Research › Search › Judgment

Rajasthan High Court · body

2017 DIGILAW 1961 (RAJ)

Tulsi Khemawala v. Parveen Arya

2017-09-01

MOHAMMAD RAFIQ

body2017
JUDGMENT : MOHAMMAD RAFIQ, J. 1. This application under section 11(6) of the Arbitration and Conciliation Act, 1996, has been filed by petitioner Smt. Tulsi Khemawala, praying for appointment of independent and impartial Arbitrator to convene arbitration proceedings to adjudicate the dispute arising out of partnership agreement dated 10.12.2016 between the petitioner and respondent regarding properties of the partnership firm M/s. Shree Krishana Stone Crusher. 2. The petitioner is the partner of firm M/s. Shree Krishana Stone Crusher, which is a partnership firm registered with the Registrar of Firms, Government of Rajasthan. Respondent is another partner of the firm. A partnership agreement deed was executed between the petitioner and the respondent on 10.12.2000. The registered office of the said firm is situated at the land bearing Khasra No. 1094/1853 measuring 0.84 hectare situated in village Bilochi, Tehsil Amber, District Jaipur, which is the property of the firm occupied in the stone crusher purposes. Under condition no. 7 of the partnership agreement, it was agreed between the parties that the profit and loss of the partnership after providing interest on capital and remuneration to working partners shall be shared by the partners in the share of 50:50. Condition no. 9 of the partnership agreement provided that the land and mine available to the partners will be available for the present business of the firm and the estimated value of the same will be credited against their capital. The business of the firm, which was started from 06.12.2000, was smoothly carried out by the petitioner till 05.08.2016. As per the petitioner, however, the husband of the respondent Mr. Vishupal Arya on telephonic call made on 05.08.2016 conveyed the petitioner to stop the crusher and threatened and abused the workers. On 15.08.2016 again the husband of the respondent and one Chetan Choudhary reached the premises of the firm and looked down the premises and houses there. He refused to settle the account of the firm according to its properties including the land, plant & machinery. Due to such act on his part, the crusher had to be stopped. No production was carried out after 15.08.2016. 3. Mr. Mahendra Shandilya, learned counsel for petitioner, submitted that condition no. He refused to settle the account of the firm according to its properties including the land, plant & machinery. Due to such act on his part, the crusher had to be stopped. No production was carried out after 15.08.2016. 3. Mr. Mahendra Shandilya, learned counsel for petitioner, submitted that condition no. 12 of the partnership deed especially incorporated, deals with the dispute and difference at any time arising out between the parties, and provides that the same shall be referred to Arbitrator in accordance with the provisions of the Arbitration Act, 1940. The petitioner therefore served a legal notice on the respondent by the registered post on 12.09.2016 through her counsel therein, wherein it was stated that the respondent had illegally locked the business premises of the firm and the stone crusher. The plant and machinery of the firm has been illegally captured by the respondent and therefore cannot presume such dispute and matter be referred to the Arbitrator. The petitioner proposed name of one Mr. Nitin Vyas to be appointed as an Arbitrator to resolve the dispute arising out of partnership deed dated 10.12.2000. The respondent through her counsel sent reply dated 24.09.2016 to the said legal notice of the petitioner, in which though she admitted arbitration proceedings in the partnership deed but did not agree on the proposed name of the Arbitrator and rather took a stand that the Arbitration Act, 1940 does not apply to the unregistered partnership firm. It is therefore prayed that the application be allowed. Mr. Ganesh Sharma, learned counsel for the respondent, opposed the application and submitted that since the firm is unregistered, the Arbitration Act, 1940 does not apply to the dispute in question notwithstanding the arbitration clause in the partnership deed. The partnership deed was simply notarized and it was not registered by the Registrar of Firms and since it is an unregistered firm at the time the deed was executed. The registration certificate of the firm would show that it was registered in the year 2014 after 14 years from the formation of the firm. The registration has been made without consent of the respondent and without informing her and it is also that the firm was registered for business in urban area while the work area of the firm was rural. 4. The registration has been made without consent of the respondent and without informing her and it is also that the firm was registered for business in urban area while the work area of the firm was rural. 4. Learned counsel submitted that the allegation of the petitioner is that the husband of the respondent telephoned the petitioner to stop the work is totally baseless. He also denied the allegation that the husband of the respondent locked the business premises of the firm. The husband of the petitioner had filed a false report in this regard before the Police Station, Harmada and police did not find any offence after investigation. It is argued that the legal notice was sent under the provisions of the Act of 1940, whereas there is no enactment by that nomenclature as of now. Besides, the present application has been moved under the provisions of the Arbitration and Conciliation Act, 1996. It is therefore prayed that the application be dismissed. 5. Having heard learned counsel for petitioner as also learned counsel for respondent and perused the material on record, this court finds that the allegation of the respondent that the firm was not registered, is untenable because as per own showing of the respondent, the firm was later registered in the year 2014. Even otherwise I had the occasion to deal with similar objection in Abhishek Soni v. Sanjeev Soni - 2016 (3) WLC (Raj.) 759, wherein this court has already overruled this objection by holding that the non-registration of partnership firm would not be a bar under section 69 of the Indian Partnership Act of 1932 for proceeding under Section 11 of the Act of 1996. Second objection of the respondent is that reference of Arbitration Act, 1940 is made in Clause 12 of the Partnership Deed, whereas the Arbitration Act, 1940 has already repealed and is no more in existence. Even this objection is unfounded. Even if the Clause 12 of the Partnership Deed has reference of the Arbitration Act, 1940, which has been repealed by the subsequent Act i.e. the Arbitration and Conciliation, 1996, the reference to the Arbitration Act, 1940 for the present purpose shall be construed to mean the Act of 1996. Even this objection is unfounded. Even if the Clause 12 of the Partnership Deed has reference of the Arbitration Act, 1940, which has been repealed by the subsequent Act i.e. the Arbitration and Conciliation, 1996, the reference to the Arbitration Act, 1940 for the present purpose shall be construed to mean the Act of 1996. In the present case, the agreement was entered between the parties in the year 2000 and therefore therein the provisions of the Act of 1940 would not apply as by that time the Act of 1996 was in existence. The scheme of the Act of 1996 is different and the process of mechanism for alternate dispute resolution system has to be construed not identical to the of Act of 1940, considering the difference in their schemes. 6. This court had an objection to deal with similar objection in Shri Pashupati Gaushala v. State Government of Rajasthan and Others - S.B. Arbitration Application No. 68/2012, decided vide judgment dated 12.05.2017, wherein it has been held that reference to Arbitration Act of 1940 of the Central Legislature in the relevant Clause of agreement should be taken to have been substituted by Arbitration and Conciliation Act, 1996 as the intention of the parties was to submit their matter to the arbitration in the event of any dispute arising between them in respect of interpretation or compliance with the terms of the lease or the sufficiency thereof, or to any matter or things in any way connected with the agreement. 7. The application succeeds and is allowed. Hon'ble Mr. Justice G.S. Sarraf (Retd.), R/o E-45, Sidharth Nagar, Sector 13, Malviya Nagar, Jaipur (Telephone Number 0141-2547123 and Cell Number 9414497133), is hereby appointed as an independent sole arbitrator to resolve the disputes between the parties. Payment of the 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. 8. A copy of this order be sent to Hon'ble Mr. Justice G.S. Sarraf (Retd.), R/o E-45, Sidharth Nagar, Sector 13, Malviya Nagar, Jaipur, for needful.