Bombay High Court
Bablu Namdev Navratne vs Khimji Jaisa Sanda on 23 March, 2016
Bench: R.D. Dhanuka
ppn 1 903.arbp-46.15.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
ARBITRATION PETITION NO.46 OF 2015
ALONG WITH
CIVIL APPLICATION NO.2 OF 2015
IN
ARBITRATION PETITION NO.46 OF 2015
Bablu Namdev Navratne )
Age- 41 yrs., Occ.-Business )
A-203, Chandu Avenue, )
Lodha Heaven, Nilje, )
Post- Nilje, Kalyan
Versus
ig ) .. Petitioner
1.Khimji Jaisa Sanda Krishna Enterprises)
Lodha Hevan Nilje, 2nd Phase, )
Near Bank of Baroda, Opp. Shakuntala )
Bulding, Chya Mage Krishan Residency)
Dombivali (E), Thane. )
2.Manabhai Ladabhai Patel )
B/301, Om Shree Swami Samarth Apt., )
Yeshoda Nagar Bus Stop, )
Thane (W), Thane. )
3.Manji B. Patel )
Mumbai Traders, Gokul Nagar, )
Agra Road, Thane (W), Thane. ) .. Respondents
---
Mr.Rupesh Jaiswal i/by Ms.Asmita Jaiswal for the petitioner.
Mr.D.W. Bhosale a/w Mr.S.K. Kolge for the respondents.
---
CORAM : R.D. DHANUKA, J.
DATE : 23rd March 2016
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Oral Judgment :-
. By this petition filed under Section 11 (4) of the Arbitration
and Conciliation Act, 1996 (for short "the said Act"), the petitioner seeks
appointment of an arbitrator.
2. There is no dispute that the arbitration agreement exists
between the parties as referred in Clause 16 of the Partnership Deed
dated 10th September 2011. The dispute arose between the parties. The
petitioner herein filed a petition bearing No.56 of 2014 under Section 11
of the said Act, inter alia, praying for appointment of an arbitrator. The
learned designate of the Chief Justice passed an order on 28 th October
2014 holding that the said petition did not disclose any notice as required
under Section 11(5) of the said Act having been served by the petitioner
on the respondents and accordingly dismissed the said arbitration
petition.
3. The petitioner, thereafter, issued a notice on 7 th November
2014 addressed to the respondent no.1-partnership firm and two partners.
The said notice was issued under Section 11(5) of the said Act for
invoking arbitration agreement recorded in Clause 16 of the Partnership
Deed and calling upon the respondents to revert back within 7 days from
the date of receipt of the said notice. Admittedly, the said notice was
served only upon one of the partners Mr.Manabhai Ladabhai Patel on
22nd December 2014 and not on the partnership firm. The arbitration
petition is affirmed on 7th November 2014. The arbitration petition is
however lodged on 19th January 2015.
ppn 3 903.arbp-46.15.doc
4. Learned counsel appearing for the respondents raises an
issue of maintainability of this arbitration petition on the ground that the
petition has not been filed after expiry of 30 days' notice to be computed
from the date of receipt of notice by the respondents and is pre-mature.
It is submitted that the partnership firm as well as one of the partners
have not been served with any notice of arbitration petition.
5. Learned counsel appearing for the petitioner submits that
there is an agreed procedure for appointment of an arbitrator prescribed
under Clause 16 of the Partnership Deed. Since the respondents did not
agree for appointment of an arbitrator inspite of notice received by at
least one of the partners of the partnership firm, the provisions of Section
11(6) of the said Act would stand attracted and not Section 11(5) of the
said Act. He submits that under Section 11(6) of the said Act, there is no
time of 30 days prescribed for issuing any notice and thus even if the
notice period of 30 days had not expired on the date of receipt of the
notice by one of the partners, the present petition is maintainable. In
support of this submission, the learned counsel placed reliance on the
judgment of this Court in the case of Smt.Satya Kailashchandra Sahu
& Ors. Vs.M/s.Vidarbha Distillers, Nagpur & Ors., reported in AIR
1998 Bombay 210 and more particularly paragraphs 39 and 40 thereof.
He also placed reliance on the judgment of the Jharkhand High Court in
the case of M/s.P.B. Enterprises, Engineers and Contractors, Burdwan,
Vs.Eastern Coalfields Limited, Burdwan & Ors., reported in AIR 2004
Jharkhand 71 and in particular paragraphs 11 and 12 thereof. He
submits that the period of limitation for filing an application under
Section 11(6) of the said Act read with Article 137 of Schedule I to the
Limitation Act, 1963 is three years and not 30 days.
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6. In so far as preliminary objection raised by the respondents
that admittedly no notice invoking arbitration was served upon the
partnership firm and one of the partners is concerned, it is submitted by
the learned counsel that under Section 24 of the Indian Partnership Act,
1932, if a notice is served upon an acting partner, such notice to a partner
operates as a notice to the firm, except in the case of a fraud on the firm
committed by or with the consent of that partner.
7. Learned counsel for the respondents, on the other hand,
submits that there is no agreed
ig procedure under the arbitration
agreement for appointment of an arbitrator and thus, Section 11(6) of the
said Act would not be applicable. He submits that Section 11(5) of the
said Act would apply. Since the arbitration petition is filed before expiry
of 30 days' notice, the arbitration petition is pre-mature.
8. My attention is invited to the arbitration agreement recorded
in Clause 16 of the Partnership Deed in support of the submission that
no agreed procedure was prescribed under the said arbitration agreement
for an appointment of an arbitrator.
9. I shall first deal with the submission of the learned counsel
for the petitioner that there was an agreed procedure prescribed under
the arbitration agreement and thus Section 11(6) of the said Act will be
attracted in the facts of this case.
10. A perusal of the arbitration agreement recorded in Clause
16 of the Partnership Deed indicates that in case of dispute between the
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parties arising out of the Partnership Deed, the dispute shall be referred
to the arbitration. The said clause does not provide any procedure for
appointment of an arbitrator. It provides that the arbitration proceedings
will be resolved under the provisions of the law applicable to the
arbitration.
11. A perusal of Section 11(2) of the said Act makes it clear that
subject to sub-section (6) of Section 11, the parties are free to agree on a
procedure for appointing an arbitrator or arbitrators. Section 11 (3)
provides that failing any agreement referred to in sub-section (2) of
Section 11, 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. Section 11(4)
which is to be read with Section 11(3) provides that if the appointment
procedure in sub-section (3) applies and a party fails to appoint an
arbitrator within thirty days from the date of receipt of a request to do so
from the other party; or 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, upon request of a party, by the Chief Justice
or any person or institution designated by him.
12. A conjoint reading of Sections 11(2), 11(3) and 11(4) of
the said Act makes it clear that failing any agreement referred to in sub-
section (2) of Section 11, if a party fails to appoint an arbitrator within
thirty days from the receipt of a request to do so from the other party;
upon request of a party, the Chief Justice or any person or institution
designated by him to appoint an arbitrator.
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13. Section 11 (5) of the said Act further provides that failing
any agreement referred to in sub-section (2) of Section 11, 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, upon request of
a party, by the Chief Justice or any person or institution designated by
him. It is thus clear beyond reasonable doubt that in this case, since in
the arbitration agreement, the parties have not agreed on number of
arbitrators, the arbitral tribunal shall consist of a sole arbitrator in view of
Section 10 of the Arbitration and Conciliation Act. Since there was no
agreed procedure, in my view, Section 11(5) of the said Act would apply
to the facts of this case.
14. Section 11(6) of the said Act would apply only if the
appointment procedure was agreed between the parties which in this
case is absent. I am thus not inclined to accept the submission of the
learned counsel for the petitioner that either there was an agreed
procedure for appointment of an arbitrator in the arbitration agreement
recorded in Clause 16 of the partnership deed or that Section 11(6) of
the said Act would be applicable to the facts of this case.
15. A perusal of the order passed by this Court on 28 th October
2014 in the earlier Arbitration Petition No.56 of 2014 filed by the
petitioner also clearly indicates that the said arbitration petition was
rejected by this Court having found that the petition did not disclose any
notice as required under Section 11(5) of the said Act.
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16. A perusal of the notice issued by the petitioner on 7 th
November 2014 also clearly indicates that the said notice was issued
by the petitioner under Section 11(5) of the said Act. A perusal of the
arbitration petition filed by the petitioner indicates that the petition was
already affirmed on 7th November 2014. Prior to 7th November 2014, the
petitioner had not even issued a notice invoking arbitration agreement.
After affirming the arbitration petition on 7th November 2014, the
petitioner made correction in paragraph 11 of the arbitration petition
stating that the notice was sent on 22 nd December 2014 which was
much after affirmation of the arbitration petition. Be that as it may, the
arbitration petition is admittedly lodged on 19th January 2015 i.e. before
expiry of 30 days from the date of receipt of notice by one of the partners
of the partnership firm.
17. In so far as the judgment of this Court in the case of
Smt.Satya Kailashchandra Sahu & Ors. (supra) relied upon by the
learned counsel for the petitioner in support of his submission that no
period of 30 days is prescribed under Section 11(6) of the said Act is
concerned, in my view, this judgment does not apply to the facts of this
case, since there is no agreed procedure prescribed in the arbitration
agreement. This judgment does not indicate that even for filing of an
application under Section 11(6) of the said Act, the applicant is not
required to wait for expiry of 30 days from the date of receipt of the
notice before filing of an application under Section 11(6) of the said Act.
Reliance placed on the judgment of this Court in the case of Smt.Satya
Kailashchandra Sahu & Ors. (supra) thus is totally misplaced.
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18. In so far as the judgment of the Jharkhand High Court in the
case of M/s.P.B. Enterprises, Engineers and Contractors, Burdwan,
(supra) relied upon by the learned counsel for the petitioner in support
of his submission that Article 137 will apply and thus the petition could
have been filed within three years is concerned, in my view, this
judgment relied upon by the learned counsel for the petitioner discloses
a total non-application of mind. The respondents have not raised any
issue of limitation in filing the arbitration petition under Section 11 of
the said Act, but the contention of the learned counsel for the petitioner is
that the petition is pre-mature. The judgment of the Jharkhand High
Court in the case of M/s.P.B. Enterprises, Engineers and Contractors,
Burdwan, (supra) thus does not assist the case of the petitioner. In my
view, even if the notice is received by one of the partners of the
partnership firm, the fact remains that before expiry of 30 days from
the date of receipt of such notice, the petitioner admittedly has already
lodged this petition. The day on which the petitioner had got this petition
affirmed, the notice under Section 11(5) of the said Acts was not even
issued by the petitioner. The petitioner subsequently lodged the petition
and made those corrections in the arbitration petition.
19. The arbitration petition, in my view, is thus pre-mature and
is not maintainable. The petition is accordingly dismissed. No order as
to costs. In view of dismissal of the arbitration petition, civil application
does not survive and is accordingly dismissed.
R.D. DHANUKA, J.
