S.b. Arbitration Application v. Smt Parveen Arya

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR S.B. Arbitration Application No. 93 / 2016 Smt. Tulsi Khemawala W/o Shri Suresh Kumar Agarwal, Aged About 47 Years, R/o A-G-4 Niliyam Sutlej Apartment, Sector 2, Vidhya Dhar Nagar, Jaipur, Raj. ----Petitioner Versus Smt Parveen Arya W/o Shri Vishupal Arya, R/o Rawatsar Road, Near Railway Crossing, Hanumangarh Town, Rajasthan. At Presently ResidingAt Arya Niwas, Income Tax Colony, Durgapura, Jaipur ----Respondent _____________________________________________________ For Petitioner(s) : Mr. Mahendra Shandilya For Respondent(s) : Mr. Ganesh Sharma _____________________________________________________ HON'BLE MR. JUSTICE MOHAMMAD RAFIQ Judgment 01/09/2017 This application under Section 11(6) of the Arbitration andConciliation Act, 1996, has been filed by petitioner Smt. TulsiKhemawala, praying for appointment of independent and impartialArbitrator to convene arbitration proceedings to adjudicate the disputearising out of partnership agreement dated 10.12.2016 between thepetitioner and respondent regarding properties of the partnership firmM/s. Shree Krishana Stone Crusher. The petitioner is the partner of firm M/s. Shree Krishana StoneCrusher, which is a partnership firm registered with the Registrar ofFirms, Government of Rajasthan. Respondent is another partner of thefirm. A partnership agreement deed was executed between thepetitioner and the respondent on 10.12.2000. The registered office ofthe said firm is situated at the land bearing Khasra No.1094/1853measuring 0.84 hectare situated in village Bilochi, Tehsil Amber, DistrictJaipur, which is the property of the firm occupied in the stone crusher purposes. Under condition no.7 of the partnership agreement, it wasagreed between the parties that the profit and loss of the partnershipafter providing interest on capital and remuneration to working partnersshall be shared by the partners in the share of 50:50. Condition no.9 ofthe partnership agreement provided that the land and mine available tothe partners will be available for the present business of the firm andthe estimated value of the same will be credited against their capital.The business of the firm, which was started from 06.12.2000, wassmoothly carried out by the petitioner till 05.08.2016. As per thepetitioner, however, the husband of the respondent Mr. Vishupal Arya ontelephonic call made on 05.08.2016 conveyed the petitioner to stop thecrusher and threatened and abused the workers. On 15.08.2016 againthe husband of the respondent and one Chetan Choudhary reached thepremises of the firm and looked down the premises and houses there.He refused to settle the account of the firm according to its propertiesincluding the land, plant & machinery. Due to such act on his part, thecrusher had to be stopped. No production was carried out after15.08.2016. Mr. Mahendra Shandilya, learned counsel for petitioner, submittedthat condition no.12 of the partnership deed especially incorporated,deals with the dispute and difference at any time arising out betweenthe parties, and provides that the same shall be referred to Arbitrator inaccordance with the provisions of the Arbitration Act, 1940. Thepetitioner therefore served a legal notice on the respondent by theregistered post on 12.09.2016 through her counsel therein, wherein itwas stated that the respondent had illegally locked the businesspremises of the firm and the stone crusher. The plant and machinery ofthe firm has been illegally captured by the respondent and thereforecannot presume such dispute and matter be referred to the Arbitrator. Mr. Mahendra Shandilya, learned counsel for petitioner, submittedthat condition no.12 of the partnership deed especially incorporated,deals with the dispute and difference at any time arising out betweenthe parties, and provides that the same shall be referred to Arbitrator inaccordance with the provisions of the Arbitration Act, 1940. Thepetitioner therefore served a legal notice on the respondent by theregistered post on 12.09.2016 through her counsel therein, wherein itwas stated that the respondent had illegally locked the businesspremises of the firm and the stone crusher. The plant and machinery ofthe firm has been illegally captured by the respondent and thereforecannot presume such dispute and matter be referred to the Arbitrator. The petitioner proposed name of one Mr. Nitin Vyas to be appointed asan Arbitrator to resolve the dispute arising out of partnership deeddated 10.12.2000. The respondent through her counsel sent reply dated24.09.2016 to the said legal notice of the petitioner, in which thoughshe admitted arbitration proceedings in the partnership deed but did notagree on the proposed name of the Arbitrator and rather took a standthat the Arbitration Act, 1940 does not apply to the unregisteredpartnership firm. It is therefore prayed that the application be allowed. Mr. Ganesh Sharma, learned counsel for the respondent, opposedthe application and submitted that since the firm is unregistered, theArbitration Act, 1940 does not apply to the dispute in questionnotwithstanding the arbitration clause in the partnership deed. Thepartnership deed was simply notarized and it was not registered by theRegistrar of Firms and since it is an unregistered firm at the time thedeed was executed. The registration certificate of the firm would showthat it was registered in the year 2014 after 14 years from theformation of the firm. The registration has been made without consentof the respondent and without informing her and it is also that the firmwas registered for business in urban area while the work area of thefirm was rural. Learned counsel submitted that the allegation of the petitioner isthat the husband of the respondent telephoned the petitioner to stopthe work is totally baseless. He also denied the allegation that thehusband of the respondent locked the business premises of the firm.The husband of the petitioner had filed a false report in this regardbefore the Police Station, Harmada and police did not find any offenceafter investigation. It is argued that the legal notice was sent under theprovisions of the Act of 1940, whereas there is no enactment by thatnomenclature as of now. Besides, the present application has been moved under the provisions of the Arbitration and Conciliation Act,1996. It is therefore prayed that the application be dismissed. Learned counsel submitted that the allegation of the petitioner isthat the husband of the respondent telephoned the petitioner to stopthe work is totally baseless. He also denied the allegation that thehusband of the respondent locked the business premises of the firm.The husband of the petitioner had filed a false report in this regardbefore the Police Station, Harmada and police did not find any offenceafter investigation. It is argued that the legal notice was sent under theprovisions of the Act of 1940, whereas there is no enactment by thatnomenclature as of now. Besides, the present application has been moved under the provisions of the Arbitration and Conciliation Act,1996. It is therefore prayed that the application be dismissed. Having heard learned counsel for petitioner as also learnedcounsel for respondent and perused the material on record, this courtfinds that the allegation of the respondent that the firm was notregistered, is untenable because as per own showing of the respondent,the firm was later registered in the year 2014. Even otherwise I had theoccasion to deal with similar objection in Abhishek Soni Vs. SanjeevSoni – 2016 (3) WLC (Raj.) 759, wherein this court has alreadyoverruled this objection by holding that the non-registration ofpartnership firm would not be a bar under Section 69 of the IndianPartnership Act of 1932 for proceeding under Section 11 of the Act of1996. Second objection of the respondent is that reference ofArbitration Act, 1940 is made in Clause 12 of the Partnership Deed,whereas the Arbitration Act, 1940 has already repealed and is no morein existence. Even this objection is unfounded. Even if the Clause 12 ofthe Partnership Deed has reference of the Arbitration Act, 1940, whichhas been repealed by the subsequent Act i.e. the Arbitration andConciliation, 1996, the reference to the Arbitration Act, 1940 for thepresent purpose shall be construed to mean the Act of 1996. In thepresent case, the agreement was entered between the parties in theyear 2000 and therefore therein the provisions of the Act of 1940 wouldnot apply as by that time the Act of 1996 was in existence. The schemeof the Act of 1996 is different and the process of mechanism foralternate dispute resolution system has to be construed not identical tothe of Act of 1940, considering the difference in their schemes. This court had an objection to deal with similar objection in ShriPashupati Gaushala Vs. State Government of Rajasthan andOthers – S.B. Arbitration Application No.68/2012, decided vide judgment dated 12.05.2017, wherein it has been held that referenceto Arbitration Act of 1940 of the Central Legislature in the relevantClause of agreement should be taken to have been substituted byArbitration and Conciliation Act, 1996 as the intention of the parties wasto submit their matter to the arbitration in the event of any disputearising between them in respect of interpretation or compliance with theterms of the lease or the sufficiency thereof, or to any matter or thingsin any way connected with the agreement. The application succeeds and is allowed. Hon'ble Mr. Justice G.S.Sarraf (Retd.), R/o E-45, Sidharth Nagar, Sector 13, Malviya Nagar,Jaipur (Telephone Number 0141-2547123 and Cell Number ), is hereby appointed as an independent sole arbitrator toresolve the disputes between the parties. Payment of the costs ofarbitration proceedings and the arbitration fees shall be made as perthe Fourth Schedule of the Arbitration and Conciliation (Amendment)Act, 2015 read with Manual of Procedure for Alternative DisputeResolution, 2009 of this Court, as amended from time to time. A copy of this order be sent to Hon'ble Mr. Justice G.S. Sarraf(Retd.), R/o E-45, Sidharth Nagar, Sector 13, Malviya Nagar, Jaipur, forneedful. (MOHAMMAD RAFIQ)J. //Jaiman//12