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2017 DIGILAW 1290 (RAJ)

Om Prakash Raheja S/o Late Shri Hari Ram Raheja v. Suresh Chandra Kedawat S/o Late Shri R. P. Kedawat

2017-05-19

MOHAMMAD RAFIQ

body2017
ORDER Mohammad Rafiq, J. 1. This application under Section 11 of the Arbitration and Conciliation Act, 1996 has been filed by Shri Om Prakash Raheja praying for appointment of sole arbitrator for adjudicating the dispute between the parties. 2. Shri Gaurav Sharma Saraswat, learned counsel for the petitioner has submitted that The petitioner and the respondent had executed a partnership Deed & entered into a partnership dated 14.02.2009 to carry on a business in the name and style of M/s. V. K. Stationers under which certain liabilities were fastened upon respondent. As per clause 3 of the partnership deed, the premises for carrying out business was provided by the petitioner. Clause 6 thereof provided that the respondent shall be fully and individually responsible for carrying out the business of the firm. Clause 7 provided for the profit sharing wherein the petitioner was to be paid a minimum of Rs.12000/- per month in the first year ending on 31.03.2009 and Rs.15000/- per month in the second year and thereafter the monthly payment was to be increased by 10% every year or 52% of the share of profits, whichever is higher. As per clause 9, respondent was also made responsible to keep proper books of accounts of the business and the petitioner was given right to see the books of accounts at any time. 3. It is contended that prior to the said deed and at the beginning the petitioner's father Late Hari Ram Raheja and respondent formed a partnership firm aforesaid vide partnership deed dated 03.07.1987 to carry on the business of stationary. Thereafter w.e.f. 01.04.1992, a new partnership deed was made between them to vary the terms and conditions of the said partnership deed. Thereafter, a fresh deed of partnership was executed between late Hari Ram Raheja and respondent vide partnership deed dated 05.09.2008, whereby the petitioner was inducted as partner in the said firm. Before, petitioner's induction as partner in the said firm, the late Hari Ram Raheja and respondent had disputes amongst themselves and thus to resolve the disputes, two memorandum of understanding dated 25.04.2008 and 11.10.2008 were executed between themselves. As per the said MOUs, the respondent had been put to strict terms and conditions to carry on the business of the firm. As per the said MOUs, the respondent had been put to strict terms and conditions to carry on the business of the firm. The petitioner was not tendered the payments due to him since 31.08.2009 and was paid less amount than stipulated in the partnership deed prior to the said date. The respondent defaulted to pay the petitioner in violation of terms of partnership deed dated 14.02.2009 and previous deeds and MOUs executed by him. The details of the default in payment totaling to Rs.16,38,672 is summarised in tabular form in para 7C of the memo of application. 4. It is contended that in addition and continuation of the aforesaid defaults, no payment had been tendered by the respondent to the petitioner till date despite numerous reminders. The respondent has neither paid the dues to the petitioner nor showed to the petitioner the books of accounts of the partnership deed. Clause-15 of the partnership deed dated 14.02.2009 provided that any dispute or differences that may at any time arise between the partners with regard to any matter relating to the partnership, or any matter in connection therewith or incidental thereto shall be referred to arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996. In the facts, the petitioner issued a registered A.D. letter cum notice dated 08.02.2016 to the respondent to agree for appointment of sole Arbitrator and suggested name of Shri Bhagwan Das Lalwani S/o Shri Choithram Lalwani R/o 676, Tiki Walon Ka Rasta, Near Andheri Darwaja, Baba Harish Chandra Marg, Jaipur (Raj.) to arbitrate and pass award upon the dispute and difference as referred above. In accordance with the provisions of the Act of 1996, the respondent did not choose to respond to the said letter dated cum notice dated 08.02.2016 even after passing of the statutory period of 30 days. In the facts of the case, therefore, since the respondent has failed to agree on the appointment of the arbitrator as requested by the petitioner, the petitioner has been left with no alternative but to prefer the present application under Section 11(5) of the Arbitration and Conciliation Act, 1996. 5. Though in reply to the application, Shri A.K. Pareek, learned counsel for the respondents has denied the factual assertions made by the petitioner, but could not deny that there does exist a dispute between the parties and also arbitration clause in the partnership. 5. Though in reply to the application, Shri A.K. Pareek, learned counsel for the respondents has denied the factual assertions made by the petitioner, but could not deny that there does exist a dispute between the parties and also arbitration clause in the partnership. His contention is that a settlement was arrived at between the parties viz. Hari Ram Raheja, petitioner-Om Prakash Raheja and the respondent-Suresh Kedawat on 31.8.1997, but Shri Hari Ram Raheja did not comply with the settlement. However, a meeting was again held on 22.2.2004 between the petitioner and the respondent. While the respondent has complied with minutes of the said meeting, the petitioner failed to comply his part. Further meeting was held on 16.2.2005 in which Shri Hari Ram Raheja agreed to resolve the dispute within 15 days, even then he did not comply that condition. He then entered into an arbitration proceeding on 8.3.2005, but the said proceedings were terminated on 17.5.2005. Hari Ram Raheja then filed civil suit, which was ultimately dismissed under the provisions of Order 7, Rule 11 CPC on application of the respondent as to availability of alternate remedy of arbitration. The revision petition filed against that order was also then dismissed by this Court vide order dated 17.4.2013. It is contended by learned counsel for the respondent that since the partnership deed already stood dissolved, the clause of arbitration does not survive. 6. Learned counsel for the petitioner has rejoined and cited judgements of the Supreme Court to argue that even after termination of partnership deed, the arbitration clause would survive and reference can be made. The Supreme Court in National Agricultural Cooperative Marketing Federation India Ltd. v. Gains Trading Ltd.- AIR 2007 SC 2327 has held that arbitration clause forming part of contract shall be treated as independent of other terms of contract and abrogation of contract by mutual agreement would not entail ipso jure the validity of arbitration clause. 7. The Supreme Court in Branch Manager, Magma Leasing and Finance Ltd. & Anr. v. Potluri Madhavilata & Anr.- (2009) 10 SCC 103 has held that merely because the contract has come to an end by its termination due to breach, the arbitration clause does not perish, nor is rendered inoperative, rather it survives for resolution of disputes arising "in respect of" or "with regard to" or "under" the contract. 8. v. Potluri Madhavilata & Anr.- (2009) 10 SCC 103 has held that merely because the contract has come to an end by its termination due to breach, the arbitration clause does not perish, nor is rendered inoperative, rather it survives for resolution of disputes arising "in respect of" or "with regard to" or "under" the contract. 8. In view of the fact that even when the partnership deed has been dissolved or terminated, the arbitration clause, which is a stand alone agreement within the said partnership deed would survive and disputes can be referred to arbitration for resolution. 9. In view of above, the present application succeeds and is accordingly allowed. Hon'ble Mr. Justice Mahesh Bhagwati (former Judge, Rajasthan High Court), "Sukh Shanti", L-44, Income Tax Colony, Tonk Road, Durgapura, Jaipur (Cell Nos.9414160666 and 7665000000) is hereby appointed as an independent Arbitrator to resolve the disputes between the parties. Payment of costs of arbitration proceedings and the arbitration fees shall be made as per the Fourth Schedule of the Arbitration and Conciliation (Amendment) Act, 2015 read with Manual of Procedure for Alternative Dispute Resolution, 2009, of this Court, as amended from time to time. 10. A copy of this order be sent to Hon'ble Mr. Justice Mahesh Bhagwati (former Judge, Rajasthan High Court), "Sukh Shanti", L- 44, Income Tax Colony, Tonk Road, Durgapura, Jaipur (Cell Nos.9414160666 and 7665000000).