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Madhya Pradesh High Court · body

2020 DIGILAW 31 (MP)

Narendra Singh v. Ashendra Mishra

2020-01-07

PRAKASH SHRIVASTAVA

body2020
ORDER : By this application u/S.11(6) of the Arbitration and Conciliation Act, 1996 the prayer has been made for appointment of independent Arbitrator for resolving the dispute between the parties. 2. The case of the applicant is that the applicant and the respondent are in partnership in a partnership firm working in the name and style of M/s.Kautilya Academy. The partnership firm undertakes the coaching activity and prepares the students for participating and clearing the competitive examinations like UPSC, MPPSC, Sub Inspector, Bank, PO Examinations etc. Further case of the applicant is that the petitioner and respondents are working as partnership and doing the coaching activity since 2003 and in the year 2008, the terms of partnership were decided and the partnership deed dated 3/1/2008 was executed and as per the partnership deed, each of the partner has 1/3 share. Further case of the applicant is that the partnership deed contains the arbitration clause and the respondents had acted in violation of the clauses of the partnership deed and have indulged in siphoning the funds and business of the Firm. It has been alleged that the respondents have opened a number of parallel coaching institute and have allotted unauthorized franchisees of Kautilya Academy without the consent of the applicant and that the resembling trade marks have frivolously got registered in the name of the respondent No.2. The applicant had given the notice dated 9/3/2018 to the respondents for appointment of the Arbitrator and by the reply dated 24/3/2018 the respondent No.2 had denied the agreement itself, hence the present application has been filed. 3. The respondent No.2 has filed the reply denying the execution of any such partnership deed or doing the business in the name of the partnership deed. The documents filed along with the application have been denied as false and fabricated and a plea has also been raised that the clause in the deed is not an arbitration clause and there are serious allegation of forgery and fraud which cannot be decided by the Arbitrator and the civil suit is already pending. 4. Learned counsel for applicant submits that since the partnership deed was executed between the parties which contains the arbitration clause and that the dispute has arisen between the parties on account of the respondents acting in contravention of the conditions of deed and, therefore, the Arbitrator needs to be appointed. 5. 4. Learned counsel for applicant submits that since the partnership deed was executed between the parties which contains the arbitration clause and that the dispute has arisen between the parties on account of the respondents acting in contravention of the conditions of deed and, therefore, the Arbitrator needs to be appointed. 5. Opposing the prayer, learned counsel for respondents has submitted that there is no partnership deed, there is no arbitration clause and there is serious allegation of fraud and forgery which cannot be decided by the Arbitrator and the remedy is the civil suit. 6. Having heard the learned counsel for parties and on perusal of the record, it is noticed that the applicant is seeking appointment of the Arbitrator on the basis of the partnership deed Annexure P/1 dated 3rd January, 2008. It is not a registered partnership firm. The very execution of this partnership has been denied by the respondents. The signature of the respondents contained in this deed are stated to be the fabricated signature. Similarly, the signature which are contained in the documents enclosed with the arbitration case have been denied by the respondents and a plea has been taken that these signatures are fabricated and forged signature and the respondent has not signed these documents. Hence, a serious dispute exists between the parties in respect of the execution of the partnership deed which can be decided by the competent civil court by permitting the parties to lead evidence. 7. The alleged partnership deed contains the following clause. ^^8- iap fu.kZ;%& Hkkxhnkjksa ds vkilh >xM+ksa ,oa erHksnksa dk fu.kZ; Hkkxhnkjksa }kjk fu;qDr ,d ;k ,dkf/kd iapksa }kjk fd;k tkosaxk tks lHkh mDr of.kZr Hkkxhnkjx.kksa ds firk gksaxsA ;fn fdlh fLFkfr esa ,slk laHko ugha gqvk rks leLr Hkkxhnkjx.k vkilh lgefr }kjk mDr iapksa dk p;u djsaxsA 9- U;k;ky;hu dk;Zokgh%& ;g fd] ;fn fdlh fookn dk fujkdj.k mDr iap i}fr ls laHko ugha gksrk gS] rks mDr fookn dk U;k;ky;hu dk;Zokgha }kjk fujkdj.k fd;k tkosxkA ftlesa yxus okyk leLr O;; mDr rhuksa Hkkxhnkjx.kksa }kjk leku :i ls ogu fd;k tkosaxkA^^ 8. The stand of the respondent is that the aforesaid clause is not the arbitration clause. 9. The Supreme court in the matter of K.K. Modi Vs. The stand of the respondent is that the aforesaid clause is not the arbitration clause. 9. The Supreme court in the matter of K.K. Modi Vs. K.N. Modi and others (1998)3 SCC 573 have enumerated the essential attributes of the arbitration agreement as under:- “17-Among the attributes which must be present for an agreement to be considered as an arbitration agreement are : (1) The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement, (2) That the jurisdiction of the tribunal to decide the rights of parties must derive either from the consent of the parties or from an order of the Court or from a statute, the terms of which make it clear that the process is to be an arbitration, (3) The agreement must contemplate that substantive rights of parties will be determined by the agreed tribunal, (4) That the tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal owing an equal obligation of fairness towards both sides, (5) That the judgment of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law and lastly, (6) The agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the tribunal.” 10. The above clauses 8 and 9 of the partnership deed reveal that the decision of the Arbitrator is not treated to be final and the option of approaching the civil court has been left open to the parties. The attributes which are mentioned by the Supreme Court in the case of K.K. Modi (supra) are missing in the alleged arbitration clause in the present case. 11. The record further reflects that the dispute between the parties is in respect of misuse of the trade mark Kautilya Academy. The Supreme Court in the matter of A.Ayyasamy Vs. A. Paramasivam and others (2016) 10 SCC 386 has mentioned certain disputes which are not arbitrable and patent trade mark and copyright is one such category of dispute. In the case of Ayyasamy (supra) the Hon’ble Supreme Court has held that:- “14--In the instant case, there is no dispute about the arbitration agreement inasmuch as there is a specific arbitration clause in the partnership deed. In the case of Ayyasamy (supra) the Hon’ble Supreme Court has held that:- “14--In the instant case, there is no dispute about the arbitration agreement inasmuch as there is a specific arbitration clause in the partnership deed. However, the question is as to whether the dispute raised by the respondent in the suit is incapable of settlement through arbitration. As pointed out above, the Act does not make any provision excluding any category of disputes treating them as non-arbitrable. Notwithstanding the above, the Courts have held that certain kinds of disputes may not be capable of adjudication through the means of arbitration. The Courts have held that certain disputes like criminal offences of a public nature, disputes arising out of illegal agreements and disputes relating to status, such as divorce, cannot be referred to arbitration. Following categories of disputes are generally treated as non-arbitrable: (i) patent, trademarks and copyright; (ii) anti-trust/competition laws; (iii) insolvency/winding up; (iv) bribery/corruption; (v) fraud; (vi) criminal matters. Fraud is one such category spelled out by the decisions of this Court where disputes would be considered as non-arbitrable.” 12. The record further reflects that there are serious allegation of fraud and forgery made by the applicant in the arbitration case and in terms of the judgment in the case of Ayyasamy (supra) also the matter relating to fraud cannot be referred to the Arbitrator. 13. That apart, the record further reflects that the respondent No.2 has already filed the civil suit at Indore against the applicant u/O.7 Rule 1 of the CPC read with Sec.62 of the Copyright Act, 1957 seeking declaration and permanent injunction against the applicant. 14. Though, counsel for petitioner has placed reliance upon the judgment of the Supreme Court in the matter of Abdul Kadir Shamsuddin Bubere Vs. Madhav Prabhakar Oak AIR 1962 SC 406 wherein it has been held that not every allegations imputing dishonesty would be enough for court to take matters to arbitration forum but the factual position in that case was entirely different. Similarly counsel for petitioner has placed reliance upon the judgment of the Supreme Court in the matter of State of Orissa and others Vs. Similarly counsel for petitioner has placed reliance upon the judgment of the Supreme Court in the matter of State of Orissa and others Vs. Bhagyadhar Dash (2011) 7 SCC 406 wherein the test has been laid down to determine the arbitration clause, but in the present case not only the existence of the arbitration clause is in dispute, but the very execution of the partnership deed containing the alleged arbitration clause has been disputed. Counsel for petitioner has also placed reliance upon the judgment of the Supreme Court in the matter of A.Ayyasamy Vs. A. Paramasivam and others (2016) 10 SCC 386 wherein it has been held that only in cases of serious fraud, the reference of dispute to the arbitration should be refused but in the present case not only there is allegation of fraud, but the agreement is in dispute and civil suit has already been filed. 15. Having regard to the aforesaid circumstances of the case, I am of the opinion that it is not a fit case for allowing the prayer for appointment of Arbitrator u/S.11 of the Arbitration and Conciliation Act. The proper remedy available to the applicant is to approach the civil court and establish the partnership deed by leading the oral as well as the documentary evidence and then establish the allegation of fraud. 16. Hence, the arbitration case is dismissed, however with liberty to the applicant to approach the civil court.