Ramadhar Singh Partner, M/S New Automobile Store v. Raj Mangal Singh, Partner M/S New Automobile Store
2017-03-29
RAJENDRA MENON
body2017
DigiLaw.ai
JUDGMENT : Rajendra Menon, J. Invoking the jurisdiction of this Court under Section 11 of the Arbitration and Conciliation Act, 1996 and seeking constitution of an Arbitral Tribunal for resolution of the dispute that has arisen in the matter in pursuance to a deed of partnership contemplating an arbitration provision, the application has been filed. 2. Before adverting to consider the dispute which is primarily between the applicant and Respondent No. 1, the objection raised by the learned counsel for Respondent No. 2, the Indian Oil Corporation should be considered. 3. Indian Oil Corporation is not a party to the arbitration agreement and, therefore, there is much force in the objection of the Corporation to say that they are not a necessary party in these proceedings and they cannot be subjected to any arbitration. For the present, in these proceedings under Section 11, Respondent No. 2 is not a necessary party, and, therefore, they are discharged from the proceedings. 4. Document (Annexure-1) is a Partnership Deed executed between the applicant and Respondent No. 1 and in the deed in question with regard to the partnership in question if any dispute arises, Clause 20 contemplates an arbitration agreement for resolution of dispute in accordance to the Indian Arbitration Act. The only objection of the respondent is that this is a fraudulently executed and produced document. It does not bear his signature and he denies execution of this agreement. The application for appointment of Arbitrator was filed before this Court on 09.08.2016 and before that the documents show that the petitioner had issued notice to the respondent vide Annexure-2 on 29.06.2016. The respondent initially refused to accept notice and finally filed his counter affidavit on 8th of February, 2017 and just denied the partnership deed by contending that it is a forged document and in support thereof except for making the bald allegation a copy of First Information Report (Annexure-A) is filed, which is said to be registered on 06.08.2006 to say that he has in this First Information Report made a complaint with regard to the works of the firm. 5.
5. The petitioner by filing a rejoinder has indicated that based on the partnership deed executed which is now said to be a fabricated and false one, all these years the partnership firm and the petrol outlet in question has been functioning and, therefore, it is only an allegation made for the first time to somehow frustrate the claim for resolution of the dispute through arbitration. That apart, learned counsel for the petitioner invites my attention to a judgment of the Supreme Court in the case of A. Ayyasamy v. A. Paramasivam and others reported in AIR 2016 SC 4675 to say that a mere allegation of fraud by one party against another would not nullify the effect of arbitration agreement between the parties and this issue of fraud itself can be determined by the Arbitral Tribunal. Accordingly, contending that the ground raised is not sufficient enough for rejecting the claim, learned counsel prays for constituting an Arbitral Tribunal for adjudication of the dispute. 6. Having heard learned counsel for the parties at length and on going through the materials available on record, it is clear that the applicant relies on the partnership deed (Annexure-A) and makes specific averment to say that it is the photo copy of the original agreement deed, original of which is with the respondent. The respondent only makes a vague allegation to say that it is a forged document, therefore, the question would be as to whether based on these allegations and counter allegations invoking of jurisdiction of this Court should be rejected and the matter relegated to be adjudicated by the parties in accordance to the common law remedy available of approaching the Civil Court. The answer to the aforesaid question is available in the case decided by the Hon'ble Supreme Court in A. Ayyasamy's case (supra) that was also a case where in the matter of execution of an arbitral agreement allegations of fraud were made and similar arguments were canvassed. Hon'ble Supreme Court has held that mere allegation of fraud simpliciter may not be a good ground to nullify the effect of an arbitration agreement between the parties.
Hon'ble Supreme Court has held that mere allegation of fraud simpliciter may not be a good ground to nullify the effect of an arbitration agreement between the parties. It is only when a Court finds that there are serious allegations of fraud which makes a virtual case of criminal offence or when the allegations are found to be complicated that the matter should be decided by the Civil Court but when mere allegation of fraud is made without any supporting material or without any cogent or substantial material and when it is found that it is only a device for wriggling out of the arbitration agreement, such allegations which are not serious in nature, they can be taken care of by the Arbitrator and the Arbitrator can deal with these issues. In Paragraph 22 and thereafter again in Paragraph 38 Hon'ble Supreme Court has dealt with the issue in detail and this Court finds that if the aforesaid principles are applied in the facts and circumstances of this case, it would be seen that the claim relating to fraud made in this particular case by Respondent No. 1 is a bald allegation. It only says that the case is based on wrong facts and a forged document has been annexed. However, it is seen that various allegations in the working of the partnership firm are also made in the counter affidavit of the respondent. That being so, looking to the nature of allegations levelled with regard to the forgery committed, this Court is of the considered view that the allegation does not meet the requirement of being one which falls in the category of a serious allegation made which prima facie indicates commission of a criminal offence, on the contrary, it falls in the category of an allegation simpliciter made without any substantial basis and primarily seems to be only for the purpose of avoiding reference of the dispute for arbitration. That being so, the objection raised is overruled. The application is allowed and Justice Sri Ramesh Kumar Datta, a retired Judge of this Court, is appointed as Arbitrator to adjudicate upon the dispute between the parties. The question of the partnership deed in question being a forged or fabricated document is also left open to be considered and decided by the learned Arbitrator while holding the proceedings. 7. The Request Case stands disposed of with the aforesaid.