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Madhya Pradesh High Court · body

2015 DIGILAW 694 (MP)

Lekhraj Rawal v. Kirti Kumar P. Ganeriwala

2015-07-06

ROHIT ARYA

body2015
ORDER 1. An application under section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act of 1996) has been filed by the applicant for appointment of an arbitrator. 2. Facts necessary for disposal of this application are to the effect that the applicant and the non-applicant as well as one Rai Chand Bolodaya, resident of 29, Avanti Marine Drive, Mumbai had entered into partnership under the name and style of M/s.. KRL Motor Transport, Naya Bazar, Gwalior (MP) on 1.10.2000, on terms and conditions stipulated in the partnership agreement. Rai Chand Bolodaya stated to have died on 11.1/2006. The non-applicant and the applicant agreed to continue the said business in partnership since 12.1.2006 and the revised partnership agreement between them was executed on 12.1.2006 and the business continued in the name and style of M/s.. K.R.L. Motor Transport. Annexure A-1 is copy of the partnership agreement. As per the partnership , there shall be division of the profits and loss in equal proportion ( 50% each). The partnership business was of the nature of transport agents and contractors as well as allied business thereto. The partnership also provide for doing business of other nature and commodities as may mutually agreed upon by the partners from time to time. Clause 12 provides for arbitration, which reads as under: “That, in the event of any dispute between the parties hereto with regard to anything related to the partnership business, the matter shall be referred to Arbitration under the provisions of the Indian Arbitration Act then in force.” It appears that dispute arose between the partners in respect of apportionment of profits as detailed in paragraph 4 of the application and as pleaded by the applicant, the non-applicant did not respondent to settle the dispute as requested by the applicant. Under such circumstances, the applicant invoked the arbitration clause by sending a notice to the non-applicant for appointment of arbitrator through counsel on 16.7.2012 (Annexure A-3). After more than 30 days, the applicant approached this Court for appointment of arbitrator under section 11(6) of the Act of 1996. 3. Respondent has filed reply thereto and pleaded that the averments made in the application under section 11(6) of the Act of 1996 are incorrect, somuch so, even the partnership deed, Annnexure A-1 has also been denied alleging that the partnership agreement dated 1.10.2000 was not annexed with the application. 3. Respondent has filed reply thereto and pleaded that the averments made in the application under section 11(6) of the Act of 1996 are incorrect, somuch so, even the partnership deed, Annnexure A-1 has also been denied alleging that the partnership agreement dated 1.10.2000 was not annexed with the application. Further, pleaded that there is no existence of partnership, Annexure A-1 and consequently, the clauses in the agreement and particularly, clause 12 dealing with arbitration has no relevancy and, therefore, the application is misconceived. That apart, it is pleaded that no claim whatsoever subsists against the non-applicant, much less, as described in paragraph 4 of the application. The amount due shown in paragraph 4, i.e., Rs.8,56,426/- is alleged to be based on concocted balance sheet having no statutory authenticity. That apart, the non-applicant further pleaded that if what the applicant submits is accepted that there was partnership agreement between the applicant and the non-applicant, the firm MTI Logis Tech (P) Ltd., Gwalior is no where connected with the partnership business as indicated in Annexure A-1 as there was no privity of contract between the said firm and the non-applicant. Therefore, no dispute can be said to subsists between the alleged firm and the non-applicant for resolving the dispute under section 11(6) of the Act of 1996. 4. It is also pleaded that even the claim is barred by time as the dispute of non-payment of profits is of the year 2006 and the application for appointment of arbitrator is filed in the year 2013. With the aforesaid pleadings, non-applicant prayed for dismissal of the application. 5. Applicant filed I.A. No.4193/2014, an application for taking the additional facts and documents on record wherein it is submitted that the notice (Annexure A-3) for appointment of arbitrator was sent by a registered dock on 16.7.2012, the receipt thereof is annexed with Annexure A-3. However, on receipt of reply to the application under section 11(6) of the Act of 1996 wherein it was alleged that no notice for appointment of arbitrator was received by the non-applicant, i.e., Annexure A-3, the applicant made online complaint with the postal department and asked whether the article was delivered or not. It has been informed that the article was delivered on 21.7.2012 and the document issued by the postal department is annexed as Annexure A-4. Heard counsel for the parties. 6. It has been informed that the article was delivered on 21.7.2012 and the document issued by the postal department is annexed as Annexure A-4. Heard counsel for the parties. 6. Before adverting to the rival contentions, it is considered apposite to observe that jurisdiction of this Court under section 11(6) of the Act of 1996 is no more administrative but judicial in nature in the light of the judgment of the Hon’ble Supreme Court, reported in (2005)8 SCC 618 , SBP and Co. v. Patel Engineering Ltd., and another. Upon satisfaction of the threefold facts, namely; (i) existence of arbitration agreement between the parties, (ii) arbitral dispute; and (iii) failure of procedure in the matter of appointment of arbitrator by the parties, the jurisdiction under section 11(6) of the Act of 1996 can be exercised by this Court. 7. Now, turning to the facts of the case, in the light of the evidence brought on record (Annexure A-4) as regards service of notice (Annexure A-3) containing request for appointment of arbitrator addressed to the non-applicant by the applicant, the denial therefore by non-applicant pales into insignificance and this Court concludes that the notice was duly sent by the applicant to the non-applicant. Despite having received the notice (Annexure A-3), the non-applicant has chosen not to file reply thereto at any point of time. As per notice (Annexure A-3), the partnership is in the name and style of M/s.. K.R.L. Motor Transport, Naya Bazar, Gwalior (MP) and the partnership was constituted on 1.10.2000 amongst the applicant, non-applicant and one Rai Chand Bolodaya, resident of 29, Avanti Marine Drive, Mumbai. As Rai Chand Bolodaya has expired on 11.1.2006, the business was continued by the applicant and the non-applicant with revised partnership agreement under the same name and style with effect from 12.1.2006. The partnership agreement contains arbitration clause vide clause 12 of the agreement to settle the dispute arising out of partnership including apportionment of profits. Therefore, there is existence of arbitration clause. The nature of dispute as contained in the notice demanding appointment of arbitrator, in the opinion of this Court, prima facie, appears to be arbitral in nature as parties have failed to reach to a conclusion for appointment of arbitrator, there is failure of decision in that behalf. Therefore, there is existence of arbitration clause. The nature of dispute as contained in the notice demanding appointment of arbitrator, in the opinion of this Court, prima facie, appears to be arbitral in nature as parties have failed to reach to a conclusion for appointment of arbitrator, there is failure of decision in that behalf. As such, this Court finds prevalence of jurisdictional facts for invoking the provisions of section 11(6) of the Act of 1996 in the instant case. 8. During the course of arguments, objections have been raised by the non-applicant as regards the right of claim made by MTI Logis Tech (P) Ltd., Gwalior, out of the partnership business between the applicant and the non-applicant by virtue of partnership agreement dated 12.1.2006 (Annexure A-1). Learned counsel for the applicant fairly concedes that no claim shall be made by the applicant on behalf of MTI Logis Tech (P) Ltd., Gwalior as the partnership is limited to the applicant and the non-applicant. 9. In view of the aforesaid statement made at Bar by learned counsel for the applicant, this Court is of the view that the objection so raised by non-applicant need not be addressed. 10. In view of the aforesaid facts and circumstances of the case and the fact that the applicant and non-applicant have failed to arrive at a decision for appointment of arbitrator in terms of clause 12 of the partnership agreement (Annexure A-1), this Court appoints Hon’ble Justice Shri A.K.Shrivastava (since demitted the office) as an arbitrator. Both the parties shall appear before the arbitrator on 20.7.2015. The arbitrator’s fee and expenses shall be mutually settled by the applicant and non-applicant with the arbitrator on the first date of hearing. Both the parties are at liberty to raise all the questions on facts and law available to them before the arbitrator. 11. This application stands allowed and disposed of, accordingly.