Madras High Court
M/S.Cherran Institute Of Health ... vs Mr.Santhosh.J on 15 September, 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 15.09.2023
CORAM
THE HONOURABLE MS.JUSTICE R.N.MANJULA
Arb.O.P.No.62 of 2023
M/s.Cherran Institute of Health Sciences,
Rep by its Authorised Signatory,
Mr.K.Anand
No.78, Cheran Towers, Arts College Road,
Coimbatore 641 018. … Petitioner
Vs.
Mr.Santhosh.J. ... Respondent
PRAYER: Petition filed under Section 11(6) of the Arbitration and
Conciliation act, prays to appoint an arbitrator to adjudicate the disputes
between the petitioner and the respondent in terms of the Letter of
Employment Agreement dated 05.03.2020.
For Petitioner : Mr.T.Thiageswaran
For Respondent : Mr.Niranjan.R.S
ORDER
This Original Petition has been filed under Section 11(6) of the
Arbitration and Conciliation Act seeking to appoint an arbitrator to
adjudicate the disputes between the petitioner and the respondent in terms
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of the Letter of Employment Agreement dated 05.03.2020.
2. The learned counsel for the petitioner submitted that the petitioner
by name M/s.Cherran Institute of Health Sciences is conducting a three
years Nursing course and for which the respondent has been appointed as
an “Admission Co-ordinator”; the petitioner and the respondent had entered
into an agreement on 05.03.2020 and it contains an arbitration clause; the
respondent while acting as the Admission Co-ordinator had collected all the
three years' fees from the students and remitted one year fee alone to the
petitioner; this caused commotion in the Institute and the students and their
parents blamed the petitioner's Institute and that had resulted in a police
complaint given by the petitioner against the respondent; even though the
Employment Agreement contains an arbitration clause and the respondent
had accepted to make good the loss, caused due to any lapse on his part, he
did not shoulder the responsibility and evaded to make payments; notice
given by the petitioner for appointment of an Arbitrator was also not
received by the respondent and he did not come forward to co-operate with
the petitioner for appointment of an Arbitrator; hence the present petition
has been filed.
3. The learned counsel for the respondent submitted that the
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arbitrable dispute is not made out by the petitioner; the allegations of fraud
made against the respondent is criminal in nature and for which, arbitration
cannot be held. He relied on the decision of the Hon'ble Supreme Court in
the case of A.Ayyasamy Vs. A.Paramasivam and Others, reported in
(2016) 10 SCC 386. It is further submitted that the complex issues are
involved in this matter and hence the issue cannot be arbitrated; the dispute
touches upon public by involving the students and the parents who are
third parties to the Letter of Employment.
DISCUSSION :
4. The fact that the respondent was appointed as Admission Co-
ordinator is not in dispute. Further fact that the petitioner and the
respondent had entered into an employment agreement is also not denied.
The petitioner had alleged that the respondent while discharging his
functions as Admission Co-ordinator had collected three years' fees from
several students and remitted only one year fee to the petitioner and due to
which, many students got aggrieved and the fees due to be paid to the
petitioner also remains unpaid. Even though a criminal complaint on the
allegation of fraud has been made against the respondent that will not bar
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the petitioner from claiming the amount that was retained in the hands of
the respondent. So far as the claim for the money alleged to have been
collected by the respondent is concerned, there is no doubt that an
arbitrable dispute has arisen apart from the aspect of fraud for which a
complaint has been given. Even in the judgment of the Hon'ble Supreme
Court in the case of A.Ayyasamy Vs. A.Paramasivam and Others, reported
in (2016) 10 SCC 386, the Hon'ble Supreme Court has held in paragraph
No.25 as under:
"25. In view of our aforesaid discussions, we are of
the opinion that mere allegation of fraud simplicitor may
not be a ground to nullify the effect of arbitration
agreement between the parties. It is only in those cases
where the Court, while dealing with Section 8 of the Act,
finds that there are very serious allegations of fraud which
make a virtual case of criminal offence or where
allegations of fraud are so complicated that it becomes
absolutely essential that such complex issues can be
decided only by civil court on the appreciation of the
voluminous evidence that needs to be produced, the Court
can sidetrack the agreement by dismissing application
under Section 8 and proceed with the suit on merits. It can
be so done also in those cases where there are serious
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allegations of forgery/fabrication of documents in support
of the plea of fraud or where fraud is alleged against the
arbitration provision itself or is of such a nature that
permeates the entire contract, including the agreement to
arbitrate, meaning thereby in those cases where fraud goes
to the validity of the contract itself of the entire contract
which contains the arbitration clause or the validity of the
arbitration clause itself. Reverse position thereof would be
that where there are simple allegations of fraud touching
upon the internal affairs of the party inter se and it has no
implication in the public domain, the arbitration clause
need not be avoided and the parties can be relegated to
arbitration. While dealing with such an issue in an
application under Section 8 of the Act, the focus of the
Court has to be on the question as to whether jurisdiction
of the Court has been ousted instead of focusing on the
issue as to whether the Court has jurisdiction or not. It has
to be kept in mind that insofar as the statutory scheme of
the Act is concerned, it does not specifically exclude any
category of cases as non-arbitrable. Such categories of
non- arbitrable subjects are carved out by the Courts,
keeping in mind the principle of common law that certain
disputes which are of public nature, etc. are not capable of
adjudication and settlement by arbitration and for
resolution of such disputes, Courts, i.e. public for a, are
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better suited than a private forum of arbitration. Therefore,
the inquiry of the Court, while dealing with an application
under Section 8 of the Act, should be on the aforesaid
aspect, viz. whether the nature of dispute is such that it
cannot be referred to arbitration, even if there is an
arbitration agreement between the parties. When the case
of fraud is set up by one of the parties and on that basis
that party wants to wriggle out of that arbitration
agreement, a strict and meticulous inquiry into the
allegations of fraud is needed and only when the Court is
satisfied that the allegations are of serious and
complicated nature that it would be more appropriate for
the Court to deal with the subject matter rather than
relegating the parties to arbitration, then alone such an
application under Section 8 should be rejected."
5. The fraud alleged to have been committed by the respondent is not
very complex in nature. The amount withheld by him is not something
which cannot be determined. It is submitted by the respondent that the
claim also involves the interest of the third party students and they cannot
be examined before the Arbitrator and hence a regular suit mechanism
should be invoked to handle the issue. No doubt the proceedings before the
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Arbitrator is summary in nature. Hence, the claim of payment by students
can be proved by producing the receipts and hence, it does not require
examination of students. The dispute involves money claim and the same is
also computable. There is a valid arbitration agreement between the parties.
Hence I feel the petitioner has made out a case for appointment of
Arbitrator.
6. In view of the above stated reasons, this Court appoints
Mr.V.Ramasamy, Retired District Judge, having office at No.87, Rani
Garden, 1st Street, S.I.H.S.Colony Road, Singanallur, Coimbatore -
641 005, Mobile Number : 9443669997, as the Sole Arbitrator to enter
upon the reference and adjudicate the disputes inter se the parties. The
learned Arbitrator may, after issuing notice to the parties and upon hearing
them, pass an award as expeditiously as possible, preferably within a period
of six months from the date of receipt of the order. The learned Arbitrator is
at liberty to fix his remuneration and other incidental expenses as per the
schedule to the Arbitration & Conciliation Act, 1996. The proceedings may
be conducted under the aegis of the Madras High Court Arbitration Centre
and in accordance with the Madras High Court Arbitration Rules. The
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disclosure and declaration may be made by the learned Arbitrator in the
form specified in the Sixth Schedule to the Arbitration and Conciliation
Act, 1996.
7. This Original Petition is allowed accordingly and the parties are
liable to bear their own costs.
15.09.2023
gsk
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Copy to:
Mr.V.Ramasamy,
Retired District Judge,
No.87, Rani Garden, 1st Street,
S.I.H.S.Colony Road,
Singanallur, Coimbatore - 641 005
https://www.mhc.tn.gov.in/judis
R.N.MANJULA, J.
gsk
Arb O.P.No.62 of 2023
15.09.2023
https://www.mhc.tn.gov.in/judis
