions of the Act, the appointment of arbitrator would be beyond pale of the arbitration agreement, empowering the court to appoint such arbitrator(s) as may be permissible. It is so held by the Apex Court in **M/s.Voestalpine Schienen GMBH v. Delhi Metro** A.R.15 of 2017 7 ## **Rail Corporation Ltd.** (AIR 2017 SC 939). Paragraph 17 of the said judgment reads thus : “17. Keeping in mind the afore-quoted recommendation of the Law Commission, with which spirit, Section 12 has been amended by the Amendment Act, 2015, it is manifest that the main purpose for amending the provision was to provide for neutrality of arbitrators. In order to achieve this, sub-section (5) of Section 12 lays down that notwithstanding any prior agreement to the contrary, any person whose relationship with parties or counsel or the subject-matter of the dispute falls under any of the categories specified in the Seventh Schedule, he shall be ineligible to be appointed as arbitrator. In such an eventuality, i.e., when the arbitration clause finds foul with the amended provisions extracted above, the appointment of an arbitrator would be beyond pale of the arbitration agreement, empowering the court to appoint such arbitrator(s) as may be permissible. That would be the effect of non-obstante clause contained in sub-section (5) of Section 12 and the other party cannot insist on appointment of the arbitrator in terms of arbitration agreement.” 7. In the result, the arbitration request is allowed and Smt.Leelamani N. (Jal Vayu Vihar, Flat No.B-8-4, Near Passport Office, Panampilly Nagar, Kadavanthra, Kochi), a retired District Judge from the panel of arbitrators maintained by this Court is appointed provisionally as the arbitrator in this A.R.15 of 2017 8 matter. The Registry shall obtain the disclosure in writing from the arbitrator appointed as provided for under Section 11(8) of the Act, in the prescribed form and place the matter again before the Court for confirmation of the appointment of the arbitrator. Sd/- ## **P.B.SURESH KUMAR, JUDGE.** tgs (true copy)