Sree Aarvee Gas Service v. V. A. R. Alagirisamy & Others
2005-09-21
D.MURUGESAN
body2005
DigiLaw.ai
Judgment :- (Petition filed under Article 226 of The Constitution of India, praying to issue a Writ of Certiorari, calling for the records relating to the order of this Hon'ble Court dated 24.2.05 in O.P.No.520 of 2002 and to quash the same and consequently appoint an arbitrator.) An LPG distributorship was allotted to one Raju alias Rangasamy Naidu, who was carrying on the said business under the name and style of M/s Sree Aarvee Gas Service. During his lifetime, the said Raju alias Rangasamy Naidu inducted his wife Gangammal and two sons namely, A.R.Balakrishnan and A.R.Srinivasan as partners. The said Raju alias Rangasamy Naidu died on 8.3.89. After his demise, the petitioner by name A.R.Srinivasan, the son of the said Raju alias Rangasamy Naidu, and the brother of the petitioner by name A.R.Balakrishnan along with their mother Gangammal were carrying on the said business as partners. The reconstituted firm was approved by the Indian Oil Corporation Limited. Smt.Gangammal died intestate on 18.4.2001 and thereafter the business was carried on by the petitioner and his brother A.R.Balakrishnan. It appears that after the demise of Gangammal, the younger brothers of the petitioner namely, A.R.Alagirisamy, A.R.Ramachandran and R.Jaganathan claimed to be the partners of the firm. A dispute arose between them. Due to the said dispute, the Indian Oil Corporation Limited informed the firm on 25.6.2002 that the dealership would be suspended unless the family dispute was resolved. A reply was sent to the Indian Oil Corporation Limited explaining that the problem was created only by the younger brothers, who have no right to become the partners of the firm. Thereafter, the Indian Oil Corporation Limited appears to have advised the petitioner to seek relief in terms of the arbitration clause provided in the partnership deed. Clause 15 of the partnership deed provided a provision for arbitration, which is as follows:- "All the disputes and question in connection with the partnership arising between the partners or between any one of them and the legal representatives of the other or between their respective legal representatives and whether during or after the partnership shall be settled as per the provisions of the Indian Arbitration Act." 2. In terms of the aforesaid clause, the petitioner and other legal heirs approached one Mr.N.V.Ramasamy for settlement of disputes and entered into a memorandum of understanding on 22.2.2001. An attempt was made to resolve the dispute amicably through him.
In terms of the aforesaid clause, the petitioner and other legal heirs approached one Mr.N.V.Ramasamy for settlement of disputes and entered into a memorandum of understanding on 22.2.2001. An attempt was made to resolve the dispute amicably through him. Clause 8 of the terms and conditions of the memorandum of understanding reads as under: - "In case of any dispute arising any of the matters relating to the management, rendering of accounts and regularisation of individual drawings by any of the parties, the decision of the Arbitrator Sri N.V.Ramaswamy Naidu shall be final and binding on all of them." It is the case of the petitioner that since the said N.V.Ramasamy acted detrimental to the interest of the petitioner, it was felt that there was no need to seek his help and, more particularly, when the partnership deed itself provided for an arbitration and in any case, the memorandum of understanding came to an end on 30.9.2001. Hence, the petitioner filed O.P.No.520 of 2002 before this Hon'ble Court under Sections 14 and 15 read with 11(4) of the Arbitration and Conciliation Act, 1996 to appoint a sole Arbitrator to resolve the dispute. This Court, by an order dated 24.2.2005, while closing the petition had observed that as already Thiru N.V.Ramasamy was appointed as Arbitrator in pursuance of the memorandum of understanding dated 22.2.2001 and who had also entered reference and was about to pass an award, there was no need to appoint an Arbitrator under the provisions of the Act. This order has been questioned in the writ petition. 3. Mr.S.Vijayakumar, learned counsel for the petitioner would submit that inasmuch as the partnership deed provided for an arbitration clause for appointment of an Arbitrator, the petitioner had rightly approached this Court for appointment of a sole Arbitrator from among any one of the retired Judges of this High Court. Secondly, he would submit that in any case the memorandum of understanding dated 22.2.2001 was only for a period upto 30.9.2001 and, therefore, on and after 30.9.2001, Mr.N.V.Ramasamy, the sole Arbitrator would have no jurisdiction to proceed with the arbitration. 4. Per contra, Mr.A.K.Sriram, learned counsel appearing for the respondents 1 to 4 submitted that inasmuch as the dispute had arisen, in exercise of the provision of clause 15 of the partnership deed, the matter was referred to an Arbitrator.
4. Per contra, Mr.A.K.Sriram, learned counsel appearing for the respondents 1 to 4 submitted that inasmuch as the dispute had arisen, in exercise of the provision of clause 15 of the partnership deed, the matter was referred to an Arbitrator. Once the matter was referred to an Arbitrator, he would enter reference and adjudicate the same irrespective of the fact that the memorandum of understanding entered before him came to an end. He would also submit that in any case, in terms of Section 16 of the Arbitration and Conciliation Act, even the jurisdiction of the Arbitral Tribunal could be agitated before the very same Arbitrator. 5. I have given my mature consideration to the rival submissions. There is no dispute that the partnership deed provided for an arbitration clause. In terms of the arbitration clause 15, parties to the deed had appointed a sole Arbitrator by name N.V.Ramasamy. Equally, there is no dispute that the said Arbitrator had entered into the reference. It appears that since the petitioner was not satisfied with the Arbitrator, as he felt that he acted detrimental to the interest of the petitioner, he did not want to participate in the arbitration. So long as an Arbitrator is appointed in terms of the provisions of the arbitration agreement, the Arbitrator would have jurisdiction to decide the dispute till he passes an award. The exercise of powers by Arbitrator relating to a dispute referred to him does not cease merely because the memorandum of understanding entered into between the parties had subsequently expired. What is relevant for the purpose of jurisdiction of the Arbitrator is as to whether the dispute arose during the currency of the partnership deed, whether an arbitration clause was provided under the said deed, whether such clause was invoked and an Arbitrator was appointed. If the argument of the learned counsel for petitioner as to the expiry of the agreement dated 22.2.2001 is accepted, the clause providing for arbitration in the partnership deed would become ineffective. So long as the arbitration clause exists in the partnership deed, the appointment of Mr.N.V.Ramasamy as a sole Arbitrator cannot be questioned and he should be allowed to make a reference and pass an award.
So long as the arbitration clause exists in the partnership deed, the appointment of Mr.N.V.Ramasamy as a sole Arbitrator cannot be questioned and he should be allowed to make a reference and pass an award. In this context, it must be kept in mind that the Arbitrator was not appointed under clause 8 of the memorandum of understanding dated 22.2.2001, but was appointed even prior to that only based on clause 15 of the partnership deed, which provided for appointment of a sole Arbitrator. 6. Even as to the question of jurisdiction, the said issue can be decided by the very Arbitrator himself. Sub-section (1) of Section 16 of the Arbitration and Conciliation Act contemplates that the arbitral tribunal may rule on its own jurisdiction, including ruling on any objections, with respect to the existence or validity of the arbitration agreement. Section 16 of the said Act came up for consideration before the Supreme Court in "Konkan Railway Corporation Ltd., Vs. Rani Construction (P) Ltd., ( 2002 (2) SCC 388 )", wherein the Supreme Court has held that the questions relating to the improper constitution of Arbitral Tribunal or its want of jurisdiction or objections with respect to the existence or validity of the arbitration agreement are matters to be pleaded before the Arbitral Tribunal itself which has been specifically empowered to rule on such issues and its own jurisdiction as well. This judgment was quoted with approval by the Supreme Court in "Food Corporation of India Vs. Indian Council of Arbitration and others ( 2003 (6) SCC 564 )". In this regard, it must be also seen that the legislative intent underlying the Arbitration and Conciliation Act, 1996 is to minimise the supervisory role of the Courts in the arbitral process and appoint an Arbitrator without wasting time, leaving all contentious issues to be urged and agitated before the Arbitral Tribunal itself. 7. For all the above reasons, I am of the view that the impugned order does not call for interference. Accordingly, the writ petition fails and the same is dismissed. The petitioner is at liberty to raise the issue as to the jurisdiction as well the existence of the memorandum of understanding before the Arbitrator and in the event such issues are raised, the Arbitrator shall consider the same before any award is passed. No costs. Consequently, W.P.M.P.No.8588 of 2005 and W.V.M.P.No.972 of 2005 are also dismissed.