Madras High Court
M.Ganesan vs T.Chidambaram on 22 September, 2025
Author: N. Anand Venkatesh
Bench: N. Anand Venkatesh
Arb O.P No. 13 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 22-09-2025
CORAM
THE HONOURABLE MR JUSTICE N. ANAND VENKATESH
Arb O.P No.13 of 2025
AND
A No. 3709 of 2025
M.Ganesan, aged 35 years
S/o Moorthy.P
No.4/129,V.Salvarpatti,
Naranapuram Post, Sivakasi
Presently residing at No.2/104, Kaspa
Paraipatti Street, Jameen Salvarpatti
Village, Sivakasi, Virudhunagar Petitioner
Vs
1. T.Chidambaram
S/o Thangamuthu Nadar
No.104, Thiyagarajapuram
Mudalipatti Post
Sivakasi, Virudhunagar
2. C.Shanmugathai
Wife of T.Chidambaram
No.104, Thiyagarajapuram
Mudalipatti Post, Sivakasi,
Virudhunagar Respondents
A No. 3709 of 2025
M.Ganesan, Aged 35 years
S/o Moorthy
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Arb O.P No. 13 of 2025
No.4/129,V.Salvarpatti,
Naranapuram Post, Sivakasi
Presently residing at No.2/104 Jameen
Salvarpatti Village, Naranapuram,
Sivakasi, Virudhunagar
Applicant
Vs
1. T.Chidambaram
S/o Thangamuthu Nadar
C.Shanmugathai (Deceased)
W/o T.Chidambaram
Both respondents residing at
No.104, Thiyagarajapuram
Mudalipatti Post, Sivakasi
Virudhunagar
2. C.Dharmalingam, 51 years
S/o.T.Chidambaram,
4/43, Nadar Street,
Thiyagarajapuram,
Kanniseripudhur,
Mudalipatti, Sivakasi,
Virudhunagar 626 189
3. C.Marisamy, 47 years
S/o.T.Chidambaram
4/42, Nadar Street, Kanniseripudur,
Thammanayakkanpatti,
Virudhunagar 626 189
4. T.C.Panchavadivu
S/o.T.Chidambaram,
4/42,Thiyagarajapuram, Sivakasi
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Arb O.P No. 13 of 2025
5. C.Kaliraj, 41 years
S/o.T.Chidambaram,
4/326-10, Karpagavinayakar Street,
Amathur, Virudhunagar 626 005
6. C.Thangathai, 39 years
W/o. Prabhu Prasath
No.36, Sri Ram Nagar
Chetty Thangal Road
Ranipet 632 401 Respondents
Arb O.P No. 13 of 2025
PRAYER
To Appoint a Sole Arbitrator to hear and decide the Arbitral dispute between the
Petitioner and the Respondents, arising out of the Partnership deed, Dated
21.02.2008.
A No. 3709 of 2025
PRAYER
To permit the applicant to bring on record the Respondents 2 to 6 / Proposed
Respondents 3 to 7 who are Legal Representatives of the Petitioner in above
O.P. 13 of 2025.
Arb O.P No. 13 of 2025
For Petitioner: Mr.Sunny Sheen for
M/s.Kingsly Solomon J
For Respondents : Mr.S.M.Ananthamurugan
ORDER
This petition has been filed under Section 11(6) of the Arbitration and
Conciliation Act, 1996 for appointment of a sole Arbitrator to hear and decide
the dispute between the petitioner and the respondents arising out of the
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Partnership Deed dated 21.02.2008.
2. The case of the petitioner is that the petitioner and the respondents
entered into a partnership deed dated 21.02.2008 for the firm with the name and
style “Aravind Paper Caps”. The firm was engaged in the manufacture,
purchase and sale of all types of paper caps, amorces and other allied products
as well as dealing in fireworks raw materials and related goods. The further case
of the petitioner is that he along with his father had contributed a sum of
Rs.25,00,000/- towards the construction and establishment of the firm. That
part, the petitioner has also personally contributed a sum of Rs.10,000/- as
capital investment for the firm.
3. The respondents issued a legal notice accompanied by the demand draft
for Rs.10,000/- and informed the petitioner that the partnership firm stood
terminated with effect from 19.11.2024. The respondents also proceeded to
unilaterally issue the paper publication dated 22.12.2024 and publicly declared
that the partnership between the petitioner and the respondents stood dissolved
as of 19.11.2024.
4. The petitioner, aggrieved by the same, issued a reply notice dated
05.12.2024 and thereafter issued the trigger notice under Section 21 of the
Arbitration and Conciliation Act on 31.03.2025 by proposing the name of
retired District Judge to act as Arbitrator at Madurai. The respondents received
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the same and there was no response from them. Hence the present petition has
been filed before this Court to refer the dispute for arbitration.
5. The learned counsel for respondents submitted that the second
respondent died during the pendency of the proceedings on 03.06.2025. The
learned counsel further submitted that the firm stood dissolved by operation of
law and pursuant to the same, the arbitration clause in the agreement cannot
stand independently, since the rights of third parties qua the firm and its partners
can never be decided by the Arbitrator. To substantiate his submission, the
learned counsel relied upon the judgment of this Court in R.Subbulakshmi and
others v. R.Venkitapathy and others made in O.P.Nos.40 of 2019 etc dated
10.08.2023. The learned counsel submitted that this Court framed a specific
issue as to whether after the dissolution of the firm, the Arbitrator can proceed
further and act as a liquidator for the dissolved firm. It was submitted that this
Court specifically took note of the effect of Section 43 of the Partnership Act
and came to a conclusion that once the firm is dissolved, the subsequent
proceedings with respect to liquidation has to happen in accordance with law
and the Arbitrator cannot adorn that role.
6. In the case on hand, it is admitted that it is a Partnership at Will and
hence, once the notice is being served terminating the partnership and public
notice has also been issued, the firm does not exist and the subsequent
settlement of shares and the rights that are claimed by the third parties, cannot
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be done by the Arbitrator. In view of the same, the learned counsel sought for
the dismissal of this petition.
7. Per contra, the learned counsel for petitioner submitted that the dispute
in the present case pertains to the salary payable to the petitioner and the share
that has to be given to the petitioner. The learned counsel submitted that the
Arbitrator can always deal with the inter-se rights of the partners with respect to
the salary payable and share that is sought for by the petitioner and the
Arbitrator can also get into the issue as to whether there was proper dissolution
of the firm. If ultimately the Arbitrator comes to a conclusion that the firm has
been dissolved, he cannot take over as liquidator and the process of law has to
take the dispute to its logical end.
8. This Court has carefully considered the submissions made on either
side and the materials available on record.
9. The scope of the petition filed under Section 11(6) of the Arbitration
and Conciliation Act, 1996 was gone into in extenso in a recent judgment in
Arb.O.P.(Com.Div.)No.319 of 2025 dated 16.09.2025. This Court, after
considering all the judgments on the issue, came to the following conclusions:-
“28. The result of the discussions is that the wheel has now
come a full circle. The test formulated by the Hon'ble Supreme
Court in the decision in Duro Felguera, S.A., departed from the
decision of the Hon'ble Supreme Court in Hyundai
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Engineering & Construction Co.Ltd., has now been reinstated
in the decision of the Hon'ble Supreme Court in Re: Interplay
between Arbitration Agreements under the Arbitration and
Conciliation Act 1996 and the Indian Stamp Act, 1899.
Consequently, it must follow that the jurisdiction of the Court
under Section 11(6A) is confined to examining the existence of
an arbitration agreement. Nothing more and nothing less.
29. As the Hon'ble Supreme Court pointed out in the decision in
Managing Director, Bihar State Food and Civil Supply
Corporation Limited, it is just as necessary to follow a
precedent as it is to make one. The objections of the respondent
on grounds of limitation and accord and satisfaction must,
therefore, necessarily await adjudication before the Arbitral
Tribunal.”
10. In view of the above, the scope of the present petition confines itself
only to examination of the existence of arbitration agreement in line with
Section 7 of the Arbitration and Conciliation Act. Nothing more and nothing
less.
11. In the course of arguments, the learned counsel for respondents, by
pointing out to Section 10 of the Commercial Courts Act, 2015, submitted that
all applications or appeal arising out of the matters other than commercial
arbitration, can only lie before the Principal Civil Court of Original Jurisdiction
in a District. Admittedly, in the present case, the dispute had arisen within the
jurisdiction of Virudhunagar. Therefore, application can be filed only before the
Principal District Judge, Virudhunagar and not before this Court.
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12. The above preliminary objection that was raised by the learned
counsel for respondents cannot be sustained, for the simple reason that a
petition under Section 11 for appointment of Arbitrator can be filed only before
the High Court or before the Supreme Court, as the case may be, and it cannot
lie before a Principal District Court. Since the present case involves
appointment of Arbitrator, the provisions under the Arbitration and Conciliation
Act, 1996 will get precedence over the Commercial Courts Act, 2015.
Therefore, the present petition filed under Section 11 before this Court is
certainly maintainable.
13. The next issue pertains to the ground raised by the learned counsel for
respondents to the effect that the partnership firm has already been dissolved
and therefore the Arbitrator cannot adorn the role of liquidator to decide the
rights of the third parties qua the partnership firm and its partners.
14. The basis of the above submission made by the learned counsel for
respondents is Section 43 of the Partnership Act. Section 43 talks about the
rights of the partners to seek for dissolution in a Partnership at Will. According
to the learned counsel for respondents, once the dissolution is sought for and
notice of dissolution has been issued, the firm stands dissolved from the date
specified in the notice. Under such circumstances, the partnership deed comes
to an end and the arbitration clause in the deed cannot have effect in appointing
an Arbitrator to decide the issue. This is more so since third party rights will get
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in after the dissolution of the firm.
15. There are basically two issues that are involved in this case. The first
issue is with respect to the inter-se dispute between the partners and the
settlement of their shares, income, etc. The other issue is with respect to
whether there was a proper dissolution of the firm. Insofar as the former is
concerned, the dispute can always be decided by the Arbitrator. Even assuming
that the partnership firm has come to an end, it is not possible to accept that the
arbitration clause will cease to exist. There is a valid arbitration agreement
between the parties and the disputes have arisen between the parties and the
parties are bound to resolve their dispute only before the Arbitrator. To that
extent, the inter-se dispute has to go only before the Arbitrator. Insofar as the
latter issue is concerned, it is always left open to the Arbitrator to decide as to
whether there was a valid dissolution of the firm. If ultimately the Arbitrator
finds that the firm has been properly dissolved, he cannot thereafter continue as
liquidator, since the Arbitrator cannot decide the third parties' rights qua the firm
and its partners. That is an issue which cannot be considered by this Court while
dealing with a petition under Section 11(5) & (6) of the Arbitration and
Conciliation Act. It has to be left open to the Arbitrator to deal with this issue,
since the Arbitral Tribunal is entitled to decide on its jurisdiction under Section
16 of the Arbitration and Conciliation Act.
16. In the light of the above discussion and in the light of the limited
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jurisdiction that is available to this Court, all the objections that have been
raised on the side of respondents can always be raised before the learned
Arbitrator, who will decide the same on its own merits and in accordance with
law.
17. The upshot of the above discussion is that there is a partnership deed
between the parties and it contained an arbitration clause and this agreement is
in line with Section 7 of the Arbitration and Conciliation Act. All the other
objections have to be raised only before the learned Arbitrator. Hence, this
Court is inclined to appoint a sole Arbitrator to decide the disputes between the
parties. On carefully reading the partnership deed and also after taking into
consideration the fact that the cause of action had arisen at Virudhunagar, this
Court can safely conclude that the seat of Arbitrator can be placed at Madurai.
Accordingly, Mr.S.Srinivasa Raghavan, Advocate, residing at No.2/583 Alli
Street East, First Floor, Sixth Main Road, Gomathipuram, Madurai 626 020
(Mobile No.94423 62835) (email: [email protected]) is appointed as
the sole Arbitrator in this case. The learned Arbitrator is requested to enter upon
reference qua the partnership deed dated 21.02.2008 containing the arbitration
clause and adjudicate upon the disputes that have arisen between the parties by
holding the sittings in any venue at Madurai to the convenience of all concerned
and render an award. The fees of the learned Arbitrator shall be in accordance
with the Madras High Court Arbitration Centre (MHCAC)(Administrative Cost
and Arbitrator's Fees) Rules, 2017. The learned Arbitrator, after issuing notice
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to both the parties and upon hearing them, is requested to pass an award as
expeditiously as possible as the partnership deed is of the year 2008.
18. This original petition stands allowed in the above terms.
Consequently, A.No.3709 of 2025 stands closed.
22-09-2025
Index:Yes/No
Speaking/Non-speaking order
Internet:Yes
Neutral Citation:Yes/No
Registry is directed to communicate
the copy of order forthwith
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To
1. Mr.S.Srinivasaraghavan
No.2/583 Alli Street East
First Floor, Sixth Main Road
Gomathipuram
Madurai 626 020
(Mobile No.94423 62835)
(email: [email protected])
2. The Director
Tamil Nadu Mediation and Conciliation
Centre-cum-Ex-Officio Member
Madras High Court Arbitration Centre
Chennai – 600 104
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N.ANAND
VENKATESH J.
ss
22-09-2025
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