IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.T.SANKARAN FRIDAY, THE 21ST JANUARY 2011 / 1ST MAGHA 1932 AR.No. 66 of 2010() ----------------------------- PETITIONERS: ---------------------- 1. MRS.KRISHNA BEN K.PATEL, KRISHNA NIVAS, WARRIAM ROAD, ERNAKULAM, KOCHI-682 016. 2. MRS.BAIBEN K.PATEL, MADHAVPURA, OPPOSITE HUBLI, DAHARWAD CORPORATION BUILDING, HUBLI-580 020. 3. MR.BHARAT K.PATEL, KRISHNA NIVAS, WARRIAM ROAD, ERNAKULAM, KOCHI-682 016. 4. MR.VINOD.B.PATEL, SHRI KRISHNA KRUPA, NEAR KUNDROLI SHIV TEMPLE, ALAKA, MANGALORE-570 003. BY ADVS. SRI.PREMJIT NAGENDRAN, SRI.K.B.SUBHAGAMANI. RESPONDENT(S): ---------------------------- NATWARLAL P.PATEL, HOUSE NO.39/2793, NEAR CHINMAYA COLLEGE, WARRIAM ROAD, ERNAKULAM, KOCHI-682 016. BY SRI.M.C.SEN, SENIOR ADVOCATE, BY ADV. SMT.VIDHYA. A.C., SRI.A.C.VENUGOPAL. THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 21/01/2011, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Kss K.T.SANKARAN, J. ------------------------------ A.R.No.66 OF 2010 ------------------------------ Dated this the 21st day of January, 2011 ORDER The petitioners and the respondent are partners of a firm M/s.Bharathkumar Patel & Company. It is stated that the Partnership was constituted in the year 1986. It was reconstituted and the last reconstitution was as per Annexure-A dated 1.4.1992. Disputes and differences arose between the partners, namely, the petitioners on the one hand and the respondent on the other hand. On behalf of the respondent, Annexure-B notice dated 26.10.2010 was issued to which Annexure-C reply dated 1.11.2010 was issued by the petitioners. Thereafter, as per Annexure-D notice dated 16.11.2010 issued on behalf of the petitioners, they nominated Sri.Joseph Kodianthara, Senior Advocate as the sole arbitrator. Annexure-E reply was issued on behalf of the respondent in which the respondent nominated Sri.K.Ramachandran, Advocate, A.R.No.66 OF 2010 2 (retired District Judge) as the sole arbitrator. 2. The Arbitration Clause is contained in paragraph 11 of Annexure-A which reads as follows: “11. Any dispute arising among the partners or between the legal representatives of the deceased partner and the remaining partners, regarding the interpretation of this deed or the rights and liabilities arising hereunder or in relation to any other matter whatsoever touching the affairs of this partnership, shall be settled by arbitration by a sole arbitrator to be mutually agreed upon, and if the parties cannot agree upon the choice of a sole arbitrator, each party to the dispute shall nominate one arbitrator and the reference shall be to such arbitrators jointly and the provisions of the Indian Arbitration Act, 1940 shall apply there to.” 3. In this Arbitration Request, the petitioners pray for appointing an Arbitrator. Probably, the petitioners filed this Arbitration Request since they thought that even number of arbitrators, one each appointed by either side, would not be a proper constitution of the Arbitration Tribunal. A.R.No.66 OF 2010 3 The petitioners relied on M.M.T.C.LIMITED v. STERLITE INDUSTRIES (INDIA) LTD.(1996)6 SCC 716) in support of the contention that the third arbitrator is to be appointed in the Arbitration Request. 4. Sri.M.C.Sen, learned Senior Counsel appearing for the respondent submitted that as per law, there is no bar in appointing two arbitrators and even if it is against Section 10(1) of the Arbitration and Conciliation Act, there is no bar for them to proceed with the arbitration and if there is difference of opinion between them, a third arbitrator can be appointed. It is submitted by the learned counsel for the respondent that as of now, both parties have appointed one arbitrator each which constitute a proper appointment of arbitrators as per the arbitration clause in the Partership Deed. The learned Senior Counsel relied on the decision in Narayan Prasad Lohia v. Nikunj Kumar Lohia And Others[(2002)3 SCC 572]. Paragraph A.R.No.66 OF 2010 4 17 thereof reads as follows: “We are also unable to accept Mr.Venugopal's argument that, as a matter of public policy, Section 10 should be held to be non-derogable. Even though the said Act is now an integrated law on the subject of arbitration, it cannot and does not provide for all contingencies. An arbitration being a creature of agreement between the parties, it would be impossible for the legislature to cover all aspects. Just by way of example Section 10 permits the parties to determine the number of arbitrators, provided that such number is not an even number. Section 11(2) permits parties to agree on a procedure for appointing the arbitrator or arbitrators. Section 11 then provides how arbitrators are to be appointed if the parties do not agree on a procedure or if there is failure of the agreed procedure. A reading of Section 11 would show that it only provides for appointments in cases where there is only one arbitrator or three arbitrators. By agreement parties may provide for appointment of 5 or 7 arbitrators. If they do not provide for a procedure for their appointment or there is failure of the agreed procedure, then Section 11 does not contain any provision for such a contingency. Can this be taken to mean that the agreement of the parties is invalid? The answer obviously has to be in the negative. Undoubtedly the procedure provided in Section 11 will mutatis mutandis apply for appointment of 5 or 7 or more arbitrators. Similarly, even if parties provide for appointment of only two arbitrators, that does not mean that the agreement becomes invalid. Under Section 11(3) the two arbitrators A.R.No.66 OF 2010 5 should then appoint a third arbitrator who shall act as the presiding arbitrator. Such an appointment should preferably be made at the beginning. However, we see no reason, why the two arbitrators cannot appoint a third arbitrator at a later stage i.e, if and when they differ. This would ensure that on a difference of opinion the arbitration proceedings are not frustrated. But if the two arbitrators agree and give a common award there is no frustration of the proceedings. In such a case their common opinion would have prevailed, even if the third arbitrator, presuming there was one, had differed. Thus we do not see how there would be waste of time, money and expense if a party, with open eyes, agrees to go to arbitration of two persons and then participates in the proceedings. On the contrary there would be waste of time, money and energy if such a party is allowed to resile because the award is not to its liking. Allowing such a party to resile would not be in furtherance of any public policy and would be most inequitable.” 5. In view of the submission made by the learned Senior counsel for the respondent, Sri.Premjith Nagendran, the learned counsel appearing for the petitioners submitted that the petitioners have no objection if the two arbitrators appointed by each party function as A.R.No.66 OF 2010 6 the Arbitration Tribunal. The learned counsel for the respondent has also no objection to such a course being adopted. In the light of the submissions, the learned counsel for the petitioners sought permission to withdraw the Arbitration Request. The Arbitration Request is, accordingly, dismissed as withdrawn after recording the submissions made by both sides. K.T.SANKARAN, JUDGE. cms