Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Mad) 4702

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
K.Murali Shankar, J.
J.Muthurajan and ors. - Appellants
Versus
S.Vaikundarajan and ors. - Respondents
A.S.(MD)Nos.252 and 253 of 2024 and C.M.P.(MD)Nos.13274, 13275, 13276, 13334, 13335 and 13337 of 2024
Decided On : 31-01-2025

Advocates:
Advocate Appeared,
For the Appellant : Mr. S.Parthasarathy, Senior Counsel for Mr. N.V.Prakash
For the Respondent: Mr. V.Raghavachari, Senior Counsel, for Mr. J.Kingsly Soleman, Mr. V.Prakash, Senior Counsel, for Mr. V.Janakiramulu, Mr. R.Anand, for Mr. A.Muthupandian, Mr. S.Meenakshi Sundaram, Senior Counsel, for Mr. R.T.Arivukumar, Mr. V.Perumal, Mr. Sricharan Rangarajan, Senior Counsel, for Mr. J. Jeba Selvan Newman, Mr. K.Subburanga Bharathi, Mr. Elambharathi, Mr. P.P. Alwin Balan

The court upheld that challenges to conciliation awards must follow specific statutory procedures under the Arbitration and Conciliation Act, and a plaint may be rejected if it fails to disclose a valid cause of action.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 34 and 47, Code of Civil Procedure - Order 7 Rule 11 - Rejection of plaint - Plaintiffs sought declaratory relief against conciliation award and partition deed claiming them illegal and void due to defective execution - Appeal dismissed due to failure to provide particulars of alleged fraud and non-disclosure of valid cause of action. (Paras 80-81)

(B) The court reiterated the mandatory nature of Order 7, Rule 11, stating the plaint shall be rejected if it does not disclose a cause of action or if any ground for rejection is satisfied, providing a summary mechanism to terminate meritless suits. (Paras 12, 18)

(C) Judicial intervention in matters governed by the Arbitration and Conciliation Act is limited; claims regarding the validity of an arbitral award must be sought through the statutory provisions laid out under the Act. (Paras 20, 36)

Judgement Key Points

The court upheld that challenges to conciliation awards must follow specific statutory procedures under the Arbitration and Conciliation Act, and a plaint may be rejected if it fails to disclose a valid cause of action. [judgement_subject]

The court reiterated the mandatory nature of Order 7, Rule 11, stating the plaint shall be rejected if it does not disclose a cause of action or if any ground for rejection is satisfied, providing a summary mechanism to terminate meritless suits. (!) (!)

Judicial intervention in matters governed by the Arbitration and Conciliation Act is limited; claims regarding the validity of an arbitral award must be sought through the statutory provisions laid out under the Act. (!) (!)

The plaintiffs sought declaratory relief against a conciliation award and partition deed, claiming them illegal and void due to defective execution. The appeal was dismissed due to the failure to provide particulars of alleged fraud and non-disclosure of a valid cause of action. (!) (!)

Table of Content
1. overview of the case and parties' disputes. (Para 1 , 3 , 4 , 5)
2. details of mediation and disputed agreements. (Para 7 , 8 , 9)
3. summary of previous legal proceedings. (Para 10)
4. legal observations regarding the rejection of plaint. (Para 11 , 12)
5. criteria for rejection under order 7 rule 11 c.p.c. (Para 18)
6. arguments on the validity of the conciliation award. (Para 19 , 20 , 21 , 22)
7. consequences of failing to challenge the award within time. (Para 32 , 33 , 34)
8. final conclusions on the appeal merits. (Para 36 , 38 , 39)
9. final ruling on suit's merits. (Para 72)
10. decision on appeals with costs. (Para 80 , 81)

JUDGMENT :

K. Murali Shankar, J.

These appeals are directed against the order made in I.A.No.5 of 2023 in O.S.No.72 of 2022, dated 29.08.2024 rejecting the plaint.

2. For the sake of convenience and brevity, the parties will hereinafter be referred as per their status/ranking in the original suit.

3. The appellants in both appeals have filed a suit to declare that the conciliation proceedings of the seventh defendant culminating in the conciliation award dated 02.01.2019 propounded by the defendants is a fraudulent and fabricated document, void and illegal and not binding on the plaintiffs and to declare that the Kaithadi Baga Pirivinai Pathiram dated 31.12.2018 propounded by the defendants has no legal status and it is not binding on the plaintiffs as it is neither registered nor having sufficient stamp duty.

4. The relationship not in dispute is that the first plaintiff and the first defendant are brothers, that the second plaintiff is the wife and the plaintiffs 3 to 5 are the sons of the first plaintiff, that the sixth plaintiff is the wife of the third plaintiff, that the second defendant is the wife, and the defendants 8 and 9 are the sons and the 11^th defendant is the daughter of the first defendant, that the fifth defendant is the wife of the third defendant and that the seventh defendant is the step-brother of the first defendant and the first plaintiff.

5. Pending suit, the first defendant filed a petition invoking Order7 Rule 11 C.P.C., seeking to reject the plaint. The plaintiffs 1 to 6 as respondents 1 to 6 have filed their counter statement raising objections. The defendants 2 to 7 who are the respondents 7 to 12 have not filed any counter statement. During enquiry, the plaintiffs/respondents 1 to 6 have produced and exhibited 16 documents as Exs.R.1 to R.16. The learned Principal District Judge, after enquiry, passed the impugned order dated 29.08.2024 allowing the petition in I.A.No.5 of 2023 and thereby rejected the plaint. Aggrieved by the rejection of plaint, the plaintiffs 3 and 5 have filed an appeal in A.S.(MD)No.252 of 2024 and the remaining plaintiffs have filed another appeal in A.S.(MD)No.253 of 2024.

6. Heard the learned Senior Counsel appearing for the appellants and the learned Senior Counsel and the learned Counsel appearing for the respondents and perused the materials available on record.

7. The facts not in dispute are :

(a) The first plaintiff, the first defendant, and their brother S.Chandresan were partners/directors in various family businesses, with the primary business involving the separation of minerals from raw beach sand. The family held several leases in the districts of Tuticorin, Tirunelveli, Kanyakumari, and in the state of Andhra Pradesh, operating under the name and style of M/s. V.V.Minerals. The family was also involved in V.V.Minerals (100% export-oriented unit), Edison Paints and Chemicals, V.V.Marine Products, Transworld Garnet India Pvt Ltd., Vijay Cements, and Vetrivel Marketing and Warehousing entities.

(b) The first defendant is the founder of the V.V.Minerals Group and serves as the Managing Director of the companies and Managing Partner of the firms. The first plaintiff was the then Joint Managing Director and overall financial controller of the firms and companies.