The Kerala High Court has dismissed an arbitration appeal arising from a long-running dispute over a partnership that once operated the popular “Hotel Alakananda” in Kollam. The court declined to interfere with an arbitral award that dissolved the partnership and declared certain sale deeds ineffective, holding that no legal ground existed to overturn the Commercial Court’s decision.
Background of the Case
The dispute traces back to a partnership formed in the early 1990s to run a hotel, restaurant, and bar under the name Hotel Alakananda. The original claimant had established the hotel on his own land and held an FL-3 liquor licence in his personal name.
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As the business faced financial stress, a partnership was formed in 1993. Over time, the partnership underwent several reconstitutions, with partners entering and exiting. Registered sale deeds were executed among partners, purportedly transferring ownership interests in property linked to the business.
After nearly two decades, relations soured. The claimant alleged fraud, lack of consideration, and failure by partners to discharge liabilities. The dispute was referred to arbitration, resulting in an award passed in March 2017.
The arbitrator partially allowed the claim. The partnership was dissolved, and two sale deeds were declared void on the ground that they were unsupported by consideration. The arbitrator held that the deeds were merely internal arrangements meant to secure business contributions, not genuine transfers of ownership.
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Aggrieved parties challenged the award under Section 34 of the Arbitration and Conciliation Act before the Commercial Court, Kollam. The Commercial Court dismissed the challenge, prompting the present appeal under Section 37.
Counsel for the appellants argued that the dispute was not arbitrable, as it involved registered sale deeds and property rights. They also contended that the claims were barred by limitation and that the arbitrator lacked jurisdiction to invalidate registered documents.
The respondents countered that the dispute arose purely from internal partnership arrangements. They argued that the arbitrator had carefully evaluated evidence and that no third-party rights were affected.
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Court’s Observations
After hearing both sides, the Division Bench closely examined the scope of interference permitted under Section 37. The court noted that appellate scrutiny in arbitration matters is narrow and does not permit reappreciation of evidence.
“The arbitral tribunal is the final judge of facts,” the bench observed, adding that courts cannot substitute their own view merely because another interpretation is possible.
The judges accepted the arbitrator’s factual finding that the sale deeds were “shadow documents” executed without consideration. Since the deeds did not create enforceable rights in rem, the court rejected the argument that the dispute was non-arbitrable.
On limitation, the court agreed with the arbitrator and the Commercial Court that once the documents were found void for lack of consideration, the question of limitation lost significance.
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Decision
Finding no patent illegality, jurisdictional error, or violation of public policy, the High Court dismissed the arbitration appeal. The court upheld the arbitral award dated 30 March 2017 and the Commercial Court’s order dated 3 September 2022. No costs were awarded.
Case Title: Lazar Chakkola & Others v. Sudarsanan Pillai & Another
Case No.: ARB.A No. 2 of 2023
Case Type: Arbitration Appeal
Decision Date: 17 December 2025
