High Court of KeralaSingle Judge2016-07-11Original petition dismissed; reference to arbit...

M.K. Anandavally v. K.T. Soman and K. Udayabhanu and M/S Malabar Scales and Services

Case / Petition Number:OP(C). No. 3218 of 2013 (O)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: K. Harilal
Judgment Date: 2016-07-11
Court Decision / Holding: Consequently, the Original Petition is dismissed. The High Court upholds the court below’s order referring the dispute to arbitration under Clause 17 of the Partnership Deed and dismisses the review petition Ext.P8.
Final Disposition: Original petition dismissed; reference to arbitration upheld; review petition dismissed.

Parties to the Case

Appellants / Petitioners

M.K. Anandavally

Respondents

K.T. Soman
K. Udayabhanu
M/S Malabar Scales and Services

Legal Representation & Advocates

Counsels for Petitioners

• SRI.V.V.SURENDRAN
• SRI.P.A.HARISH

Counsels for Respondents

• SRI.K.B.SIVARAMAKRISHNAN
• MRS.S.SREELAKSHMY

Case Synopsis & Summary

This original petition under OP(C) challenges an order referring the dispute to arbitration under Clause 17 of the 2006 Partnership Deed. The suit in O.S. No.325/2012 before the Principal Munsiff’s Court-I, Kozhikode seeks rendition of accounts and an injunction restraining the defendants from entering the plaint schedule shop and protecting the plaintiff’s possession. I.A. No.2905/2012 under Section 8 of the Arbitration and Conciliation Act was allowed to refer the dispute to arbitration. The petitioner contends that a third party interest is involved, namely tenancy rights devolved on the petitioner and her son after the death of Gangadharan Nair, and that such rights were not made assets of the partnership; therefore the matter should not be referred to arbitration. The respondents submit that the third party is not a party to the suit or to the dispute, and that the tenancy rights, being outside the partnership assets, should not affect the scope of reference. The High Court notes the suit seeks rendition of accounts and injunction within the ambit of the 2006 partnership deed, and relying on P. Anand Gajapathi Raju v. P.V.G. Raju (2000) 4 SCC 539, holds that where an arbitration clause exists, the court must refer to arbitration and no further adjudication remains in the original petition. Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya (2003) 5 SCC 531 is distinguished for lack of bifurcation. The petition is dismissed, upholding the reference to arbitration and dismissing the review.

Provisions of Law Cited

Arbitration and Conciliation Act, Section 8Partnership Deed Clause 17

Legal Doctrines & Maxims

Obligation to refer to arbitration where there exists an arbitration clause (P. Anand Gajapathi Raju v. P.V.G. Raju)
Non-applicability or distinction of bifurcation concept when reliefs fall within the scope of the agreement (Sukanya Holdings)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner submits that there is a third party interest involved in the dispute, particularly tenancy rights devolved upon the petitioner and her son after the death of Gangadharan Nair. Since these tenancy rights were not incorporated as assets of the partnership, they contend that the dispute cannot be confined solely to the partnership and should not be referred to arbitration under Clause 17 of the 2006 partnership deed. They argue that reference to arbitration should not be ordered where the subject matter includes third-party interests and rights outside the assets of the partnership.

Contentions of Respondents

The respondents contend that the third party is not a party to the suit or to the subject matter; therefore his interests need not be considered for the purpose of Section 8 reference. They argue that the reliefs sought, being rendition of accounts and injunction within the scope of the 2006 partnership deed, fall within the arbitration clause, and the court’s order referring the dispute to arbitration is proper. They maintain that the tenancy rights devolved upon the petitioner do not affect the arbitration proceeding since they are not part of the assets of the partnership.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
P. Anand Gajapathi Raju and others v. P.V.G. Raju (Dead) and others	2000 (4) SCC 539	Positive	Apex Court held that where there is an arbitration clause, it is obligatory for the court to refer the parties to arbitration; nothing remains to be decided in the original petition after such an application is made.
Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and Another	[(2003) 5 SCC 531]	Distinguished	Not applicable here due to bifurcation considerations; the judgment notes bifurcation was present there, which is not the case in the instant matter.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.HARILAL** **MONDAY, THE 11TH DAY OF JULY 2016/20TH ASHADHA, 1938** **OP(C).No. 3218 of 2013 (O) ---------------------------** **OS 325/2012 OF PRINCIPAL MUNSIFF COURT-I, KOZHIKODE ....** **PETITIONER(S): -------------** **M.K.ANANDAVALLY, AGED 67 YEARS, W/O.GANGADHARAN NAIR, RESIDING AT AKHILAM, METHALE PARAMBA, GOVINDAPURAM, VALAYANAD AMSOM DESOM OF KOZHIKODE TALUK.** **BY ADVS.SRI.V.V.SURENDRAN SRI.P.A.HARISH** **RESPONDENT(S):** **--------------** **1. K.T.SOMAN, S/O.APPU NAIR, RESIDING AT KOLADITHAZHAM HOUSE, P.O.KURUVATTOOR, KURUVATTOR AMSOM DESOM, KOZHIKODE-673 611.** **2. K.UDAYABHANU, S/O.BALAKRISHNAN NAIR, RESIDING AT SARATH NIVAS, SANTHINIKETAN COLONY, P.O.GOVINDAPURAM, KOZHIKODE-673 016.** **3. M/S.MALABAR SCALES AND SERVICES, A REGISTERED FIRM HAVING ITS OFFICE AT 8/1117, CONVENT ROAD, NAGARAM AMSOM DESOM, KOZHIKODE-673 032, REPRESENTED BY ITS MANAGING PARTNER K.UDAYABHANU.** **BY ADVS. SRI.K.B.SIVARAMAKRISHNAN MRS.S.SREELAKSHMY** **THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 11-07-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **msv/** ## **OP(C).No. 3218 of 2013 (O) --------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS:** ## **------------------------** - **P1: TRUE COPY OF THE REPLY NOTICE SEND BY RESPONDENTS 1 AND 2 TO THE COUNSEL FOR THE PETITIONER.** - **P2: TRUE COPY OF THE PLAINT IN ORIGINAL SUIT.** - **P3: TRUE COPY OF THE AFFIDAVIT FILED IN SUPPORT OF I.A.2905/12.** - **P4: TRUE COPY OF THE COUNTER STATEMENT FILED BY THE PETITIONER.** - **P5: TRUE COPY OF THE ORDER DTD.20.12.2012.** - **P6: TRUE COPY OF THE IA.948/2013 SEEKING TO REVIEW EXT.P5 ORDER.** - **P7: TRUE COPY OF THE COUNTER STATEMENT FILED BY RESPONDENTS 1 AND 2.** ## **RESPONDENT(S)' EXHIBITS:** ## **NIL** ## **//TRUE COPY//** ## **P.S.TO JUDGE** ## **Msv/** ## K.HARILAL, J. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ## O.P.(C). No.3218 of 2013 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Dated this the 11[th] day of July, 2016 **==> picture [74 x 25] intentionally omitted <==** The petitioner is the plaintiff in O.S.No.325/2012 on the files of the Principal Munsiff's Court-I, Kozhikode as well as the respondents in I.A. No.2905/2012 filed therein by the respondents herein, who are the defendants in the above suit. The aforesaid suit is one for rendition of account and injunction, restraining the defendants from entering into the plaint schedule shop room and also for obstructing the plaintiff/petitioner from the possession and enjoyment over the plaint schedule shop room. The respondents filed I.A. No.2905/2012 under Section 8 of the Arbitration and Conciliation Act seeking reference of the dispute to the Arbitrator by invocation of Clause 17 of the Partnership Deed. After considering the objection raised by the **OP(C).3218/13 :2:** petitioner, the court below allowed the said application by Exts.P5 order. Aggrieved by Ext.P5, they have preferred a review petition and the same was also got dismissed by Ext.P8 order. The legality, propriety and correctness of the reasons, whereby the court below referred the dispute for arbitration, are under challenge in this original petition. 2. Heard the learned counsel for the petitioner and the learned counsel for the respondents. 3. The learned counsel for the petitioner advanced arguments contending that a third party interest is also involved in the dispute. So, the court below ought not have referred the dispute for arbitration under Clause 17 of the Partnership Deed. 4. Per contra, the learned counsel for the respondents advanced arguments to justify the reasonings whereby the court below allowed the said application. The respondents contended that the alleged third party is not a party in the suit as well as **OP(C).3218/13 :3:** the subject matter of the dispute. Therefore, his interest need not be taken into consideration while determining the scope of reference under Section 8 of the Arbitration and Conciliation Act. 5. In view of the submissions made at the Bar, the point to be considered is, whether there is any illegality or impropriety in the order referring the matter for arbitration invoking Clause 17 of the Partnership Deed. 6. Going by Ext.P2 copy of the plaint, it is seen that the suit is filed by the petitioner alone and the reliefs sought for are rendition of account and injunction against the respondents. 7. The learned counsel for the petitioner produced the partnership deeds executed between Gangadharan Nair and the respondents dated 28.2.1994 and subsequent partnership deed executed between the petitioner and the respondents, after the death of Gangadharan Nair. It is the case of the petitioner that **OP(C).3218/13 :4:** the 3[rd] respondent firm was originally a proprietary concern run by the husband of the petitioner, by name Gangadharan Nair, in the plaint schedule property and in the partnership agreement the leasehold right of the petitioner's husband was not made an asset. When the petitioner's husband Gangadharan Nair became ill, he was assisted by the respondents in the business and subsequently, he entered into a partnership agreement with the respondents 1 and 2 with respect to the business. On the death of the said Gangadharan Nair, the petitioner entered into subsequent partnership deed dated 12.12.2006 and the firm is being run under the terms and conditions contemplated under the subsequent partnership deed dated 12.12.2006. 8. The main contention raised by the petitioner in this original petition is that after the death of Gangadharan Nair, tenancy right devolved upon the petitioner and her son Akhilesh. It is also contended that even after the execution of a partnership deed, **OP(C).3218/13 :5:** the petitioner's husband was paying rent and thereafter the petitioner was paying rent to the petition schedule property. The licence of the petitioner's husband or the tenancy which he had over the petition schedule property was not made an asset of the partnership deed. In view of the above admission, this Court is of the view that if the tenancy right which he had over the petition schedule property was not made an asset of the partnership, the tenancy right devolved upon the legal heirs of the deceased Gangadharan Nair will not come within the purview of the subject matter of the partnership deed. 9. The above view is supported by two subsequent events. After the death of Gangadharan Nair, the partnership was re-constituted by partnership deed dated 12.12.2006 between the petitioner and the respondents. Therefore, by the death of Gangadharan Nair, no kind of right devolved upon his son Akhilesh with respect to the subject matter of the partnership **OP(C).3218/13 :6:** deed. The suit is filed by the petitioner alone as a partner of the firm in tune with subsequent partnership deed dated 12.12.2006. In short, the said Akhilesh is an alien to the subject matter of the partnership deed and the relief sought for is rendition of account, a matter within the scope of partnership deed only. Even if any kind of tenancy right devolved upon the said Akhilesh, that will not be a subject matter of the arbitration reference. Therefore, even if he had any kind of tenancy right as the legal heir of the deceased Gangadharan Nair, that right will not be affected by the arbitration, in view of the specific relief sought for by the petitioner. In other words, the relief sought for are within the ambit of the subject matter of the partnership deed only. 10. In the decision reported in P. Anand Gajapathi Raju and others v. P.V.G. Raju (Dead) and others [2000 (4) SCC 539], the Apex Court held that where there is an arbitration clause in the agreement, it is obligatory **OP(C).3218/13 :7:** for the court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original petition after such an application is made except to refer the dispute to an Arbitrator. 11. The learned counsel for the petitioner cited the decision reported in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and Another [(2003) 5 SCC 531]. But, the proposition laid down in the aforesaid decision is not applicable to the instant case, because, there, there was a bifurcation of the subject matter. Here, there is no question of bifurcation of subject matter as the reliefs sought for are confined to the subject matter of the agreement dated 12.12.2006 only. 12. In the above analysis, the court below is justified in referring the matter for arbitration, invoking Clause 17 of the Partnership Deed dated 12.12.2006. I do not find any kind of illegality or impropriety in the impugned orders. In the lack of any **OP(C).3218/13 :8:** error apparent on the face of the record, the court below is justified in dismissing the review petition also, by Ext.P8 order. Consequently, this original petition is dismissed. Sd/- K. HARILAL, JUDGE okb.