Point of Law; Dispute in the matter of right in rem (right against the world at large), the same cannot be decided by an Arbitrator and the jurisdiction of the Arbitrator would be in relation to dispute.

ORDER :

Two relevant questions arise herein are:

(1) What is decisive while considering the question of referring a dispute to an arbitrator in terms of an arbitration agreement?

(2) What are the parameters governing grant of leave in a petition filed under Section 92(1) of the Code of Civil Procedure?

Respondents 1 and 2 in O.P (leave) No.23/2021 on the file of the Principal of the District Judge, Palakkad, have filed this Revision Petition under Section 115 of the Code of Civil Procedure challenging order passed by the learned District Judge under Section 92(1) of the Code of Civil Procedure.

2. Respondents herein are the original petitioners in the above scheme suit.

3. Heard Advocate Rajesh Sivaramankutty appearing for the petitioners, Advocate Sreehari, representing the 4th respondent and Advocate P.B.Krishnan appearing for other respondents.

4. Short facts: Petitioners filed O.P.No.23/2001 before the District Court, Palakkad under Section 92(1) of the Code of Civil Procedure seeking leave to institute the Suit. Suit also filed along with the leave petition. The prayers in the Suit in relation to a public Trust include direction to the defendants by way of mandatory injunction to register the trust deed in accordance with the general body decision on 17.11.2019 and 25.12.2019, a mandatory injunction to direct the defendants to vouch the accounts of the trust for the period between 12.08.2017 to 04.03.2022 and formation of adhoc committee to administer the trust till a new managing committee being elected in terms of the amendment brought into, as per the general body meetings dated 17.10.2019 and 25.12.2019. Generally, the petitioners allege mis-management on the part of the respondents.

5. The learned counsel for the petitioners would submit that there is an arbitration clause in the trust deed and therefore the respondents herein ought to have opted the remedy of disputed resolution by way of arbitration. Whereas, Advocate P.B.Krishnan would urge that though there is an arbitration clause in the trust deed, the dispute sought to be adjudicated in the Scheme Suit filed by the respondents cannot be adjudicated by an Arbitrator since the reliefs sought for are not subject matter of arbitration. The learned counsel placed a decision of the Apex Court reported in [2016(4) KHC 669 : 2016(3) KLJ 652 : 2016(4) KLT SN 22], Vimal Kishor Shah & Ors. v. Jayesh Dinesh Shah & Ors., to butress this point. In the said decision, the Apex Court held in para.61 as under:

“61. We, accordingly, hold that the disputes relating to Trust, trustees and beneficiaries arising out of the Trust Deed and the Trust Act are not capable of being decided by the arbitrator despite existence of arbitration agreement to that effect between the parties. A fortiori - we hold that the application filed by the respondents under S.11 of the Act is not maintainable on the ground that firstly, it is not based on an “arbitration agreement” within the meaning of S.2(b) and S.2(h) read with S.7 of the Act and secondly, assuming that there exists an arbitration agreement (Clause 20 of the Trust Deed) yet the disputes specified therein are not capable of being referred to private arbitration for their adjudication on merits.”

6. The learned counsel for the petitioners submitted that though as per the decision in Vimal Kishor Shah & Ors. v. Jayesh Dinesh Shah & Ors.'s case (supra) the Apex Court expressed the view that disputes pertaining to public Trusts to be decided by applying the principle of right in rem, subsequently a 3 Judge Bench of the Apex Court again considered the said question and settled 4 fold test to determine the subject matter of dispute involved in an arbitration agreement is arbitrable or not. The 4 fold test settled by the Apex Court in [2020 0 Supreme(SC) 727], Vidya Drolia & Ors. v. Durga Trading Corporation, are as under:-

“(1) when cause of action and subject matter of the dispute relates to actions in rem, that do not pertain to subordinate rights in