Research Institute, Rajagiri vs Asian School Of Business

G.Girish, J.

This Arbitration Request has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) seeking the appointment of a sole Arbitrator for the determination of all disputes and differences between the applicant and the respondent as per the Memorandum of Understanding executed in between them.

The petitioner claims to be a Society registered under the Travancore Cochin Literary Scientific and Charitable Societies Registration Act, 1955 engaged in the field of providing management consultancy services to other institutions. The 1st respondent represented by the 2nd respondent, is also a Society registered under the aforesaid Act involved in providing management education in Kerala. On 23.07.2016, the petitioner and the respondents are said to have entered into a Memorandum of Understanding as per which the petitioner agreed to provide consultancy services for the purpose of improving curriculum standards, training methodologies, career orientation etc. to the respondents. It is stated that the petitioner took all steps for attaining the standards promised by them and achieved the same within a very short time. The term of Memorandum of Understanding was for a period of ten years. However, the petitioner would allege that the respondents started making lame excuses to avoid payment of consultancy fee and expenses after the achievement of the objectives. It is the further allegation that the respondents started raising frivolous issues and demanded unilateral amendments to the Memorandum of Understanding and delayed paying the dues to the petitioner. To the reminder letter dated 14.12.2021 issued by the petitioner in connection with outstanding invoices, the respondents sent a letter dated 16.12.2021 terminating the Memorandum of Understanding with immediate effect on the basis of allegations which the petitioner term as unfounded and frivolous. Thereupon, the petitioner is said to have issued a letter dated 21.12.2021 calling upon the respondents to pay the outstanding dues of Rs.5,52,28,657/- and other potential dues. As the respondents disputed the above liability vide letter dated 08.01.2022, the petitioner is said to have issued a letter dated 14.01.2022 seeking the concurrence of the respondent for conciliatory discussions for an amicable settlement of the issue. The respondents allegedly evaded the request for amicable settlement for one reason or other. The respondents also disagreed for the appointment of a sole Arbitrator in accordance with Clause 8(b) of the Memorandum of Understanding as suggested by the petitioner by the notice dated 18.10.2022. Upon the above grounds, the petitioner has approached this Court with this Arbitration Request under Section 11(5) of the Act for the appointment of a Sole Arbitrator for the resolution of the disputes with the respondents.

The respondents appeared through their counsel and filed counter affidavit disputing the right and authority of the signatory to this Arbitration Request to approach this Court as a representative of the petitioner Society. According to the respondents, the person claiming to be the authorised representative of the petitioner is not competent to sue for and on behalf of the petitioner. The respondents further contended that there was no valid and enforceable arbitration agreement and that the dispute sought to be resolved is not arbitrable. The respondents challenged the legal sanctity of the Memorandum of Understanding alleging that it was executed without any authority by the petitioner. It is the further allegation of the respondents that the petitioner failed to achieve the standards of consultancy services promised to be provided and that the petitioner deceitfully charged and siphoned off enormous amounts as consultancy charges and other claims. For the above reasons, the respondents seek dismissal of the Arbitration Request.

The point to be decided is whether the request of the petitioner, for the appointment of a sole Arbitrator for the resolution of the issues with the respondents, is allowable.

At the time of arguments, the learned counsel for the respondents confined the challenge against this Arbitration Request to the right and authority of the signatory to this Arbitration Request to represent the petitioner Society. It is pointed out by the learned counsel for the respondents that, but for the cause title of this request mentioning the name of one Issac Varghese as the authorised representative of the petitioner, there is absolutely nothing stated in this Arbitration Request about the right and authority of the signatory to this request to represent the petitioner Society and to move this Court seeking the appointment of sole Arbitrator for the resolution of the disputes with the respondents. It is further contended that as per Clause 11 of the Rules and Regulations of the petitioner Society, the Society shall sue or be sued upon, in the name of the Director, and that there is absolutely nothing on record to show that the person by name Issac Varghese, who is the signatory to this Arbitration Request, is the Director of the petitioner Society.

The learned counsel for the respondents relied on Ext.R1(a) reply given by the Public Information Officer of the office of the District Registrar, Ernakulam, and the list of office bearers of the petitioner Society from 2017-18 to 2023-24 which are marked as Exts.R1(b) to R1(g) to substantiate his contention that the name of Mr.Issac Varghese who has instituted this Arbitration Request does not figure in any of those documents as the office bearer of the petitioner Society. It is pointed out by the learned counsel for the respondents that after the filing of counter by the respondents mentioning the incompetence of the person who filed this Arbitration Request, the petitioner Society has resorted to fabrication of records to make it appear that Mr.Issac Varghese who had moved this Arbitration Request was duly authorised to approach this Court as a representative of the said Society.

The learned counsel for the petitioner relied on Annexure-F document dated 20.08.2021 to show that Mr.Issac Varghese who had instituted this Arbitration Request was a duly authorized Director of the petitioner Society in accordance with the above delegation of authority made by the President of the said Society, and that he was competent to represent the petitioner Society before courts, legal firms, Advocates, Mediators, Arbitrators or clients in connection with the settlement of disputes or other legal process. The learned counsel for the respondents would challenge Annexure-F delegation of authority contending that the President of the Society is not legally empowered to delegate such powers upon a Director. As regards the recital in Annexure-F that the above delegation of authority has been approved by the Council of Management, the learned counsel for the respondents would contend that it is a false statement deliberately incorporated for the purpose of this case since it could be seen from Ext.R1(e) which is the list of office bearers of the petitioner Society during 2021-2022, obtained from the office of the District Registrar, that the name of Mr.Issac Varghese does not figure in the above document as an office bearer of the petitioner Society. Thus, it is stated that if the person by name Issac Varghese who filed this Arbitration Request was actually a Director of the petitioner Society on 20.08.2021, the date of Annexure-F, his name ought to have been incorporated in Ext.R1(e), the list of office bearers. I am not inclined to accept the above argument of the learned counsel for the respondents since the omission of the name of Mr.Issac Varghese, the person who filed this Arbitration Request, in Ext.R1(e) cannot be taken as a circumstance pointing to the falsity of Annexure-F delegation of authority, warranting the eschewal of that document. It is not possible to cast aspersions of forgery or falsification of records by the President of the petitioner Society for the sole reason that the list of office bearers for the relevant period, submitted before the office of the District Registrar, omitted to mention the name of Mr.Issac Varghese as an office bearer of the Society.

It is to be noted that Annexure-H minutes of the General Body Meeting of the petitioner Society, held on 09.02.2024, would reveal that Clause 11 of the Rules and Regulations of the petitioner Society was amended empowering the President, Secretary or Treasurer of the Society to appoint designated Directors or any other authorised representatives to represent the Society before courts, legal firms, lawyers, mediators etc. The list of office bearers attached to Annexure-H contains the name of Mr.Issac Varghese as a member of the Council of Management holding the post of Director of the Society. True that Annexure-H cannot be taken as a document showing the capacity of Mr.Issac Varghese as Director on 20.08.2021 when Annexure-F was issued by the President of the petitioner Society. But still it is not possible to consider the above aspect as a serious issue in a proceedings like this where this Court is not expected to delve upon an elaborate ratiocination of the question whether the documents relied on by the petitioner to show the authority of the person who instituted the Arbitration Request, was in fact a document cooked up for the purpose of this litigation. This Court is not expected to embark upon an enquiry as to the sanctity of the proceedings of the petitioner Society authorising the person who moved this Arbitration Request to approach this Court seeking the relief of appointment of an Arbitrator. Those are all internal matters of business of the petitioner Society over which the respondents cannot be expected to have a say.

It is pertinent to note that Annexure-D reply letter dated 28.11.2022 sent by the respondents to the petitioner’s counsel contains clear indication that the respondents have been contacting Mr.Issac Varghese as the representative of the petitioner Society in connection with the issues involved in this case. Thus, it could be seen that the respondents accepted the person by name Issac Varghese who instituted this Arbitration Request, as the representative of the petitioner Society, and indulged in communications with him on several occasions in respect of the dispute involved in this case. That being so, the question whether there had been any flaws in the procedures adopted by the petitioner Society in connection with the authorisation of Mr.Issac Varghese to approach this Court with this Arbitration Request, is not a matter which could be pondered upon by this Court while exercising jurisdiction under Section 11 of the Act. Therefore, the challenge raised by the respondents against the maintainability of this Arbitration Request on the ground of absence of proper authorisation of the person who moved this proceedings, for and on behalf of the petitioner Society, is devoid of merit.

Clause 8(a) of Annexure-A Memorandum of Understanding between the petitioner and the respondents require them to make an effort initially to settle the dispute between them in connection with the matters covered by the above Memorandum of Understanding. Annexure-B letter dated 21.12.2021 issued by the petitioner Society to the 2nd respondent would go to show that inspite of several requests made by the petitioner for resolving the issues with the respondents amicably, it did not materialise. As per the said letter, the 2nd respondent was requested to meet the officials of the petitioner Society on or before 10.01.2022. It appears that the respondents did not choose to avail the above opportunity and hence the petitioner Society had to invoke Clause 8(b) of Annexure-A Memorandum of Understanding for the appointment of an Arbitrator. There is absolutely no reason to disallow the request of the petitioner in this regard.

Accordingly, I find that the request of the petitioner for the appointment of a sole Arbitrator, for the resolution of the dispute with the respondents, has to be allowed.

In the result, the Arbitration Request stands allowed as follows:

i) Mr. Justice K. Padmanabhan Nair, H.No.34/2383-A, Panchajanyam, Mangattu Road, Mamangalam, Kochi-682 025 is appointed as the sole Arbitrator to arbitrate upon the disputes that have arisen between the applicant and the respondents within the purview of Annexure-A Memorandum of Understanding.

ii) The learned Arbitrator is at liberty to rule on his own jurisdiction if the parties raise such a dispute.

iii) The Registry is directed to communicate a copy of this order to the learned Arbitrator within a period of ten days from today and to obtain a Statement of Disclosure from the learned Arbitrator as provided under Section 11(8) read with Section12(1) of the Act.

iv) Once the Disclosure Statement is obtained from the learned Arbitrator, the Registry shall issue the certified copy of this order to the learned Arbitrator, with a copy of the said statement appended to it, retaining the original of the same by this Court.

v) The fees of the learned Arbitrator shall be governed by the Fourth Schedule of the Act.

vi) The learned Arbitrator shall decide the manner in which the fees and expenses of the arbitration proceeding has to be paid by the parties.

vii) The parties will appear before the learned Arbitrator on such date and place as decided by the learned Arbitrator.

viii) As the seat of Arbitration is at Ernakulam, Kerala, as per Annexure-A, the seat and venue will be at Ernakulam, as per the convenience of the Arbitrator.

ix) All contentions of the parties, including the authority of the persons representing them to participate in the arbitration proceedings for and on behalf of those parties, are left open to be raised before the learned Arbitrator.