17 December 2021 | PK Kamala v. PK Manoharan and others & connected cases | Arb. A. No. 11/2016 | PB Suresh Kumar & CS Sudha JJ | Kerala High Court
Authoring for a 2-judge bench, CS Sudha J has made several important observations in the context of binding non-signatory to arbitration and the arbitral award.
A sole arbitrator appointed by the court passed an award for dissolution and rendition of account of three partnership firms: for convenience, Raja Mills, Kamala International (or Kamala Hotel), and Raja City. One Mr Nair had organized these firms. However, after his demise, the remaining partners, his wife Mrs Kamala and their daughters on the one side and the son Manoharan on the other, had several disputes. The arbitral tribunal made an award.
The set-aside court partially set aside the award in re Kamala International on the ground that the arbitrator exceeded the scope of reference. It reasoned that the claimant Mrs Kamala’s application for the appointment under Section 11 ACA made no mention of Kamala International. Thus, it was never the subject matter of the reference.
The court restored the award and ruled as follows.
On the effect of the pleadings in the prior Section 11 ACA application:
On the preclusive effect of Section 16 ACA, i.e., whether the respondent Manoharan, who did not raise the argument before the tribunal under Section 16 ACA, could raise it in the set-aside stage:
On whether Kamala International---a partnership firm--could be “brought within the scope of the arbitration proceedings” by applying the group of companies’ doctrine: -
Could the tribunal make another non-signatory individual (the respondent Manoharan’s son, Amarjith) a party to the arbitration? He was impleaded in the Raja City arbitration, his preliminary challenges had failed, and the courts had reserved his rights for the set-aside stage. Concluding, yes, the court said:
Lastly, the court said that the set-aside court erred in interfering with the tribunal’s finding of Manoharan’s malfeasance concerning the third firm.
Read the decision here.
Categories: Appealable Orders | Application for Setting Aside Arbitral Award | Arbitration Agreement | Arbitrators Interpretation of Contract | Binding Non Signatory to Arbitration | Chloro Controls | Competence Competence | Composite Transaction | Construction of Arbitration Agreement | Doctrine of Group of Companies | Finality of Arbitral Awards | Interpretation of Arbitration Agreement | Joinder of Non Signatories | Jurisdiction of Arbitral Tribunal | Kompetenz Kompetenz | Merits Based Review | MTNL | Necessary Party | Patent Illegality | Plausible View | Pleading Requirement under Section 11 ACA | Preclusive effect of Kompetenz Kompetenz | Preclusive Effect of Section 16 ACA | Proper Party | Reappreciation of Evidence | Revaluation of Evidence | Review on the Merits of the Dispute | Section 11 ACA | Section 16 ACA | Section 34 (2A) | Section 35 ACA | Section 37 ACA | Section 7 (5) ACA | Section 7 ACA | Setting Aside Arbitral Award | Standard for Setting Aside Arbitral Award