Delhi High Court
Sh.Puneet Chandna vs Sanjay Kumar on 23 January, 2009
Author: Anil Kumar
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ AA No.352/2007
% Date of Decision: 23.01.2009
Sh.Puneet Chandna ....... Petitioner
Through: Ms.Harvinder Oberoi, Advocate.
Versus
Sanjay Kumar ........ Respondent
Through : Mr.Sanjay Kumar, Advocate.
CORAM :-
HON'BLE MR. JUSTICE ANIL KUMAR
1. Whether reporters of Local papers may be YES
allowed to see the judgment?
2. To be referred to the reporter or not? NO
3. Whether the judgment should be reported in NO
the Digest?
ANIL KUMAR, J.
*
1. This is a petition under Section 11 of the Arbitration and
Conciliation Act, 1996 for appointment of an Arbitrator. The petitioner
contended that he entered into a partnership agreement for running the
business under the name and style of M/s. Unigenetics Inc having
registered office at C-1/121, First Floor, Janakpuri, New Delhi. The
share of the plaintiff was 55% whereas the share of the respondent was
45%. According to the petitioner, the partnership was dissolved and a
deed of dissolution dated 6th January, 2007 was executed which was
duly signed by the parties.
2. It is asserted by the petitioner that few days after the execution
and singing of deed of dissolution, the respondent along with his
brother, Mr. Rajiv Jain started threatening the petitioner and his wife.
According to the petitioner, in gross violation of the terms of dissolution,
the respondent has illegally, wrongfully and fraudulently transferred
Rs.1824/- to one Mr. Prabhjeet Singh. The respondent also withdrew a
sum of Rs.7,32,824/- against the total credit of Rs.6,66,035/-. It is
contended that the respondent has withdrawn a sum of Rs.67,789/- in
excess from the accounts of the firm. The respondent has also alleged
to have fraudulently generated false and fabricated invoices in back
date which do not find mention in Annexure-C to the deed of
dissolution. An allegation has also been made regarding issuance of a
cheque on the firm's Federal Bank account.
3. The petitioner in the circumstances has claimed a sum of
Rs.62,13,613/- from the respondent which amount also includes the
amounts claimed by the petitioner towards distress, embarrassment,
illegal and fraudulent withdrawals which amount the respondent is not
paying and thus disputes have risen about the partnership business
between the parties..
4. According to petitioner, there is arbitration agreement in terms of
Clause 13 of the partnership deed which is as under :
"Clause 13. That any dispute concerning the partnership
of this deed shall be referred to & decided as per the
provisions of Indian Arbitration Act then in force."
5. The petitioner contends that a notice dated 16th June, 2007 was
given invoking the arbitration agreement between the parties which was
replied by a communication dated 23rd June, 2007. However, the
Arbitrator has not been appointed.
6. On failure to appoint the Arbitrator, the petitioner filed the
present petition on 7th August, 2007.
7. The petition is contested by the respondent contending, inter alia,
that there is no arbitration agreement between the parties as a
dissolution deed dated 6th January, 2007 was executed. It is further
contended that the disputes raised between the parties are not
adjudicable in the arbitration proceedings. It is contended that the
allegations made against the respondent are false. Various allegations
raised by the petitioner were denied by the respondent.
8. I have heard the learned counsel for the parties. It cannot be
disputed that the Arbitrator has not been appointed for adjudication of
disputes raised by the petitioner in terms of Clause 13 of the
partnership deed which is the arbitration agreement. Though in terms
of deed of dissolution dated 6th January, 2007, the partnership was
dissolved, however, the disputes which have been raised by the
petitioner pertains to partnership. Whether those disputes do not exist
due to execution of deed of dissolution is also a dispute which is to be
adjudicated. Whether these disputes are not to be arbitrated in view of
execution of dissolution deed is also to be decided by the Arbitrator.
9. The petitioner had invoked the arbitration agreement by notice
dated 9th April, 2007. Though the notice was replied by a
communication dated 23rd June, 2007, the respondent have not
appointed an arbitrator within 30 days of invocation of arbitration
agreement and/or before the filing of this petition on 7th August, 2007,
and consequently he has lost the right to appoint an arbitrator of his
choice.
10. In Union of India v. M/s. R.R. Industries, 120 (2005) DLT 572
(DB) it was held that once a party does not supply the vacancy or fails
to supply the vacancy before filing of a petition under Section 11(6) of
the Arbitration and Conciliation Act, such a party forfeits the right to
supply the vacancy in terms of the arbitration clause and what remains
is only the arbitration clause, i.e. the dispute has to be resolved under
the mechanism of alternative dispute redressal scheme but no right
survives to the respondent to supply the named Arbitrator in the
arbitration clause. In the present facts and circumstances there is no
named arbitrator.
11. A three-Judge Bench of this Court in Punj Lloyd Ltd. v. Petronet
MHB Ltd., III (2006) SLT 287=II (2006) CLT 251 (SC)=(2006) 2 SCC 638,
considered the applicability of Section 11(6) and held that once notice
period of 30 days had lapsed, and the party had moved the Chief
Justice under Section 11(6), the other party having right to appoint
Arbitrator under arbitral agreement loses the right to do so. While
taking this view, the Court had referred to the judgment rendered in
Datar Switchgears Ltd. v. Tata Finance Ltd. and Another, VII (2000) SLT
543=IV (2000) CLT 191 (SC)=(2000) 8 SCC 151, wherein at page 158
(para 19) SCC, it was held as under :
"19. So far as cases falling under Section 11(6) are
concerned--such as the one before us -- no time limit has
been prescribed under the Act, whereas a period of 30 days
has been prescribed under Section 11(4) and Section 11(5)
of the Act. In our view, therefore, so far as Section 11(6) is
concerned, if one party demands the opposite party to
appoint an Arbitrator and the opposite party does not make
an appointment within 30 days of the demand, the right to
appointment does not get automatically forfeited after
expiry of 30 days. If the opposite party makes an
appointment even after 30 days of the demand, but before
the first party has moved the Court under Section 11, that
would be sufficient. In other words, in cases arising under
Section 11(6), if the opposite party has not made an
appointment within 30 days of demand, the right to make
appointment is not forfeited but continues, but an
appointment has to be made before the former files
application under Section 11 seeking appointment of an
Arbitrator. Only then the right of the opposite party ceases.
We do not, therefore, agree with the observation in the
above judgments that if the appointment is not made within
30 days of demand, the right to appoint an Arbitrator under
Section 11(6) is forfeited."
12. In the circumstances, it will be just and appropriate to appoint
an arbitrator to adjudicate the disputes which are raised and which
may be raised by the parties.
13. Considering the facts and circumstances, Sh.B.L.Garg (Retd)
Additional District Judge, r/o.A-9, Ganpati Apartments, 6, Alipur Road,
Civil Lines, Delhi-110054,( Cellular No.9810827815) is appointed as an
arbitrator. The fees of the arbitrator shall be Rs.10,000/- per hearing
subject to a maximum of Rs.1,50,000/-. The fees of the arbitrator shall
be shared equally. The learned Arbitrator shall decide his procedure for
adjudication of the disputes. The parties are directed to appear before
the learned arbitrator on 12th February, 2009 at 4.30 PM. A copy of this
order be sent to the learned arbitrator. Copies of the order be also given
to the parties dasti.
JANUARY 23, 2009 ANIL KUMAR, J.
skw
