Sunrise Institute Of Medical Science ... vs Dr.Prasad Madhava Menon
2025 Latest Caselaw 7619 Ker

Kerala High Court

Sunrise Institute Of Medical Science ... vs Dr.Prasad Madhava Menon on 4 April, 2025

AR NO.22/2025                  1



                                             2025:KER:33030


         IN THE HIGH COURT OF KERALA AT ERNAKULAM

                         PRESENT

        THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.

  FRIDAY, THE 4TH DAY OF APRIL 2025 / 14TH CHAITHRA, 1947

                     AR NO.22 OF 2025

PETITIONER:

         SUNRISE INSTITUTE OF MEDICAL SCIENCE PVT LTD.
         REPRESENTED BY ITS CHAIRMAN/DIRECTOR, DR.HAFEEZ
         RAHMAN, SEA PORT AIRPORT ROAD, KAKKANAD,
         ERNAKULAM, PIN - 682030


         BY ADVS.
         M.RISHIKESH SHENOY
         ANN MARY.V.I
         REMYA M. MENON




RESPONDENTS:

    1    DR.PRASAD MADHAVA MENON
         AGED 52 YEARS
         S/O T.C MADHAVA PANIKER, PARTNER, KASARAGOD
         INSITUTE OF MEDICAL SCIENCES(KIMS) ASHWINI NAGAR,
         POST KASARAGOD, KASARAGOD DISTRICT, PIN - 671121

    2    SMT.PADMAVATHI S RAO
         W/O DR.B SHANKARA NARAYANA, NAYAK'S ROAD, POST
         KASARAGOD, KASARAGOD DISTRICT, PIN - 671121

    3    DR.B.SHANKARA NARAYANA RAO
         NAYAK'S ROAD, POST KASARGOD,
         KASARGOD DISTRICT, PIN - 671121
 AR NO.22/2025                      2



                                                    2025:KER:33030


    4    DR.RADHIKA MADHAVAN
         VASUDHA, GUEST HOUSE ROAD, PULIKKUNNU, POST
         KASARAGOD, KASARAGOD DISTRICT, PIN - 671121


         BY ADVS.
         K.JAJU BABU (SR.)(K/116/1981), R1
         M.U.VIJAYALAKSHMI, R1
         P.B.SUBRAMANYAN, R2 & R3
         BRIJESH MOHAN(K/1851/1999), R1
         MANIKANTAN S.KANDATHIL(K/002487/2023), R1
         AISHWARYA SATHEESAN(K/1623/2024), R1
         POOJA K.(K/000514/2024), R1
         SREELAKSHMI S.N.(K/000649/2025), R1
         SABU GEORGE(K/000711/1998), R2 & R3
         MANU VYASAN PETER(K/000652/2013), R2 & R3
         MEERA P.(K/000191/2019), R2 & R3
         AISWARYA MOHAN(K/274/2020), R2 & R3
         CHITRA JOHNSON(K/000924/2018), R2 & R3



     THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON
04.04.2025,   THE   COURT   ON   THE   SAME   DAY   DELIVERED   THE
FOLLOWING:
 AR NO.22/2025                             3



                                                             2025:KER:33030




                                  ORDER

Dated this the 04th day of April, 2025

This Arbitration Request is filed invoking Section 11 of the

Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the

Act") seeking to appoint an Arbitrator with respect to the disputes

and differences that have arisen between the petitioner and the

respondents under Annexure A partnership deed.

2. The petitioner and the respondents had entered into

Annexure A partnership deed dated 06.02.2018 for the purpose of

running a hospital by the name 'Kasaragod Institute of Medical

Sciences' at Kasaragod. Annexure A has an arbitration clause at

Clause 22, which reads as follows:

"In case of any dispute or differences arising between any of the partners, then the same shall be referred for arbitration under the Arbitration and Reconciliation Act 1996 (sic) and the decision of the arbitrator shall be final and binding on the parties."

Disputes arose between the parties under the partnership deed. The

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1st respondent, by his letter dated 16.11.2023, invoked the above

arbitration clause and filed O.P.(Arb) No.21 of 2024 invoking Section

9 petition of the Act before the District Court, Kasaragod. An order

dated 29.06.2024 rendered by the District Court, Kasaragod therein,

was challenged by the petitioner by filing Arbitration Appeal No.30 of

2024 before this Court. During pendency of the said appeal,

A.R.No.90 of 2024 filed by the 1 st respondent was disposed of by

this Court vide order dated 25.09.2024, appointing an Arbitrator.

Thus the Arbitration Appeal filed by the petitioner was dismissed

vide judgment dated 29.10.2024, taking note of the appointment of

the Arbitrator in the Arbitration Request. Subsequent thereto,

Annexure B notice dated 16.11.2024 was issued by the petitioner

and respondent Nos.2 and 3 to respondent Nos.1 and 4 inter alia

informing that the partnership stands dissolved and invoking the

arbitration clause in Annexure A, suggesting to appointment of the

very same Arbitrator for the adjudication of dispute referred to in

Annexure B notice. Alleging that in spite of receipt of Annexure B

notice, respondent Nos.1 and 4 have failed to agree on the

reference and appointment of the Arbitrator; this Arbitration Request

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has been filed by the petitioner invoking Section 11 of the Act.

3. A counter affidavit has been filed in this Arbitration

Request by the 1st respondent, producing therewith Annexes R1 (a)

to R1(e). It is contended in the counter affidavit that though

Annexure B notice had been issued stating to be on behalf of both

the petitioner as well as respondents 2 and 3, the said respondents

2 and 3 have not vouched for any decision as reflected therein. Only

the petitioner has submitted the above Arbitration Request before

this Court and respondents 2 and 3 have not disclosed any decision

on their part to dissolve the partnership either in the arbitration

proceedings pending or in this Arbitration Request. Therefore, the

claim in the Arbitration Request that the petitioner and respondents

2 and 3 have collectively issued notice dissolving the partnership is

unreliable, incorrect and denied by the 1 st respondent. It is further

contended in the counter affidavit that Clause 22 of Annexure A

partnership deed states that "in case of any dispute or differences

arising between any of the partners", the same shall be referred for

arbitration under the Act and Clauses 18 and 19 thereof stipulate

the manner and method of retiring from the partnership. It follows

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that, as per Clause 22, any dispute or differences arising between

the 'partners' alone could be referred for arbitration. Since the

petitioner has stated that he has dissolved the partnership on

16.11.2024, he ceases to be a partner and is thus precluded from

invoking the arbitration clause. The remedy, if any, for the petitioner

lies elsewhere, and this Arbitration Request is not maintainable at

the instance of the petitioner. It is stated that since the firm was

running a hospital, the 1st respondent and the 4th respondent are

constrained to continue the business on their own, continuing with

the partnership. It is also contended that though clause 22 of the

partnership deed mentions that the partnership is at will, the

partners are entitled only to retire or to unanimously dissolve the

partnership or to approach the competent court for dissolution and

accounting relating to the partnership. Annexure B notice issued by

the Advocate on behalf of the petitioner and respondents 2 and 3

can thus only be construed as an intention to retire from the

partnership. The subject matter covered under Annexure B is not

arbitrable and dispute, if any, in the said respect can be decided

only by a competent civil court.

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4. No counter affidavit has been filed by respondents 2 and 3.

5. Heard Sri.Anil Xavier, Senior Advocate, instructed by

Sri.Rishikesh Senoy M., Advocate for the petitioner. Sri.K.Jaju

Babu, Senior Advocate, instructed by Smt.M.U.Vijayalakshmi,

Advocate, was heard on behalf of respondent No.1.

Sri.P.B.Subramanyan, Advocate, appeared for respondents 2 and 3.

6. The learned Senior Counsel for the petitioner submitted that

Annexure B notice had to be issued since the 1 st respondent had

indulged in illegal activities meant to destroy the business of the

partnership and had persistently committed breach of the covenants

and obligations relating to the management of the affairs of the firm

thus making it impossible and impracticable to carry on business of

the partnership and leaving the petitioner and respondents 2 and 3

with no option other than to expel the 1 st respondent from the

partnership or in the alternative to dissolve the partnership.

Accordingly, since the partnership was one at will, the petitioner and

respondents 2 and 3 had dissolved the partnership vide Annexure B

and had also invoked the arbitration clause, inter alia suggesting the

reference of the dispute to the very same Arbitrator already

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appointed by this Court. As regards the contention of the 1 st

respondent that the petitioner cannot invoke the arbitration clause

since he is no longer a partner pursuant to the dissolution of the

firm, the learned counsel places reliance on the dictum laid down by

the High Court of Bombay in Ankit Vijaykumar Khandelwal v.

Aarti Rajkumar Khandelwal [AIR 2021 Bom 151] and submits that

it is trite that an arbitration clause being a collateral term need not in

all situations perish with the coming to an end of the contract. It may

survive and this concept of separability of the arbitration clause is

settled and accepted. Reliance is placed on the dictum laid down by

the Supreme Court in Reva Electric Car Company Private Limited

v. Green Mobil [(2012) 2 SCC 93] and Branch Manager, Magma

Leasing and Finance Ltd. and another v. Potluri Madhavilata

and another [(2009) 10 SCC 103]. The learned Senior Counsel

appearing for the petitioner reiterates the contentions made in the

Arbitration Request and submits that all the essential mandates for

invoking Section 11 of the Act have been duly satisfied and hence

the Arbitration Request is fit to be allowed as prayed for.

7. The learned Senior Counsel appearing for the 1 st

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respondent vehemently objected to the contentions put forth on

behalf of the petitioner and submitted that the Arbitration Request is

not maintainable in law and is only to be dismissed. The contentions

made in the counter affidavit of the 1 st respondent were reiterated

and sought to be buttressed by placing reliance on the dictum laid

down by the High Court of Gujarat in Kirtikumar Fakrichand Mehta

and others v. Dilip Kumar Jayantilal Sanghvi- HUF through

Karta Dilip Kumar and others [(2013) SCC OnLine Guj 2942].

Based on the said dictum, it is contended that since the dissolution

of the partnership firm is itself in dispute, the matter cannot be

referred to arbitration as the firm is unregistered. Placing reliance on

the dictum laid down by the Hon'ble Supreme Court in Prabhu

Shankar Jaiswal v. Sheo Narain Jaiswal and others [(1996) 11

SCC 225] and in Prem Latha and another v. Ishar Dass

Chamanlal and others [(1995) 2 SCC 145], it is contended that the

proposition that the firm having been dissolved, the question cannot

be referred to arbitration for dissolution is thus settled and trite. It is

further contended that without a decision on the question whether

Annexure B notice is to be construed as a retirement or dissolution,

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the prayer for referring the matter to the Arbitrator is unsustainable

in law. Once the partnership comes to an end on account of the

notice issued, the arbitration clause itself will come to an end, and

any matter relating to dissolution or accounting cannot be subject

matter for reference to an Arbitrator. It is submitted that the only

option in such a scenario is to approach the competent civil court

seeking necessary reliefs and Section 11 of the Act cannot be

invoked. The learned senior counsel thus sought dismissal of the

Arbitration Request.

8. I have heard both sides in detail. Clause 22 of Annexure A

partnership deed stipulates arbitration as the dispute resolution

process chosen by the parties. This Court already considered the

said clause while considering A.R.No.90 of 2024 filed by the 1 st

respondent and has appointed a retired Judge of this Court as the

Arbitrator vide order dated 25.09.2024. The pleadings reveal the

existence of disputes between the parties under Annexure A1 and

due invocation of the relevant arbitration clause. The essential

elements to constitute an arbitration agreement viz., (1) The

presence of a present or a future difference in connection with some

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contemplated affair. (2) Intention of the parties to settle such

differences by a private Tribunal. (3) Agreement in writing to be

bound by the decision of such Tribunal, and (4) the parties being in

ad idem regarding same, stands satisfied. [See Babanrao Rajaram

Pund v. Samarth Builders & Developers and another (2022) 9

SCC 691]. The invocation of the arbitration clause vide Annexure B

notice is also not in dispute. As regards the contention that the

petitioner no longer is a partner and hence cannot invoke the

arbitration clause in the partnership deed, it is no longer res integra

that an arbitration clause in a partnership deed typically survives the

deed's termination or dissolution, meaning it remains valid and

enforceable even after the partnership is dissolved. This is because

the arbitration clause is often treated as an independent agreement,

separate from the main partnership agreement, which continues to

exist even after the underlying contract is terminated. This is clearly

revealed by Section 16 (1) of the Act, which reads as follows:

"16. Competence of the arbitral tribunal to rule on its jurisdiction.-

1. The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for

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that purpose,

(a) An arbitration clause which forms part of the contract shall be treated as an agreement independent of the other terms of the contract, and

(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause."

It is thus trite that an arbitration clause, being a collateral term, need

not in all situations perish with the coming to an end of the contract.

It may survive, and this concept of separability of the arbitration

clause is widely accepted. [See Reva Electric Car Company

Private Limited v. Green Mobil (supra); Branch Manager, Magma

Leasing and Finance Ltd. and another v. Potluri Madhavilata

and another (supra)]. Hence, contentions to the contrary put forth

by the learned counsel for the 1 st respondent cannot be

countenanced. As regards the question whether there has indeed

been a dissolution and that the purported decision taken by the

petitioner and 2nd and 3rd respondents could only construed as a

notice of retirement, the same is an issue that verges on arbitrability

and is better left to be decided by the Arbitrator rather than be

resolved in this reference proceedings. The law on the point is also

trite and clear [See SBI General insurance SBI General Insurance

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Co. Ltd. v. Krish Spinning [(2024) SCC OnLine SC 1754].

9. In view of the above, I deem it fit and proper to allow the

Arbitration Request and to appoint the very same learned Arbitrator

who had been appointed by this Court vide order dated 25.09.2024

in A.R.No.90 of 2024 to arbitrate the disputes between the parties.

Accordingly, this Arbitration Request stands allowed, and it is

ordered as follows :

(i) Mr.Justice P.R.Raman, Former Judge, High Court of

Kerala, Dikshit, 113-Jawahar Nagar, Kadavanthra,

Kochi - 682020 is nominated as the sole Arbitrator to

resolve the disputes that have arisen between the

petitioner and the respondents in this case.

(ii) The learned Arbitrator may entertain all

disputes/issues between the parties in connection with

the said agreement, including questions of arbitrability,

jurisdiction and limitation, if any, raised by the parties.

(iii) The Registry shall communicate a copy of this

order to the learned Arbitrator within ten days from

today and obtain a Statement of Disclosure from the

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learned Arbitrator as stipulated under Section 11(8)

read with Section 12(1) of the Act.

(iv) Upon receipt of the Disclosure Statement, the

Registry shall issue to the learned Arbitrator a certified

copy of this order with a copy of the Disclosure

Statement appended. The original of the Disclosure

Statement shall be retained in the Court.

(v) The fees of the learned Arbitrator shall be governed

by the Fourth Schedule of the Act.

Sd/-

SYAM KUMAR V.M. JUDGE csl

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PETITIONER'S ANNEXURES

Annexure A TRUE COPY OF THE PARTNERSHIP DEED DATED 06.02.2018 CONTAINING ARBITRATION CLAUSE EXECUTED BETWEEN THE PETITIONER AND THE RESPONDENTS

Annexure B TRUE COPY OF THE LAWYER NOTICE DATED 16/11/2024 ISSUED BY THE PETITIONER AND RESPONDENTS 2 & 4 TO RESPONDENTS 1 & 3, DISSOLVING THE PARTNERSHIP AND REFERRING THE DISPUTE FOR ARBITRATION

Annexure C TRUE COPY OF THE POSTAL RECEIPT EVIDENCING THE SERVICE OF THE ANNEXURE B TO THE FIRST AND FOURTH RESPONDENT

Annexure D TRUE COPY OF THE PROOF OF DELIVERY EVIDENCING THE SERVICE OF ANNEXURE-B NOTICE TO THE FIRST RESPONDENT

Annexure E TRUE COPY OF THE PROOF OF DELIVERY EVIDENCING THE SERVICE OF ANNEXURE-B NOTICE TO THE FOURTH RESPONDENT

Annexure F TRUE COPY OF THE JUDGMENT OF THE HON'BLE COURT IN AR 90/2024 DATED 25/09/2024

RESPONDENTS' EXHIBITS

Exhibit R1(a) True copy of the reply notice dated 14.12.2023 forwarded by the counsel for the petitioner to this respondent

Exhibit R1(b) True copy of the counter affidavit filed by the petitioner in Arbitration Request No.90 of 2024 dated 19.06.2024 (without exhibits) before this Honble Court.

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Exhibit R1(c) True copy of the order dated 29.06.2024 in OP(Arb).No.21/2024 passed by the Additional District Judge-II, Kasargod.

Exhibit R1(d) True copy of the Division Bench judgment dated 29.10.2024 in ARB.A.No.30 of 2024 of this Honble Court.

Exhibit R1(e) True copy of the order dated 07.11.2024 in OP No.175/2024 before the District Judge Kasargod