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2024 Supreme(Online)(MAD) 16661
HIGH COURT OF MADRAS
Hon`ble Mr.Justice D.BHARATHA CHAKRAVARTHY
PONNI DELTA RETIREMENT COMMU – Appellant
Versus
M/S.AKNAM FINVEST PRIVATE LI – Respondent
The court emphasized that referral to arbitration under Section 8 requires all parties to the dispute to be signatories to the arbitration agreement, particularly post-2015 amendments limiting judicial discretion.
Headnote:
Arbitration - Civil Revision Petition - Arbitration and Conciliation Act, Section 8 - The court evaluated the applicability of the arbitration agreement in light of potential fraud and unsustainable claims, emphasizing limited judicial discretion post-2015 amendments, leading to the conclusion that all parties necessary to the dispute must be included in arbitration.
Fact of the Case:
The plaintiff, a member of an apartment owners' association, contested the validity of amendments to the association's bye-laws that expelled him and sought various injunctive reliefs due to alleged collusion between the association and the builder. Conversely, the defendants sought referral to arbitration under Section 8 of the Arbitration and Conciliation Act, citing an arbitration clause in the bye-laws.
Issues: Whether the trial court erred in denying the referral to arbitration under Section 8 of the Arbitration and Conciliation Act, given the involvement of non-signatory parties and the nature of allegations made in the suit.
Ratio Decidendi: The court determined that the referral to arbitration is contingent upon the inclusion of all necessary parties to the dispute; the presence of non-signatories to the arbitration agreement in the suit precludes valid referral under Section 8.
Final Decision: The Civil Revision Petition was dismissed.
ORDER
A. The Civil Revision Petition:
1. The Civil Revision Petition is directed against the order dated 29.03.2021 made in I.A.No.04 of 2021 in O.S.No.24 of 2021 on the file of the District Munsif cum Judicial Magistrate, Srirangam. By the said order, the trial Court dismissed the interlocutory application filed by the petitioners herein under Section 8 of the Arbitration and Conciliation Act.
B. The Parties to the Suit:
2. The first respondent/plaintiff filed a suit in O.S.No.24 of 2021.
In the said suit, Ponni Delta Retirement Community, which is a Society of apartment owners registered under the Societies Registration Act, 1860 and bearing Registration No.104/16, represented by its Secretary, who is arrayed as a first defendant. The defendants 2 to 4 are its other Office bearers. The fifth defendant is the Company, which was the builder and promoter of the said apartment complex. The defendants 6 and 7 are its Directors. The State of Tamil Nadu represented by the District Collector is arrayed as eighth defendant and the Registrar of Societies, Tiruchirapalli is arrayed as ninth defendant.
C. The Case of the Plaintiff:
3. With the above array of parties, it is the contention of the plaintiff that the plaintiff is also the owner of the apartment bearing No.H001 named Sampurna in the Ponni Delta Retirement Community situated in S.No.21/2, Thimmarayasamudram Revenue Village, Srirangam Taluk, Tiruchirapalli District. The plaintiff was a member of the first defendant Association. The crux of the case of the plaintiff is that the first defendant Association and its Office bearers have colluded with the fifth defendant builder/promoter and had not accounted for several sums of money the builder was collecting from the apartment owners. The plaintiff had raised the issue with the first defendant Association which is the apartment owners Association. Enraged by the fact that the plaintiff and the other owners of the H Block have been insisting for the accounts, a special resolution was passed by amending the bye-law to remove S.F.No.21/2 in para 2.1, 2.8 in the memorandum of bye-laws 10.1 and to remove H Block and its residents and to expel them from the very membership of the Association.
3.1 Therefore, the plaintiff has laid the suit declaration that the amendment of bye-laws in the Annual General Meeting of the first defendant Association held on 20.12.2020 as null and void; to grant permanent injunction restraining the ninth defendant to give effect to the resolution relating to the amendment of bye-laws in the Annual General Meeting of the first defendant Association held on 20.12.2020; to declare the resolution relating to the expulsion of the plaintiff from the membership of the first defendant Association in the Annual General Meeting of the first defendant Association held on 20.12.2020 as null and void and not binding on the plaintiff and that the plaintiff continues to be a member of the first defendant Association; for a mandatory injunction, directing the ninth defendant to supersede the executive committee of the first defendant Association and appoint a special officer for the first defendant Association and for costs.
D. The Section 8 Application:
4. In the said suit, the defendants 1 to 4, ie., the Society and its Office bearers have filed the present application under Section 8 of the Arbitration and Conciliation Act (hereinafter referred to be as 'the Act'). According to them, the bye-laws of the Society contain the following clause in 13.13 regarding the disputes, which is extracted hereunder:
"13.13 Disputes:
(a) The Executive Committee shall amicably settle all disputes either between members and the Association or amongst the members and the Association or amongst the members. When the Executive Committee fails to bring consensus between the parties, the dispute shall be referred to the General Body Meeting for voting and decision. The General Body Meeting after thorough debate shall settle the dispute by majority of vot
