Sri.P.Radhakrishnan Nair vs M/S.Tulsi Vkl Developers
2025 Latest Caselaw 4699 Ker

Kerala High Court

Sri.P.Radhakrishnan Nair vs M/S.Tulsi Vkl Developers on 4 March, 2025

AR NO.223/2024                 1



                                            2025:KER:33039
         IN THE HIGH COURT OF KERALA AT ERNAKULAM

                         PRESENT

        THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.

 TUESDAY, THE 4TH DAY OF MARCH 2025 / 13TH PHALGUNA, 1946

                    AR NO.223 OF 2024

PETITIONER:

         SRI.P.RADHAKRISHNAN NAIR,
         AGED 74 YEARS
         S/O.LATE N PARAMESWARAN NAIR, KEERTHI, KN-45,
         3RD CROSS ROAD, KEERTHI NAGAR, KOCHI -,
         PIN - 682026


         BY ADVS.
         P.MARTIN JOSE
         P.PRIJITH
         THOMAS P.KURUVILLA
         R.GITHESH
         AJAY BEN JOSE
         MANJUNATH MENON
         SACHIN JACOB AMBAT
         HARIKRISHNAN S.
         ANNA LINDA EDEN



RESPONDENTS:

    1    M/S.TULSI VKL DEVELOPERS,
         36/299, 139, MAVELIPURAM,
         NEAR SUN RISE HOSPITAL, SEA-PORT AIRPORT ROAD,
         KAKKANAD -, PIN - 682030

    2    MR.TULASIDAS G.,
         MANAGING PARTNER, M/S.TULSI VKL DEVELOPERS,
         2.D., SHARON NEST, VAZHAKKALA,
         KOCHI -, PIN - 682030
 AR NO.223/2024                 2



                                            2025:KER:33039
    3    SMT.TINTU THULASIDAS,
         W/O.MR.TULASIDAS G, PARTNER, M/S.TULSI VKL
         DEVELOPERS, 2.D., SHARON NEST,
         VAZHAKKALA, KOCHI -, PIN - 682030


         BY ADV PRAVEEN.K.JOY, R1 TO R3


     THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION
ON 04.03.2025, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
 AR NO.223/2024                             3



                                                            2025:KER:33039



                                ORDER

Dated this the 04th day of March, 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 disputes and

differences that have arisen between the petitioner and respondents

under Annexure I and Annexure III.

2. Petitioner and the 2nd respondent were partners of the 1 st

respondent firm TULSI VKL Developers which was constituted vide

Annexure I partnership deed dated 23.11.2015. The said

partnership deed contained an arbitration clause at Clause 16. The

business of the 1st respondent firm was that of property developers

and builders. Annexure II understanding termed as 'partners of

understanding' was entered into between the petitioner and the 2 nd

respondent on 24.11.2015 with respect to the sale and development

of 5 acres of land scheduled in the said document and situated in

Puthencruz. Villas were proposed to be constructed on the said land

after dividing the same into plots. Petitioner contends that as per the

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Annexure II the entire responsibility of development of the said land

was upon the 2nd respondent. Disputes arose between the petitioner

and the 2nd respondent concerning the project envisaged under

Annexure II. The petitioner contends that with respect to the sale of

the plots developed pursuant to Annexure II, an amount of

Rs.2,73,61,690/- is due to him from respondents 1 and 2. It is also

contended that over and above such sale of land, the profit earned

on account of the sale of villas constructed thereon at an average

rate of Rs.12 lakh per villa, which is Rs.6,84,00,000/- and 50% of

which works out to Rs.3,42,00,000/- is also his entitlement.

According to the petitioner, the total amount due to be paid to each

partner was Rs.6,15,61,690/- along with interest and the same had

not paid. It is thus the contention of the petitioner that, despite the 1 st

respondent firm having received such huge profit, the petitioner was

not paid his legitimate share and this led him to issue a resignation

letter dated 03.02.2022 inter alia seeking settlement of the amounts

due to him. It is the case of the petitioner that the respondents 1 and

2 offered to pay the amount due to the petitioner on execution of a

deed of retirement from the 1st respondent partnership firm and

hence a deed of retirement dated 01.04.2022 produced as Annexure

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III was entered into. By the said deed of retirement, the petitioner

resigned from the 1st respondent and the wife of the 2 nd respondent

(3rd respondent in this A.R.) was made a partner of the 1 st respondent

firm. The said deed of retirement also contained an arbitration clause

at Clause 16. In so far as the amounts due remained unpaid and

since a dispute had thus arisen between the parties under the

relevant arbitration clause, petitioner issued to the respondents a

notice (Annexure A IV) invoking the arbitration clause on 28.08.2024,

and nominating a retired Judge of this Court as the Arbitrator. The

respondents, however, failed to act upon the invocation and hence

the petitioner has filed this Arbitration Request invoking Section 11 of

the Act.

3. A counter affidavit has been filed by the respondents inter

alia contending that Annexure I partnership deed had been

reconstituted based on Annexure III Deed of Reconstitution and as

per which the petitioner has retired with effect from 01.04.2022.

Since the petitioner has thus retired, it is contended by the

respondents that no further claim would lie against the respondent

firm or against the other continuing partners. After having retired

unconditionally there cannot be any claim nor would an Arbitration

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Request lie seeking appointment of Arbitrator. No Arbitration

Request is maintainable under Annexure I partnership deed nor

under Annexure III reconstitution deed. The wording used in

Annexure III is "Dispute between the partners". Since the petitioner is

not a partner under Annexure III, he cannot invoke the arbitration

clause therein nor file the Arbitration Request seeking to appoint an

Arbitrator. It is also contended that Annexure IV notice had been

issued with respect to an agreement for sale dated 30.04.2015 and

a joint venture agreement dated 23.11.2015 between the 2 nd

respondent and a group of Companies represented by one Sri.Shaji

K.Mathew. The said documents do not fall within the scope and

ambit of Annexure III. On the said count too, the Arbitration Request

is not maintainable. Thus the claims under Annexure IV notice does

not come under the scope of the arbitration clause, they are not

arbitrable. The claims seen raised in Annexure IV notice and the

purported dispute mentioned therein are separate, independent and

unconnected with Annexure I, partnership deed. Thus it is contended

that the disputes raised by the petitioner are not capable of being

arbitrated and the purported disputes raised based on the aforesaid

agreements dated 30.04.2015 and 23.11.2015 are by itself time

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barred claims and hence the arbitration request is also hit by the bar

of limitation. The Arbitration Request thus according to respondents

is only to be dismissed.

4. Heard Sri. Martin Jose P., Advocate, for the Petitioner and

Sri. Praveen K. Joy, Advocate for the respondents.

5. The learned counsel 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. As regards the contentions put forth in the counter affidavit,

it is submitted by the learned counsel for the petitioner that, the same

are all questions that are beyond the purview of consideration of this

court while exercising reference under Section 11 of the Act. It is

submitted that the scope of inquiry at the stage of appointment of

Arbitrator is limited to the scrutiny of the prima facie existence of the

arbitration agreement and nothing else. If the referral court cannot

decide the issue without going into disputed facts, it ought to leave

the issue to be decided by the arbitral tribunal. The referral court

should not unnecessarily interfere with the arbitration proceedings

and must allow the arbitral tribunal to exercise its primary jurisdiction.

It is also submitted that the question whether the non-signatory is

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indeed a party to the arbitration agreement may have to be decided

based on factual appreciation and hence ought to be left to the

Arbitrator to decide. Thus, according to the learned counsel for the

petitioner, the question whether the claims under Annexure IV

invocation notice fall within the arbitration clauses under Annexure I

or Annexure III is a matter for the Arbitrator to look into and decide

and not for this court to consider in the reference stage. Reliance is

placed in this respect on the dictum laid down by the Hon'ble

Supreme Court in Cox and Kings Ltd. v. SAP India Pvt. Ltd. And

another [(2025)1 SCC 611].

6. Per contra, the learned counsel appearing for the

respondents reiterated the contentions made in the counter affidavit

filed and submitted that the disputes now raised by the petitioner

after his retirement from the partnership cannot be arbitrated and

that the claims put forth in Annexure IV notices of invocation are

totally beyond the scope of the arbitration clauses in Annexure I as

well as Annexure III. He places reliance on the dictum laid down by

the Hon'ble Supreme Court in Kerala State Electricity Board v.

Kurien E Kalathil, [AIR 2018 SC 1351]. wherein it has been held

that referring the parties to arbitration has serious consequences of

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taking them away from the stream of civil courts and subjecting them

to the rigor of arbitration proceedings. In the absence of an

arbitration agreement, the court can refer the parties to arbitration

only with the written consent of the parties, either by way of a joint

memo or joint application. Insofar as the petitioner is no longer a

partner, he is not entitled to invoke the arbitration clause in Annexure

III. The Arbitration Request filed by the petitioner is hence not

sustainable in law. Reliance is also placed by the learned counsel for

the respondents on the dictum laid down by the Hon'ble Supreme

Court in NBCC (India) Ltd. v. Zillion Infra Projects Pvt. Ltd.

[(2024) 7 SCC 174] wherein it had been held that the arbitration

clause from another contract can be incorporated into the contract

only by specific reference to the arbitration clause. A reference to the

document in the contract should be such that shows the intention to

incorporate the arbitration clause from another document into the

contract between the parties. The case at hand is a 'two contract

case' and not a 'single contract case'. Therefore the arbitration

clause as mentioned in Annexure I and Annexure III would not cover

a dispute arising from the agreement for sale dated 30.04.2015 and

the joint venture agreement dated 23.11.2015. Any dispute arising

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from the latter cannot be arbitrated invoking the arbitration clause in

the former. It is even more so since the petitioner is no longer a

'partner'. Reference is also made to the judgment of the High Court

of Delhi in GTM Builders and Promoters Pvt. Ltd. v. Sneh

Development Pvt. Ltd. [2023 SCC OnLine Del 1666] wherein it was

held that while adjudicating a petition under Section 11(6) of the Act,

a court has to endeavour to evaluate whether there exists a written

agreement between the parties for resolution of disputes through

arbitration and whether the aggrieved party has made out a prima

facie arbitrable case. It is necessary to take note of the fact that the

mere existence of an arbitration agreement or arbitration clause

would not be sufficient to allow the prayer for reference to an

Arbitrator. Even in the presence of an arbitration agreement, the

court may decline the reference to appoint an Arbitrator when the

dispute does not correlate to the agreement. Based on the said

dictum it is contended that the petitioner has failed to show that the

dispute which is sought to be referred to the Arbitrator is a dispute

arising out of the or connected to Annexure I nor Annexure III and

hence the dispute is not per se arbitrable in nature.

7. I have heard both sides in detail, pursued the annexures

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produced and have considered the precedents relied on. The

arbitration clause (Clause 16) of Annexure I, partnership deed reads

as follows.

"Any dispute arising out of this partnership between the partners or their legal representative shall be referred for adjudication to arbitration of persons appointed by partners or their legal representatives."

A similar clause is seen incorporated in Clause 16 of Annexure III

agreement also. Petitioner as well as the 2 nd respondent are

signatories to both Annexure I and Annexure III. 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 that purpose,

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

2025:KER:33039 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 [(2012) 2 SCC 93; Branch

Manager, Magma Leasing and Finance Ltd. and Anr. v. Potluri

Madhavilala and Anr. (2009) 10 SCC 103]. Hence contentions to

the contrary put forth by the learned counsel for the respondent

cannot be countenanced.

8. It is clearly discernible that a dispute had arisen between the

parties with respect to and arising out of their relationship under

Annexure I partnership deed. It is also clearly discernible that the

retirement of the petitioner from the partnership had been effected

only on 01.04.2022 by the execution of the Annexure III reconstituted

deed of partnership. Petitioner is a party to the said reconstituted

deed of partnership as the retiring partner. It is the contention of the

petitioner that he had while retiring from the partnership of the 1 st

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respondent firm requested for settlement of the amounts due to him

and that there had been no such settlement of accounts till date and

there is not even a contention put forth by the 1 st and 2nd

respondents that there had indeed been a settlement of accounts

with the petitioner. I find merit in this contention. The petitioner has

made out a prima facie cause of action and subsistence of disputes

under the Annexure I, partnership deed. As regards the contention

that the arbitration request and the cause of action are time barred

and stale, in view of the fact that the Arbitration Request has been

filed on 29.10.2024 ie., well within three years of the execution of

Annexure III, the said contention cannot thus be sustained. The

contention that Annexure IV notice of invocation had been issued

with respect to disputes that do not fall within the scope and ambit of

Annexure III, the same is essentially a question that concerns

arbitrability and hence is to be left open to be decided by the

Arbitrator. Nevertheless, nothing has been produced to even prima

facie conclude that the partners of the 1 st respondent wanted to set

apart the project referred to in Annexure II from the scope and ambit

of the partnership.

9. The essential elements to constitute an arbitration

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agreement viz., (1) The presence of a present or a future difference

in connection with some 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 the same, are found

existing. [See Babanrao Rajaram Pund v. Samarth Builders &

Developers and another (2022) 9 SCC 691]. The pleadings and

annexures to the Arbitration Request reveal the existence of disputes

between the parties under the arbitration clauses in Annexure I and

Annexure III. There has been due invocation of the arbitration

clauses by the petitioner and a refusal on the part of the 1 st and 2nd

respondents to settle the dispute by reference to arbitration as

agreed. The cause of action is not time-barred. It is trite that the

Arbitrator can decide on questions regarding jurisdiction/arbitrability/

maintainability and limitation, if any, in the arbitration proceedings.

Hence, I find it fit and appropriate to allow the Arbitration Request

and to appoint a retired Judge of this Court from the panel of

Arbitrators maintained by this Court, as the Arbitrator.

Accordingly, this Arbitration Request stands allowed and it is

ordered as follows :

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(i) Justice A.M. Babu, former Judge of the High Court of

Kerala, residing at Khans' Kanjirapally (House), Sunrise

Residents' Association, Kumarapuram (P.O.),

Kunnathunadu, Ernakulam, Pin 683 565, is nominated as

the sole Arbitrator to resolve the disputes that have

arisen between the petitioner and the respondents 1 and

(ii) The learned Arbitrator may entertain all

disputes/issues between the parties in connection with

the said agreement, including questions of jurisdiction/

arbitrability/maintainability 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 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

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Statement shall be retained in 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 I ANNEXURE-I TRUE COPY OF PARTNERSHIP DEED DATED 23-11-2015 CONSTITUTED BY THE 1ST RESPONDENT IN THE NAME AND STYLE 'TULSI VKL DEVELOPERS'

Annexure II TRUE COPY OF 'PARTNERS OF UNDERSTANDING' EXECUTED BETWEEN THE PETITIONER AND 2ND RESPONDENT ON BEHALF OF 1ST RESPONDENT FIRM ON 24-11-2015

Annexure III TRUE COPY OF DEED OF RETIREMENT AND RECONSTITUTION OF THE 1ST RESPONDENT PARTNERSHIP FIRM EXECUTED ON 01-04-2022

Annexure IV TRUE COPY OF NOTICE ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT

Annexure V TRUE COPY OF ACKNOWLEDGMENT CARDS EVIDENCING THE RECEIPT OF LAWYER NOTICE BY RESPONDENTS 1 AND 2

Annexure VI TRUE COPY OF UNCLAIMED NOTICE WITH POSTAL COVER

RESPONDENT ANNEXURES

Annexure R1(a) TRUE COPY OF THE REPLY LETTER DATED NIL