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2023 DIGILAW 39 (KER)

Sajini Mathew, wife of Abraham P. Mathew v. Mariamma Sakhariah, wife of V. A. Sakhariah

2023-01-12

N.NAGARESH

body2023
ORDER : 1. The petitioner and respondent executed a Partnership Deed on 15.09.2007 to establish a Partnership under the name and style 'St. Mary's Agencies'. The firm is engaged in the business of automobile fuels, oil and allied goods. 2. It was decided by the Partners to establish a petroleum retail outlet for carrying out the above business at Manarcadu. On account of the interference from the part of the husband of the respondent, it became impossible for the petitioner to look after the business of the firm in a peaceful manner, contends the petitioner. 3. On account of the undesirable interferences, several disputes have cropped up between the petitioner and the respondent. The cordial relationship between the Partners strained. On account of the undesirable events, it has become impossible for the petitioner to continue with the partnership arrangement and she desired to dissolve the same. 4. The Partnership Firm has been conducting the business on the basis of a Dealership Agreement between the firm and the Indian Oil Corporation Limited, executed on 22.08.2008. The period of the Dealership was fixed as 15 years from the date of execution. The Dealership Agreement will be terminated by efflux of time on 21.08.2023. 5. The partnership between the petitioner and the respondent is one at will. As per Clause 19 of Annexure-1 Partnership Deed, disputes or differences of opinion among the Partners, if not amicably settled, should be referred to an arbitrator mutually agreed upon. The disputes between the petitioner and the respondent arose as early as in the year 2021 itself, regarding the conduct of the business of the firm. Therefore, the petitioner informed the respondent that she suggests Bobby John K.A., Advocate, Kottayam as the Arbitrator. She also intimated the respondent that the respondent will be at liberty to suggest an Arbitrator of her choice, if she was dissatisfied with the Arbitrator suggested by the petitioner. The petitioner handed over a letter dated 15.03.2022 to the respondent requesting the appointment of the Arbitrator for settlement of disputes. The respondent has not replied. Hence, the petitioner filed the Arbitration Request. 6. The respondent entered appearance through counsel and resisted the Arbitration Request. The respondent stated that the application is premature and is liable to be dismissed at the very threshold. The original partnership agreement has not been produced by the petitioner. The allegations made in the AR are absolutely incorrect. Hence, the petitioner filed the Arbitration Request. 6. The respondent entered appearance through counsel and resisted the Arbitration Request. The respondent stated that the application is premature and is liable to be dismissed at the very threshold. The original partnership agreement has not been produced by the petitioner. The allegations made in the AR are absolutely incorrect. The petitioner has not issued any notice or other indentures expressing her willingness to quit from the Partnership Firm or has opted her to exercise her option at will. The petitioner has not stated in her petition the date on which she expressed her will to quit from Partnership and what are the reasons for her exercising the option. It is also not stated in her petition as to from which date onwards the dispute had arisen with particular reference to: (a) The nature of the dispute. (b) The date on which the alleged dispute had arisen. (c) The dates and events pointing out the fact that the continuance of the partnership business will not be conducive to her. (d) Signifying the intention to dissolve the partnership business. No document or scrap of paper has been produced by the petitioner to establish her allegations to hold that there was a dispute. 7. Clause 19 pre-supposes a dispute and every endeavor shall be made to settle it amicably, failing which alone the question of reference arises. Even as per Clause 19, the contemplated Arbitrator should be by consensus failing which alone the petitioner can resort to Section 11(6) of the Act. 8. In this case, there is no dispute raised to the notice of the respondent. There was no amicable settlement of the alleged dispute due to the fact that there is no dispute at all. As far as the agreement on the name of the Arbitrator is concerned, the respondent was never issued with any letter or correspondences appointing Sri. Bobby John Advocate, Kottayam as Arbitrator as claimed in the notice. The respondent has not been intimated or informed about the so-called appointment of the Advocate. The respondent never received Annexure-3 letter. There is no signature or any endorsement of receipt of notice by the respondent. There is no proof for delivery of Annexure-3 to the respondent. Therefore, the fundamental pre-requisites for invoking Section 11(6) had not been complied with and hence the application is liable to be dismissed, contended the respondent. 9. The respondent never received Annexure-3 letter. There is no signature or any endorsement of receipt of notice by the respondent. There is no proof for delivery of Annexure-3 to the respondent. Therefore, the fundamental pre-requisites for invoking Section 11(6) had not been complied with and hence the application is liable to be dismissed, contended the respondent. 9. I have heard the learned counsel for the petitioner and the learned counsel representing the respondent. 10. The petitioner and respondent admit Annexure-1 Deed of Partnership of the year 2007. Clause 19 of Annexure-1 reads as follows: Dispute or difference of opinion among the partners, if not amicably settled shall be refered to an arbitrator mutually agreed upon or as provided under the Indian Arbitration Act. 11. The petitioner would contend that there are disputes between the parties arising out of the partnership and the disputes are liable to be resolved by appointing an Arbitrator mutually agreed upon or as provided under the Arbitration Act. Though the counsel for the respondent would urge that there is no arbitrable dispute, the pleadings in the Arbitration Request and Annexure-1 notice would indicate that disputes have arisen in the administration of the Partnership. 12. It is clear from the pleadings that the parties have failed to amicably settle the disputes or to refer the matter for arbitration. Therefore, when one of the parties has invoked Section 11 of the Arbitration and Conciliation Act, 1996, an Arbitrator has to be appointed by this Court provided the conditions for appointment of Arbitrator under the Arbitration and Conciliation Act, 1996 are satisfied. 13. The counsel for the respondent would urge that no notice of arbitration as mandated by the Act, 1996 has been served on the respondent and hence the essential condition for appointment of Arbitrator has not been satisfied. The counsel for the petitioner would assert that an Arbitration Notice dated 15.03.2022 has been served on the respondent. 14. The petitioner has produced a copy of the arbitration notice dated 15.03.2022 alleged to have been served on the respondent, as Annexure-3. The respondent has no case that Annexure-3 notice was sent by post or registered post or speed post. There is no proof of posting the article nor there is any acknowledgment of its receipt by the respondent. The pleaded case of the petitioner is that Annexure-3 notice was handed over by the petitioner to the respondent. The respondent has no case that Annexure-3 notice was sent by post or registered post or speed post. There is no proof of posting the article nor there is any acknowledgment of its receipt by the respondent. The pleaded case of the petitioner is that Annexure-3 notice was handed over by the petitioner to the respondent. The date and time of such handing over is absent in the pleadings. In the circumstances of the case, I am unable to hold that there was proper service of arbitration notice by the petitioner, on the respondent. 15. The counsel for the petitioner, relying on the judgment of the Hon’ble High Court of Karnataka in M/s.Sandur Manganese and Iron Ores Ltd. v. M/s. R.K. Infra and Engineering (India) Ltd., [CMP No. 100007/2015] argued that there is no requirement of a notice to be issued while invoking Section 11(6) of the Act, 1996. 16. The counsel for the respondent, on the other hand, urged that for the purpose of setting into motion the arbitral procedure, this Court should be satisfied that the conditions precedent or exercise of power under Section 11 of the Act, 1996 are satisfied. When there was no proper notice by the petitioner, any appointment of Arbitrator will be invalid. 17. Section 21 of the Arbitration and Conciliation Act, 1996 provides that unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commences on the date on which a request for that dispute to be referred to arbitration is received by the respondent. Therefore, it is evident that there should be a request received by one of the parties, in order to commence arbitral proceedings. There is no valid request made by the petitioner in this Arbitration Request, in order to commence arbitration. 18. The contention of the petitioner is that in cases falling under Section 11(6) of the Act, 1996, there need not be a request by way of a notice of arbitration, as it has been so held by the Hon’ble High Court of Karnataka in M/s. Sandur Manganese and Iron Ores Ltd. (Supra). Section 11 of the Act, 1996 reads as follows: (1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Section 11 of the Act, 1996 reads as follows: (1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. (3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. (3-A) The Supreme Court and the High Court shall have the power to designate, arbitral institutions, from time to time, which have been graded by the Council under section 43-I, for the purposes of this Act: Provided that in respect of those High Court jurisdictions, where no graded arbitral institutions are available, then, the Chief Justice of the concerned High Court may maintain a panel of arbitrators for discharging the functions and duties of arbitral institution and any reference to the arbitrator shall be deemed to be an arbitral institution for the purposes of this section and the arbitrator appointed by a party shall be entitled to such fee at the rate as specified in the Fourth Schedule: Provided further that the Chief Justice of the concerned High Court may, from time to time, review the panel of arbitrators. (4) If the appointment procedure in sub-section (3) applies and— (a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, on an application of the party, by the arbitral institution designated by the Supreme Court, in case of international commercial arbitration, or by the High Court, in case of arbitrations other than international commercial arbitration, as the case may be. (5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made the appointment shall be made on an application of the party in accordance with the provisions contained in subsection (4). (6) Where, under an appointment procedure agreed upon by the parties,— (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, the appointment shall be made, on an application of the party, by the arbitral institution designated by the Supreme Court, in case of international commercial arbitration, or by the High Court, in case of arbitrations other than international commercial arbitration, as the case may be to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. 19. Clause 19 of Annexure-1 provides an appointment procedure for arbitration. The Clause contemplates parties to arrive at a mutual agreement on the Arbitrator and reference of dispute to the mutually agreed Arbitrator. 20. The appointment procedure contemplated under Section 11(5) requires a receipt of a request by one party from the other party to agree on an Arbitrator. There is no valid request made by any of the parties to agree on an Arbitrator. Therefore, this Court cannot exercise powers under Section 11(5) to appoint an Arbitrator. 21. Assuming that the present case falls under Section 11(6), even then, a party has to fail to act as required under the procedure prescribed by the arbitration agreement, in order to justify appointment of Arbitrator under Section 11(6) of the Act, 1996. In this case, there is nothing on record to show that there was any valid attempt by the petitioner to appoint an Arbitrator by mutual agreement. Hence, this Court cannot invoke powers under Section 11(6) of the Act, to appoint an Arbitrator. The Arbitration Request therefore fails and it is consequently dismissed.