Sathyan M.S. and others v. Puthupallippuram SNDP Sakhayogam No. 219 and Ors

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.ANIL KUMAR** **THURSDAY,THE 22ND DAY OF NOVEMBER, 2018/1ST AGRAHAYANA, 1940** ## **CRP.No. 219 of 2016** **[AGAINST THE ORDER DTD.10.3.2016 IN I.A.NO.1212/2016 IN OS 1569/2015 of PRINCIPAL MUNSIFF COURT,ERNAKULAM]** ## **REVISION PETITIONERS:** - **1 SATHYAN.M.S AGED 46, S/O SUDAYAN, MAVOOMMOOTTIL HOUSE, A.K.G.ROAD, EDAPPALLY P.O.** - **2 RATHEESH M.T. AGED 28, S/O THANKAPPAN, MANAKKA PARAMBIL HOUSE, GODOWN ROAD, EDAPPALLY P.O.** - **3 PREMLAL M.C., AGED 52, S/O CHANDRAN, MANATHUPADOM, CHANGAMPUZHA NAGAR P.O, KALAMASSERY.** - **4 M.N.PEETHAMBHARAN, AGED 54, S/O NARAYANAN, MALOTH HOUSE, UNICHIRA, THIRKKAKARA P.O.** - **5 T.U.MANOHARAN AGED 63, S/O T.K.UNNI, THYPARAMBIL HOUSE,PUTHUPALLIPPURAM, EDAPPALLY P.O.** - **6 K.V.BHUVANACHANDRAN, AGED 68, S/O VELAYUDHAN, KURUPPAMPARAMBU HOUSE, CHANGAMPUZHA NAGAR P.O. UNICHIRA.** - **7 K.V.BOSS, AGED 64, S/O K.K. VELAYUDHAN, KURUPPANPARAMBIL HOUSE, PUTHUPALLIPPURAM KARA, CHANGAMPUZHA NAGAR P.O., KOCHI-33** CRP NO.219 OF 2016 :-2-: - **8 NISHAD P.P AGED 37, S/O. PURUSHOTHAMAN, PULUKAVUNGAL HOUSE, RAJIV NAGAR ROAD, EDAPPALLY P.O.** - **9 ANEESH R AGED 39, S/O.O.R.RAJAN, OLIPARAMBIL HOUSE, A.K.G.ROAD, EDAPPALLY P.O.** - **10 M.R.SIVADASAN MATHUKAPPILLIL HOUSE, AGED 75, S/O RAMAN, KOONAMBTHAI, EDAPPALLY P.O.** - **11 P.A.PURUSHOTHAMAN, AGED 65, S/O APPU, PULUKAVUNGAL HOUSE, RAJIV NAGAR ROAD, EDAPPALLY P.O.** - **12 E.K.SUDHAKARAN AGED 60, S/O KRISHNAN, ELAVUNGAL HOUSE, A.K.G.ROAD,EDAPPALLY P.O.** - **13 JAYAKUMAR K.P. AGED 44,S/O PUSHPAKARAN, DEVAGEETHAM, KETTETHU PARAMBIL HOUSE, K.P.N.R.A, 90 EDAPPALLY NORTH P.O.** - **14 C.P DINESHAN AGED 55, S/O PARAMU, SREEBHAVAN, CHOORAKOTTAYIL HOUSE, A.K.G.ROAD, EDAPPALLY P.O.** - **15 P.N.VELS AGED 47, S/O NARAYANAN, PUTTINGAL HOUSE, UNICHIRA, CHANGAMPUZHA NAGAR P.O.** - **16 V.G.ANILKUMAR, AGED 59, S/O GANGADHARAN, MANATHUPADOM HOUSE, PUTHUPALLIPPURAM, CHANGAMPUZHA NAGAR.** - **17 V.K.MURALI AGED 65, S/O KUTTAPPAN, PULIMOOTTIL PARAMBIL HOUSE, EDAPPALLY P.O.** CRP NO.219 OF 2016 :-3-: - **18 P.K.SUSEELAN AGED 58, S/O KARTHIKEYAN, PARAKULANGARA HOUSE, CHANGAMPUZHA NAGAR P.O. COCHIN-33.** **BY ADVS.** - **SRI.P.MARTIN JOSE SRI.ELDHO CHERIAN SRI.P.PRIJITH SRI.THOMAS P.KURUVILLA** ## **RESPONDENTS:** - **1 PUTHUPALLIPURAM SNDP SAKHAYOGAM NO. 219 PUTHUPALLIPPURAM, KOONAMTHAI,EDAPPALLY P.O., KOCHI-24 AN UNREGISTERED AND UNINCORPORATED ASSOCIATION OF NUMEROUS PERSONS REPRESENTED BY ADMINISTRATIVE OFFICER T.M.VIJAYAKUMAR** - **2 T.M.VIJAYAKUMAR, S/O.T.K.MADHAVAN, AGED 64, ADMINISTRATIVE OFFICER, THE PUTHUPALLIPPURAM SNDP SAKHAYOGAM NO.219, PUTHUPALLIPPURAM, KOONAMTHAI, EDAPPALLY P.O., KOCHI-24** - **3 THE KANAYANNOOR SNDP UNION REPRESENTED BY ITS CONVENOR,MR.P.D.SHYAMDAS, OFFICE OF THE KANAYANNOOR SNDP UNION, ASHA NAGAR,PALARIVATTOM, KOCHI-25** - **4 MR.P.D.SHYAMDAS CONVENOR, THE KANAYANNUR SNDP UNION, OFFICE OF THE KANAYANNOOR SNDP UNION, ASHA NAGAR, PALARIVATTOM, KOCHI-25** ## **ADDL.R5. & R6 IMPLEADED** - **ADDL.R5. N.MOHANAN, AGED 71, S/O.NARAYAYANAN, RESIDING AT ILLIKKATTU, PUTHUPALLIPURAM, EDAPPALLY.P.O., KOCHI-24.** - **ADDL.R6 CHANDRASEKHARAN, AGED 60, S/O.MADHAVAN RESIDING AT VADAKKEDATHU VEEDU, AMBALAM ROAD, KOONAMTHAI, CHANGAMPUZHA NAGAR, KOCHI-33.** CRP NO.219 OF 2016 :-4-: **ADDL.R5 AND R6 ARE IMPLEADED AS PER ORDER DTD.23.1.2017 IN I.A.NO.1728/2016.** **R3 BY ADVS.SRI.THOMAS.M.JACOB, SRI.AKHIL K.MADHAV, SRI.T.R.JERRY SEBASTIAN.** **ADDL.R5 & R6 BY ADVS. SRI.K.JAGADHEESCHANDRAN NAIR SRI.J.KRISHNAKUMAR** **THIS CIVIL REVISION PETITION HAVING BEEN FINALLY HEARD ON** **12.11.2018, THE COURT ON 22.11.2018 PASSED THE FOLLOWING:** CRP NO.219 OF 2016 :-5-: ## [ **CASE REPORTABLE** ] ## **N. ANIL KUMAR, J. ------------------------------------------------------C.R.P NO. 219 OF 2016 ------------------------------------------------------Dated this the 22[nd] day of November,2018** ## **O R D E R** The important question which arises for consideration in this revision petition is whether Rule 71 of the Rules of the Sree Narayana Dharma Paripalana Yogam,1999 (hereinafter referred to as 'the Rules'), which provides for resolving disputes arising between the members of the Yogam through arbitration, can constitute an 'arbitration agreement' within the meaning of Section 2(1)(b) and 2(1)(h) read with Section 7 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') and whether the application filed by the respondents under Section 8 of the Act can be held as maintainable? 2. The Yogam is a company registered under the Companies Act. It is a three tier system having the Yogam as the apex body and shakhas or branches at lower level. Rule 71 of the Rules inter alia provides that disputes pertaining to the joint clauses, between the members of the Sakha, or CRP NO.219 OF 2016 :-6-: between the members of the Sakha and Sakhas, or between the members of the Sakha and the Unions, or between the members of the Sakha and the Yogam, or between the Sakhas, or between the Sakhas and the Union, or between the Sakhas and the Yogam, or between the Unions, or between the Unions and the Yogam shall be referred to the decision of the Arbitration Council appointed by the Yogam Council or the Board and each party shall have the right to nominate one Arbitrator in the disputes in which the Yogam is a party and that if there arises a difference of opinion among the Arbitrators so appointed, the said difference of opinion shall be referred to a Mediator nominated by the Yogam Council, whose decision shall have to be the final decision. 3. Revision petitioners are the plaintiffs in O.S.No. 1569/2015 of the Principal Munsiff's Court, Ernakulam. The suit was filed seeking a decree directing the first respondent to conduct the election to the Managing Committee of the first respondent- Sakha of SNDP in accordance with the bye laws and rules under the supervision of an Advocate Commissioner and to hand over administration to the Managing Committee so elected. The petitioners filed the suit in a representative capacity under Order I Rule 8 of the Code of Civil CRP NO.219 OF 2016 ## :-7-: Procedure,1908. Respondents 1 to 4 are impleaded in a representative capacity. The above respondents filed I.A.No.1212/2016 under Section 8 of the Act seeking to refer the parties to arbitration and the court below by order dated 10[th] March, 2016, which is impugned in this revision petition, referred the parties for arbitration. 4. Learned counsel for the respondents contended that Rule 2 of the Rules of the SNDP Union mandates that it shall follow the rules of the Yogam whereas Rule 6 of the SNDP Sagha Yogam mandates that SNDP Sagha Yogam shall follow and adhere to the rules laid down by the Yogam. In the light of the aforesaid rules coupled with Rule 71 of the Rules, it is argued that the court below correctly referred for arbitration as the dispute raised in the suit is essentially a dispute between the petitioners, who claimed to be the members of the first respondent SNDP Sakha Yogam and also the third respondent SNDP Union. 5. In the case on hand, admittedly, there is no document signed by the parties to the dispute, referring to or recording an arbitration agreement between the parties. However, Rule 71 of the Rules provided that in the event of any dispute/difference arising between the members, concerning CRP NO.219 OF 2016 :-8-: the management and affairs of the Yogam and Union or Sakha, the same shall be referred to arbitration. Learned counsel for the respondents contended that the petitioners having consented to accept the Rules of the Yogam, are bound to carry out each and every rule contained in it. 6. The provision as to the reference of the dispute to arbitration, is a matter that concerns the jurisdiction of the civil courts. Generally, the civil courts are zealous of their jurisdiction and can only allow it to be curtailed in accordance with law. The provisions of the Indian Arbitration Act constitute such law. However,the provision must be strictly construed. 7. Sections 2(1)(b) and 2(1)(h) and Section 7 of the Act are relevant to examine the question involved in the case. These sections read as under:- _“_ **2. Definitions** .-- **(1) In this Part, unless the context otherwise requires,--** - (a) * * * * * * * * * * - (b)¨ _**arbitration agreement**_ ” means an agreement referred to in section 7; * * * * * * * * * * - (h) “ **party** ” means a party to an arbitration agreement. * * * * * * * * * * **7. Arbitration agreement** .--(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or CRP NO.219 OF 2016 :-9-: certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3)An arbitration agreement shall be in writing. - (4) An arbitration agreement is in writing if it is contained - in --- - (a) a document signed by the parties; - (b)an exchange of letters, telex, telegrams or other means of telecommunication [including communication through electronic means] which provide a record of the agreement; or - (c)an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. - (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.” 8. The question as to what are the conditions which are necessary for constituting a valid, binding and enforceable arbitration agreement came up for consideration before the Apex Court in **Vimal Kishor Shah and others** v. **Jayesh Dinesh Shah and others** [(2016) 8 SCC 788]. In this case, the question arises in the context as to whether a clause in a trust deed, which provides for resolving the disputes arising between the beneficiaries of the Trust through arbitration, can constitute an 'arbitration agreement' within the meaning of Sections 2(1)(b) and 2(1)(h) read with Section 7 of the Act. The CRP NO.219 OF 2016 :-10-: ## Apex Court held as follows:- “17. A reading of the aforementioned sections in juxtaposition goes to show that in order to constitute a valid, binding and enforceable arbitration agreement, the requirements contained in Section 7 have to be satisfied strictly. These requirements, apart from others, are: - (1) there has to be an agreement. - (2) it has to be in writing. - (3) parties must sign such agreement or in other words, the agreement may bear the signatures of the parties concerned, and - (4) such agreement must contain an arbitration clause. In other words, the aforementioned four conditions are sine qua non for constituting a valid and enforceable arbitration agreement. Failure to satisfy any of the four conditions would render the arbitration agreement invalid and unenforceable and, in consequence, would result in dismissal of the application filed under Section 11 of the Act at its threshold.” 9. Going by the above decision, it is clear that the existence of an arbitration agreement as defined under Section 7 of the Act is a condition precedent for exercise of power to appoint an arbitrator/Arbitral Tribunal under Section 11 of the Act. It goes without saying that it is not legally permissible for the court to refer the parties to arbitration in the absence of an arbitration agreement or mutual consent. In the absence of an arbitration agreement, this Court is of the view that the Rules of the Yogam, including Rule 71, do not satisfy the requirement of Section 2(1)(b) and 2(1)(h) read with Section 7 of the Act and hence the Rule cannot be construed as an 'arbitration agreement' within the meaning of Section 7 of the CRP NO.219 OF 2016 **==> picture [27 x 9] intentionally omitted <==** Act. In the light of the aforesaid discussion, this Court is unable to agree with the reasoning and conclusions arrived at by the learned Munsiff in the impugned order. The revision petition, thus, succeeds and is hereby allowed. The impugned order is set aside. Resultantly, the application filed by the respondents under Section 8 of the Act is dismissed as not maintainable. Sd/- **N.ANIL KUMAR** , JUDGE MBS/ -true copy- P.S.TO JUDGE