IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE MONDAY, THE 15TH DECEMBER 2008 / 24TH AGRAHAYANA 1930 AR.No. 14 of 2008 ----------------------- OS.130/2007 OF THE SUB COURT, CHERTHALA .................... PETITIONER ----------------- M.R.ARAVINDAKSHAN, S/O.LATE N.RAMAN NAMBEESAN, AGED 68 YEARS, RESIDING AT HOUSE NO.32, ERANHIPALAM HOUSING COLONY, CALICUT-673 006. BY ADV. SRI.C.P.MOHAMMED NIAS SRI.SHYAM PADMAN SMT.P.K.SHAKKEELA RESPONDENTS: ----------------------- 1. V.V.JAYARAM, S/O.K.VELAYUDHAN, AGED 70 YEARS, MANAGING DIRECTOR, TRAVANCORE EXPORTS (PVT) LTD., P.B.NO.36, BYEPASS ROAD, CHERTHALA, ALAPPUZHA, RESIDING AT SEETHA BHAVAN, 109/31, MADAKKAL, CHERTHALA POST, ALLEPPEY-688 524. 2. SUNIL JAYARAM, S/O.V.V.JAYARAM, AGED 48 YEARS, RESIDING AT SEETHA BHAVAN, 109/31, MADAKKAL, CHERTHALA POST, ALLEPPEY-688 524. 3. SURESH JAYARAM, S/O.V.V.JAYARAM, AGED 42 YEARS, RESIDING AT SEETHA BHAVAN, 109/31, MADAKKAL, CHERTHALA POST, ALLEPPEY-688 524. 4. SEETHA SASIRAJ, D/O.V.V.JAYARAM AND W/O.SASIRAJ, AGED 46 YEARS, "VANAJA", VYDYASALA NAGAR, ASHRAMAM POST, KOLLAM-691 002. 5. ANITHA BIJU, D/O.V.V.JAYARAM AND W/O.BIJU, AGED 44 YEARS, RESIDING AT BINDHU, POTHUJNANAM LANE, KUMARAPURAM, MEDICAL COLLEGE POST, THIRUVANANTHAPURAM-695 011. R1 BY ADV. SRI.ROY CHACKO R2 & R3 BY SRI.SUNIL JACOB JOSE THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 15/12/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: PIUS C. KURIAKOSE, J. ------------------------------------------- A.R.No.14 of 2008 ------------------------------------------ Dated, this the 15th day of December, 2008 ORDER This application under Section 11 of the Arbitration and Conciliation Act, 1996 ('the Act' for short), is filed by the applicant for appointment of an independent and impartial Arbitrator to adjudicate upon and settle the disputes between the applicant and the respondents. 2. According to the applicant, he was desirous of purchasing a property in and around Cherthala Municipality and the first respondent approached him through real estate brokers representing that he was empowered and entitled to sell 67.50 cents of land lying in Cherthala Vadakku Village abutting the National Highway having compound wall with buildings and sheds (Building Nos.344, 344-A, ward 28, Cherthala Municipality) and improvements thereon. The applicant submits that the A.R.No.14 of 2008 2 first respondent represented to him that he was entitled to enter into an agreement to sell and also to sell the property on behalf of his children by virtue of the registered power of attorney No.202/2006 dated 24.10.2006 of the Sub Registrar, Cherthala. The applicant further submits that after negotiations, Annexure A agreement was entered into between him and the first respondent. According to the applicant, the first respondent received a sum of Rs.15 lakhs as advance and the time fixed for completion of the sale was three months from the date of Annexure A. During the above period, the first respondent had agreed and undertaken to discharge the liability with the Federal Bank, Cherthala and to make the property free from all encumbrances and charges besides furnishing the relevant documents of title, possession, etc. Annexure B is the copy of the power of attorney. Annexures C and D are copies of the identity cards issued by the Election Commission of India to respondents 1 and 2. Annexures E and F are the Income A.R.No.14 of 2008 3 Tax PAN cards of respondent No.3 and M/s.Travancore Exports. According to the applicant, he has always been ready and willing to perform his part of the agreement and he purchased stamp papers on 21.8.2007 and prepared the sale deed dated 24.8.2007 in consultation with the respondents and in accordance with their requirements as well. Respondents 1 to 3 thoroughly scrutinised the draft of the sale deed before the same was printed on stamp paper. Printing of the sale deed on stamp paper was done with the full knowledge and consent of the respondents. The applicant, as mutually agreed by the parties, had gone over to Cherthala on 24.8.2007 fully prepared for completion of the sale with the entire balance sale consideration as specified by the respondents. But on reaching Cherthala, the applicant was shocked to find that the respondents had neglected to honour the promise and commitments under the agreement for sale. The liability of the Federal Bank had not been discharged at all. The machinery and other articles on the premises were not A.R.No.14 of 2008 4 removed and it was seen that the factory was still functioning there. The BSNL tower on the premises which the respondents had agreed to dismantle continued to remain on the premises. The respondents expressed their regrets about the failure and inability to perform their part of the agreement within the time stipulated and requested for an extension of the period by further three months categorically promising and assuring to comply with the terms and conditions. The applicant alleges that even after the expiry of the extended period which expired on 24.11.2007, the respondents did not satisfy their commitments under the agreement. The applicant submits that he was sincerely awaiting for intimation from the side of the owners regarding due compliance of the promises and commitments made by them. According to the applicant, there was absolutely nothing more to be done from his side. He was always ready with the balance sale consideration and the respondents very well knew that. But to his utter shock and surprise, the applicant received A.R.No.14 of 2008 5 a registered cover sent by Sri.John Varghese, Advocate, Cherthala containing a xerox copy of a plaint purported to be filed by the third respondent before the Sub Court, Cherthala. Apart from that, on 7.11.2007 the applicant was served with a notice dated 3.11.2007 purported to be issued by the first respondent, but the cover showing the address of Adv.John Varghese aforementioned as the sender. This according to the applicant, clearly demonstrates the collusion and mala fides on the part of respondents 1 and 3 and avaricious intent to make unjust enrichment at the expense of the applicant. Annexure G produced along with the application is the copy of the notice dated 3.11.2007. Enquiries revealed that apart from the liability with the Federal Bank, Cherthala, there was liability with the Cherthala Co-operative Bank as well. The applicant sent a personal reply on 9.11.2007 to the first respondent. Apart from that the applicant had also caused a registered lawyer notice to all the respondents requiring them to duly comply with the terms and A.R.No.14 of 2008 6 conditions agreed to and contained in the agreement for sale. Since an inadvertent typographical and clerical error had crept in while describing the scheduled property, another notice dated 19.11.2007 rectifying the omission was also issued. Annexures H and I are copies of those notices. Reply was sent only by the third respondent and Annexure J is the copy of the reply. The applicant submits that the allegations are unsustainable and false. It is pointed out that in the replies sent by the respondents and to a certain extent in the plaint filed by the third respondent, the power of attorney and the power and authority of the first respondent to enter into agreement to sell the property is seen admitted and the only case appears to be the alleged withdrawal and cancellation of the same which on the face of it can be termed an afterthought and a false statement made to somehow or other wriggle out, if possible, of the liability and responsibility. True copy of the plaint is produced as Annexure K and paragraph 3 of Annexure 3 is highlighted. A.R.No.14 of 2008 7 It is alleged by the applicant that the third respondent in collusion with the first respondent is abusing the process of the court and perpetrating injustice. The applicant has already entered appearance before the court and has filed his written statement. The applicant also submits that he has already sustained very heavy loss due to the breach of contract by the respondents. To avoid further loss, after issuing registered notice dated 18.2.2008 to the respondents, and on their failure to comply with the just, fair and reasonable requirements made therein, the applicant was constrained to apply for and obtain refund of the stamp duty which also resulted in loss to the applicant. Annexure M is the copy of the notice issued by the applicant in that regard. The applicant highlights clause 10 of Annexure A and points out that the same is an arbitration agreement. The applicant submits that inspite of the repeated requests and reminders, the respondents failed and neglected to suggest the name of the Arbitrator to settle the disputes between the parties and have been A.R.No.14 of 2008 8 indulging in protractive and dilatory tactics. Therefore, the applicant became constrained to issue registered notice dated 16.2.2008 reiterating the request for resolution of the dispute through arbitration and suggesting the name of Sri.K.P.Narayanan Nair, retired District Judge as Arbitrator. Annexure N is the copy of the said notice by which the arbitration clause was invoked. To Annexure N, only the first respondent has sent a reply. Annexure O is the copy of that reply. The contentions raised in Annexure O are unsustainable. Hence the present request for appointment of an independent and impartial Arbitrator. 3. A detailed counter affidavit has been filed by the first respondent and a separate counter affidavit has been filed by respondents 2 and 3. Various contentions are raised through these counter affidavits. Along with the counter affidavit filed by the first respondent copy of the affidavit and the interim application (I.A.No.364 of 2008) filed by the applicant in Arbitration O.P.No.34 of 2008 under Section 9 of the Act as well as the order passed by A.R.No.14 of 2008 9 the District Court, Alappuzha in that application have been produced as Exts.R1(a) and R1(b) respectively. In the counter affidavits the respondents are raising serious contentions regarding the merits of the applicant's claim against them. 4. I have heard the submissions of Sri.C.P.Mohammed Nias, learned counsel for the applicant and also those of Sri.Roy Chacko, learned counsel for the first respondent and Sri.Sunil Jacob Jose, learned counsel for respondents 2 and 3. 5. Execution of Annexure A agreement for sale is practically admitted. The existence of clause 10 in Annexure A also cannot be disputed. I have no doubt in my mind that clause 10 of Annexure A is a valid arbitration clause. The materials produced in this case will reveal that clause 10 of Annexure A has been validly invoked by the applicant and that it has not been possible for the parties to agree on an Arbitrator in terms of clause 10. 6. A Constitution Bench of the Supreme Court A.R.No.14 of 2008 10 in SBP & Co. v. Patel Engineering and another [(2005) 8 SCC 618] has categorised the various facets of disputes which can arise in applications under Section 11 of the Act submitted by the parties before the Chief justice or his designated Judge for appointment of Arbitrator. In the subsequent decision in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd. (2008 (4) KLT SN 52), the Supreme Court has analysed the judgment of the Constitution Bench and held that where an intervention of the court is sought for appointment of an Arbitral Tribunal under Section 11 of the Act, the duty of the Chief Justice or his designate is defined in the Constitution Bench judgment. It is stated that the Constitution Bench identified and segregated the preliminary issues which may arise for consideration in an application under Section 11 of the Act into three categories, namely (i) issues which the Chief Justice or his designate is bound to decide, (ii) issues which he can also decide and the issues which he may choose to decide and A.R.No.14 of 2008 11 (iii) issues which should be left to the Arbitral Tribunal to decide. The only issues which the Chief justice or his designate will have to decide is whether the party making the application has approached the appropriate High Court and whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act is a party to the agreement. It is needless to mention that the above two issues will necessarily have to be decided in favour of the applicant. All other surviving disputes between the parties fall either within category (ii) or category (iii). I am of the view that all those issues can be settled by a competent Arbitrator. 7. Accordingly, allowing this application I appoint Sri.M.M.Pareed Pillay, retired Chief Justice of the Kerala High Court, a man known for his integrity and learning, as Arbitrator to adjudicate upon all the disputes between the parties. The Arbitrator will invite pleadings from the parties and will adjudicate all claims and counter claims, if any, from the side of the parties. The Arbitrator A.R.No.14 of 2008 12 will enter upon reference at his earliest and make and publish the award without undue delay. PIUS C. KURIAKOSE, JUDGE vns