2014 Supreme(Ker) 867
IN THE HIGH COURT OF KERALA
K. HARILAL, J.
K. Link Healthcare (India) Pvt. Ltd. and others - Petitioners
Versus
George Alexander - Respondent
C.R.P. No. 472 of 2010
Decided On : 04-08-2014
For the Petitioners:Sri P. Nandakumar, Advocate.
For the Respondents:Sri Dinesh K. Shenoy, Sri G. Harikrishnan (Tripunithura) and Sri Mahesh Menon, Advocates.
Headnote:Arbitration and Conciliation Act, 1996 Section 7 Contract Act, 1872 Section 10.-The arbitration clause must be manifested and should be in writing by the both parties under section 7(1) of the act and arbitration clause should not be altered.
K. HARILAL, J.
1. The revision petitioners 1 to 3 in all these Revision Petitions are one and the same, a Private Ltd. Company, its Director and the Branch Office respectively. The common order passed in I.A. No.2851/10 in O.S. No.71/10, I.A. No.2849/10 in O.S. No.65/10 and I.A. No.2852/10 in O.S. No.66/10 on the files of the II Additional Sub Court, Ernakulam, is challenged respectively in the above Revision Petitions. All the above Original Suits are filed by the respective respondents in all these Revision Petitions against the revision petitioners. Thus, though the plaintiffs in all the suits are different, the defendants are one and the same.
2. The above suits are instituted for recovery of money from the revision petitioners/defendants. The parties are referred to as in the Original Suit. The first defendant company was involved in a network marketing in health-care products in India. The products are sold by "independent distributors" and through "Words of Mouth" Advertisements only. The second defendant is the Director of the first defendant company and the third defendant is the first defendant's branch office in Kerala. The plaintiffs joined the network of the first defendant company as distributors. The plaintiffs have claimed recovery of money from the defendants under various heads.
3. The defendants have filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, within the specified time alleging that as per the existing Rules and Regulations of the first defendant company, any dispute arising between a member and the company in respect of the company's policies and procedures, the terms and conditions of the membership or any other activity of the member of the company shall be resolved under the Indian Arbitration and Conciliation Act, 1996, by a sole Arbitrator to be appointed by the company. It was also alleged that the arbitration proceedings would be held at Chennai and the Courts in Chennai alone have exclusive jurisdiction.
4. The plaintiffs have filed separate counter affidavits in each suit contending that there is no arbitration clause in the agreement between the plaintiffs and the defendants. It is contended that when the plaintiffs joined the network as distributors, a starter kit imported from Malaysia was given and it did not contain any agreement or any rules or regulations for arbitration. The current Rules and Regulations commenced from 2003 under the second starter kit, which contain arbitration agreement, do not apply to the plaintiffs or the original distributors, who had joined in the year 2002. The plaintiffs would contend that they had never signed or accepted the revised rules containing arbitration clause introduced by the second starter kit in the year 2003. The said arbitration clause does not operate with retrospective effect covering those who have joined the network before 2003. After considering the rival contentions, the learned Sub Judge dismissed all the I.As. on a finding that the amended rules contained in the second starter kit are not binding on the distributors appointed prior to the amendment. Feeling aggrieved, all these Revision Petitions are filed on various grounds.
5. The learned counsel for the revision petitioners/ defendants advanced arguments highlighting the applicability of the Rules and Regulations including arbitration clauses contained in the second starter kit. It is also contended that as per the first starter kit given to the plaintiffs, the plaintiffs are bound by the subsequent amendments to the Rules and Regulations made by the defendants. The defendants had reserved the right to amend or modify the existing rules unilaterally and, therefore, the Rules and Regulations, which are now in force and mentioned in the second starter kit issued in the year 2003, are binding on the plaintiffs. In short, the arbitration clause contained in the second starter kit given in the year 2003 to the plaintiffs are binding on the plaintiffs,