A. AYYASAMY Vs. A. PARAMASIVAM & ORS.
LAWS(SC)-2016-10-22
SUPREME COURT OF INDIA
Decided on October 04,2016

A. Ayyasamy Appellant
VERSUS
A. Paramasivam And Ors. Respondents

JUDGEMENT

A.K.SIKRI,J. - (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 arbitration.
(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.;


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