SHRIRAM TRANSPORT FINANCE CO LTD Vs. BABU

JUDGEMENT

(1.) These revision petitions are referred to the Division Bench particularly on the question whether T.M.L Financial Services Ltd. v. Vinod Kumar, 2010 1 KerLT 209, hereinafter referred to as 'TML', requires re-consideration. The impact, if any, of Section 9 of the Arbitration and Reconciliation Act, 1996, hereinafter referred to as the 'A & C Act', is focused in the reference order as a question that may be germane for consideration. TML was decided in a matter that arose from a suit filed for damages and for a declaration that the plaintiff was not liable to repay any outstanding instalments defaulted on a loan availed from the defendant. Holding out an arbitration agreement, the defendant invoked Section 8 of the A & C Act and applied to the trial court to refer the parties to arbitration. That was refused. That led to the judgment in TML, holding, inter alia, that when the agreement is opposed to public policy or where one of the parties commit acts which are per se illegal and causes injury to the other party, the arbitration agreement cannot be put forward as a shield. In TML, it was found that suit of a civil nature would lie in situations where the act complained of is not referable to the agreement between the parties and relief sought for is built on legal rights de hors the agreement, including the arbitration agreement.

(2.) The fact that the arbitration agreement cannot be used as a shield in cases of acts which are per seillegal or unlawful is not in dispute before us. The fundamental issue that was sought to be focused is the effect of Section 9 of the A & C Act, including whether the availability of such remedy amounts to an implied bar to other proceedings.

(3.) We heard learned counsel appearing for the petitioners and Adv. M. Gopikrishnan Nambiar as Amicus Curiae.