S S M SOUNDAPPAN Vs. K G BALAKRISHNAN

JUDGEMENT

(1.) C. R. P. No. 1511 of 1997 is against the Order in (Arbitration) O. P. No. 394 of 1994, and revision petitioners are the petitioners in the O. P. also. That O. P. was filed under Sections 30 and 33 of the Arbitration Act, to declare that there was no reference of disputes to respondents 1 and 2 by petitioners, to declare that respondents 1 and 2 were never appointed as Arbitrators, to declare that the letter dated 24. 8,1993 purporting to appoint respondents 1 and 2 as arbitrators is forged, null and void, to declare that the document dated 31. 10. 1994 styled as Interim Award is null and void and not binding on the petitioners, and for consequential reliefs.

(2.) C. R. P. No. 1661 of 1997 is against the Order passed in (Arbitration) O. P. No. 425 of 1994, filed by the respondents 3 to 15 herein to pass a decree in terms of the Award of the Arbitrators who are respondents 1 and 2 therein.

(3.) EVEN though an understanding was reached on 24. 8. 1993, respondents 3 to 9 did not want to act on the same. They were interested only in taking note of such of the agreed terms as would benefit them and discarded the reciprocal obligations. EVEN though frequent appeals and requests were made by the petitioners to respondents 3 to 9, to respect the Mou, the same were not acceded to. In the Mou, there is a clause whereby the parties agreed to appoint arbitrators and seek the passing of Award in terms of the compromise memo. It was never the intention of the parties that respondents 1 and 2 should be appointed as Arbitrators. If there was any such intention, their names could have been mentioned in the Mou itself. Subsequent to the Mou, second petitioner addressed a letter on 3. 8. 1993 to one L. Dhakshinamoorthy, a family counsel complaining about the non-performance of the obligations by respondents 3 to 9, and the third respondent also sent a letter to the same counsel complaining about the non-performance of the obligations by the petitioners. Dhakshinamoorty had even written to both of them stating that he will sort out the matter. If in fact, respondents 1 and 2 were appointed as Arbitrators on 24. 8. 1993, the correspondence with Dhakshinamoorthy was unnecessary. In the meanwhile, even though correspondence was going on between the parties and Dhakshinamoorty, respondents 3 to 9 were proclaiming that they had taken into confidence respondents 1 and 2, and they can manage everything through them. Apprehending some mischief, petitioners wrote a registered letter on 28. 10. 1993 to the second respondent asking him to destroy the blank signed papers which the first petitioner, his father and other members had entrusted to him, which were intended to be made use of at the time of final settlement. EVEN though second respondent received the said registered letter as early as on 1. 11. 1993, there was no reply from him. S. S. M. Brothers Limited, a corporate entity, which came to the control of the petitioners as per the earlier understanding, was owning land at R. A. Puram, Madras-28. Respondents 3 to 9 were making use of those properties as licensees. The company wrote a letter on 16. 8. 1994 revoking the licence. Naturally, respondents 3 to 9 got irritated and they wanted to continue to be in the premises somehow or other. Soon after, they filed a suit as C. S. No. 1294 of 1994 on the original side of this Court, on 16. 8. 1994. That suit was one for injunction to restrain the petitioners from interfering with their possession. The entire claim made in that suit was on the basis of the mou signed by both sides. On getting notice of the suit and the interim application filed therein, a detailed counter affidavit was filed by these petitioners stating that the Mou was inadmissible in evidence, and that will not confer title on respondents 3 to 9, and it is only a contract to enter into another contract, and, as per the provisions of Mou, the matter has to be referred to an Arbitrator and till the date of filing the counter affidavit, there had been no reference to Arbitrator and the suit itself is not maintainable. After counter affidavit was filed, even though the injunction application came for hearing on more than two occasions, the same was not proceeded with by respondents 3 to 9. In the meanwhile, respondents 3 to 9 also moved an application under Section 111 of the Companies Act through some of their employees, for initiating action against the petitioners. The Company Law board questioned the maintainability of such an application, and the same was dismissed even at the threshold. While petitioners and respondents 3 to 9 were fighting each other, they received a letter dated 8. 11. 1994, on 10. 11. 1994 along with an Interim Award purported to have been passed by respondents 1 and 2. In that Interim Award, it was stated that respondents 1 and 2 were appointed arbitrators for the purpose of implementing the Mou said to have been signed on 24. 8. 1993. It is under these circumstances, petitioners have filed the petition challenging the very existence of the arbitration agreement and also the validity of the interim Award. Various reasons are stated by the petitioners to contend that there is no arbitration agreement. The following reasons are mentioned. (1) Respondents 1 and 2 have claimed that they were appointed as arbitrators in writing. If, in fact, respondents 1 and 2 were appointed as arbitrators at that stage, then the Mou executed on 24. 8. 1993 would have contained a clause that respondents 1 and 2 have been appointed as Arbitrators. (2) On 28. 10. 1993, petitioners informed the second respondent that they have entrusted certain signed blank papers believing him that they would be made use of at the time of final settlement. Since respondents 3 to 9 did not act in accordance with the Mou, they directed the second respondent to destroy those blank papers signed by the petitioners. Second respondent received the same on 1. 11. 1993, and the same is evidence from the signed postal acknowledgment. He did not send any reply, nor has he denied the allegation that blank papers were entrusted to him. (3) O. S. No. 1294 of 1994 filed by respondents 3 to 9 was one for injunction to restrain the petitioners from interfering with their possession and management of the properties allotted to them as per the Mou dated 24. 8. 1993. In that suit, there is no reference to the arbitration agreement. If in fact there was an arbitration agreement, the suit itself would not have been entertained. Likewise, if the Arbitrator was proceeding with the arbitration also, such a suit would not have been entertained by court. (4) The third petitioner complained to the family lawyer Dhakshinamoorthy about certain properties over which she claimed that she is entitled to one-third share. She wanted to construct a weaving shed to expand her business. She wanted the boundary to be put up, demarcating her share in the property. The family lawyer sent a reply stating that he is intending to visit the properties and put an end to the misunderstanding. He also said that he will be taking some qualified surveyors to measure the land and allot her the share due to her as provided in the Mou. This fact was also informed to respondents 3 to 9. They immediately filed O. S. No. 366 of 1994 before the Sub Court, Sankari, for injunction restraining the petitioners herein from interfering with their possession. They wanted the joint possession not to be disturbed. That suit was filed on 19. 8. 1994. In that suit, respondents 3 to 9 who were entitled to only one-third share on the basis of Mou, claimed 3/4th share in the property. In that case also, there was no reference to the Arbitration.