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2014 DIGILAW 4223 (MAD)

A. Tharsees v. A. Arokiasamy

2014-11-12

K.RAVICHANDRABAABU

body2014
JUDGMENT : K. Ravichandrabaabu, J. 1. This Civil Revision Petition is filed seeking to strike off the proceedings before the Sole Arbitrator-Shri Pappaiah Dharmarajan at Chennai in A.C.P. (PARTNERSHIP) No. 101 of 2014. Heard Mr. P. Valliappan, learned Counsel appearing for the Petitioner and Mr. S. Rajendrakumar, learned Counsel appearing for the Respondent. 2. By consent of both parties, the main Civil Revision Petition itself is taken up for final disposal. 3. The proceedings before the Sole Arbitrator is sought to be struck off by the Petitioner only on the reason that the appointment of the said Arbitrator was not in accordance with Section 11(5) of the Arbitration and Conciliation Act, 1996 (in short "Act"), since there was no agreement between the parties with regard to the procedure for such appointment of the Sole Arbitrator. In other words, the Petitioner is willing to submit himself before the Arbitration proceedings, only when such appointment of the Arbitrator is made in accordance with Section 11(5) of the Act and not as done by the Respondent, unilaterally. 4. Short facts, that arise for consideration in this Civil Revision Petition, are as follows: Admittedly, there was a Partnership Deed entered between the parties on 5.2.2009, wherein Clause 12 reads as follows: "12. Difference of opinion (or) dispute arising between the Partners touching these presents shall be got settled by Arbitration." Therefore, it is evident that the parties have agreed to settle any difference of opinion or dispute arising between them, touching the partnership, by way of arbitration. 5. It is stated that some dispute has arisen between the parties and consequently, the Respondent has filed a Suit in O.S. No. 88 of 2014 on the file of the Sub-Court, Dharmapuri, for dissolution of partnership and for other relief. Thereafter, on 12.5.2014, the very same Respondent issued a Notice to the Petitioner by appointing the present Arbitrator as a sole Arbitrator and subsequently, filed a Claim Petition on 16.5.2014 before the said Arbitrator. According to the Petitioner, such appointment made by the Respondent, unilaterally, is not valid appointment, since there was no agreement between the parties on the procedure for appointing the sole Arbitrator. 6. It is true that the above said Partnership Deed entered between the parties contain the Arbitration Clause. According to the Petitioner, such appointment made by the Respondent, unilaterally, is not valid appointment, since there was no agreement between the parties on the procedure for appointing the sole Arbitrator. 6. It is true that the above said Partnership Deed entered between the parties contain the Arbitration Clause. But, at the same time, a perusal of the said Clause, as referred to supra, would disclose that there is no agreement between the parties as contemplated under Section 11(2) as to how and in what manner such Arbitrator has to be appointed. If that is the position, Section 11(5) of the Act contemplates that a party must make a request to other party indicating a person as an Arbitrator and if the other party is not agreeing on the Arbitrator within 30 days form the receipt of the said request, then any of the party can approach the Hon'ble Chief Justice of this Court or any person or institution designated by him and file an Application for appointment of the sole Arbitrator. For proper appreciation, Section 11(2) & (5) is extracted hereunder: "Section 11(2): Subject to sub-section (6), the parties are free to agree on a procedure for appointing the Arbitrator or Arbitrators. Section 11(5): Failing any Agreement referred to in sub-section (2), in an arbitration with a sole Arbitrator, if the parties fail to agree on the Arbitrator within third days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him." 7. In this case, the facts and circumstances would reveal that no such request by way of Notice was issued by the Respondent to the Petitioner and on the other hand, the present Arbitrator was appointed straight away by the Respondent himself. In my view, such course of action adopted by the Respondent is not in accordance with law, more particularly, when Section 11(5) contemplates different procedures, when there is no agreement on the procedure of appointment of Arbitrator between the parties. 8. Learned Counsel appearing for the Respondent invited this Court's attention to Section 16 of the Act to contend that the jurisdictional issue also can be considered by the Arbitrator and the Petitioner herein has raised such issue before the Arbitrator through the Counter Affidavit filed by him. 8. Learned Counsel appearing for the Respondent invited this Court's attention to Section 16 of the Act to contend that the jurisdictional issue also can be considered by the Arbitrator and the Petitioner herein has raised such issue before the Arbitrator through the Counter Affidavit filed by him. Thus, he contended that the issue raised in this Civil Revision Petition may be left open to be decided by the Arbitrator himself. I am unable to appreciate the said submission in view of the fact that Sections 11 & 16 of the Act are operating entirely on a different circumstances and Section 11 alone is the relevant provision of law touching upon the appointment of the Arbitrator. As the Petitioner is questioning the very appointment of the Arbitrator as bad and not in accordance with law, we have to see as to whether such appointment was made in accordance with Section 11 of the Act or not. The jurisdictional issue is totally different from the issue touching the very appointment of the Arbitrator himself. Thus, the contention of the learned Counsel for the Respondent is liable to be rejected. Accordingly, I find that the appointment of the sole Arbitrator is bad and consequently, further proceedings by the Arbitrator cannot be sustained. Thus, the appointment of the sole Arbitrator, namely, Shri Pappaiah Dharmarajan at Chennai, is set aside and consequently A.C.P. (PARTNERSHIP) No. 101 of 2014, pending before the said Arbitrator, is also struck off. The parties are at liberty to move appropriate Application before the Hon'ble Chief Justice of this Court as contemplated under Section 11(5) of the Act seeking for appointment of the sole Arbitrator within a period of thirty days from the date of receipt of a copy of this Order. In fine, this Civil Revision Petition stands allowed. No costs. Consequently, connected M.P. No. 1 of 2014 is closed.