G Mohanan vs Saraswathy

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **TUESDAY, THE 4TH DAY OF JULY 2017/13TH ASHADHA, 1939** **AR.No. 46 of 2014** **-------------------** **APPLICANT: ---------** **G MOHANAN S/O.GOPALAN ACHARY, CHAITHRAM, THIRUMULLAVARAM, KOLLAM WEST VILLAGE, KOLLAM DISTRICT.** **BY ADV. SRI.C.RAJENDRAN** **RESPONDENT:** **-----------** **SARASWATHY,** **SMRA, NEAR VISHNATHUKAVU TEMPLE, THIRUMULLAVARAM P.O., KOLLAM WEST VILLAGE, KOLLAM DISTRICT.671012.** **BY ADVS. SRI.JOHN JOSEPH VETTIKAD SRI.C.JOSEPH JOHNY** **THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 20-06-2017, THE COURT ON 04.07.2017 PASSED THE FOLLOWING:** **K.V.** ## **AR.No. 46 of 2014:** ## **-----------------** ## **APPENDIX** ## **PETITIONERS ANNEXURES:** ## **----------------------** - **A1; A TRUE PHOTOCOPY OF THE PARTNERSHIP DEED DATED 21.6.2013.** - **A2; A TRUE PHOTOCOPY ODF THE NOTICE DATED 19/3/2014.** - **A3; A TRUE PHOTOCOPY OF THE ACKNOWLEDGMENT CARD DATED 22/3/2014.** - **A4; A TRUE PHOTOCOPY OF THE SALE DEED NO 2610/13 DATED 4/12/2013 OF SUB REGISTRY OFFICE KOLLAM.** - **A5 A TRUE PHOTOCOPY OF THE SDALE DEED NO 2032/2014 DATED 28/8/2014 OF SUB REGISTRY OFFICE KOLLAM.** - **A6 A TRUE PHOTOCOPY OF THE SALE DEED NO 2067/2014 DATED 30/8/2014 OF SUB REGISTRY OFFICE KOLLAM.** - **A7 A TRUE PHOTOCOPY OF THE PARTNERSHIP DEED DATED 11/6/2013.** - **A8 A TRUE PHOTOCOPY OF THE PARTNERSHIP DEED DATED 21/3/2012.** - **A9 A TRUE PHOTOCOPY OF THE RECEIP ISSUED FROM THE KOLLAM BRANCH OF THE SBT DATED 8/6/2012.** - **A10 A TRUE PHOTOCOPY OF THE LETTER TRANSFERRING THE AMOUNT TO THE LPG COLLECTION BRANCH OF THE SBI MUMBAI DATED 8/6/2012.** - **A11: A TRUE PHOTOCOPY OF THE TEMPORARY APPOINTMENT LETTER DATED 2/2/2013.** - **A12: A TRUE PHOTOCOPY OF THE CHEQUE APPLICATION DATED 5/3/2011 FOR RS.250000/-** - **A13; A TRUE PHOTOCOPY OF THE RTGS DATED 5/3/2011 FOR RS 1500000/** - **A14; A TRUE PHOTOCOPY OF THE LETER DATED 3.4.2013.** - **A15; A TRUE PHOTOCOPY OF THE REGISTRATION CERTIFIED DATED 1/8/2013** - **A16 PROOF AFFIDAVIT OF A.R.AYYAPPAN ADVOCATE KOLLAM DATED 3.10.2016.** - **A17 PROOF AFFIDAVIT OF AYYAPPAN S/O RISHNAN KOTTAPPURATHU VEEDU, THIRUMULLAVARAM, KOLLAM DATED 3.10.2016.** - **A18 A TRUE PHOTOCOPY OF THE RELEVANT PAGE OF THE PASSPORT OF THE APPLICANT.** **RESPONDENT(S)' ANNEXURES** - **------------------------** - **R1(A) TRUE COPY OF THE LETTER ISSUED BY M/S BHARATH PETROLEUM CORPORATION DATED 3.4.2013.** **-2-** **-2-** ## **AR 46 OF 2014:** - **-------------** **R1(B) TRUE COPY OF THE PARTNERSHIP DEED DATED 10/4/2013.** - **R1(C) TRUE COPY OF AGREEMENT DATED 12/4/2013 ENTERED INTO BY THE PARTNERSHIP WITH M/S BHARATH PETROLEUM CORPORATION.** - **R1(D) TRUE COPY OF THE ACKNOWLEDGEMENT PF REGISTRATION OF FIRMS DATED 23/7/2013.** - **R1(E) THE TRUE COPY OF THE FIR IN CRIME NO 16/14.** - **R1(G) THE TRUE COPY OF THE REPORT FROM THE STATE FORENSIC LABORATORY AT THIRUVANANTHAPURAM ALONG WITH COVERING LETTER.** **AR 46 OF 2014 IN IA 16 OF 2017:** - **R1(G) THE TRUE COPY OF THE CHARGE SHEET IN CC NO 1035/2016 BEFORE THE TEMPORARY FIRST CLASS MAGISTRATE COURT, KOLLAM** **/TRUE COPY/** **P.S.TO JUDGE** **K.V.** ## **SHAJI P. CHALY, J.** -------------------------------------------------- ## **A.R. No.46 of 2014 ----------------------------------------------Dated this the 4[th] day of July, 2017** ## **O R D E R** This arbitration request is filed by the applicant seeking to appoint an advocate as arbitrator to resolve the disputes by and between the applicant and the respondent. Material facts for the disposal of the arbitration request are as follows: 2. The applicant and the respondent executed a partnership deed on 21.06.2013 and registered with the Registrar of Firms. As per the terms of the partnership, the applicant shall have a right to appoint his nominee in addition to the staff appointed by the respondents, and his nominee shall have full powers to verify all the accounts kept in the concern, at any time when the partnership continues, and also to make timely suggestions for the effective management of the partnership concern. According to the applicant, in violation of the above referred conditions of the partnership deed, the respondent has not allowed the applicant either to appoint his nominee or to verify the accounts kept in the concern, and is not sharing the profit as agreed. It is also 2 **A.R. No.46 of 2014** contended that, petitioner has got material information that the respondents has transferred the immovable assets of the concern with a view to defraud and cheat the applicant. That apart, it is contended that, the respondent was carrying on the business of distribution of LPG Gas Cylinders of Bharat Petroleum Corporation Ltd. through her proprietary concern, “M/s. Chittoor Agencies Bharat Gas Distributors”. The said agency had godown of its own. It was due to the interest expressed by the respondent in admitting a partner in the said Gas Agency, applicant entered into the partnership, and Annexure-A1 Partnership was constituted. According to the applicant, he had invested an amount of Rs.1,04,00,000/- for joining as a partner in the firm, and it was agreed to share the profits among the partners equally. 3. However, in utter defiance of the terms and conditions of the partnership deed, on 04.12.2013, respondent sold the property wherein the godown of the concern situates, by executing a sale deed in favour of one Sindhu, for a consideration of Rs.14,50,000/-. Therefore, according to the applicant, the applicant has already suffered considerable loss due to the respondent's dishonest and defrauding acts. 3 ## **A.R. No.46 of 2014** Therefore, the applicant wishes to retire from the partnership after settling the accounts till the date of settlement, and thereafter he will be entitled to receive an interest at the rate of 12% per annum for his investment of Rs.1,04,00,000/-. 4. Therefore, according to the applicant, since a dispute arose by and between the parties, as provided under Clause 16 of Annexure-A1 Partnership Deed, the same will have to be resolved by resorting to arbitration. In that view of the matter, applicant has caused to issue Annexure-A2 lawyer notice dated 19.03.2014 to respondent, espousing the causes of the applicant, and also informing that the advocate himself will act as the arbitrator, and also requested the respondent to appoint an arbitrator of her choice and arbitrators will have to appoint an umpire to resolve the disputes. According to the applicant, the same was received by the respondent, evident from Annexure-A3 postal acknowledgment card. However, no reply was issued. 5. A counter affidavit is filed by the respondent, basically disputing all the claims, demands and allegations made in the request as well as in Annexure-A2 notice issued. The very constitution of the partnership on 21.06.2013 itself is 4 ## **A.R. No.46 of 2014** disputed by the respondent. According to the respondent, respondent was not conducting distribution of LPG Distributorship on 21.06.2013, as alleged by the applicant. The LPG Distributorship of Bharat Petroleum Corporation Ltd. was run by her husband, late K. Thulasi as a Proprietorship business with effect from 19.08.1985. The said Thulasi expired on 01.02.2013. Thereafter, BPCL had accorded sanction to respondent's sons viz., T.S.Krishna Kumar and T.S.Haririshnan to constitute a partnership firm and continue to operate the distributorship in the very same name, evident from Annexure-R1(a) communication dated 03.04.2013. Accordingly, the children of the respondent entered into an oral agreement on 03.04.2013 to continue the business of 'M/s. Chitoor Agencies'. 6. Thereafter, a formal agreement of partnership was entered into between the children on 10.04.2013, evident from Annexure-R1(b). A formal agreement with the company was also entered into on 12.04.2013, evident from Annexure-R1 (c). The application for registration of partnership as submitted before the Registrar of Firms and the acknowledgment is produced as Annexure-R1(d). According to **A.R. No.46 of 2014** 5 the respondent, respondent has no manner of connection with 'M/s. Chittoor Agencies' and therefore, the statement in the application as well as in the lawyer notice that partnership was entered into to carry on the business of 'M/s. Chitoor Agencies' cannot be sustained under law. 7. The other allegations that the applicant invested money in the partnership firm are all denied by the respondent. However, it is admitted that the husband of the respondent had some liabilities with the Uco Bank, Kollam Branch and with certain private parties. In order to settle the above liabilities, late Thulasi had borrowed some amount from the applicant by providing the residential property as security. It is also stated that since the applicant insisted late Thulasi to execute a sale deed in respect of the above property as a security for the above transactions, and due to the fraudulent influence exerted by the applicant, late Thulasi happened to execute a document styled as a Sale Deed with the Sub Registrar Office, Kollam bearing No.900/2012. According to the respondent, the children repaid the amount by paying Rs.4,500/- every day from 24.03.2012 to 15.11.2013. 6 **A.R. No.46 of 2014** 8. It is also contended that, after the death of Thulasi, applicant obtained signatures of the respondent and children in blank papers and blank stamp papers, and also on blank cheques as security for the amount advanced to late Thulasi. It is contended that, it is thus misusing the said blank stamp papers and papers, fabricated the false documents like the partnership deed. It is further stated that the respondent is taking steps to cancel the partnership deed. Other contentions are also raised with respect to the illegality in Annexure-A1 partnership deed. That apart, it is contended that, AnnexureA2 demand for appointment of the arbitrator is not in accordance with law, since the same is not in terms of Annexure-A1 partnership deed, especially due to the fact that the lawyer himself has offered him as an arbitrator to arbitrate the issue and demanding the respondent to appoint her arbitrator in order to enable the arbitrators to appoint an umpire. 9. Therefore, according to the respondent, there is no dispute existing by and between the parties and Annexure-A1 partnership deed is the outcome of fraud employed by the applicant on the respondent. Various documents are produced **A.R. No.46 of 2014** 7 by the applicant before this Court along with reply affidavit and other petitions. 10. The paramount contention advanced by learned counsel for the applicant is that, since there is an arbitration clause contained under the partnership deed, whatever disputes arising by and between the applicant and the respondent is to be resolved by resorting to the Alternative Disputes Resolution mechanism agreed by and between the parties. It is also the contention of the learned counsel that the allegations with respect to fabrication of Annexure-A1 document are all concocted stories to wriggle out the settlement of issues by and between the parties. The attempt of the respondent is also to protract the proceedings some way or other and decline the payments due to the applicant. 11. Learned counsel appearing for the respondent, on the other hand, submitted that, when the respondent has a contention that the very basic document itself is a fabricated document, then the respondent is not liable to adhere to settle the claims alleged by the applicant through the mechanism provided in the concocted document. Learned counsel also submitted that the respondent is not a partner in M/s Chitoor **A.R. No.46 of 2014** 8 Agencies. The children are carrying on business by constituting a partnership in accordance with the approval granted by M/s. BPCL, after the death of late Thulasi, who was carrying on a proprietary business of Gas distribution. 12. Learned counsel also invited my attention to the judgments of the apex court in _**'India Household and Healthcare Ltd. v. LG Household and Healthcare Ltd.**_ ' [(2007) 5 SCC 510] and _**'A. Ayyasamy v. A. Paramasivam and Others'**_ [(2016) 10 SCC 386] to canvass the proposition that when there is a serious allegation of fraud or any criminal conduct on one of the parties is attributed, resolution of disputes by resorting to arbitration is not a feasible method. 13. I have considered the rival submissions made across the Bar. On a deeper probe into the claims and demands raised by the applicant and the allegations made by the respondent against the applicant, and perusing the documents on record, the question to be considered is whether under the fact circumstances, the disputes by and between the parties allegedly exist can be directed to be settled by appointing an arbitrator. The judgments referred to above rendered by the apex court is paramount so far as the facts 9 **A.R. No.46 of 2014** and circumstances of this case is concerned, wherein it is held that, arbitration clause can be ignored by a court where the court finds very serious allegations of fraud that makes a virtual case of criminal offence, or where the allegations of fraud are so complicated, that it becomes essential that such complicated issues can be decided only by a civil court on appreciation of voluminous evidence, and where serious allegations of forgery or fabrication of documents are put forth in support of plea of fraud or where fraud is alleged against arbitration provision itself, then, it may not be appropriate to resolve such disputes by resorting to arbitration. 14. On consideration of the facts and circumstances and the allegations by and between the parties, in my considered opinion, it is explicitly clear that voluminous evidence and intrinsic analysis of the subject issues raised by the parties are required in order to unravel the real issues pending by and between the parties. The said exercise can be done only by appreciating the evidence tendered by the rival parties, and even by securing report from experts as to the issue with respect to the alleged fabrication of the basic document, viz., the Partnership deed etc. etc. The tenor and terms of rival **A.R. No.46 of 2014** 10 contentions makes it clear that, without adduction of oral, documentary and expert evidence, the issues cannot be sorted out. Moreover, clear and convincing materials are not produced by the applicant with respect to the formation of the partnership, payment of money etc. etc. into the partnership account. The said documents are vital to decide reference of dispute to arbitration by ascertaining pendency of a genuine dispute, especially when the respondent has projected a case of fraud and fabrication of the basic document. 15. Therefore, I find force in the contention advanced by learned counsel for the respondent that even if an arbitrator is appointed by this court, the issues by and between the parties will not be able to be unearthed in the light of the contentions and disputes existing by and between the parties. Therefore, in my considered opinion, the facts and circumstances available on record would not justify appointment of an arbitrator. Accordingly, the request made by the applicant to appoint an arbitrator is declined. However, I make it clear that the findings rendered above shall not be construed as any expression of opinion on merits of the matter or interference with any rights and interests of the parties **A.R. No.46 of 2014** 11 pending in dispute. All the questions of fact and law raised by the parties are left open to be agitated in an appropriate proceeding. Therefore, the arbitration request is dismissed accordingly. Sd/- **SHAJI P. CHALY JUDGE** St/28.06.2017