A. AYYASAMY Vs. A. PARAMASIVAM & ORS.
SUPREME COURT OF INDIA
A. Paramasivam And Ors.
Click here to view full judgement.
(1.) The parties to this lis, who are brothers, had entered into a
deed of partnership dated 01.04.1994 for carrying on hotel
business and this partnership firm has been running a hotel with
the name 'Hotel Arunagiri' located at Tirunelveli, Tamil Nadu.
Some disputes arose out of the said partnership deed between
the parties. Partnership Deed contains an arbitration clause i.e.
Clause (8) which stipulates resolution of disputes by means of
(2.) Notwithstanding the same, the respondents herein have filed a civil suit before the Court of Ist Additional District Munsif Court,
Tirunelveli, Madurai (Tamil Nadu) seeking a declaration that as
partners they are entitled to participate in the administration of the
said hotel. Relief of permanent injunction restraining the
defendant (appellant herein) from interfering with their right to
participate in the administration of the hotel has also been sought.
This suit was filed in the year 2012. The appellant, after receiving
the summons in the said suit, moved the application under
Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter
referred to as the 'Act') raising an objection to the maintainability
of the suit in view of arbitration agreement between the parties as
contained in clause (8) of the Partnership Deed dated 01.04.1994
and submitted that as per the provisions of Section 8 of the Act, it
is mandatory for the Court to refer the dispute to the arbitrator.
This application was resisted by the respondents with the
submission that since acts of fraud were attributed to the
appellant by the plaintiffs/respondents, such serious allegations of
fraud could not be adjudicated upon by the Arbitral Tribunal and
the appropriate remedy was to approach the civil court by filing a
suit, and that was exactly done by the respondents. For this
purpose, the respondents had relied upon the judgment of this
Court in the case of N. Radhakrishnan v. Maestro Engineers
and Others (2010) 1 SCC 72. This plea of the respondents was sought to be
controverted by the appellant by arguing that aforesaid judgment
was found to be per incuriam by this Court in Swiss Timing Ltd.
v. Commonwealth Games 2010 Organising Committee (2014) 6 SCC 677,
wherein the application under Section 11 of the Act was allowed
holding that such a plea of fraud can be adequately taken care of
even by the arbitrator. It was, thus, argued that the parties were
bound by the arbitration agreement and there was no reason to
file the civil suit. The trial court, however, dismissed the
application of the appellant herein by its order dated 25.04.2014,
relying upon the judgment in N. Radhakrishnan.
(3.) Feeling aggrieved by this order, the appellant preferred revision petition before the High Court repeating his contention that
judgment in N. Radhakrishnan was held to be per incuriam and,
therefore, trial court had committed jurisdictional error in rejecting
the application of the appellant under Section 8 of the Act.
Brushing aside this plea, the High Court has also chosen to go by
the dicta laid down in N. Radhakrishnan with the observations
that Swiss Timing Ltd. is the order passed by a single Judge of
this Court under Section 11 of the Act whereas judgment in N.
Radhakrishnan is rendered by a Division Bench of two Hon.
Judges of this Court, which is binding on the High Court.
Whether the aforesaid view of the High Court in following
the dicta laid down in the case of N. Radhakrishnan, in the facts
of this case, is correct or not, is the question that needs
determination in the instant appeal.;
Copyright © Regent Computronics Pvt.Ltd.