K.A. Mohamed Saleem v. P.L. Nobert and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **THURSDAY, THE 26TH DAY OF OCTOBER 2017/4TH KARTHIKA, 1939** **OP(C).No. 2515 of 2017 (O) ---------------------------** **OP(ARB.) 75/2017 of V ADDITIONAL DISTRICT COURT, ERNAKULAM OP(ARB.) 79/2017 of V ADDITIONAL DISTRICT COURT, ERNAKULAM ----------------------** ## **PETITIONER(S)/1ST RESPONDENT: ----------------------------** **K.A.MOHAMED SALEEM S/O. LATE K.K. ABU, AGED 58 YEARS, RESIDING AT 12/204B, KUNJUMAKKACHALIL, PAPPALI LINE, VAZHAKKALA, KOCHI - 682 030 FORMER DIRECTOR AND SHAREHOLDER OF M/S. ASSET HOMES PVT LTD.** **BY ADV. SRI.P.SATHISAN** **RESPONDENT(S)/PETITIONER, RESPONDENTS 2 & 3, ARBITRATOR: --------------------------------------------------------** **1. P.L.NOBERT** **SOLE ARBITRATOR, FORMER DISTRICT & SESSIONS JUDGE, NINS AEDIS, SASTHA TEMPLE ROAD, PALLURUTHY, KOCHI - 682 006** **2. M/S ASSET HOMES PVT LTD,** **HAVING ITS REGISTERED OFFICE AT G-129, 28/34A, PANAMPILLY NAGAR, KOCHI, ERNAKULAM - 682 036 REPRESENTED BY ITS MANAING DIRECTOR V. SUNIL KUMAR, S/O. T.V VASUDEVAN PILLAI NO.42,BHUVAN TAGORE NAGAR, KADAVANTHARA, COCHIN - 682 020** **3. V. SUNIL KUMAR, S/O. T.V VASUDEVAN PILLAI, NO.42, BHUVAN TAGORE NAGAR, KADAVANTHARA, COCHIN - 682 020.** **4. ANIL KUMAR KERALA VARMA,** **S/O. N. KERALA VARMA, 17/369 B, BHARANI, SANSKRIT COLLEGE ROAD,TRIPUNITHURA - 682 031.** **R2 & 3 BY ADV. SRI.PHILIP MATHEW R4 BY ADV. SRI.ABRAHAM MATHEW (VETTOOR) R4 BY ADV. SRI.ANIL ABEY JOSE** **THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 26-10-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **OP(C).No. 2515 of 2017 (O)** ## **---------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** ## **-----------------------** **EXHIBIT P1 TRUE COPY OF NOTICE DATED 13/10/15 ISSUED BY PETITIONER TO 2ND RESPONDENT. EXHIBIT P2 TRUE COPY OF NOTICE DATED 13/10/15 ISSUED BY PETITIONER TO 3RD RESPONDENT. EXHIBIT P3 TRUE COPY OF NOTICE DATED 13/10/15 ISSUED BY PETITIONER TO 4TH RESPONDENT. EXHIBIT P4 TRUE COPY OF THE ACKNOWLEDGMENT CARD RECEIVED BY 2ND RESPONDENT. EXHIBIT P5 TRUE COPY OF THE ACKNOWLEDGMENT CARD RECEIVED BY 3RD RESPONDENT EXHIBIT P6 TRUE COPY OF THE ACKNOWLEDGMENT CARD RECEIVED BY 4TH RESPONDENT EXHIBIT P7 TRUE COPY OF THE RELEVANT EXTRACT OF THE CLAIM PETITION FILED BY THE PETITIONER BEFORE THE HON'BLE ARBITRATOR. EXHIBIT P8 TRUE COPY OF THE ORDER DATED 11.7.2016 OF THE ARBITRATOR. EXHIBIT P9 TRUE COPY OF THE RELEVANT EXTRACT OF APPLICATION FILED BY THE RESPONDENTS 2 & 3 IN ARB NO.9/2015 BEFORE THE HON'BLE ARBITRATOR. EXHIBIT P10 TRUE COPY OF THE RELEVANT EXTRACT OF THE COUNTER STATEMENT FILED BY THE PETITIONER TO EXHIBIT P9 APPLICATIONS. EXHIBIT P11 TRUE COPY OF THE ORDER DATED 14.01.2017 OF THE ARBITRATOR. EXHIBIT P12 TRUE COPY OF THE RELEVANT EXTRACT OF THE OP ARBITRATION NO.75/2017 FILED BY 2ND RESPONDENT BEFORE THE HON'BLE DISTRICT COURT ERNAKULAM. EXHIBIT P13 TRUE COPY OF RELEVANT EXTRACT OF THE OP ARBITRATION NO.79/2017 FILED BY 3RD RESPONDENT BEFORE THE HON'BLE DISTRICT COURT ERNAKULAM. EXHIBIT P14 TRUE COPY OF THE RELEVANT EXTRACT OF THE OBJECTION FILED BY THE PETITIONER TO EXHIBIT P12 EXHIBIT P15 TRUE COPY OF THE RELEVANT EXTRACT OF THE OBJECTION FILED BY THE PETITIONER TO EXHIBIT P13. EXHIBIT P16 TRUE COPY OF THE ADVANCE PETITION FILED BY THE PETITIONER IN ARB OP 75/17.** ## **OP(C).No. 2515 of 2017 (O) --------------------------** ## **:: 2 ::** |**EXHIBIT P17**|**TRUE COPY OF RELEVANT EXTRACT OF THE APPLICATION**| |---|---| ||**FILED BY 4TH RESPONDENT UNDER SEC.24 OF THE**| ||**ARBITRATION AND CONCILIATION ACT IN OP ARB 75/17.**| |**EXHIBIT P18**|<br>**TRUE COPY OF RELEVANT EXTRACT OF THE APPLICATION**| ||**FILED BY 3RD RESPONDENT UNDER SEC.24 OF THE**| ||**ARBITRATION AND CONCILIATION ACT IN OP ARB 75/17.**| |**EXHIBIT P19**|<br>**TRUE COPY OF THE RELEVANT EXTRACT OF THE OBJECTION**| ||**FILED BY THE PETITIONER TO EXHIBIT P17.**| |**EXHIBIT P20**|<br>**TRUE COPY OF THE RELEVANT EXTRACT OF THE OBJECTION**| ||**FILED BY THE PETITIONER TO EXHIBIT P18.**| |**RESPONDENT'S**|**EXHIBITS:**| |**EXHIBIT R2(a)**|**COPY OF THE TRIPARTITE SHARE HOLDER AGREEMENT DATED**| ||**30.07.2013.**| |**EXHIBIT R2(b)**|**COPY OF THE QUADRIPARTITE EQUITY SHARE TRANSFER**| ||**AGREEMENT DATED 9.02.2014.**| |**EXHIBIT R2(c)**|**COPY OF THE NOTICE DATED 15.01.2014 REGARDING THE**| ||**RESOLUTIONS IN RESPECT OF BUYBACK OF SHARES BY THE**| ||**2ND RESPONDENT-COMPANY TO BE PASSED BY MEMBERS IN**| ||**THE SAID EGM.**| |**EXHIBIT R2(d)**|**COPY OF THE LETTER DATED 19THE OCTOBER 2015 ISSUED**| ||**BY THE 1ST RESPONDENT (SOLE ARBITRATOR).**| |**EXHIBIT R2(e)**|**COPY OF THE ACCEPTANCE LETTER DATED 27TH OCTOBER,**| ||**2015 SENT BY THE RESPONDENTS NO.2 AND 3 TO THE 1ST**| ||**RESPONDENT.**| |**EXHIBIT R2(f)**|**COPY OF THE PROCEEDINGS RECORDED ON 23RD AUGUST,**| ||**2016 BY THE SOLE ARBITRATOR REGARDING HIS FEES.**| |**EXHIBIT R2(g)**|**COPY OF THE INTERIM APPLICATION FOR TEMPORARY**| ||**INJUNCTIN FILED ON 3.12.2016 BY THE PETITIONER.**| |**EXHIBIT R2(h)**|**COPY OF THE NOTICE ISSUED BY THE IST RESPONDENT ON**| ||**26TH AUGUST, 2017 REGARDING THE ALLEGED DIRECTION**| ||**OF THIS HON'BLE COURT.**| |**EXHIBIT R2(i)**|**COPY OF THE REPLY SENT BY THE 2ND RESPONDENT-**| ||**COMPANY AND THE 3RD RESPONDENT THROUGH THEIR**| ||**COUNSEL ON IST SEPTEMBER, 2017.**| |**EXHIBIT R2(j)**|**COPY OF THE COMMUNICATION DATED 14TH SEPTEMBER,**| ||**2017 RECEIVED BY THE COUNSEL OF THE 2ND RESPONDENT**| ||**AND THE 3RD RESPONDENT.**| ## **//TRUE COPY//** **P.A. TO JUDGE** **STK** ## **ANIL K. NARENDRAN, J.** **-------------------------------O.P.(C)No.2515 of 2017 ----------------------------------** Dated this the 26[th] day of October, 2017 ## **JUDGMENT** The petitioner, who is the claimant in Arbitration Proceedings No.9/2015 pending before the first respondent Sole Arbitrator and also the first respondent in O.P.(Arb.) Nos.75/2017 and 79/2017 on the file of the Fifth Additional District Court, Ernakulam is before this Court in this original petition filed under Article 227 of the Constitution of India, seeking a declaration that the entire proceedings as per O.P.(Arb.) Nos.75/2017 and 79/2017, i.e., Exts.P12 and P13, are illegal and not maintainable; or in the alternative to transfer the proceedings as per Exts.P12 and P13 to any other District Court having jurisdiction in the matter for considering its maintainability within one month; and to direct the first respondent Sole Arbitrator to pass final award in the proceedings commenced as per Exts.P1 to P6 within a time limit to be ## **O.P.(C)No.2515 of 2017** ## **-: 2 :-** fixed by this Court. 2. Heard the learned counsel for the petitioner/first respondent in O.P.(Arb.) Nos.75/2017 and 79/2017, the learned counsel for respondents 2 and 3/petitioner and third respondent in O.P.(Arb.) and also the learned counsel for the 4[th] respondent/second respondent in O.P.(Arb.). 3. Ext.P12 is an original petition filed by the 2[nd] respondent herein as O.P.(Arb) No.75/2017, under Section 14(2) of the Arbitration and Conciliation Act, 1996, seeking a declaration that the mandate of the first respondent, Sole Arbitrator stood terminated since he has become _de jure_ unable to perform his function as an Arbitrator of the disputes between the parties due to the expiry of the time limit for passing the arbitral award on 26.10.2016, by efflux of 12 months from the date when Arbitral Tribunal entered appearance on 27.10.2015. The further relief sought for in that original petition is an order directing the claimant, the petitioner herein, to seek his ## **O.P.(C)No.2515 of 2017** ## **-: 3 :-** reliefs, if so advised, against the second respondent herein before the competent forum as per the provisions of the Companies Act, 2013. 4. Ext.P13 is another original petition filed by the third respondent herein, under Section 14(2) of the Act seeking the very same relief sought for as relief (i) in O.P. (Arb.) No.75/2017. In the said original petition the third respondent has also sought for an order directing the claimant, the petitioner herein, to follow the procedure provided under the Equity Share Transfer Agreement dated 9.2.2014 for adjudication of the disputes, if any, between the parties. 5. To Ext.P12 original petition, the petitioner herein filed Ext.P14 preliminary objection raising the question of maintainability. In the said preliminary objection, it is contended that the relief sought for in Ext.P12 is not legally maintainable in view of the provisions under Section 21 of the Arbitration and Conciliation Act, since ## **O.P.(C)No.2515 of 2017** ## **-: 4 :-** the arbitration proceedings were commenced by the issuance of notice with respect to the arbitration, which has been received by the respondents on 19.10.2015. It is also contended that the provisions under the Companies (Transfer of Pending Proceedings) Rules, 2016, apply to the proceedings under the Companies Act, 2013 and not to proceedings under the Arbitration and Conciliation Act. The petitioner has also filed Ext.P15 preliminary objection in Ext.P13 original petition raising similar contentions. 6. In Ext.P12 original petition, the fourth respondent herein filed Ext.P17 interlocutory application under Section 24 of the Code of Civil Procedure, 1908, read with Section 151, seeking an order to transfer Arbitration Proceedings No.9/2015 pending before the first respondent Sole Arbitrator, to the National Company Law Tribunal, Chennai. The third respondent herein has also filed Ext.P18 interlocutory application in Ext.P12 original petition seeking an order of transfer to the National ## **O.P.(C)No.2515 of 2017** ## **-: 5 :-** Company Law Tribunal, Chennai. To the aforesaid interlocutory applications, the claimant, the petitioner herein, filed Exts.P19 and P20 objections, contending that the provisions under the Companies (Transfer of Pending Proceedings) Rules, 2016, or the Private Limited Company and Unlisted Public Company (Buy-Back of Securities) Rules, 1999, or Section 77A or 77AA or Section 77B or the like provisions of the Companies Act, 1956, have no application in the matter and that the proceedings now pending before the first respondent Sole Arbitrator cannot be transferred to the National Company Law Tribunal. 7. In **Shalini Shyam Shetty v. Rajendra Shankar Patil [(2010) 8 SCC 329]** the Apex Court, while analysing the scope and ambit of the power of superintendence under Article 227 of the Constitution, held that the object of superintendence, both administrative and judicial, is to maintain efficiency, smooth and orderly functioning of the entire machinery of ## **O.P.(C)No.2515 of 2017** ## **-: 6 :-** justice in such a way as it does not bring it into any disrepute. The power of interference under Article 227 is to be kept to the minimum to ensure that the wheel of justice does not come to a halt and the fountain of justice remains pure and unpolluted in order to maintain public confidence in the functioning of the tribunals and courts subordinate to the High Court. 8. In **Jacky v. Tiny @ Antony [(2014) 6 SCC 508]** the Apex Court held that the High Court under Article 227 of the Constitution of India has the jurisdiction to ensure that all subordinate courts as well as statutory or quasi-judicial tribunals, exercise the powers vested in them within the bounds of their authority. If a suit is not maintainable it was well within the jurisdiction of the High Court to decide the same in appropriate proceedings but in no case power under Article 226 and 227 of Constitution of India can be exercised to question a plaint. 9. In view of the law laid down in the decisions ## **O.P.(C)No.2515 of 2017** ## **-: 7 :-** referred to supra, the declaratory relief sought for as to maintainability of Exts.P12 and P13 original petitions now pending before the Fifth Additional District Court, Ernakulam cannot be decided in this original petition filed under Article 227 of the Constitution of India. It is for the petitioner to raise all such contentions before the said court. 10. During the course of argument, it is submitted by the learned counsel on both sides that, in Exts.P12 and Ext.P13 original petitions and also in Exts.P17 and P18 interlocutory applications filed in those original petitions, detailed arguments were heard. At that point of time, the petitioner filed this original petition, invoking the supervisory jurisdiction of this Court under Article 227 of the Constitution of India, wherein this court granted an order of stay on 18.08.2017, which is still in force. 11. Considering the fact that Exts.P12 and P13 original petitions and Exts.P17 and P18 interlocutory ## **O.P.(C)No.2515 of 2017** ## **-: 8 :-** applications are now pending consideration before the Fifth Additional District Court, Ernakulam, I deem it appropriate to dispose of this original petition, directing the said court to consider Exts.P12, P13, P17 and P18 and pass appropriate orders thereon, as expeditiously as possible, at any rate within a period of one month from 16.11.2017, the date on which the aforesaid original petitions/interlocutory applications now stand posted to. It is made clear that this Court has not expressed anything on the merit of the rival contentions and it is for the said court to take appropriate decision on those original petitions/interlocutory applications, strictly in accordance with law. sd/- **ANIL K. NARENDRAN, JUDGE** STK