At, High Court of Judicature at Madras
By, THE HONOURABLE MS. JUSTICE P.T. ASHA
For the Petitioner: T. Mohan for J.K. Associates, Advocates. For the Respondents: R. Balachandaran, Advocate.
(Prayer: Review Application is filed under Section 114 of the Code of Civil Procedure to review the order made in O.P.No.623 of 2018 dated 18.09.2018.)
1. The above Review Application has been filed by the respondent in the Original Petition on the ground that the name of the counsel had not been displayed in the Cause list and therefore the Review Petitioner was unrepresented on all the dates when the Original Petition, O.P.No.623 of 2018 was posted for hearing before this Court.
2. The following are the averments made in the affidavit filed in support of the Review Petition. In Paragraph No.3 of the common affidavit dated 08.011.2018 the Review Petitioner would submit as follows:
'3. I submit that the order of the Hon’ble Court has not consider the Respondent’s plea, when the case was listed on 21.08.2018 in Item No.108, the Petitioner/Respondent’s counsels name has not printed in the cause list and also requested this Hon’ble Court to print my counsels name and post the matter for some other Judge.'
3. On 21.08.2018 the Court has passed the following order in the presence of the Review Petitioner:
'Since Mr.T.Mohan, learned counsel appears for the respondent, this case may be posted before some other Bench after obtaining necessary orders from the Hon’ble Chief Justice.'
4. The order dated 21.08.2018 passed by my predecessor does not reflect the contention of the Review Petitioner extracted in Paragraph No.2 supra. Thereafter, the deponent would state that on 04.09.2018, 05.09.2018, 06.09.2018 and 07.09.2018 and when the matter was listed on 18.09.2018 for pronouncing orders the counsel’s name was not printed. However the deponent would contend that the party’s name (Greenpeace Luxury Homes LLP) and the Review Petitioner/respondent counsel’s firm’s name was printed.
5. It is seen from the records that on 04.09.2018 when O.P.NO.623 of 2018 was listed the name of the Respondent’s counsel was not listed and on the representation of the counsel for the Petitioner/Respondent herein and on seeing the order dated 21.08.2018, this Court directed that the name of M/s.J.K.Associates who had entered appearance for the respondent to be printed. When the matter was listed on 05.09.2018 the name of J.K.Associates was printed as appearing for the respondent and this was repeated on 05.09.2018, 07.09.2018 and 18.09.2018. The name of the respondent was also printed and these facts have been admitted by the Review Petitioner themselves in their affidavit. The argument that was advanced by Mr.T.Mohan appearing for the counsel for the Review Petitioner at the time of hearing the Review Petition was that the firm is not a registered firm and therefore the firm was not a recognised agent and the Review Petitioner had engaged the service of J.Elumalai and K.Venugopal and therefore they had failed to note down the case.
6. It is to be noted that this averment has not been made in the affidavit and further the Review Petitioner was aware of the matter being listed in the name of the respondent and the counsel’s firm (A reading of the affidavit would establish this). It is further seen that even the Review Petition and the vakalat has been filed in the name of J.K.Associates, J.Elumalai and K.Venugopal and in the vakalat the name J.K.Associates is shown in bold letters and a bigger font. Therefore the contention of the Review Petitioner lacks credibility. On the 21st of August 2018 the Review Petitioner had entered appearance when the cause list reflected the name J.K.Associates and once again in the Review Petition it is the same name that has been displayed. On 07.09.2018 this Court had not only asked the counsel for the Original Petitioner/Respondent herein to inform the Review Petitioner’s counsel but also had a scroll showing the name of the counsel J.K.Associates put up on the Court display board.
7. The 2nd ground on which the order dated 18.09.2018 was sought to be reviewed is on the ground that the invocation of the Arbitration was premature and therefore contrary to the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996. He would rely on the Judgment reported in CDJ 2005 SC 821 = 2005 (8) SCC 618 - S.B.P & Co. Vs. Patel Engineering Ltd. And another at Paragraph No.38.
8. This ground was the 1st issue for consideration in the order dated 18.09.2018 and after a detailed discussion this Court has finally held that the respondent in the Review Petition has fulfilled the first part of Clause 13.5 and therefore was entitled to invoke the Arbitration Clause. The Review Petitioner has not let in any new point to set aside the above finding of this Court except for saying that the Review Petitioner has been trying to resolve the issue.
9. The next contention that Mr.T.Mohan, learned counsel for the petitioner raised is that the Respondent herein had alleged fraud against the Review Petitioner and such allegations of fraud cannot be gone into by the Arbitral Tribunal. In support of his contentions he has relied on the following Judgments:
(a) Abdul Khadir Shamsuddin Bubere Vs. Madhav Prabhakar Oak reported in (1962) 2 SCR 702 = AIR 1962 SC 406.
(b) A.Ayyasamy Vs. A.Paramasivam and others reported in CDJ 2016 SC 923 = AIR 2016 SC 4675.
10. Mr.R.Balachander appearing on behalf of the respondent herein/Original Petitioner would contend that the Review Petitioner has not made out any case for reviewing the order dated 18.09.2018 as the Review Petitioner has not been able to point out any error apparent on the face of record warranting a review. He would point out that the points that are raised in the review has already been answered in the order under review and therefore there is no call to review the order dated 18.09.2018. He would rely on the Judgment of the Hon’ble Supreme Court in Duro Felguera S.A Vs. M/s. Gangavaram Pvt. Ltd. reported in CDJ 2017 SC 1149 = 2017 (9) SCC 729 in support of his contention that after the Amendment to the Arbitration Act in 2015 all that the Courts need to see in whether an Arbitration Agreements exists.
11. Heard both parties and perused the records. As regards the 1st contention regarding the invocation for arbitration being premature, the same has been dealt with extensively by this Court in its order dated 18.09.2018 and no new contention has been put forward by the Review Petitioner warranting the finding being reviewed. Therefore this contention of the Review Petitioner fails.
12. The next point of canvass was that the respondent herein has alleged fraud against the Review Petitioner which cannot be dealt with by the Arbitral Tribunal.
13. The fraud that has been alleged is the diversion of the funds collected by the Review Petitioner by mortgaging the 60% share of the respondent herein in the schedule property to another project and not to the project, subject matter of the Arbitral proceedings.
14. This allegation does not involve an intricate examination of evidence. The Honourable Supreme Court in the Judgment cited on the side by the Review Petitioner reported in CDJ 2016 SC 923 = AIR 2016 SC 4675 - A.Ayyasamy Vs. A.Paramasivam and others has held as follows in Paragraph No.14:
'14. The position that emerges both before and after the decision in N.Radhakrishnan is that successive decisions of this Court have given effect to the binding precept incorporated in Section 8. Once there is an arbitration agreement between the parties, a judicial authority before whom an action is brought covering the subject matter of the arbitration agreement is under a positive obligation to refer parties to arbitration by enforcing the terms of the contract. There is no element of discretion left in the Court or judicial authority to obviate the legislative mandate of compelling parties to seek recourse to arbitration. The Judgment in N.Radhakrishnan has, however, been utilised by parties seeking a convenient ruse to avoid arbitration to raise a defence of fraud. First and foremost, it is necessary to emphasise that the Judgment in N.Radhakrishnan does not subscribe to the broad proposition that a mere allegation of fraud is ground enough not to compel parties to abide by their agreement to refer disputes to arbitration. More often that not, a bogey of fraud is set forth if only to plead that the dispute cannot be arbitrated upon. To allow such a plea would be a plain misreading of the Judgment in N.Radhakrishnan. As I have noted earlier, that was a case where the appellant who had filed an application under Section 8 faced with a suit on a dispute in partnership had raised serious issues of criminal wrongdoing, misappropriation of funds and malpractice on the part of the respondent. It was in this background that this Court accepted the submission of the respondent that the arbitrator would not be competent to deal with matters 'which involved an elaborate production of evidence to establish the claims relating to fraud and criminal misappropriation'. Hence, it is necessary to emphasise that as a matter of first principle, this Court has not held that a mere allegation of fraud will exclude arbitrability. The burden must lie heavily on a party which avoids compliance with the obligation assumed by it to submit disputes to arbitration to establish the dispute is not arbitrable under the law for the time being in force. In each such case where an objection on the ground of fraud and criminal wrongdoing is raised, it is for the judicial authority to carefully sift through the materials for the purpose of determining whether the defence is merely a pretext to avoid arbitration. It is only where there is a serious issue of fraud involving criminal wrongdoing that the exception to arbitrability carved out in N.Radhakrishnan may come into existence. Allegations of fraud are not alien to ordinary civil Courts. Generations of Judges have dealt with such allegations in the context of Civil and Commercial disputes. If an allegation of fraud can be adjudicated upon in the course of a trial before an ordinary civil court, there is no reason or justification to exclude such disputes from the ambit and purview of a claim in arbitration. Parties who enter into commercial dealings and agree to a resolution of disputes by an arbitral forum exercise an option and express a choice of a preferred mode for the resolution of their disputes. Parties in choosing arbitration place priority upon the speed, flexibi
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lity and expertise inherent in arbitral adjudication. Once parties have agreed to refer disputes to arbitration, the Court must plainly discourage and discountenance litigative strategies designed to avoid recourse to arbitration. Any other approach would seriously place in uncertainty the institutional efficacy of arbitration. Such a consequence must be eschewed.' 15. In the case of hand also the Review Petitioner has not made out any ground as to why the Arbitral Tribunal would be incompetent/unable to consider the issue of diversion of funds. This ground, in the opinion of this Court, has been raised to avoid submitting themselves to arbitration. The conduct of the Review Petitioner right from the inception of the contract appears to be a case of 'dragging their fact'. At each stage there appears to be a delay on the part of the Review Petitioner. In view of the above, this Court is of the opinion that the Review Petitioner has not made out a case for Reviewing the order dated 18.09.2018 passed in O.P.No.623 of 2018. In the result Review Application No.561 of 2019 stands dismissed and the order dated 18.09.2018 in O.P.No.623 of 2018 stands.