2008 Supreme(P&H) 918
PUNJAB & HARYANA HIGH COURT
Ranjit Singh, J.
Ramesh Sharma
Versus
Mool Chand
Decided On : APRIL 25, 2008
The entire subject matter of the suit should be subject to the arbitration agreement, and the parties must be ad idem for reference of the dispute to the arbitrator.
Headnote:
Trustees - Educational Institute - Arbitration and Conciliation Act, 1996 - Sections 8 and 11
Fact of the Case:
The case involves a dispute between trustees of a private Trust formed to run an Educational Institute. The contest seems to be about controlling the institute and its finances rather than the welfare of the Trust. The petitioner filed an application under Sections 8 and 11 of the Arbitration and Conciliation Act, 1996, which was declined by the trial court.
Finding of the Court:
The trial court declined the application for arbitration, stating that the parties were not ad idem and that some reliefs claimed were not covered by the arbitration clause. The High Court upheld the trial court's decision, emphasizing that the entire subject matter of the suit should be subject to the arbitration agreement and that the parties must be ad idem for reference of the dispute to the arbitrator.
Issues: The main issue was whether the dispute between the trustees should be referred to arbitration under the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: The court held that for reference of a matter to an arbitrator, the entire subject matter of the suit should be subject to the arbitration agreement, and the parties must be ad idem. It also emphasized that the arbitrator/arbitral Tribunal should not become a judge of their own cause.
Final Decision: The High Court dismissed the revision petition, finding no legal infirmity in the trial court's decision.
Ranjit Singh, J.
1. A contest between trustees of a private Trust formed to run an Educational Institute has reached the High Court second time. Means to control this institute and thus the finances which are generated, seem to be the real aim behind this contest, rather than any aim for doing any welfare, which was the stated aim of the Trust when formulated.
2. Respondent No. 1, who claims himself to be the life President of the Trust and thus not removable, filed a civil suit for declaration to this effect, besides other relief. Prayer is also made for declaring some meetings held by the defendants in the suit to be null and void and for declaration that the trust deed, which was amended, be declared as not legally enforceable and valid document. He has also challenged the election purported to have been held on 21.5.2007 of the office bearers of the Trust as well as Shri Krishna Polytechnic Kuruksheta to be null and void and not enforceable.
3. Petitioner filed an application under Sections 8 and 11 of the Arbitration and Conciliation Act, 1996 before the Court trying this suit, which is declined by the Court and thus is impugned through the present revision petition.
4. The facts, as narrated in the petition, would disclose that this Trust was formed with 12 founder trustees on 9.12.1996. The Trust Deed is on record as Annexure P-3 with the petition. Certain amendments were carried out in the Trust Deed subsequently, but however, the amendment carried out on 7.11.2006 seems to be a bone of contention between the parties. According to respondent No. 1, the Trust Deed was amended on this date and was executed and registered on 3.1.2007. The petitioner seems to be contesting this amendment, which according to him was not endorsed in the subsequent meeting of the Trust. It is disclosed that this amended Trust Deed was signed by respondent No. 1, 7, 8, 2, 3 and 4. This Trust Deed is stated to have been subsequently amended on 15.5.2007, which is challenged by filing a civil suit by respondent No. 1.
5. The application filed by the petitioner for appointment of an arbitrator in terms of the Trust Deed was declined by the civil court on 31.8.2007, which was impugned by the petitioner through Civil Revision No. 4716 of 2007 before this Court. This Court while setting-aside the impugned order thought it appropriate to remit the matter back to the trial court to take notice of the contents of one civil misc. application filed before this Court in the revision petition and then to pass an order afresh in the context of plea put forth by the petitioner for reference of the dispute to the arbitrator. It is noticed in this order passed by this Court which is annexed with the petition as Annexure P-7, the trial court had negatived the plea of the petitioner on the finding that the parties before the court were not ad idem and thus the case law cited was of on avail. This trial court had also found that in such circumstances it would not be just to refer the dispute to the Board of Trustees. In which the defendants have a 2/3 majority. What had necessitated the remand of the case by this Court to the trial court apparently is that the three trustees, who were signatory to the amended Trust Deed had filed Misc. Application No. 18567-CII of 2007 to the effect that each one of them is fully aware of the arbitration clause in the initial Trust Deed and that they would have no objection in the case the matter is referred to the arbitrator. The trial court has again declined the prayer of the petitioner for referring the matter to the arbitrator and that is how the petitioner is now again before this Court to challenge the said order.
6. While declining the prayer of the petitioner for referring the matter to the arbitrator, the trial court has noticed that defendant No. 8 has filed an affidavit objecting to the reference to the dispute to the arbitrator and thus has found that the parties are still at not ad idem to the arbitration cl