High Court of KeralaSingle Judge2021-09-28Writ petition dismissed; arbitral proceedings m...

Subramaniyan N.N. v. Anwar C.K., M/S Shriram Transport Finance Co. Ltd., Sreenivas K., Shareef M.I. and Others

Case / Petition Number:W.P.(C) No.20307 of 2021

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: P.B. Suresh Kumar
Judgment Date: 2021-09-28
Court Decision / Holding: The writ petition is dismissed. The court held that there is no merit in issuing a writ of mandamus or staying the arbitral proceedings. While acknowledging the arguments around the validity of the clause enabling the second respondent to nominate the sole arbitrator, the court emphasized that the dispute should be resolved within the Act’s framework, and where available, through Sections 13 and 34, rather than through Article 226, thereby preserving the efficacy and objective of arbitration.
Final Disposition: Writ petition dismissed; arbitral proceedings may continue under the appointed arbitrator.

Parties to the Case

Appellants / Petitioners

SUBRAMANIYAN N.N.

Respondents

ANWAR C.K.
M/S. SHRIRAM TRANSPORT FINANCE CO. LTD.
SREENIVAS K.
SHAREEF M.I.

Legal Representation & Advocates

Counsels for Petitioners

• Adv. Bindu Sreekumar

Case Synopsis & Summary

The petitioner Subramaniyan N.N., a guarantor for a loan taken by the third respondent from the second respondent for purchase of a vehicle, challenged the arbitration arrangement in Ext.P1. Ext.P1 provides that disputes arising from the agreement would be settled by arbitration under the Arbitration and Conciliation Act, 1996, with the sole arbitrator nominated by the second respondent. The second respondent invoked this clause and nominated the first respondent as arbitrator, who then initiated arbitration against the petitioner and the third respondent. The petitioner moved a writ petition under Article 226 seeking a declaration that the appointment of the arbitrator is void ab initio and a stay of arbitral proceedings. The core contention is that the clause empowering the second respondent to nominate the sole arbitrator is invalid in light of amendments to the Act and relevant Supreme Court judgments. The court reminds that arbitration is a mechanism to reduce court delays and maximize efficiency, and that the Act creates a self-contained framework to challenge arbitrator appointments primarily through Section 13, and if unsuccessful, to challenge an award under Section 34. It notes the 2015 amendments and authorities such as TRF Limited v Energo Engineering Projects Ltd and Perkins Eastman Architects DPC and Another v HSCC (India) Ltd, but ultimately holds that invoking Article 226 in exceptional circumstances is not warranted here. The writ petition is dismissed, allowing the arbitral process to continue under the appointed arbitrator.

Provisions of Law Cited

Arbitration and Conciliation Act, 1996Arbitration and Conciliation (Amendment) Act, 2015Section 5 of the ActSection 13(2)Section 13(4)Section 13(5)Section 34Article 226 of the ConstitutionPart I of the Act

Legal Doctrines & Maxims

Non obstante clause (Section 5 uses a non obstante clause)
The Act is a code by itself (doctrine)
Arbitration as a mechanism to minimize judicial interference
Exceptional circumstances or bad faith as grounds to invoke extraordinary writs under Article 226

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that the clause in Ext.P1, which authorises the second respondent to nominate the sole arbitrator, invalidates the arbitration process and violates the intent of the amended Arbitration and Conciliation Act, 2015. The writ petition seeks a declaration that the appointment of the arbitrator is void ab initio and requests stay of arbitration. It argues that Article 226 should be available in exceptional circumstances where the statute does not provide an adequate remedy or where bad faith is shown by a party, given the constitutional right to approach courts.

Contentions of Respondents

The respondents argue that arbitration is a self-contained, legislatively guided process designed to minimize court interference. They rely on the statutory scheme, including Section 5 of the Act, to limit judicial intervention, and point to the availability of challenging arbitrator appointments under Section 13 (with subsections 2, 4, and 5) and challenging awards under Section 34. They contend that there is an adequate statutory remedy within the Act, and that the petition does not establish exceptional circumstances or bad faith justifying intervention under Article 226.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
TRF Limited v. Energo Engineering Projects Ltd.	(2017) 8 SCC 377	Mentioned Only	Cited to discuss amendments to the Arbitration and Conciliation Act and the scope of judicial intervention; not directly applied to decide the petition.
Perkins Eastman Architects DPC and Another v. HSCC (India) Ltd	(2019) SCC OnLine SC 1517	Mentioned Only	Cited as part of jurisprudence on amendments, without being directly controlling for the outcome in this case.

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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 P.B.SURESH KUMAR** **TUESDAY, THE 28[TH] DAY OF SEPTEMBER 2021 / 6TH ASWINA, 1943** ## **WP(C) NO. 20307 OF 2021** ## **PETITIONER/RESPONDENT 2:** **SUBRAMANIYAN N.N, AGED 70 YEARS, S/O. NARAYANAN, 2478 NANDANATHUTHUNDI, THAMMANAM P.O., CHAKKARAPARAMBU, OPP. MC DOWNALDS, ERNAKULAM-682 032** **BY ADV BINDU SREEKUMAR** ## **RESPONDENT/CLAIM PETITIONER/RESPONDENTS 1 AND 3:** - **1 ANWAR.C.K, AGE NOT KNOWN, FATHERS NAME NOT KNOWN, ADVOCATE ARBITRATOR** - **2 M/S. SHRIRAM TRANSPORT FINANCE CO.LTD., 2ND FLOOR, SAIRA PLAZA, OPP.MODERN BREAD, HIGH SCHOOL JN, EDAPPALLY, COCHIN-682 024, REPRESENTED BY THE POWER OF ATTORNEY HOLDERJINSA KHALID** - **3 SREENIVAS.K., AGED 40 YEARS, S/O. SREEDHARAN, 1539 KATTUMOOCHIKKAL, SHANTHI NAGAR ROAD, VENNALA, ERNAKULAM-682 034, PRESENTLY RESIDING AT KATTUMOOCHIKKAL (H), THOTTAKARA, OTTAPALAM, PALAKKAD-679 102** - **4 SHAREEF.M.I., S/O. MUHAMMED ILLIYAS, THOMAS PARAMBU, PADIVATTOM, PIPELINE ROAD, EDAPPALLY, ERNAKULAM-682 024** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 28.09.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** 2 W.P.(C) No.20307 of 2021 ## **C.R.** ## **P.B.SURESH KUMAR, J.** **-------------------------------------------** ## **W.P.(C) No.20307 of 2021** ## **-----------------------------------------------** **Dated this the 28[th] day of September, 2021** ## **J U D G M E N T** Petitioner is one of the guarantors to the loan availed by the third respondent from the second respondent for purchasing a vehicle. Ext.P1 is the agreement entered into between the petitioner, second respondent and the third respondent. Ext.P1 agreement provides that all disputes, differences and/or claim arising out of or in connection with the said agreement, whether during its subsistence or thereafter shall be settled by arbitration in accordance with the provision of the Arbitration and Conciliation Act, 1996, or any statutory amendments thereof and shall be referred to the sole 3 W.P.(C) No.20307 of 2021 arbitration of an arbitrator nominated by the second respondent. The third respondent committed defaults in repaying the loan availed from the second respondent. The second respondent, in the circumstances, invoked the clause aforesaid in Ext.P1 agreement and nominated the first respondent as arbitrator to adjudicate their claim against the petitioner and the third respondent. The first respondent has initiated arbitral proceedings on that basis against the petitioner and the third respondent. Ext.P2 is the claim statement preferred by the second respondent before the first respondent. Along with the claim statement, the second respondent has preferred an interlocutory application also. The first respondent issued notice to the petitioner on the interlocutory application directing the petitioner to appear before him on 30.07.2021. Ext.P3 is the notice issued by the first respondent in this regard. The writ petition is filed thereupon, seeking a declaration that the appointment of the first respondent as the arbitrator by the second respondent to 4 W.P.(C) No.20307 of 2021 adjudicate the claim of the second respondent against the petitioner is void _ab initio_ . The petitioner also seeks stay of the arbitral proceedings. The case set out by the petitioner in the writ petition is that the clause in Ext.P1 agreement conferring authority on the second respondent to nominate the sole arbitrator to adjudicate the claim of the second respondent against the petitioner is invalid. 2. Heard the learned counsel for the petitioner. 3. In the light of the amendments made to the Arbitration and Conciliation Act, 1996 (the Act) in terms of the Arbitration and Conciliation (Amendment) Act, 2015 and various decisions of the Apex Court explaining the scope of the said amendments including the decisions in **TRF Limited v. Energo Engineering Projects Ltd.** , (2017)8 SCC 377 and **Perkins Eastman Architects DPC and Another v. HSCC (India) Ltd** ., 2019 SCC OnLine SC 1517, there is certainly force in the contention of the petitioner that the clause in Ext.P1 agreement conferring authority on the second respondent to W.P.(C) No.20307 of 2021 5 nominate the sole arbitrator to adjudicate the claim of the second respondent against the petitioner is invalid. But, the question arising for consideration is whether the petitioner is justified in approaching this Court seeking a declaration to that effect invoking the jurisdiction of this Court under Article 226 of the Constitution. 4. As is well known, arbitration is an arrangement for taking and abiding by the judgment of selected persons in some disputed matters, instead of carrying the dispute to established courts of justice and is intended to avoid the formalities, the delay, the expense and vexation of ordinary litigation. The object of the Act is to make appropriate provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration and to minimize the supervisory role of courts in the arbitral process so as to promote the concept of arbitration as an effective dispute resolution mechanism. The Act is a code by itself. Section 5 of the Act which begins with a _non obstante_ clause 6 W.P.(C) No.20307 of 2021 provides without any sort of ambiguity that in matters governed by Part I of the Act, there shall not be any judicial interference except where so provided in the said Part. Of course, a legislative enactment cannot curtail a constitutional right including the one provided for under Article 226 of the Constitution, but it is now trite that the said power can be invoked only in exceptional circumstances where a party to a dispute is left remediless under the statute or a clear bad faith is shown by one of the parties. The question arises for consideration, therefore, is whether the petitioner has made out any exceptional circumstances or bad faith on the part of the second respondent, for invoking the remedy under Article 226 of the Constitution. 5. Sub-section (2) of Section 13 of the Act lays down the procedure to challenge the appointment of an arbitrator. True, sub-section (4) of Section 13 provides that if such a challenge is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award. W.P.(C) No.20307 of 2021 7 Sub-section(5) of Section 13, however, clarifies that where an arbitral award is made under sub-section (4), the party challenging the arbitrator is free to make an application for setting aside the arbitral award in accordance with Section 34 of the Act. In other words, a very effective alternative remedy is provided in the Act for a party to an arbitral proceedings who is challenging the arbitrator. It is evident from the provisions contained in Section 13 of the Act that the scheme of the Act is that the grievances of the parties concerning the appointment of the arbitrator shall be addressed in terms of the provisions of the Act itself and that there shall not be any judicial interference in the course of the arbitral proceedings for redressal of such grievances. That being the scheme of the Act, according to me, if the courts interfere in the arbitral process beyond the ambit of the Act, the efficiency of the arbitral proceedings would be impaired and the object of the Act would be defeated. In the said view of the matter, according to me, 8 W.P.(C) No.20307 of 2021 there is no merit in the writ petition and the same is, accordingly, dismissed. **Sd/-** **P.B.SURESH KUMAR, JUDGE.** YKB W.P.(C) No.20307 of 2021 9 ## **APPENDIX OF WP(C) 20307/2021** ## **PETITIONER EXHIBITS** **Exhibit P1 TRUE COPY OF THE AGREEMENT DATED 28.2.2017 BETWEEN THE PARTIES** **Exhibit P2** **TRUE COPY OF THE CLAIM PETITION DATED 9.5.20 FILED BEFORE THE 1ST RESPONDENT** **Exhibit P3** **TRUE COPY OF THE NOTICE DATED 20.7.2021 ISSUED BY THE 1ST RESPONDENT** **Exhibit P4 TRUE COPY OF THE REPRESENTATION DATED 27.8.21 SUBMITTED BY THE PETITIONER** **Exhibit P5 TRUE COPY OF THE AFFIDAVIT DATED 9.9.21 SUBMITTED BY THE 2ND RESPONDENT** **Exhibit P6 TRUE COPY OF THE E.MAIL COMMUNICATION DATED 11.9.21 SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT** **Exhibit P7** **TRUE COPY OF THE EMAIL COMMUNICATION DATED 13.9.21 SUBMITTED BY THE PETITIONER TO THE 1ST RESPONDENT**