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2017 DIGILAW 41 (JK)

Vinod Sharma v. Mohd. Sharief

2017-02-03

DHIRAJ SINGH THAKUR

body2017
ORDER : Dhiraj Singh Thakur, J. The present petition has been filed under Section 11(6) of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 for reference of the disputes mentioned in the petition for arbitration to an independent arbitrator. 2. It is averred that the petitioner was incorporated as a partner along with the respondent in the business of selling of LPG Gas and the partnership deed executed between them, which was registered before the learned Sub- Registrar, 2nd Additional Munsiff, Jammu on 26-4-2011. 3. It is further averred by the petitioner that he had invested a capital of Rs. 20,00,000/- (Rupees Twenty Lacs) in the partnership business with the understanding that the profits would be shared in equal proportion by both the partners but subsequently it is averred that the respondent went back on his promise and stopped sharing the profits of the business and also filed a suit for permanent prohibitory injunction, restraining the petitioner from interfering into the business of Gas Agency, which is run in the name and style of M/s. Shaheed Mohd. Fareed Gas Agency, Nowshera). 4. Further it is averred that the disputes have arisen between the parties, which are required to be adjudicated upon in accordance with the arbitration clause contained in the agreement. 5. Per contra, the respondent in his objections has taken a stand that the arbitration petition is barred by limitation and in view of the fact that a civil suit has been filed by the respondent, seeking declaration that the partnership deed be declared as null and void, the present arbitration petition is not maintainable. 6. It was further averred by the respondent that a sum of Rs. 20,00,000/- (Rupees Twenty Lacs), which was advanced as loan to the respondent had since been paid back and therefore, disputes raised by the petitioner was illusory. 7. Heard learned counsel for the parties. 8. The issue with regard to application of the Jammu and Kashmir Limitation Act to arbitration petitions is no longer res integra. A full Bench of this Court in M/s. Megha Enterprises & Ors. v. State & Ors. 7. Heard learned counsel for the parties. 8. The issue with regard to application of the Jammu and Kashmir Limitation Act to arbitration petitions is no longer res integra. A full Bench of this Court in M/s. Megha Enterprises & Ors. v. State & Ors. as reported in AIR 1995 J&K 16 has in very clear terms held in paragraph 17 as under: 'In the premises, we hold that Article 181 of the State Limitation Act, 1938, does not govern and is not applicable to applications filed under the special acts including the applications under Section 20 of the Arbitration Act and is limited to application under the Code of Civil Procedure only. In other words, it does not prescribe any time limitation for an application under Section 20 of the Arbitration Act or for any application under the special act. We answer the reference accordingly but hasten to add that it will be the duty of the arbitrator to consider the plea of limitation and to decide whether or not the claims of appellants are time barred.' 9. Although reference in the aforementioned judgment was to Section 20 under the Jammu and Kashmir Arbitration Act, 1945, which has since been repealed, yet the provisions of the J&K Limitation Act, Samvat, 1995 continue to remain the same. 10. Section 43 of the J.&K. Arbitration and Conciliation Act, 1997 applies the provisions of the Limitation Act, Samvat, 1995 to arbitrations as it applies to proceedings in court. Sub-section (2) of Section 43 of the said Act envisages that for purposes of Section 43 and the Limitation Act, Samvat, 1995, an arbitration shall be deemed to have commenced on the date referred to in Section 21. Section 21 deals with commencement and completion of arbitral proceedings and is reproduced hereunder: 21. Commencement and completion of arbitral proceedings. Unless otherwise agreed by the parties the arbitral proceedings in respect of a particular dispute.- (a) shall commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent; and (b) shall be completed within a period of four months from the date of its commencement under Clause (a). 11. Unless otherwise agreed by the parties the arbitral proceedings in respect of a particular dispute.- (a) shall commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent; and (b) shall be completed within a period of four months from the date of its commencement under Clause (a). 11. The Apex Court in State of Goa v. Praveen Enterprises, (2012) 12 SCC 581 : ( AIR 2011 SC 3814 , para 15) elucidated the purpose of Section 21 of the Arbitration Act in paragraph 18 as under : 18. In regard to a claim which is sought to be enforced by filing a civil suit, the question whether the suit is within the period of limitation is decided with reference to the date of institution of the suit, that is, the date of presentation of a plaint. As Limitation Act, 1963 is made applicable to arbitrations, there is a need to specify the date on which the arbitration is deemed to be instituted or commenced as that will decide whether the proceedings are barred by limitation or not. Section 3 of Limitation Act, 1963 specifies the date of institution for suit, but does not specify the date of ' institution- for arbitration proceedings. Section 21 of the Act supplies the omission. But for section 21, there would be considerable confusion as to what would be the date of ' institution- in regard to the arbitration proceedings. It will be possible for the respondent in an arbitration to argue that the limitation has to be calculated as on the date on which statement of claim was filed, or the date on which the arbitrator entered upon the reference, or the date on which the arbitrator was appointed by the court, or the date on which the application was filed under section 11 of the Act. In view of section 21 of the Act providing that the arbitration proceedings shall be deemed to commence on the date on which ' a request for that dispute to be referred to arbitration is received by the respondent'" the said confusion is cleared. Therefore, the purpose of section 21 of the Act is to determine the date of commencement of the arbitration proceedings, relevant mainly for deciding whether the claims of the claimant are barred by limitation or not. 12. Therefore, the purpose of section 21 of the Act is to determine the date of commencement of the arbitration proceedings, relevant mainly for deciding whether the claims of the claimant are barred by limitation or not. 12. In any case, in view of the ratio of the Full Bench Judgment of this court in M/s. Megha Enterprises ( AIR 1995 J&K 16 (FB)) (supra), there is no limitation prescribed for filing an application for appointment of an arbitrator under the Jammu and Kashmir Arbitration and Conciliation Act, 1997. The ratio of the judgment cited above is relevant only for purposes of deciding whether or not the claims made by the petitioner in a petition are dead or stale claim. 13. In view of the above, the first objection raised is found to be without any merit and is accordingly rejected. 14. The second ground raised is with regard to maintainability of the petition is the pendency of the civil suit for declaration filed by the respondent, which is pending in the court of learned Third Additional Munsiff, Jammu wherein the plaintiff-respondent seeks a decree for declaration, declaring the partnership deed as null and void. 15. The fact that partnership deed was executed between the parties, however, is not denied by the respondent and the fact that the parties had agreed to resolution of their disputes through the mechanism of arbitration in case of a dispute between the parties is also not denied. 16. The mere fact that the plaintiff had also filed a civil suit for declaration would not in any manner prevent the operation of the arbitration clause and take away the right of the petitioner herein to seek appointment of an arbitrator in terms thereof. In fact, in view of the existence of the arbitration clause, the defendant-petitioner herein may have a right to question the maintainability of the civil suit for declaration itself. However, I would not like to go into that aspect of the matter at this stage. 17. Be that as it may, the objection with regard to the maintainability of the arbitration petition from the aforementioned ground of pendency of a civil suit is also without any merit and is accordingly rejected. 18. However, I would not like to go into that aspect of the matter at this stage. 17. Be that as it may, the objection with regard to the maintainability of the arbitration petition from the aforementioned ground of pendency of a civil suit is also without any merit and is accordingly rejected. 18. In view of the Clause 8 of the Partnership Deed, in my opinion, the disputes which have arisen between the parties in connection with and arising out of the partnership deed require to be referred for adjudication through an independent arbitrator. 19. In view of the above, this petition is allowed. Sh. L.K. Sharma, learned Senior Advocate is appointed as an arbitrator, who shall enter upon the reference and adjudicate upon the disputes between the parties within the prescribed statutory period. The parties shall be at liberty to file detailed claims and counter claims before the learned arbitrator. The arbitrator shall render his award within the prescribed statutory period. He shall be entitled to fix his own fee. Registrar Judicial shall intimate the learned arbitrator accordingly. 20. Disposed of accordingly.