ARB.P. NO. 1 OF 2023

# `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ## `PRESENT` ``` THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN TUESDAY, THE 8[TH] DAY OF AUGUST 2023 / 17TH SRAVANA, 1945 ``` ``` ARB.P. NO. 1 OF 2023 ``` ``` [IN THE MATTER OF O.P.(ARBITRATION)NO. 14/2023 ON THE FILES OF THE DISTRICT COURT, PATHANAMTHITTA & ARB.CASE NO.90E/2022 BEFORE THE SOLE ARBITRATOR, MRS.LEELAMANI N., DISTRICT JUDGE (RETD)] ``` ## `PETITIONERS/RESPONDENT NOS.1 & 3 IN ARBITRATION:` - `1 ABRAHAM MATHEW, AGED 42 YEARS, S/O. MATHEW, KIZHAKKETHIL, ELANTHOOR P.O., PATHANAMTHITTA – 689643.` - `2 DARIN PHILIP, AGED 38 YEARS, W/O. ABRAHAM MATHEW, KIZHAKKETHIL, ELANTHOOR P.O., PATHANAMTHITTA – 689643.` ``` BY ADVS. MATHEW KURIAKOSE K.R.ARUN T.G.SUNIL (PERUMBAVOOR) J.KRISHNAKUMAR (ADOOR) C.N.PRAKASH MONI GEORGE SHAJI P.K. ``` ## `RESPONDENTS/PETITIONER & 2ND RESPONDENT IN ARBITRATION:` - `1 M/S SAKTHI FINANCE LTD., HAVING AT REGISTERED OFFICE AT NO.62, DR. NANJAPPA ROAD, COIMBATORE - 641018 REPRESENTED BY ITS PATHANAMTHITTA BRANCH MANAGER AND POWER OF ATTORNEY HOLDER, PRADEEP CHANDRAN, AGED 45, S/O. P.R. CHANDRASEKHARAN.` - `2 RATHEESH K. NAIR, AGED 34, S/O. OMANAKKUTTAN NAIR, KULANJITHARAYIL, ELANTHOOR P.O., PATHANAMTHITTA – 689643.` ## `THIS ARBITRATION PETITION HAVING COME UP FOR ADMISSION ON` ``` 08.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ## `ARB.P. NO. 1 OF 2023` ``` -2- ``` ## `ORDER` ``` The endorsements on files of this case show ``` ``` that respondent No.2 has refused to accept the summons issued by this Court. I, therefore, declare the service of the said respondent to be completed. ``` ``` 2.The petitioners say that first among them borrowed certain amounts from the 1[st] ``` ``` respondent – M/s Sakthi Finance Ltd. (‘Company’, ``` ``` for short), and the second one stood as guarantor for the same. They say that a vehicle was thus purchased by the 1[st] petitioner; and ``` ``` that though they were initially prompt in ``` ``` repaying the equated monthly installments as per ``` ``` the loan sanction, they were incapacitated to do ``` ``` so on account of certain setbacks in their ``` ``` business, thus some of them being defaulted. ``` ``` 3.The petitioners submit that, however, ``` ``` they are fully willing and agreeable to either ``` ## `ARB.P. NO. 1 OF 2023` ``` -3- ``` ``` regularize the loan, or to settle it, if given some time; but that, even though they made such a request before the 1[st]respondent, they ``` ``` refused to do so; and unilaterally appointed a ``` ``` former District Judge as an Arbitrator. They assert that this falls foul of Section 12(5) of the Arbitration and Conciliation Act, 1996 ``` ``` (‘Act’, for short), as it presently stands. ``` ``` 4.Sri.Mathew Kuriakose – learned counsel ``` ``` for the petitioners, further explained that the ``` ``` learned Arbitrator thereafter issued an interim ``` ``` Award, which was then sought to be executed by ``` ``` the 1st respondent through the jurisdictional ``` ``` District Court by filing OP(Arb.)No.14/2023. He ``` ``` argued that no such Award could have been passed ``` ``` by the learned Arbitrator; and that, in the alternative, even if it has such competence, same could not have been executed in such manner, because the value of the claim is more ``` ``` ARB.P. NO. 1 OF 2023 ``` ``` -4- ``` ``` than Rs.10 lakhs, thus it being a matter for the Commercial Court under the Commercial Courts Act. He, therefore, prayed that mandate of the Arbitrator appointed by the 1[st] respondent be ``` ``` forthwith terminated; and OP(Arb.)No.14/2023 before the District Court, Pathanamthitta, be ``` ``` declared to be not maintainable. ``` ``` 5.I notice from the files that, even ``` ``` though summons from this Court was validly served on the 1[st] respondent, they have chosen not to be present in person or represented ``` ``` through counsel; thus inferentially guiding me ``` ``` to the impression that they have nothing to offer in answer to the various assertions made ``` ``` by the petitioners in this case. ``` ``` 6.As is evident from the afore narrative, the primary grievance of the petitioners is that 1[st]respondent had appointed an Arbitrator ``` ``` unilaterally, in violation of Section 12(5) of ``` ``` ARB.P. NO. 1 OF 2023 ``` ``` -5- ``` ``` the ‘Act’; and that when the said Authority issued an interim Award, it was sought to be executed by them, filing OP(Arb.)No.14/2023 before the District Court, Pathanamthitta. ``` ``` 7.Obviously, therefore, the primary question to be decided by this Court is whether appointment of the Arbitrator by the 1[st] respondent is in violation of Section 12(5) of the ‘Act’; and if so, axiomatically, whether the steps before the District Court, Pathanamthitta, are not maintainable. ``` ``` 8.It is without doubt and as has been declared by the Hon’ble Supreme Courtin several judgments, includingTRF Ltd. v. Energo Engineering Projects Ltd.[(2017) 8 SCC 377] and Perkins Eastman Architects DPC & Another v. HSCC (India) Limited[AIR 2020 SC59], which have beenfollowedby this Court inTulsi Developers India Pvt. Ltd. v. Dr.Appu Benny Thomas[2021 ``` ``` ARB.P. NO. 1 OF 2023 ``` ``` -6- ``` ``` (5) KHC 404], after the amendment of Section 12(5) of the ‘Act’, no party to the dispute can arbitrate or appoint an Arbitrator. When the declaration of law is vehemently to such effect, one fails to understand how the 1strespondent could have unilaterally nominated an Arbitrator on their own and how the said Authority could have gone ahead and proceeded with the ``` ``` arbitration proceedings. ``` ``` 9.I am, therefore, of the firm view that this is a fit case where the jurisdiction of this Courtunder Section 14 of the ‘Act’has ``` ``` been justifiably invoked, particularly when the ``` ``` 2nd respondent has refused even to accept the ``` ``` summons issued by this Court. ``` ``` In the afore circumstances,I orderthis ``` ``` Arbitration Petition and directthat the mandate of the arbitrator, Smt.Leelamani N., District Judge (Retd), shall cease forthwith; thus, ``` ``` ARB.P. NO. 1 OF 2023 ``` ``` -7- ``` ``` further steps in OP(Arb.)No.14/2023 being terminatedbytheDistrictCourt, ``` ``` Pathanamthitta. ``` ``` Needless to say, the right of the parties to ``` ``` seek appointment of an Arbitrator in terms of law is, however, left open, without being touched upon, in any manner, on its merits in this judgment. ``` ``` Sd/- ``` ## `DEVAN RAMACHANDRAN` ``` JUDGE ``` ``` akv ``` ``` ARB.P. NO. 1 OF 2023 ``` ``` -8- ``` ## `APPENDIX OF ARB.P. 1/2023` ## `PETITIONER EXHIBITS` - `EXHIBIT P1 TRUE COPY OF THE CERTIFICATE OF REGISTRATION IN RESPECT OF THE VEHICLE BEARING REGISTRATION NO. KL-2-AM-3600` - `EXHIBIT P2 TRUE COPY OF THE NATIONAL PERMIT DATED 15.07.2022 ISSUED IN THE NAME OF THE 1ST PETITIONER BY THE SECRETARY, RTA PATHANAMTHITTA` - `EXHIBIT P3 TRUE COPY OF THE STATEMENT OF ACCOUNT ISSUED BY THE 1ST RESPONDENT IN RESPECT OF THE FINANCIAL TRANSACTION OF THE PETITIONERS WITH THE 1ST RESPONDENT` - `EXHIBIT P4 TRUE COPY OF THE NOTICE DATED 28.07.2022 ISSUED BY THE 1ST RESPONDENT TO MRS. LEELAMANI N., DISTRICT JUDGE (RETD) WITH COPY TO THE PETITIONERS` - `EXHIBIT P5 TRUE COPY OF THE PETITION IN O.P. (ARB) 14/2023 FILED BY THE 1ST RESPONDENT AGAINST THE PETITIONERS AND 2ND RESPONDENT HEREIN, BEFORE THE DISTRICT COURT PATHANAMTHITTA` - `EXHIBIT P6 TRUE COPY THE CASE DETAILS OF O.P. (ARB) 14/2023 ON THE FILES OF THE DISTRICT COURT PATHANAMTHITTA, OBTAINED FROM THE WEBSITE OF E-COURT SERVICES` - `EXHIBIT P6(A) TRUE COPY THE DAILY STATUS OF O.P. (ARB) 14/2023 ON THE FILES OF THE DISTRICT COURT PATHANAMTHITTA, AS ON 18.01.2023, OBTAINED FROM THE WEBSITE OF E-COURT SERVICES` ## `ARB.P. NO. 1 OF 2023` ``` -9- ``` ``` EXHIBIT P6(B). TRUE COPY THE DAILY STATUS OF O.P. (ARB) 14/2023 ON THE FILES OF THE DISTRICT COURT PATHANAMTHITTA, AS ON 04.02.2023, OBTAINED FROM THE WEBSITE OF E-COURT SERVICES ``` ``` EXHIBIT P6(C)TRUE COPY THE DAILY STATUS OF O.P. (ARB) 14/2023 ON THE FILES OF THE DISTRICT COURT PATHANAMTHITTA, AS ON 25.02.2023, OBTAINED FROM THE WEBSITE OF E-COURT SERVICES. ```