IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE MONDAY, THE 15TH DECEMBER 2008 / 24TH AGRAHAYANA 1930 AR.No. 36 of 2008 ----------------------- APPLICANT: ----------------- V.K. SHIBU, S/O. K.J. KURIAKOSE, VALIAVEETIL HOUSE, MULANTHURUTHY-682 314. BY ADV. SRI.V.M.KURIAN SRI.MATHEW B. KURIAN SRI.K.T.THOMAS RESPONDENTS: ------------------------ 1. THOMAS JOHN KITHU, S/O. JOHN KITHU, KITHU HOUSE, KANDANAD- 682 305. 2. ANTO FRANCIS, S/O. FRANCIS, THADIKKARAN HOUSE, KALOOR, KOCHI - 682 017. BY ADV. SRI.T.O.XAVIER THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 15/12/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: PIUS C. KURIAKOSE, J. ------------------------------------------- A.R.No.36 of 2008 ------------------------------------------ Dated, this the 15th day of December, 2008 ORDER In this application under Section 11 of the Arbitration and Conciliation Act, 1996 ('the Act' for short), the applicant who is a partner of the partnership firm M/s.Southern Communications doing business in telecommunication apparatus seeks that an independent and impartial Arbitrator be appointed for settlement of the disputes between the applicant and the opposite parties who were also partners in the said firm. Annexure I is the copy of the partnership deed. It is submitted that in terms of clause 9.1 of Annexure 1 the applicant was nominated as the Managing Partner of the firm and the applicant claims that he has discharged all his duties as Managing Partner very sincerely. The applicant alleges that while he was trying to steer the business of the firm towards a profitable direction, the opposite parties were trying to sabotage the business of the firm through non-infusion of funds, excessive withdrawals and institution of commercial A.R.No.36 of 2008 2 ventures which were directly competitive to the business of the partnership firm. The applicant submits that realising the futility of continuing business as partners, the applicant gave notice to the opposite parties in March, 2008 for dissolution of the firm. Annexure 2 is the copy of that notice. The applicant submits that the opposite parties received Annexure 2 during the third week of March, 2008, but did not deny the averments of the applicant that the actions of the opposite parties had led to a situation whereby the business of the firm could not be continued. Annexures 3 and 4 respectively are the postal acknowledgment cards issued by opposite party No.1 and opposite party No.2 against Annexure 2. The applicant points out that clause 17(b) of Annexure 1 partnership deed is the arbitration agreement. Since Annexure 2 was of no avail, the applicant decided to invoke the arbitration clause. Accordingly the notice Annexure 5 was issued on 9.5.2008. The applicant submits that under Annexure 5 the applicant expressed his A.R.No.36 of 2008 3 desire to have the arbitration conducted by Sri.N.Sukumaran, retired District Judge. But despite Annexure 5, the opposite parties have not responded in any manner. Annexure 6 is the acknowledgement card of the first opposite party to Annexure 5 and Annexure 7 is the acknowledgement card of the second opposite party. The applicant alleges that the attitude of the opposite parties is deliberate and therefore, requests this Court to appoint an independent and impartial Arbitrator invoking the powers under the Arbitration and Conciliation Act. 2. A detailed counter affidavit has been filed by the opposite parties 1 and 2 wherein the allegations levelled by the applicant against them are stoutly denied. It is submitted that the partnership was not registered with the Registrar of Firms. The non-registration of the partnership with the Registrar of Firms, it is contended, is an act of cheating by the applicant. Referring to clause 17 (a) of Annexure 1 partnership deed, it is contended that the said clause has been violated by the applicant leading A.R.No.36 of 2008 4 to the institution of suit O.S.No.243 of 2006 before the Sub Court, Ernakulam by the financing bank. Very serious allegations are levelled against the applicant in the counter affidavit. It is alleged that the applicant contrary to his averment has been misappropriating the partnership funds. It is also alleged that substantial amounts are due to the opposite parties from the applicant on account of expenses incurred and for services rendered in connection with the partnership business. 3. I have heard the submissions of Sri.V.M.Kurian, learned counsel for the applicant and also Sri.T.O.Xavier, learned counsel for the opposite parties. Mr.Kurian drew my attention to the judgment of the Supreme Court in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd. (2008(4) KLT SN 52). 4. Having considered the pleadings and the rival submissions addressed at the Bar and in the light of the judgment of the Supreme Court in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd. (2008(4) KLT SN 52) A.R.No.36 of 2008 5 and also the judgment of the Constitution Bench of the Supreme Court in SBP & Co. v. Patel Engineering and another [(2005) 8 SCC 618], I am of the view that this application is only to be allowed. As noticed by the Supreme Court in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd. (2008(4) KLT SN 52), the Constitution Bench has segregated and identified the preliminary issues which may arise for consideration in an application under Section 11 of the Act into three categories (i) issues which the Chief Justice or his designate is bound to decide, (ii) issues which he can also decide and the issues which he may choose to decide and (iii) issues which should be left to the Arbitral Tribunal to decide. I am of the view that the issues in the present case which the Chief justice or his designate is bound to decide are whether the applicant has approached the appropriate High Court and whether there is arbitration agreement and whether the party who has filed the application is a party to such an agreement. Both the above issues necessarily have to be answered in A.R.No.36 of 2008 6 favour of the applicant. All the other issues fall within the categories 2 and 3. I am of the view that it is for the Arbitrator to be appointed by this Court to decide all the other issues. 5. Accordingly, allowing this application I appoint Sri.N.Sukumaran, Advocate and retired District Judge, 'Thriveni', Warriam Road, Ernakulam, Kochi-682016 as Arbitrator to adjudicate upon and settle all the disputes which survive between the applicant and the opposite parties. The Arbitrator will invite pleadings from the parties and will adjudicate all claims and counter claims, if any, from the side of the parties. The Arbitrator will enter upon reference at his earliest and make and publish the award without undue delay. PIUS C. KURIAKOSE, JUDGE vns