IN THE HIGH COURT OF KERALA AT ERNAKULAM
CRP.No. 1109 of 2007()
1. CHOLAMANDALAM DBS FINANCE LIMITED,
... Petitioner
Vs
1. K.H.ABDULLA, S/O. HASSAN,
... Respondent
2. P.A.ISHA, W/O. K.H.ABDULLA,
For Petitioner :SRI.PHILIP T.VARGHESE
For Respondent :SRI.VARGHESE C.KURIAKOSE
The Hon'ble MR. Justice M.SASIDHARAN NAMBIAR
Dated :04/07/2008
O R D E R
M.SASIDHARAN NAMBIAR, J.
-------------------------------
C.R.P.No.1109 of 2007
-------------------------------
Dated this the 4th July, 2008.
O R D E R
Original sole defendant in O.S.No.1441 of 2006, on the
file of Munsiff Court, Ernakulam, is the petitioner. Respondents are the
plaintiffs. The suit was instituted for a declaration that the certificate
issued by Additional Registering Authority is valid and subsisting, and
that the finance with the defendant has been cancelled with effect from
31.12.2003 as shown in the certificate, and also for a permanent
prohibitory injunction restraining defendant from proceeding against
the vehicle. When petitioner, the sole defendant, filed a petition under
Section 8 of Arbitration and Conciliation Act, 1996 (for short ‘the Act’),
contending that there is an arbitration clause in the agreement entered
into by the petitioner and respondents, respondents got impleaded the
registering authority as well as State of Kerala as additional
defendants. In the written statement filed subsequently, petitioner
contended that they re-possessed the vehicle as per the terms of the
agreement on 11.7.2002 and thereafter sold the vehicle to one
Mammooty for Rs.2,15,000/= and as he paid that amount, form No.35
CRP.No.1109 of 2007
2
declaration was issued to him to enable him to cancel the endorsement
in the registration certificate of the vehicle, and thereafter respondents
purchased the vehicle from the said Mammooty and they obtained
cancellation of the endorsement from Regional Transport Officer and
registering authority and the State are not necessary parties to the
suit. Learned Munsiff, under order dated 25.10.2007 dismissed
I.A.No.522/2007, the petition filed under Section 8(1) of the Act. This
revision petition is filed challenging that order.
2. The learned counsel appearing for the petitioner and
learned counsel appearing for the respondents were heard.
3. Under the impugned order, learned Munsiff
dismissed the petition on three grounds. Firstly, it was found that the
original agreement between petitioner and respondents was not
produced, and what was produced is only a notorised copy, which is
not a duly certified copy or the original of the agreement, as provided
under Section 8 of the Act. Secondly, it was found that as the
agreement was not produced before the court at all and therefore
Section 8 of the Act cannot be applied. Thirdly, it was found that the
contract between the petitioner and respondents was cancelled, and,
CRP.No.1109 of 2007
3
therefore, the arbitration clause cannot be invoked. Finally, it was
found that in the suit, additional defendants 2 and 3 are also parties,
and they are not parties to the agreement contained in the arbitration
clause, and the relief sought for in the suit is for a declaration with
regard to the certificate issued by the second defendant, and the cause
of action as against them cannot be split up and the suit referred to
arbitration.
4. Section 8(1) of the Act provides that a judicial
authority before which an action is brought in a matter which is the
subject of an arbitration agreement, and a party applies not later than
submitting his first statement on the substance of the dispute, has to
refer the parties to arbitration. Under sub-section (2), the application
referred to in sub-section (1) shall not be entertained unless it is
accompanied by the original arbitration agreement or a duly certified
copy thereof. Petitioner did not produce the original agreement. The
original agreement was not produced before the court by the plaintiffs
also. What was produced was only a notorised copy. It is for that
reason learned Munsiff held that it is not a duly certified copy. True, a
notorised copy cannot be a duly certified copy. But question is
whether a notorised copy of the agreement will suffice for a reference
CRP.No.1109 of 2007
4
as provided under Section 8(1) of the Act.
5. A learned Single Judge of this Court in N.I.I.T v.
Manoharan (2005 (3) KLT 1025) considered a similar question. In
that case, the original document was available in the court though not
produced by the party who filed the petition. The question whether a
copy of the agreement would suffice was considered by the learned
Single Judge in the light of the decision of Calcutta High Court in ITC
Classic Finance Ltd. v. Grapco Mining & Co. Ltd. (AIR 1997
CALCUTTA 397). It was held that production of the original agreement
or duly certified copy is to find out whether there is an arbitration
clause in the agreement and when the original agreement is before
the court or when existence of the agreement and the arbitration
clause therein is not disputed, failure to produce the original
agreement or duly certified copy is not fatal. That view was followed
by another Single Judge of this Court in Natarajan v General
Manager, Southern Railways (2006(2) klt 390). Considering the
object of Section 8, I am in agreement with the views expressed by
the learned Judges in those cases. When there is no case for the
respondents that the notorised copy of the agreement produced is not
the original agreement, learned Munsiff should not have held that the
CRP.No.1109 of 2007
5
application is not maintainable for the non production of the original
agreement or the duly certified copy thereof.
6. But question is when the relief sought for in the suit
is a declaration with regard to the certificate issued by the second
defendant, whether that relief could be split up or whether it is a
dispute which could be settled by the arbitration as provided in the
agreement. Clause 23 of the agreement in the case defenitely
provides for arbitration under that clause, all disputes, differences and
claims arising out of the agreement during the subsistence of the
agreement, as well as thereafter, is covered by the said arbitration
clause. But when the subject matter of the suit is not the dispute
covered by the agreement, there cannot be a reference of that dispute
to the Arbitrator as sought for by the petitioner. Even according to
the petitioner, vehicle was re-possessed from the possession of
respondents and was sold to one Mammooty. When that vehicle was
sold for Rs.2,15,000/= to Mammooty, the hire purchase agreement
which was existing till then will cease to subsist thereafter, because as
far as Mammooty is concerned, he has purchased the vehicle from the
financier and the vehicle was sold in favour of Mammooty for
realisation of the amount due under the finance transaction.
CRP.No.1109 of 2007
6
Therefore, the registering authority certified that the finance originally
available to the vehicle is not subsisting. The declaration sought for in
the suit is only with regard to that certificate. The declaration is not
that the liability of the respondents under the agreement is either
satisfied or closed. As the relief sought for is limited to the extent of
the certificate issued by second defendant, it cannot be said that that
is a dispute to be referred to arbitration invoking the arbitration clause
in the agreement.
7. The question whether when the reliefs sought for in
the suit and the subject matter of the suit are overlaping and the
subject matter could be split up and arbitration clause could be made
applicable to one part alone and whether the suit could be referred to
arbitration in such a case, under Section 8 of the Act, was considered
by the Apex Court in India Household and Healthcare Ltd. v. LG
Household and Healthcare Ltd. (2007 (5) SCC 510). Following
the earlier decision in Sukanya Holdings (P) Ltd. v. Jayesh
H.Pandya (2003 (5) SCC 531) it was held:-
“21. The said prayers fall outside the
arbitration agreement since LG logo belongs to LG
Corporation which is the owner of the trade mark.
CRP.No.1109 of 2007
7
It is not a party to the arbitration agreement. It
allegedly has filed a separate suit. In a case of this
nature, a Division Bench of this Court in Sukanya
Holdings (P) Ltd. v. Jayesh H.Pandya held:(SCC
p.535, para 13)
“13. Secondly, there is no provision in
the Act that when the subject matter of the
suit includes subject matter of the arbitration
agreement as well as other disputes, the
matter is required to be referred to
arbitration. There is also no provision for
splitting the cause or parties and referring the
subject matter of the suit to the arbitrators.”
It was further stated: (SCC p.536, paras 16-17)
“16. The next question which requires
consideration is-even if there is no provision
for partly referring the dispute to arbitration,
whether such a course is possible under
Section 8 of the Act. In our view, it would be
difficult to give an interpretation to Section 8
under which bifurcation of the cause of action,
that is to say, the subject matter of the suit or
in some cases bifurcation of the suit between
parties who are parties to the arbitration
agreement and others is not possible. This
would be laying down a totally new procedure
not contemplated under the Act. If bifurcation
of the subject matter of a suit was
contemplated, the legislature would have
used appropriate language to permit such a
course. Since there is no such indication in
the language, it follows that bifurcation of the
CRP.No.1109 of 2007
8
subject matter of an action brought before a
judicial authority is not allowed.
17. Secondly, such bifurcation of suit in
two parts, one to be decided by the Arbitral
Tribunal and the other to be decided by the
civil court would inevitably delay the
proceedings. The whole purpose of speedy
disposal of dispute and decreasing the cost of
litigation would be frustrated by such
procedure. It would also increase the cost of
litigation and harassment to the parties and
on occasions there is possibility of conflicting
judgments and orders by two different
forums.”
22. We, are, however, not oblivious of
the fact that Sukanya Holdings has been
distinguished in Rashtriya Ispat Nigam Ltd. v.
Verma Transport Co. The present case,
however, is covered by Sukanya Holdings.
In the light of the law as settled, I do not find any
illegality of irregularity warranting interference in the impugned order.
Revision Petition is dismissed.
M.SASIDHARAN NAMBIAR,
JUDGE
nj.