Trusts cannot refer their disputes to arbitration: Supreme Court

In a landmark judgment delivered recently the Supreme Court has said that “the disputes relating to trust, trustees and beneficiaries arising out of the Trust Deed and the Trust Act are not capable of being decided by the arbitrator despite existence of arbitration agreement to that effect between the parties.”

It further said that an application under section 11 of the Act is not maintainable on the ground that it is not based on an “Arbitration agreement” within the meaning of section 2(b) and 2(h) read with section 7 of the Act and secondly assuming that there exists an Arbitration agreement in the Trust Deed, yet the disputes specified therein are not capable of being referred to private arbitration for their adjudication on merits.

Delivering the judgment in Sri Vimal Kishor Shah and others, Civil appeal No. 8164 of 2016, Justice Abhay Manohar Sapre speaking for himself and Justice J Chelameshwar said: “Adjudication of certain categories of proceedings are reserved by the legislation exclusively for public fora as a matter of public policy. Certain other categories of cases, though not expressly reserved for the adjudication by public fora (Courts and tribunals), may be necessary implication stand excluded from the purview of private fora.

Consequently, where the cause/dispute is non-arbitrable, the Court where a suit is pending will refuse to refer the parties to arbitration, under section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such dispute. The well-recognised examples of non-arbitration disputes are: Disputes relating to rights and liabilities which give rise to or arise out of criminal offences: (a) Matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody: (a) Guardianship matters:
a) Insolvency and winding-up matters:
b) Testamentary matters (grant of probate, letters of administration and succession certificate):and,
c) Eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified Courts are conferred jurisdiction to grant eviction or decide the disputes.” Now, after this latest judgment disputes arising out of Trust Deed and Trust Act are also added as non-arbitrable matters.

PIL on NSP weapons
In a gesture that would make the legal fraternity proud, the Supreme Court has appreciated the initiative taken by an advocate- petitioner in filing a public interest Writ Petition (Civil) No. 462 of 2007 and thereby bringing to the fore a sensitive issue which otherwise may have gone unnoticed. The court also directed the Union of India to pay cost quantified at Rs 10,000 to the petitioner.

Arvind Kumar Sharma, an advocate practising in Supreme Court had filed a petition under Article 32 the Constitution of India raising public interest issue regarding illegal selling of “Prohibited/NSP bore- weapons” obtained by the Army Personnel through Central Ordiance Depot (COD), Jabalpur on the basis of the order passed by the Allotment Committee.

It was alleged that the weapons have been sold to the general public including to persons with criminal records, in breach of relevant Rules and provisions of the Arms Act, 1959. The petitioner had also referred to an instance of registration of various cases by the Central Bureau of Investigation (CBI) under sections 465, 468,471 and 420. In all, around 30,000 arm licences were issued by the concerned officials/District Magistrate between 1994 and 1998.

To buttress his plea, the petitioner relied on newspaper reports and prayed the apex court that an enquiry be directed through an independent agency like CBI and cancel forthwith all licences issued without due verification/identification in violation of Arms Act, 1959. Besides, the petitioner also sought directions against the Union of India to strictly follow the provisions of the Arms Act, 1959 and to frame strict guidelines to ensure the verification of the applicants’ background.

The apex court after considering the reports and affidavits filed by the respective authorities from time to time was satisfied that suitable action had been taken by the appropriate authorities against officers whose involvement had been noted in the independent inquiries and expressed its opinion that “nothing more needs to be done.” The judgment was delivered by Justice A M Khanwilkar speaking for the bench comprising the Chief Justice and Justice Dr D Y Chandrachud, besides himself.

BRICS Legal Forum
India’s first and the oldest lawyers’ body, the Bar Association of India (BAI) will host the Third BRICS Legal Forum in New Delhi from December 10-12. BRICS is the peak bodies of legal profession in Brazil, Russia, India, China and South America. The first meeting of the representatives of all these five countries took place in Brasilia in December, 2014 where the Brasilia Declaration was signed. The Second BRICS Legal Forum took placein Shanghai in October, 2015 where further structures of the Forum were decided and the Shanghai Declaration was adopted.

The third BRICS legal forum would be attended by the delegates from the member countries including experts who will deliberate on various legal issues. The legal summit will culminate into signing of the New Delhi Declaration and launching of the International Disputes Resolution Centre for BRICS and Emerging Economies at New Delhi.

Bogus training school
The Hyderabad District Consumer Disputes Redressal Forum (II) established under the Consumer Protection Act has recently ordered a so-called training Institute in share market trading to refund an amount of Rs 8,000 collected from an aspirant along with 9 per cent annual interest besides the cost of Rs 3,000.

The verdict came in a case, C.C No.501/2015 filed by a practising lawyer V Surya Prakash aginst K Ramesh and another. According to the complainant, he is a retired officer from the service of a state-owned undertaking. After retirement he began practising law in local courts. Once he came across a handbill circulated by the respondents wherein it was mentioned that the respondents were offering two weeks training to housewives, retired persons and others in trading in stocks and shares online. The fee payable was Rs.10,000.

It was also claimed that after getting the training the trained person could earn about Rs.20,000 a month. The complainant said that he was lured by the contents of the handbill and he approached the respondents at their address at Tarnaka in the city. After negotiations the respondents agreed to accept a fee of Rs 8,000 instead of Rs 10,000 mentioned in the printed handbill. The fee was paid by cash for which the respondents gave a receipt to the complainant.

The complainant further stated that thereafter he regularly went to the ‘Institute’ but no training was imparted. There were no other trainees except himself and the respondents were busy on a computer doing online trading for themselves. They asked the complainant to get a laptop if he wanted to learn the trading techniques, the complainant added. Frustrated with the experience, the complainant asked the respondents to refund the amount of Rs 8,000 collected from him but the respondents stoutly refused.

Aggrieved by such behaviour of the respondents, the complainant after serving a legal notice filed the complainant in the District Forum II under Section 12 of the Consumer Protection Act alleging the deficiency in service by the respondents. The respondents contested the case. In their defence, they stated that the training was imparted to the complainant. The ‘Institute’ has been set up by the senior retired government servants as a non-profit making organisation. The court did not buy the respondents’ arguments and allowed the complaint with the aforesaid order.

Rent Control Act
Supreme Court dealing with the question whether a tenant who regularly deposits the monthly rental to the court after receiving notices from the landlord can be called a “defaulter,” the apex court held in a recent judgment namely, Babu Rao S/o Narayana Rao Terkar Vs Pokhardas, S/o Bhanumal Khatnani(D) through L.R.S and others, Civil appeal No. 2606 of 2013 that the tenant was not a defaulter much a wilful defaulter.

The appellant landlord claiming to be the owner of premises being shop situated in Cloth Lane, Latur had instituted an eviction application against the respondent/tenant on the ground of arrears of rent and thereby the tenant had become a defaulter within the meaning of Section 15 of the Hyderabad Houses (Rent, Eviction, and Lease) Control Act, 1954.

The Rent Controller held that the respondent-tenant had committed the default and was liable to be evicted. Against that decision the tenant preferred a statutory appeal before the District Judge at Latur who reversed the finding of fact recorded by the Rent Controller. The appellant court found that the tenant upon receipt of notices from the landlord immediately approached the Rent Controller and deposited the amount towards rent as prescribed by the Rent Controller.

Thereupon, the landlord withdrew the amount deposited in the court by the tenant. For these reasons the District Court allowed the appeal by the tenant. Subsequently, the matter was taken in further appeal to the High Court by the landlord. The High Court also affirmed the view taken by the District Court and dismissed the revision application. Against this decision the landlord filed the Civil Appeal no.2606 of 2013 in the Supreme Court.

The apex court noted that the tenant continued to periodically deposit the rent amount in the court. The court also brushed aside the landlord’s contention raised for the first time, that he required the suit shop for his personal and bona fide need. The court also took notice of the stand taken by the tenant that the landlord was not genuinely interested in using the premises for his personal use, but was more interested in getting higher rent from the new tenant.

The tenant also volunteered to enhance the monthly rent from Rs 400 to Rs.10,000 and informed the court through his Counsel that an agreement to this effect was already reached between him and the landlord. Accordingly, even though the landlord’s appeal was dismissed, the apex court disposed of the matter with a direction to the tenant to pay a monthly rent in respect of the suit shop to the landlord at the rate of Rs 10,000 per month w.e.f January 1, 2016 .