# Ballabh Lal v. Kukkoo Motors Finance Pvt. Ltd. & Anr

- **Citation:** (2016) 3 ILRA 663
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2016-02-23
- **Bench:** Suneet Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/ballabh-lal-v-kukkoo-motors-finance-pvt-ltd-anr-43503
- **Pages:** 5

## Headnote

664 INDIAN LAW REPORTS ALLAHABAD SERIES
Sri Dinesh Kumar

Section 8 Arbitration Act - Mandatory Reference to Arbitration - Petitioner challenged trial court
and revisional court orders referring parties to arbitration in suit for injunction against vehicle
seizure/auction under hire-purchase agreement after loan default - Held, existence of signed
arbitration clause in commercial hire-purchase agreement mandates reference under Section 8; bald
allegation of signing blank papers does not constitute serious fraud requiring civil court adjudication.
(Paras 1-5, 11-12)

Arbitration Clause - Scope and Enforceability - Dispute over loan recovery, vehicle repossession,
and auction falls squarely within arbitration clause; no unconscionability or public policy violation -
Held, civil court must refer parties to arbitration as per peremptory language of Section 8, without
bifurcating claims or retaining jurisdiction. (Paras 3, 13-15)

Fraud Allegations - Threshold for Civil Court Jurisdiction - Unlike N. Radhakrishnan (2010) 1 SCC
72 involving complex partnership fraud, mere claim of signing blank forms in commercial transaction
insufficient to oust arbitration - Held, no complicated questions of law/fact necessitating evidence;
trial court correctly referred matter post-remand. (Paras 9-10)

Section 11 Appointment Power - Exclusive Jurisdiction - Trial court directed parties to suggest
arbitrators under Section 11 - Held, per S.B.P. & Co. Vs. Patel Engineering Ltd. (2005) 8 SCC 618,
only Chief Justice/High Court Chief Justice has exclusive power; civil courts lack jurisdiction. (Para 6)

Petition Partially Allowed - Reference to Arbitration Upheld; Section 11 Direction Set
Aside - Parties at liberty to approach under Arbitration Act for appointment

Listed of Cases cited:

S.B.P. & Company Vs. Patel Engineering Ltd., (2005) 8 SCC 618
N. Radhakrishnan Vs. Maestro Engineers, (2010) 1 SCC 72
Hindustan Petroleum Corpn. Ltd. Vs. Pinkcity Midway Petroleums, (2003) 6 SCC 503
P. Anand Gajapathi Raju Vs. P.V.G. Raju, (2000) 4 SCC 539
Magma Leasing & Finance Ltd. Vs. Potluri Madhvilata, (2009) 10 SCC 103
Sukanya Holdings Pvt. Ltd. Vs. Jayesh H. Pandya, (2003) 5 SCC 531
Orix Auto Finance India Ltd. Vs. Jagmander Singh, (2006) 2 SCC 598
Sundaram Finance Ltd. Vs. T. Thankam, Civil Appeal No. 2079/2015 (02.02.2015)

## Text

3 All. Ballabh Lal Vs Kukkoo Motors Finance Pvt. Ltd. & Anr.
663
revenue record attaining finality during consolidation proceedings, therefore, could not be
corrected by the revenue authorities under Land Revenue Act, as long as, the sale deed
subsists and is not declared void by the competent court.

27. It is not being disputed that the applicants are recorded in the revenue record along
with the respondent/plaintiffs, therefore, the question of title or seeking a declaration is
primarily not involved in the facts of the present case. The respondent/plaintiffs are
aggrieved for the reason that, as long as, the void sale deed is not set aside by the competent
court, the name of the applicants in the revenue record would continue.

28. In Ram Awalamb and others vs. Jata Shanker and others7, the Full Bench
observed as follows:

A document which the Plaintiff shows also purports to have been transferred by a
person not authorized to do so can be cancelled through court to the extent of the Plaintiff's
share and after a decree has been passed in his favour, information of the same has to be
sent to Registration Department for making a note in their register.........In short the relief
for declaration or partition cannot be said to be effective alternate relief for cancellation of
sale-deed in respect of whole holding or part of holding.

29. The Full Bench did not make any distinction in this behalf in respect of void or
voidable sale deeds and according to its observation, if cause of action for cancellation of a
deed arises, the effective relief of cancellation under Section 31 of the Specific Relief Act
would be in civil court and a suit in revenue court will not be an effective substitute.

30. For the reasons and law stated herein above, I am of the view that the courts below
were justified in holding that the civil court would have jurisdiction in matter.

31. The petition being devoid of merit is, accordingly, dismissed.

32. No cost.
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ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 23.02.2016

BEFORE

THE HON'BLE SUNEET KUMAR, J.

Matters Under Article 227 No.- 1101 of 2016

Ballabh Lal ...Petitioner
Versus
Kukkoo Motors Finance Pvt. Ltd. & Anr. ...Respondents

Counsel for the Petitioner:
664 INDIAN LAW REPORTS ALLAHABAD SERIES
Sri Dinesh Kumar

Section 8 Arbitration Act - Mandatory Reference to Arbitration - Petitioner challenged trial court
and revisional court orders referring parties to arbitration in suit for injunction against vehicle
seizure/auction under hire-purchase agreement after loan default - Held, existence of signed
arbitration clause in commercial hire-purchase agreement mandates reference under Section 8; bald
allegation of signing blank papers does not constitute serious fraud requiring civil court adjudication.
(Paras 1-5, 11-12)

Arbitration Clause - Scope and Enforceability - Dispute over loan recovery, vehicle repossession,
and auction falls squarely within arbitration clause; no unconscionability or public policy violation -
Held, civil court must refer parties to arbitration as per peremptory language of Section 8, without
bifurcating claims or retaining jurisdiction. (Paras 3, 13-15)

Fraud Allegations - Threshold for Civil Court Jurisdiction - Unlike N. Radhakrishnan (2010) 1 SCC
72 involving complex partnership fraud, mere claim of signing blank forms in commercial transaction
insufficient to oust arbitration - Held, no complicated questions of law/fact necessitating evidence;
trial court correctly referred matter post-remand. (Paras 9-10)

Section 11 Appointment Power - Exclusive Jurisdiction - Trial court directed parties to suggest
arbitrators under Section 11 - Held, per S.B.P. & Co. Vs. Patel Engineering Ltd. (2005) 8 SCC 618,
only Chief Justice/High Court Chief Justice has exclusive power; civil courts lack jurisdiction. (Para 6)

Petition Partially Allowed - Reference to Arbitration Upheld; Section 11 Direction Set
Aside - Parties at liberty to approach under Arbitration Act for appointment

Listed of Cases cited:

S.B.P. & Company Vs. Patel Engineering Ltd., (2005) 8 SCC 618
N. Radhakrishnan Vs. Maestro Engineers, (2010) 1 SCC 72
Hindustan Petroleum Corpn. Ltd. Vs. Pinkcity Midway Petroleums, (2003) 6 SCC 503
P. Anand Gajapathi Raju Vs. P.V.G. Raju, (2000) 4 SCC 539
Magma Leasing & Finance Ltd. Vs. Potluri Madhvilata, (2009) 10 SCC 103
Sukanya Holdings Pvt. Ltd. Vs. Jayesh H. Pandya, (2003) 5 SCC 531
Orix Auto Finance India Ltd. Vs. Jagmander Singh, (2006) 2 SCC 598
Sundaram Finance Ltd. Vs. T. Thankam, Civil Appeal No. 2079/2015 (02.02.2015)

(Delivered by Hon'ble Suneet Kumar, J.)

1. The plaintiff/applicant has approached this Court assailing the orders passed by the
courts below purportedly under Section 8 of the Arbitration and Conciliation Act, 1996,
whereby, the parties have been referred to the Arbitrator in terms of the agreement.

2. The facts would reveal that the applicant instituted a suit being Original Suit No. 594
of 1998 (Sri Ballabh Versus Kukkoo Motors Finance Pvt. Ltd) for permanent injunction
restraining the respondent-finance company from transferring the vehicle, as well as,
seeking mandatory injunction to return the vehicle to the applicant. The applicant purchased
a truck after obtaining loan of Rs. 1,50,000/- from the respondent-finance company, the
applicant defaulted, thereafter, upon termination of the Hire-Purchase agreement the
vehicle was seized and auctioned by the respondent-finance company. It is averred in the
3 All. Ballabh Lal Vs Kukkoo Motors Finance Pvt. Ltd. & Anr.
665
plaint that the respondent-finance company had taken signatures on blank papers, further,
the applicant had not signed any agreement with the respondent-company.

3. The respondent appeared and filed an application under Section 8 contending that the
parties be referred to arbitration.

4. Initially, the trial court rejected the application filed under Section 8, however, in
revision, the order was reversed and the matter remanded. Upon remand, the trial court
considering the material available on record and the agreement allowed section 8
application and directed the parties to submit name of the Arbitrators under Section 11 of
the Arbitration and Conciliation Act, 1996. The revisional court affirmed the order.
Aggrieved, the applicant is assailing the revisional order dated 29 August 2009, as well as,
review order dated 10 December 2015 passed by the Additional District Judge, Court No. 2,
Mathura in Civil Misc. Case No. 15 of 2010 (Ballabh Lal Versus Kukkoo Motors Finance
Pvt. Ltd).

5. The revisional court in the impugned order categorically noted that there is an
agreement between the parties, whereon, the applicant appended his signature, therefore,
was of the opinion that the trial court committed no error in referring the parties to settle the
dispute through an arbitrator. However, the revisional court declined to interfere with the
consequential order passed by the trial court directing the parties to submit the name of the
arbitrators under section 11 of the Act. The applicant preferred a review application
contending that the case cited by the revisional court has since been overruled by the
Supreme Court, therefore, an error apparent on the face of the record.

6. Be that as it may, learned counsel for the applicant would not dispute that the
applicant approached the respondent-finance company to obtain loan which was duly
sanctioned and released to the applicant, thereafter, the applicant purchased the vehicle
which was on hire purchase owned by the respondent-finance company. It is sought to be
urged that certain blank papers and document were got signed from the applicant by the
finance company, of which, he had no knowledge. The averments in the plaint would
neither allege fraud or misrepresentation on behalf of the respondent-finance company nor
would reflect that the dispute that is being sought to be raised is beyond the scope of the
arbitration agreement. The dispute, inter se, parties primarily relates to non payment of the
loan and the consequential action taken by the respondent-finance company to recover the
dues by seizing the vehicle and thereafter auctioning it.

7. In these circumstances, the courts below were justified in referring the parties to seek
arbitration as per arbitration clause. The second part of the order passed by the trial court
directing the parties to suggest name of arbitrators under section 11 of the Act, in my
opinion, was without jurisdiction.

8. It has been settled by the Constitution Bench (Seven Judges) of Supreme Court in
S.B.P. and Company Versus Patel Engineering Limited and another, that Hon'ble the
Chief Justice of India or the Chief Justice High Court, as the case may be, have been
666 INDIAN LAW REPORTS ALLAHABAD SERIES
conferred exclusive power under Section 11(6) of the Act, 1996 to appoint an arbitrator.
The civil court or any other court for that matter would have no jurisdiction to exercise
powers under Section 11(6).

9. In N. Radhakrishnan Versus Maestro Engineers and others, the question before
the Supreme Court was whether though the subject matter of the suit was within the
jurisdiction of the arbitrator, or whether the arbitrator was competent to deal with the
dispute raised by the parties, the Court relying on its earlier decision rendered in Hindustan
Petroleum Corporation Ltd. Versus Pinkcity Midway Petroleums, observed that if an
agreement between the parties before the civil court, there is an arbitration clause, it would,
therefore, be mandatory for the civil court to refer the dispute to an arbitrator.

10. In the facts before the Court in Radhakrishnan's case (supra) serious allegations
of fraud were made against a party which in the opinion of the Court could not have been
gone into by the arbitrator. The questions of fraud and misrepresentation in the accounts of
partnership firm was held to be beyond the scope of the arbitrator and the matter could be
effectively decided only by a civil court. It was held that a civil court rightly refused to
refer the matter to arbitrator, where complicated question of fact and law is involved and
serious allegation of fraud is made.

11. Learned counsel for the applicant would submit that in view of Radhakrishnan's
case, the civil court was competent to entertain the suit and the matter should not have been
referred to the arbitrator.

12. The facts of the present case is distinguishable, for the reason that there is no allegation of
fraud or misrepresentation to the extent that it would involve complicated question of law and fact
which require evidence to be led by the parties, only a bald allegation was made by the applicant,
that he was made sign on printed forms and blank paper, by the respondent company, therefore,
would allege that fraud was committed. Merely signing of forms and agreement would not constitute
fraud. It is not being disputed that the transaction is a pure commercial transaction entered into by the
applicant on the terms and conditions agreed by the applicant stipulated in the hire purchase
agreement. Mere allegation that the agreement contains unfilled blank space would not mean that
applicant had not consented to abide by the terms and conditions of the agreement which includes a
clause to refer the dispute, if arises between the parties, to a sole arbitrator. Since there is an
agreement between the parties, to refer the dispute or differences arising out of the agreement to the
arbitrator; and in case, either party ignoring the terms of the agreement, approaches the civil court
and the other party, in terms of section 8 of the Arbitration Act, moves the court for referring the
parties the arbitration, in view of the peremptory language of Section 8, it is obligatory for the court
to refer the parties to arbitration in terms of the agreement. (Vide: P. Anand Gajpati Raju Versus
P.V.G. Raju and Branch Manager, Magma Leasing and Finance Limited and another Versus
Potluri Madhvilata and another)

13. Bifurcation of suit in two parts, one to be decided by the Arbitral Tribunal and the other to
be decided by the civil court is not contemplated in Section 8. (Vide: Sukanya Holdings (P)
Limited Versus Jayesh Pandya and another)
3 All. Jitendra Kumar Vs State Of U.P. & Ors.
667

14. There would be no impediment of the financier in taking the financed vehicle in terms of the
agreement unless the contract is held to be unconscionable or opposed to public policy. (Vide: Orix
Auto Finance (India) Limited Versus Jagmander Singh and another)

15. In a recent judgment in M/s Sundaram Finance Limited and another Versus T.
Thankam, decided on 2 February 2015, the Supreme Court upon considering the aforementioned
judgments, in para 15 of the report, observed as follows:

"Once an application in due compliance of Section 8 of the Arbitration Act is filed, the
approach of the civil court should be not to see whether the court has jurisdiction. It should be to see
whether its jurisdiction has been ousted. There is a lot of difference between the two approaches.
Once it is brought to the notice of the court that its jurisdiction has been taken away in terms of the
procedure prescribed under a special statue, the civil court should first see whether there is ouster of
jurisdiction in terms or compliance of the procedure under the special statute. The general law
should yield to the special law- generalia specialibus non derogant. In such a situation, the approach
shall not be to see whether there is still jurisdiction in the civil court under the general law. Such
approaches would only delay the resolution of disputes and complicate the redressal of grievance
and of course unnecessarily increase the pendency in the court."The order of the trial court declining
to refer the matter to the arbitrator was set aside.

16. For the reasons and law stated herein above, the court below was justified in the facts of the
case in referring the parties as per the arbitration clause to seek redressal under the Arbitration Act,
however, the order directing the parties to furnish the name of arbitrators under Section 11 of the
Arbitration Act being without jurisdiction is set aside.

17. The petition is partially allowed. It will be open for the parties to seek redressal regarding
appointment of the arbitrator as per the provisions of the Arbitration Act.

18. No cost.
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ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 29.03.2016

BEFORE

THE HON'BLE AMRESHWAR PRATAP SAHI, J.
THE HON'BLE ATTAU RAHMAN MASOODI, J.

Misc. Bench No. - 6093 of 2016

Jitendra Kumar ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner: