P.P. Mariya v. Sheeja, V.V. Suneer and V.V. Haneefa

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE & THE HONOURABLE MR. JUSTICE K.RAMAKRISHNAN** **TUESDAY, THE 14TH DAY OF MARCH 2017/23RD PHALGUNA, 1938** **OP (FC).No. 582 of 2016 (R)** **----------------------------** **(AGAINST THE ORDER IN I.A.146/15 IN O.P.1313/14 DATED 23.6.2016 OF THE FAMILY COURT, THRISSUR)** ## **PETITIONER/1ST PETITIONER: -----------------------------** **P.P.MARIYA, AGED 31 YEARS W/O.V.V.HANEEFA, NOW RESIDING AT VALIYAKATH HOUSE LAKKIDI DESOM, OTTAPPALAM TALUK 679 301.** **BY ADVS.SRI.NAGARAJ NARAYANAN** **SRI.RAFEEK V.K SRI.BENOJ C AUGUSTIN SMT.DEVI.R.SENS SRI.U.M.HASSAN SMT.P.PARVATHY SRI.G.RAJESH (DIWAN) SRI.SAIJO HASSAN SRI.VIVEK V. KANNANKERI SRI.VISHNU BHUVANENDRAN** ## **RESPONDENTS/RESPONDENT:** **--------------------------** **1. SHEEJA, AGED 38 YEARS S/O.SUNEER, VALIYAKATH HOUSE, KALLEPADAM DESOM PAZHAYANNUR VILLAGE, TALAPPILLY TALUK 680 587.** **2. V.V.SUNEER, AGED 38, S/O.VAVAKUTTY, VALIYAKATH HOUSE, KALLEPADAM DESOM PAZHAYANNUR VILLAGE, TALAPPILLY TALUK 680 587.** **3. V.V.HANEEFA, AGED 38, S/O.VAVAKUTTY, VALIYAKATH HOUSE, LAKKIDI DESOM OTTAPALAM TALUK 679 301.** **R1 BY ADV. SRI.G.SREEKUMAR (CHELUR)** **THIS OP (FAMILY COURT) HAVING BEEN FINALLY HEARD ON 14-03-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **OP (FC).No. 582 of 2016 (R)** **----------------------------** ## **APPENDIX** ## **PETITIONER'S EXHIBITS** **-------------------------** **EXT.P1 : TRUE COPY OF THE PETITION IA 161/2013 IN O.P.616/2013 TO ATTACH THE PROPERTY.** **EXT.P2 : TRUE COPY OF THE ORDER PASSED BY THE FAMILY COURT OTTAPALAM LIFTING THE ATTACHMENT** **EXT.P3 : TRUE COPY OF THE ORIGINAL PETITION AS OP.NO.1313/2014 FILED BY THE FIRST RESPONDENT** **EXT.P4 : TRUE COPY OF THE PARTNERSHIP DEED PRODUCED BY THE FIRST RESPONDENT** **EXT.P5 : TRUE COPY OF THE PETITION FILED BY THE PETITIONER AS IA.146/2015 IN OP NO.1313/2014** **EXT.P6 : TRUE COPY OF THE ORDER PASSED BY THE FAMILY COURT THRISSUR DISMISSING IA.146/2015 IN OP NO.1313/2014** ## **RESPONDENTS' EXHIBITS** **------------------------** ## **NIL** **//TRUE COPY//** **P.A.TO JUDGE** **ami/** ## **A.M.SHAFFIQUE & K.RAMAKRISHNAN, JJ.** **-----------------------------------------------** O.P.(F.C.)No.582 of 2016 **-----------------------------------------------** Dated this the 14[th] day of March, 2017 ## **J U D G M E N T** ## A.M.Shaffique, J. This original petition is filed challenging the order dated 23.6.2016 in I.A.No.146/15 in O.P.No.1313/14, by which, the Family Court dismissed the application filed under Section 8 of the Arbitration and Conciliation Act. 2. The short facts involved in this petition would disclose that the original petition was filed by the 1[st] respondent herein seeking for the following reliefs: “A) Pass a decree declaring that the plaint schedule property acquired by the 1[st] respondent, P.P.Mariya, as per registered assignment deed No.1350/02 of Pazhayannur S.R.O. belongs to the partnership firm M/s Surabi Palada formed on 28.2.2006 and the same is an asset of the said partnership firm and that the 1[st] respondent P.P.Mariya has no exclusive right, title or interest or possession over the same. B) Pass a preliminary decree dissolving the firm Surabhi Palada; C) Directing an account of the assets and liabilities of the partnership firm viz., Surabhi Palada to be taken and appointing a chartered accountant to audit O.P.(F.C.)No.582 of 2016 :-2-: the accounts, prepare a balance sheet, profit and loss account of the said firm, so as to enable a final decree to be passed; D) Directing the method and manner of disposal of the assets of the firm its Goodwill and discharge the liabilities, if any, and appointing a receiver to carry out the same AND/OR E) To divide the petition schedule property, the building situated therein and all the machineries and assets of the partnership firm into 4 equal shares and allotting 1 such share to the petitioner; F) Granting cost of the suit to be realized from the respondents personally and from their assets **and** G) Granting such other reliefs as are incidental thereto which the petitioner may seek and this Honourable Court may deem fit and proper to grant.” 3. The petitioner herein is the 1[st] respondent who filed Ext.P5 application seeking to refer the parties to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996. The petitioner placed reliance to an arbitration agreement, Ext.P4, by which, clause 25 indicated that any dispute or difference of opinion between the parties relating to the affairs of the partnership or in the interpretation or enforcement of any of the provisions of the deed, shall be settled by resort to Arbitration Act, 1940. It was inter alia contended that the '1940 Act' was superseded by the Arbitration and Conciliation Act, 1996. O.P.(F.C.)No.582 of 2016 :-3-: Therefore, in the light of Section 8, the parties are covered by the arbitration agreement and the parties shall be referred to the Arbitrator. 4. The application came to be objected by the petitioner in the original petition. The Family Court having considered the matter, opined that the original agreement or authenticated copy of the same has not been produced and no steps have been taken to call upon the respondent to produce an authenticated copy of the agreement. Further, it was observed that the dispute in the case is between the 1[st] petitioner and the 3[rd] respondent in the original petition and there are some matrimonial issues wherein claim for gold ornaments had been made. Insofar as the family disputes cannot be entertained by an Arbitrator, the Family Court has jurisdiction in the matter. Further, it was observed that the relief sought for is with respect to the declaration as to the document by which the property was acquired and later it was amended by the petitioner seeking for declaration with respect to the document executed by the 1[st] respondent in favour of the 3[rd] respondent and since the validity of the document is to be decided, which also is a matter that cannot be decided by the ## O.P.(F.C.)No.582 of 2016 :-4-: Arbitrator. Therefore, the dispute cannot be referred to the Arbitrator. While deciding so, the Family Court also observed that one Jeffin James had been impleaded as the 4[th] respondent who contended that the petition is not maintainable, since the original partnership deed is not produced. The partnership agreement between the petitioner and the other respondent in the case is a sham document and the 4[th] respondent is a bona fide purchaser for value without any notice of the dispute. 5. Apparently, it is seen that there is no dispute between the parties with reference to the existence of arbitration agreement. Learned counsel submits that though a copy of the agreement has been produced, the respondent did not oppose the said agreement. That apart, the 1[st] respondent himself has produced a photocopy of the same. Therefore, it is contended that the arbitration agreement between the parties is not disputed and there was no necessity for the court below to insist for the original or authenticated copy thereof. Learned counsel for the petitioner also placed reliance upon judgment of the Apex Court in **Bharat Sewa Sansthan v. U.P.Electronics Corpn. Ltd. [(2007) 7 Supreme Court Cases 737]** , wherein the Apex O.P.(F.C.)No.582 of 2016 :-5-: Court observed that when the photocopies of the agreements had been produced before the court which is not disputed and if both the parties relied upon the said document, the existence of arbitration clause cannot be disputed and it is well within the jurisdiction of the court to take on record the same under Section 8 of the 1996 Act. 6. It is also contended that the 4[th] respondent was impleaded subsequently by way of an amendment and the averments in the original petition by itself would disclose that the petition itself is not maintainable before the Family Court. No family issue had arisen between the parties and as stated by the Family Court, there is no claim for gold ornaments in the present original petition. It is also contended that a separate petition had been filed by the 1[st] respondent herein against her husband/2[nd] respondent for value of gold ornaments which is pending consideration. 7. On the other hand, the learned counsel appearing for the respondents submits that when a declaration had been sought for that the property belongs to the partnership firm, such a declaration cannot be granted by the Arbitrator and only a civil O.P.(F.C.)No.582 of 2016 :-6-: court can grant such a declaration. Learned counsel also placed reliance upon judgment of the Apex Court in **Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. & Ors. (AIR 2011 SUPREME COURT 2507)** wherein, the Apex Court having considered various issues relating to arbitrability of disputes observed that if a right in rem is being claimed, the matter cannot be referred to Arbitrator. Specific reference has been made to paragraph 23 of the judgment, which reads as under: “It may be noticed that the cases referred to above relate to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interests of the parties themselves in the subject-matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property. Correspondingly, judgment in personam refers to a judgment against a person as distinguished from a judgment against a thing, right or status and judgment in rem refers to a judgment that determines the status or condition or property which operates directly on the property itself. (Vide: Black's Law Dictionary). Generally and traditionally all disputes relating to rights in personam are considered to be amenable to arbitration; and all disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, O.P.(F.C.)No.582 of 2016 :-7-: being unsuited for private arbitration. This is not however a rigid or inflexible rule. Disputes relating to sub-ordinate rights in personam arising from rights in rem have always been considered to be arbitrable.” 8. Having heard the learned counsel on either side and having perused the records, we are of the view that when the arbitration agreement is agreed upon by the parties, there was no reason for the Family Court to have observed that the failure to produce the authenticated copy or the original was a reason for rejecting the claim. Section 8 of the Arbitration and Conciliation Act, 1996, reads as follows: “ **Power to refer parties to arbitration where there is an arbitration agreement** .-- [(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.] (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof: [Provided that where the original arbitration O.P.(F.C.)No.582 of 2016 :-8-: agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.] (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.” It is evident from the factual aspects involved in the matter that the petition has been filed on the first posting of the case itself and in between it appears that the Family Court had proceeded to implead additional 4[th] respondent in the case and had even permitted amendment of the pleadings. This procedure of the Family Court was absolutely erroneous. When an application is filed under Section 8 of the Arbitration and Conciliation Act, it was incumbent on the part of the Family Court to consider the said application and thereafter pass appropriate orders in other applications which are filed in between. 9. On a perusal of the averments in the original petition by O.P.(F.C.)No.582 of 2016 :-9-: itself will indicate that this is a case in which the petitioner has sought for dissolution of a firm and for a settlement of accounts. The only declaration sought for is that the property which was in the name of the 1[st] respondent in the original petition was contributed to the firm and it was the firm's property. In fact, in the agreement itself there is a specific reference that the property has been contributed to the firm. Therefore, practically the claim raised is with reference to the dissolution of the firm and division of the assets and liabilities of the firm by way of settlement of accounts between the partners of the firm. Such issues can be adjudicated by the Arbitrator as held by the Apex Court. Under such circumstances, the Family Court had committed serious error in taking a different view. 10. The Family Court had proceeded on the basis that there is a matrimonial dispute involved in the matter. In fact, the averments in the original petition do not disclose that there is any claim in the original petition other than for dissolution of the firm and settlement of accounts and in the process, a declaration was also sought for. The Arbitrator can decide such disputes and we cannot agree with the learned counsel for the respondent that O.P.(F.C.)No.582 of 2016 :-10-: the suit involves an action in rem. It is virtually a suit for settlement of accounts of a partnership, which involves right to property also. 11. The other reason stated by the Family court was that the declaration was sought for amending the original petition. In fact, as already stated such amendment ought not have been permitted by the Family Court without considering the application under Section 8 of the Act. The Family Court ought to have considered the averments and the pleadings as on the date when Section 8 petition was filed. Going by that principle, we are of the view that the matter ought to have been referred for arbitration. The respective arbitration clause covered by the agreement reads as under: “25. Any disputes or differences of opinion between the parties hereto relating to the affairs of the partnership or in the interpretation or enforcement of any of the provisions of this deed, shall be settled by resort to Arbitration Act, 1940.” Though reference is made to the provisions of the Arbitration Act, 1940, it is already superseded by the Arbitration and Conciliation Act, 1996, and therefore we are of the view that the claim, as it ## O.P.(F.C.)No.582 of 2016 :-11-: stood as on the date of the said application, has to be evaluated for the purpose of finding out whether a reference is required or not. Having considered the said position, we are of the view that the matter ought to have been referred to arbitration and accordingly, this original petition is disposed of as under: 1) Ext.P6 order dated 23.6.2016 in I.A.No.146/15 in O.P.No.1313/14 is set aside. The parties are referred for arbitration as contemplated under the provisions of the Arbitration and Conciliation Act, 1996. 2) With regard to the claim made against the 4[th] respondent, it shall be open for the petitioner in O.P.No.1313/14 to take appropriate steps in accordance with law. Sd/- **A.M.SHAFFIQUE JUDGE** Sd/- **K.RAMAKRISHNAN** **JUDGE** ami/18.3.17 //True copy// P.A.to Judge