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2017 DIGILAW 1314 (KER)

M. P. Korah v. Rachel Zacharia @ Rahel

2017-10-19

ANIL K.NARENDRAN

body2017
JUDGMENT : 1. This Civil Revision Petition is filed under Section 115 of the Code of Civil Procedure, 1908 challenging the order dated 18.09.2017 of the Principal Sub Court, Ernakulam in I.A.No.2348 of 2015 in O.S.No.113 of 2015, which was an application filed under Section 8(1) of the Arbitration and Conciliation Act, 1996 (for brevity, 'the Act'), by the petitioners herein, who are defendants 1 to 4 in that suit, seeking an order to refer the parties to arbitration. By the impugned order, the court below dismissed the said interlocutory application. 2. On 09.10.2017, when this Civil Revision Petition came up for admission, this Court admitted the matter on file. The 1st respondent herein, who is the plaintiff in O.S.No.113 of 2015, entered appearance through lawyer and notice to other respondents, who are defendants 5 and 6 in the suit and 2nd and 3rd respondents in I.A.No.2348 of 2015, was dispensed with, for the time being. This Court has also granted an interim stay of all further proceedings in O.S.No.113 of 2015 pending before the Principal Sub Court, Ernakulam, for a period of ten days. 3. A counter affidavit has been filed on behalf of the 1st respondent, contending that the impugned order of the court below dated 18.09.2017 is perfectly legal, which warrants no interference in this Civil Revision Petition. 4. Heard the learned Senior Counsel for the petitioners/defendants 1 to 4 and also the learned counsel for the 1st respondent/plaintiff. 5. The sole issue that arises for consideration in this Civil Revision Petition is as to the legality or otherwise of the order dated 18.09.2017 of the court below in I.A.No.2348 of 2015 in O.S.No.113 of 2015, whereby the application filed by defendants 1 to 4 under Section 8(1) of the Act, stands rejected. 6. The plaintiff filed O.S.No.113 of 2015 seeking partition of plaint A and B schedule properties. Defendants 5 and 6 are stated to be in occupation of a portion of plaint A schedule property as tenants. According to defendants 1 to 4, Good Shepherd Tourist Home is a partnership business which was constituted on 28.03.1983 and re-constituted by Exts.A1 and A2 partnership deeds dated 01.04.1996 and 30.12.2003 respectively. Clause 29 of Ext.A2 partnership deed provides for arbitration of the disputes between the parties. According to defendants 1 to 4, Good Shepherd Tourist Home is a partnership business which was constituted on 28.03.1983 and re-constituted by Exts.A1 and A2 partnership deeds dated 01.04.1996 and 30.12.2003 respectively. Clause 29 of Ext.A2 partnership deed provides for arbitration of the disputes between the parties. Therefore, on receipt of summons, defendants 1 to 4 entered appearance and filed I.A.No.2348 of 2015, under Section 8(1) of the Act to refer the parties to arbitration. 7. The plaintiff filed counter affidavit in I.A.No.2348 of 2015, contending that Ext.A2 partnership deed dated 30.12.2003 is a fabricated document. As on 30.12.2003, the plaintiff was not in India. The mother of the plaintiff and defendants 1 to 3 expired on 29.12.2003 and the funeral had taken place only after few days. As such, there was no scope for executing such a deed on 30.12.2003. 8. Subsequent to the filing of I.A.No.2348 of 2015, the plaintiff filed I.A.Nos.2443 of 2015 and 2929 of 2015 to send Exts.A1 and A2 partnership deeds for expert opinion as to its genuineness. The said applications were allowed on 14.09.2015. However, the plaintiff did not take any steps to send those deeds for expert opinion. According to the plaintiff, when there are other documents and evidence to prove that she was not in India at the time of execution of the said deeds, she did not proceed with the matter further, as sending those documents for expert opinion will certainly delay final disposal of the suit. 9. Section 8 of the Act deals with the power of a judicial authority to refer parties to arbitration where there is an arbitration agreement. Sub-section (1) of Section 8 of the Act, as it stood prior to its substitution by the Arbitration and Conciliation (Amendment) Act, 2015 provides that a judicial authority before which an action is brought in a matter which is the subject matter of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. 10. In P.Anand Gajapathi Raju v. P.V.G. Raju (dead) [ (2000) 4 SCC 539 ] the Apex Court held that, the language of Section 8 of the Arbitration and Conciliation Act is peremptory. It is, therefore, obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement. 10. In P.Anand Gajapathi Raju v. P.V.G. Raju (dead) [ (2000) 4 SCC 539 ] the Apex Court held that, the language of Section 8 of the Arbitration and Conciliation Act is peremptory. It is, therefore, obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement. Nothing remains to be decided in the original action or the appeal arising therefrom. An application before a court under Section 8 merely brings to the court's notice that the subject matter of the action before it is the subject matter of an arbitration agreement. 11. In Sundaram Finance Limited v. T. Thankam [ (2015) 14 SCC 444 ] the Apex Court held that, once there is an agreement between the parties to refer the disputes or differences arising out of the agreement to arbitration, and in case either party, ignoring the terms of the agreement, approaches the civil court and the other party, in terms of Section 8 of the Arbitration and Conciliation Act, moves the court for referring the parties to arbitration before the first statement on the substance of the dispute is filed, in view of the peremptory language of Section 8 of the Act, it is obligatory for the court to refer the parties to arbitration in terms of the agreement. 12. In Hema Khattar v. Shiv Khera [ AIR 2017 SC 1793 ] the Apex Court reiterated that, the language of Section 8 of the Arbitration and Conciliation Act is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. Therefore, it is clear that in an agreement between the parties before the civil court, if there is a clause for arbitration, it is mandatory for the civil court to refer the dispute to an arbitrator. 13. Sub-section (1) of section 8 of the Act was substituted by Section 4(i) of the Amendment Act of 2015 with effect from 23.10.2015. Therefore, it is clear that in an agreement between the parties before the civil court, if there is a clause for arbitration, it is mandatory for the civil court to refer the dispute to an arbitrator. 13. Sub-section (1) of section 8 of the Act was substituted by Section 4(i) of the Amendment Act of 2015 with effect from 23.10.2015. Sub-section (1) of Section 8, as substituted by the Amendment Act of 2015, provides that a judicial authority, before which an action is brought in a matter which is the subject matter 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. 14. Sub-section (1) of Section 8 of the Act, as substituted by the Amendment Act of 2015 mandates a judicial authority, before which an action is brought in a matter which is the subject matter of an arbitration agreement, to refer the parties to arbitration, notwithstanding any judgment, decree or order of the Supreme Court or any court, unless such authority finds that prima facie no valid arbitration agreement exists. Such an application for reference can be made by a party to the arbitration agreement or any person claiming through or under him, not later than the date of submitting his first statement on the substance of the dispute. Therefore, an application for reference made under Sub-section (1) of Section 8 of the Act, after its substitution by the Amendment Act of 2015 cannot be turned down by a judicial authority, unless such authority finds that prima facie no valid arbitration agreement exists. 15. In the instant case, a reading of impugned order dated 18.09.2017 would show that, even without a finding that prima facie no valid arbitration agreement exists, the court below dismissed I.A.No.2348 of 2015 filed by the petitioners/defendants 1 to 4 under Section 8(1) of the Act. Though the rival contentions of the parties find place in the said order, it does not contain any reasoning of the court below for rejecting the request made to refer the parties to arbitration. 16. Though the rival contentions of the parties find place in the said order, it does not contain any reasoning of the court below for rejecting the request made to refer the parties to arbitration. 16. In Woolcombers of India Ltd. v. Woolcombers Workers Union [ (1974) 3 SCC 318 ] the Apex Court, while considering the challenge made against an award under Section 11 of the Industrial Disputes Act, 1947 held that the giving of reasons in support of their conclusions by judicial and quasi judicial authorities when exercising initial jurisdiction is essential for various reasons. First, it is calculated to prevent unconscious unfairness or arbitrariness in reaching the conclusions. The very search for reasons will put the authority on the alert and minimize the chances of unconscious infiltration of personal bias or unfitness in the conclusion. The authority will adduce reasons which will be regarded as fair and legitimate by a reasonable man and will discard irrelevant or extraneous considerations. Second, it is a well known principle that justice should not only be done but should also appear to be done. Unreasoned conclusions may be just but they may not appear to be just to those who read them. Reasoned conclusions, on the other hand, will have also the appearance of justice. Third, it should be remembered that an appeal generally lies from the decisions of judicial and quasi judicial authorities to the Apex Court by special leave granted under Article 136. A judgment which does not disclose the reasons, will be of little assistance to the Court. The Court will have to wade through the entire record and find for itself whether the decision in appeal is right or wrong. Therefore, the Apex Court emphasised that judicial and quasi judicial authorities should always give the reasons in support of their conclusions. 17. In Assistant Commissioner, Commercial Tax Department v. Shukla and Brothers [ (2010) 4 SCC 785 ] the Apex Court held that, the principle of natural justice has twin ingredients; firstly, the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing and secondly, the orders so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could, in the given facts and circumstances of the case, vitiate the order itself. Such rule being applicable to the administrative authorities certainly requires that the judgment of the court should meet with this requirement with higher degree of satisfaction. 18. In Shukla and Brothers' case (supra) the Apex Court held further that, a litigant who approaches the court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. Non-recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. These principles are not only applicable to administrative or executive actions, but they apply with equal force and, in fact, with a greater degree of precision to judicial pronouncements. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighed with the court in rejecting his claim and also causes impediments in his taking adequate and appropriate grounds before the higher court in the event of challenge to that judgment. 19. In English v. Emery Reimbold and Strick Ltd. [ (2002) 1 WLR 2409 ] the Court of Appeal held that, a judicial decision which affected the substantive rights of the parties should be reasoned, although some judicial decisions, e.g. interlocutory case management decisions, did not require reasons; that, while a judge was not obliged to deal with every argument or identify or explain every factor which weighed with him, the issues the resolution of which were vital to his conclusion should be identified and the manner in which he resolved them briefly but clearly explained, so that the judgment enable the parties and any appellate tribunal readily to analyze the reasoning essential to his decision. 20. In the instant case, though an order passed in an application filed under Section 8 of the Act is not an appealable order under Section 37 of the said Act, such an order can be subjected to the revisional jurisdiction of this Court under Section 115 of the Code of Civil Procedure, 1908. 20. In the instant case, though an order passed in an application filed under Section 8 of the Act is not an appealable order under Section 37 of the said Act, such an order can be subjected to the revisional jurisdiction of this Court under Section 115 of the Code of Civil Procedure, 1908. An order without reasons virtually makes the revisional jurisdiction of this Court nugatory and ineffective, inasmuch as, such an order which does not disclose any reasons will be of little assistance to this Court, while analysing the reasoning essential to such a decision. Viewed in the light of the law laid down in the decisions referred to supra, the impugned order dated 18.09.2017 of the court below in I.A.No.2348 of 2015, which do not disclose any reason whatsoever for rejecting the request made to refer the parties to arbitration, cannot be sustained. 21. Accordingly, this Civil Revision Petition is disposed of setting aside the order dated 18.09.2017 of the Principal Sub Court, Ernakulam in I.A.No.2348 of 2015 in O.S.No.113 of 2015 and the said court is directed to reconsider the matter and pass a reasoned order in I.A.No.2348 of 2015, as expeditiously as possible, at any rate within a period of one month from the date of production of a certified copy of this order. 22. It is made clear that this Court has not expressed any opinion on merits of the rival contentions, and it is for the court below to take an appropriate decision on the request made in I.A.No.2348 of 2015 in accordance with law and arrive at a prima facie finding as to the existence of a valid arbitration agreement between the parties. 23. Since, going by sub-section (1) of Section 8 of the Act, as substituted by the Amendment Act of 2015 the petitioners/defendants 1 to 4 were not required to file written statement while making a request to refer the parties to arbitration, if it is ultimately found that prima facie no valid arbitration agreement exists, the petitioners/defendants 1 to 4 shall be given an opportunity to file their written statement.