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2025 Supreme(Online)(Ker) 31090
IN THE HIGH COURT OF KERALA AT ERNAKULAM
SYAM KUMAR V.M., J
TRAVANCORE RURAL DEVELOPMENT PRODUCER COMPANY LTD – Appellant
Versus
SETHURAJ – Respondent
AR NO. 254 OF 2024
For the Appellants/Petitioners: Sri. K.R. Renju
For the Respondents: Sri. Sinu G. Nath
The court affirmed the validity of an arbitration clause lacking explicit terms, emphasizing mutual consent to arbitrate as a primary requirement.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11 - Appointment of an arbitrator - The petition seeks the appointment of an arbitrator concerning disputes between the petitioner and respondents arising under agreements containing an arbitration clause - The respondents failed to pay due instalments, prompting invocation of arbitration clause and subsequent arbitration proceedings - The existing clause is valid despite lacking explicit terms like 'arbitration' as it reflects parties' commitment to arbitrate disputes. (Paras 1, 9, 10)
(B) Limitation Act, 1963 - Article 137 - The arbitrator's unilateral appointment without an express written agreement contravenes statutory requirements - Respondents argued proceedings were barred by limitation - The court emphasizes that limitations must be considered by the arbitrator rather than at the referral stage. (Paras 4, 8)
(C) Legal principles governing arbitration agreements - The court assessed criteria establishing a valid arbitration agreement and reiterated that the mere use of 'arbitrator' does not suffice unless mutual consent to arbitrate is evident. (Para 8)
Findings of Court:
The court appointed a retired District Judge as the arbitrator and clarified that questions of jurisdiction and maintainability should be resolved by the arbitral tribunal.
Result: Arbitration Requests are allowed.
| Table of Content |
|---|
| 1. disputes arising from non-payment in arbitration agreements. (Para 1 , 2 , 3) |
| 2. arguments on limitation and arbitration agreement validity. (Para 4 , 6 , 7) |
| 3. court's analysis of arbitration agreement validity. (Para 8) |
| 4. reasons for appointing an arbitrator. (Para 9 , 10) |
COMMON ORDER
These Arbitration Requests are filed invoking Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) seeking to appoint an Arbitrator with respect to disputes and differences that have arisen between the petitioner and respondents under agreements produced as Annexure A2 in these Arbitration Requests. Since these Arbitration Requests are filed by the very same petitioner, invoking similarly worded arbitration clauses in similar agreements entered into with different persons all of whom are members of the petitioner entity, these Arbitration Requests are heard and disposed of together by this Common Order.
2. The petitioner is a producer company and it had introduced a Members Mutual Fund (MBF) scheme to meet the financial requirements of its members. Respondents being the members of the petitioner have joined the scheme and availed different sums as specified in the respective agreements. Annex. A2 agreements contain an arbitration clause, which reads as follows :
"ഈ ഫᩂ(cid:4)ന്(cid:6)റെ(cid:8) ഇടപാ(cid:12)ട(cid:4)ൽ ᩏട(cid:12)വൻകൂ(cid:18)ർ (cid:8)(cid:18)(cid:8)ൽ റെ(cid:20)വലപാ(cid:6)റെ(cid:22)ൻ(cid:8)(cid:6)
റെᩏപാ(cid:12)(cid:20)(cid:23)(cid:18)സ്(cid:6) കൂ്ᩘന്(cid:4)ുᨱ(cid:27)(cid:28) ഇടപാ(cid:12)ട(cid:6) കൂ(cid:12)രന്(cid:27)(cid:28) തᩜ(cid:4)ൽ എറെ!ᨮ(cid:4)ല(cid:27)(cid:28) തർ്ᨪമോ(cid:22)(cid:12) ᩏപാ്ᩞ്ᨲ& മോ((cid:12) ഉടറെലട(cid:27)ᩈ(cid:12)ൽ ആ തർ്ᨪ്ᨲ((cid:27)(cid:28) ᩏപാ്ᩞ്ᨲ& ((cid:27)(cid:28) ᩏട(cid:12)വൻകൂ(cid:18)ർ (cid:8)(cid:18)(cid:8)ൽ റെ(cid:20)വലപാ(cid:6)റെ(cid:22)ൻ(cid:8)(cid:6) റെᩏപാ(cid:12)(cid:20)(cid:23)(cid:18)സ്ർ കൂ്ᩘന്(cid:4) അധി(cid:4)കൂ(cid:12)രറെ.ട(cid:27)ᩈ(cid:27)്ᩐ ആർബി(cid:4)മോᩏട്ᩢ(cid:8)(cid:27)റെട പാര(cid:4)ഗണന്ുᨱ(cid:6)്ᨪ(cid:6) വ(cid:4)ട(cid:27)്ᩐത(cid:27)(cid:28) ആർബി(cid:4)മോᩏട്ᩢ(cid:8)(cid:27)റെട ത4ര(cid:27)(cid:22)(cid:12)ന്(cid:28) അ!(cid:4)(cid:22)(cid:22)(cid:12)ുᨱ(cid:4)ര(cid:4)്ᨪ(cid:27)്ᩐത(cid:27)(cid:28) ആകൂ(cid:27)്ᩐ(cid:27)
എ്ᩐ(cid:27)(cid:28) ഇത(cid:4)ന്(cid:12)ൽ സ്ᩜത(cid:4)ᨴ(cid:27) റെകൂ(cid:12)ᩦ(cid:27)്ᩐ(cid:27)"
3. Disputes arose when the respective respondents in the Arbitration Requests failed to pay the instalments due to the petitioner. Since repeated requests, to effect payments were in vain and the respondents were not forthcoming to regularize the account by paying the amount due from them, the petitioner was constrained to issue Annexure A3 notices of invocation of arbitration clause to the respondents. Since there was no response from the respondents, the matter was referred to the sole arbitrator appointed by the petitioner. The arbitrator issued notices to the respondents and commenced the arbitration proceedings. The respondents though served with and received the notices issued, did not respond to the same. They were hence set exparte and Annexure A4 awards were rendered against the respondents. Execution proceedings from the awards were also initiated before the Additional District Judge II, Pathanamthitta. The District Court however, dismissed the execution petitions vide Annexure A5 Orders inter alia holding that they are not maintainable due to the unilateral appointment of the Arbitrator without an express agreement in writing in contravention of the proviso (2) to subsection (5) of Section 12 of the Act. The petitioner hence had to commence the arbitration proceedings de novo. This Arbitration requests are thus filed invoking Section 11 of the Act seeking to appoint an arbitrator by this court.
4. Respondents entered appearance pursuant to the notice issued by the Registry of this Court. They have filed counter affidavits inter alia stating that the Arbitration Requests are only to be dismissed for being hopele
