Dr. Arun Nirula vs Smt. Vidya Gandhi And Ors.
2005 Latest Caselaw 505 Del

JUDGMENT

S.K. Agarwal, J.

1. By this petition under Section 11 of the Arbitration and Conciliation Act, 1996, petitioner Dr. Arun Nirula is seeking appointment of an arbitrator to adjudicate upon the disputes with the respondents in terms of the agreement dated 25.10.1996.

2. Facts in brief are as follows: On 25.10.1996, petitioner entered into a partnership with the respondents, to carry on business for running guest house under the name and style of M/s. Ringo Guest House at Flat No. 17, Scindia House, Connaught Place, New Delhi-110 001; and he was inducted as a partner in place of Smt. Shubh Nirula. The agreement inter alia provided that in case of any dispute amongst the parties in respect of this deed, same shall be decided by an arbitrator. Clause 22 of the Agreement in question reads as under:

"That in case of any dispute between the parties in respect of this Deed or in respect of any matter relating to the Partnership Business, the same shall be decided by an Arbitrator under the Provisions of Indian Arbitration Act."

3. It is pleaded that petitioner inter alia filed a suit (Suit No. 565/2002) against the respondents, which was dismissed vide order dated 20.3.2003 by Hon'ble Mr.Justice J.D.Kapoor (as his Lordship then was), holding that as per arbitration clause the Arbitrator is to be appointed and the disputes can be resolved only through the arbitration; and parties were directed to appoint an Arbitrator within one month. Respondents have filed a reply, opposing the prayer for appointment of the Arbitrator.

4. I have heard learned counsel for the parties. Learned counsel for respondents argued that reference to the arbitrator is pre-mature because first reference is to be made by majority of the partners under Clause 19 of the Partnership Deed and only thereafter the question of appointment of arbitrator under Clause 22 can arise. It is further argued that there is no referable dispute as no amount is payable to the petitioner for the period in question and payments have already been made to the partners and the accounts are being maintained by the accountant.

5. Law with regard to appointment of arbitrators is well-settled by several authoritative pronouncements of the Apex Court. The court, while exercising jurisdiction under Section 11 of the Act is not required to adopt an adjudicatory role and return a verdict, recording reasons as to the existence or otherwise of the agreement or as to the tenability and legality of the respective claims. Even if there is an objection to the existence of an enforceable valid agreement, it has to be adjudicated by the arbitral tribunal and it is impermissible for the Court to undertake an adjudicatory task of judging contentious issues between the parties. Reference in this regard may be made to the recent decisions of the Supreme Court in Hindustan Petropeum Corporation Ltd. v. Pinkcity Midway Petroleums ; Konkan Railway Corporation Ltd. v. Rani Construction (P) Ltd. ; and FCI v. Indian Council of Arbitration and Ors. .

6. In this case it is admitted that petitioner and respondents were jointly doing business. The partnership deed contains a valid arbitration clause, therefore, the disputes arising between the parties have to be adjudicated by the arbitrator only. The issue sought to be raised by the learned counsel for respondents can only be examined during arbitration proceedings.

7. For the foregoing reasons, the petition is allowed and Mr.Justice K.S. Gupta, a retired Judge of this High Court, C-II/22, Bapa Nagar, New Delhi (Tel:23074147) is appointed as the sole arbitrator to decide the disputes between the parties. It shall be open to the parties to raise all claims and counter claims before the learned arbitrator. Parties shall appear before the learned arbitrator on 21th March, 2005 at 4.30 pm, and on such dates, that may be mutually agreed. The fee of the learned arbitrator is fixed at Rs.15,000/- per hearing, subject to maximum of Rs.1.50 lac, with the consent of the parties.

8. Petition stands disposed of. Copy of the order be send to learned arbitrator. dusty.