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2016 DIGILAW 3145 (ALL)

Sudhir Mohan Agarwal v. Sanjeev Kumar Agarwal

2016-09-14

BHARATI SAPRU

body2016
JUDGMENT Bharati Sapru,J. An issue has arisen in this matter with regard to the maintainability of the arbitration clause in the partnership deed dated 28.9.1996 which reads as under: "18. That in the event of any dispute amongst the partners inter se, the same will be referred to arbitration and the provisions of Indian Arbitration Act, 1940 shall apply." 2. An objection has been raised by the learned counsel for the respondent that since the arbitration clause under the deed was confined to the application of the provision of the Indian Arbitration Act, 1940 on the date when the arbitration agreement was made i.e. on 28.9.1996, the provisions of Arbitration and Conciliation Act, 1996 would not apply. 3. I have heard learned counsel for both sides on this issue and after examining the clause as well as the entire agreement, I am of the view that the objection taken by the learned counsel for the respondent does not hold water for reasons that the clause 18 as read is severable and the second part under the clause does not in any way take away or curtail intention of the parties to refer the matter to the arbitration. 4. Learned counsel for the applicant has relied on the decision in the case of Shin Satellite Public Co. Ltd. versus Jain Studios Ltd. reported in (2006) 2 SCC 628 wherein the Apex Court while examining the clause has held that if a contract is in several parts, some of which are legal and enforceable and some are unenforceable, the noble part would be enforced, provided they are severable. 5. In this case, on the date when the agreement was made, the Act of 1996 has come into being on 24.8.1996. It stands to reason that the parties were seeking to refer the matter to an arbitration under a valid Act. 6. A mistake or an oversight or even having no knowledge that an amendment in the Act has come into being, would not render the intention to seek a reference of any dispute to arbitration as negated. 7. The intention to have the matter referred to arbitration, is therefore clear from the clause and the doctrine of severability would apply. This issue stand decided in favour of the applicant. 8. 7. The intention to have the matter referred to arbitration, is therefore clear from the clause and the doctrine of severability would apply. This issue stand decided in favour of the applicant. 8. A second issue has also been raised by the other-side that there is a civil dispute pending between the two parties, which is being strongly contested by the applicant in court below. This issue is with regard to the genuineness of retirement deed dated 1.4.2005. The fact that civil dispute is pending, is not denied by the applicant. 9. Learned counsel for the respondent has relied on a decision of the Gujrat High Court in the case of Jayendra S. Shah versus Mukund Somchand Shah and another reported in 2000 (2) GLR 1124 wherein the Gujrat High Court has taken a view that in due incidence of circumstances that once there is a document of retirement which is on record, then the question whether the document is forged and fraudulent, can only be decided by the civil court. In this case, there is already a civil dispute pending, which is admitted to both sides. 10. Learned counsel for the applicant may satisfy the court on this issue as to whether in such circumstances, it would be open to the arbitrator to enter into reference. List in the next cause list.