ORDER SHEET AP 517 OF 2018 IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction ORIGINAL SIDE SRI [PRECEDENT]
BEFORE:
The Hon'ble JUSTICE [ENTITY] Date : 6th February, 2019.
Mr. [ENTITY], Ms. [ENTITY], advs for petitioner. Mr. [ENTITY], Mr. [ENTITY], adv for respondent. The Court : This arbitration petition is for appointment of arbitrator. Mr. [ENTITY], learned advocate appears on behalf of petitioner and submits, his client is partner in partnership constituted by Deed dated 1st April, 1995. The Deed carries arbitration agreement by clause 24 therein, which is reproduced below:
"That in the event of any dispute, or difference of opinion in the matter of interpretation, execution of carrying out the objects and functions of the enterprise arbitrators shall be appointed and the arbitrators appointed shall amongst themselves appoint an Umpire. The decision of the arbitrators would be binding on the parties to the disputes. In the event of any difference amongst them the decision of the Umpire would be final and binding upon all concerned according to the provisions of the [ACT]."
By letter dated 14th December, 2017, caused to be written on behalf of his client, notice of disputes arisen in respect of partnership business was given along with nominee arbitrator of his client. On failure of respondent to nominate her arbitrator, this petition made for appointment of respondent's nominee arbitrator, by Court. He submits, there is agreed procedure for appointment of arbitrators but same has failed. Court should appoint sole arbitrator considering cost impact being heavier in case arbitral tribunal consists of three arbitrators.
He submits, resistance of respondent to submit to arbitration is based on fact of civil suit filed by her, for declaration of title to properties. Though his client has filed application under [SECTION] of [ACT], in the civil court but said application is pending. According to him, adjudication of this petition culminating in appointment of arbitrator cannot be resisted on ground of pendency of either the suit or the [SECTION] application or what can be their result on adjudication. He relies on judgment of Supreme Court in [PRECEDENT], to paragraphs 32 to 38 with special emphasis on paragraph 36, which is reproduced below:
"36. The well-recognised examples of non-arbitrable disputes are:
(i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes."
Mr. [ENTITY], learned advocate appears on behalf of respondent and submits, suit has been filed, on subject matter of the arbitration agreement, wherein claims are for declaration of title. Such claims are for relief by decree in rem. The suit cannot be stayed and, hence, there should not be multiplicity of proceedings by compelling his client to also participate in arbitration. He relies on judgment of Supreme Court in [PRECEDENT] wherein dismissal of application made under [SECTION] in a suit relating to tenancy was upheld. Without prejudice to above submission he submits, when petitioner has claimed to have retired, partnership stands dissolved, hence, obliterating arbitration agreement contained in deed of it.
In a petition invoking [SECTION] for appointment of arbitrator Court is required to only examine existence of arbitration agreement per sub-section (6A). Existence of the Partnership Deed is undisputed. The Deed carries arbitration agreement as clause 24 in it. Rights of parties in working out the Deed has given rise to disputes. While petitioner appears to claim properties are partnership properties, respondent would claim otherwise and, hence, has filed suit for declaration of title.
Reference of disputes to arbitration will naturally confine the proceeding to ascertaining whether properties, in relation to disputes raised, are partnership properties and if so, the manner in which they are to be dealt with on dissolution of the firm, since petitioner has expressed desire to retire and has also alleged that he has been ousted from the partnership. If respondent has a clear case on title, she can successfully resist claims made in arbitration, in respect of suit properties, irrespective of awaiting result in her suit. What is important for adjudication of this arbitration petition is that arbitration agreement exists. While on the one hand [PRECEDENT] (supra) broadly declares what issues are not arbitrabe, respondent relies on [PRECEDENT] (supra), which is sought to be distinguished on exception made in [PRECEDENT] (supra) on application of special tenancy statute.
Court finds, there being appointment procedure agreed upon by parties, respondent has failed to act as required under that procedure and, hence, petitioner has asked for necessary measure since the appointment procedure does not provide other means for securing the appointment. So far as submission regarding obliteration of arbitration agreement is concerned, firstly, there has not been demonstration of acceptance of notice of retirement, provided said notice dated 14th December, 2017 is taken to be a notice of retirement and secondly, even if there has been retirement and consequent dissolution of the firm, that by itself would not cause the arbitration agreement to perish.
Mr. [ENTITY], Advocate, Bar Library Club, High Court, Calcutta is appointed arbitrator. Copy of this order of appointment is to be communicated to the arbitrator. Arbitral tribunal will fix its remuneration with reference to [SECTION] of the Act. Parties must bear costs of arbitration in equal share.
Arbitration petition is disposed of.
([ENTITY], J.) pkd.