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THE HIGH COURT OF ORISSA AT CUTTACK ARBP No.60 of 2018
Dinesh Khandelwal & another ……. Petitioners
-Versus-
Kamal Kishor Khandelwal & another……. Opp. Parties
______________________________________________________________ For the Petitioners : Mr. K.A. Guru, Advocate
For the Opp. Parties : Mr. Sanjib Udgata, Advocate ______________________________________________________________
CORAM:
HONOURABLE THE CHIEF JUSTICE
JUDGMENT 22nd September, 2023
S.Talapatra, CJ. By means of this petition filed under Section-11(6) of the Arbitration and Conciliation Act, 1996, the petitioners have urged for reference of the dispute to the Arbitrator in terms of the Arbitration clause in the reconstituted partnership deed, Annexure-1 to the petition. The said partnership deed dated 1st April, 2010 between the parties contains the following clause for resolution of the dispute between the parties:
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“19. THAT, if at any time, dispute, doubt or question shall arise amongst the partners, either on the construction of these presents regarding the accounts, transactions, profits and losses of the business or the rights and liabilities of any of the partners arising hereunder or under any other matter, or things concerning the partnership or the affairs thereof then every such dispute, doubts and questions shall be referred to an arbitrator appointed under the Indian Arbitration Act then in force. The findings and awards of the arbitrator shall be binding on the parties.”
The petitioners have stated that by the notice dated 19.03.2010, the petitioners had asked the partners, the opposite parties to suggest three names, not below the rank of a District Judge for appointment as arbitrator within thirty days from the date of the notice. It has been stated that the said notice was sought to be tendered, but as those partners were not available at the time of delivery, the Postman issued a notice to collect the said notice from the Post Office. But nobody had received that notice, though the notice was sent by Registered Post with A.D. in the correct address. The said notice dated 19.03.2018 was for proper distribution of funds and assets of the partnership farm between the partners. No response was received from Kamal Kishore Khandelwal, the opposite party No.1 to whom the notice was sent. It has been stated in para-7 of the petition that Sri Kamal Kishore Khandelwal had been authorised by the partners of the farm under the name and style of “M/s. Jharsuguda Pipes N Tiles” to represent the farm before all
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the authorities and also for filing of the Income Tax return and also for other returns before the statutory authorities. 3. It has been stated that after purchase of the land from where the said partnership business was carried on in the name of Ashish Khandelwal, son of Kamal Kishore Khandelwal, the rent for use of the premises was demanded from the partnership farm. The said demand was resisted by the petitioners and as consequence thereof, Kamal Kishore Khandelwal, the opposite party No.1 put lock in the gate of the said premises by stalling the business activities. He had also put lock on in the go-down where the stocks of the partnership were being kept on 04.11.2017. It has been also stated that the opposite party No.1 being the custodian of all documents and records, may manipulate accounts to deprive the petitioners from their legitimate due. 4. It has been stated by the petitioners that they have filed a petition under Section-9 of the Arbitration and Conciliation Act, 1996 seeking interim measures for securing the assets and value of the partnership farm. The said prayer of the petitioners has been seriously resisted by the opposite parties No.1 & 2. It may be noted here that the opposite party No.2 is the wife of the opposite party No.1. In the counter affidavit filed on 09.08.2019, it has been asserted that the partnership
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farm is not registered under Section-59 of the Indian Partnership Act and the parties to the agreement under Annexure-1 to the arbitration petition had approached the Jharsuguda Chamber of Commerce to arbitrate and decide the dispute. According to the opposite parties, the said Chamber of Commerce made certain interim arrangements. It has been also stated that the existence of the said arbitration/conciliation initiative has been admitted by the petitioners in their application filed under Section-9 of the Arbitration and Conciliation Act, 1996 being ARBP No.2 of 2018. The petitioners had admitted the said initiative under the aegis of Jharsuguda Chamber of Commerce. On scrutiny, the following averment is found:
“Further as the dispute arise between the partners i.e. the petitioner No.1 and the opposite No.1 with the intervention of the Chamber of Commerce in Jharsuguda, an agreement was reached between the petitioner No.1 and the opposite party No.1. Whereas, as per the said agreement with an ulterior motive, forcefully put lock and key of other business organizations which is run by the daughter-in-law of the present petitioners, who have nothing to do with the partnership business. Though the matter was informed to the local police, but no action has been taken.”
[Underline supplied]
In the counter affidavit filed by the opposite party No.2, it has been asserted that it was amicably settled at the intervention of the Jharsuguda Chamber of Commerce on 06.09.2017 that the separate shops opened by the petitioner No.1’s family and the opposite party
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No.1’s family will be shut down till the partnership assets are divided amongst the parties equally. On 07.11.2017, the opposite parties paid a sum of Rs.27 lakhs to the petitioners for relinquishing their right, if any, over the shop room of the farm. On 10.12.2017 both the parties admitted in writing that they have divided all their stocks in the shop and adjacent go-down and have taken their respective shares. Thus, it has been contended that the purported dispute is non-existent and hence, no adjudication can entail. 6. In response to the said counter affidavit filed by the opposite parties No.1 & 2, the petitioners filed one rejoinder stating that the petitioner No.1 did never agree on any issue on 06.09.2017 as stated in the counter affidavit. On the contrary, it is the opposite party No.1 who had put locks on the shop and the go-down of the partnership business and that is the reason why the application under Section-9 of the Arbitration and Conciliation Act was instituted. By the order dated 24.07.2018, according to the petitioners, learned District Judge, Jharsuguda had observed that no arbitrator was appointed as per the provisions of the Arbitration and Conciliation Act, 1996 and the said order has been assailed by the opposite parties in W.P.(C) No.14845 of 2018 which is still pending. Section-9 of the Arbitration and
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Conciliation Act is resorted to, for interim measures. One additional affidavit has been filed by the opposite parties in response to the rejoinder filed by the petitioners where it has been stated that the Jharsuguda Chamber of Commerce had called the parties by their letter dated 25.06.2018 to clarify their position, as the petitioners had claimed that they had not appointed the Chamber of Commerce as the arbitrator. It has been stated that the observation of the District Judge in respect of the appointment of arbitrator has not reached its finality, as the said observation is the subject matter of W.P.(C) No.14845 of 2018. 7. From the notice of the Jharsuguda Chamber of Commerce & Industries dated 25.06.2018, it appears clearly that the petitioners had stated that they had not appointed Jharsuguda Chamber of Commerce & Industries as the arbitrator. It is to be noted that none of the parties has produced their consent or any letter from the petitioners appointing the Jharsuguda Chamber of Commerce & Industries to arbitrate in the dispute. 8. The petitioners have filed another affidavit stating inter alia that the opposite party No.1 was supposed to register the partnership farm but he has not taken any step. The opposite parties have also filed objection in ARBP No.2 of 2018 stating that interim measure as sought
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by the petitioners under Section-9 of the Arbitration and Conciliation Act before the learned District Judge, Jharsuguda cannot be allowed, as the same could have been claimed before the Arbitrator under Section- 17 of the Arbitration and Conciliation Act. It has been further stated that this Court does not have any jurisdiction to appoint any arbitrator for adjudicating any dispute between the parties in respect of the partnership farm. If the parties did not agree on the arbitrator, then the Chief Justice of Orissa High Court could appoint the arbitrator under Section-11(5) of the Act. Again, it has been asserted that both the parties have agreed on 06.09.2017 that the separate shops opened by the petitioner No.1’s family and the opposite party No.1’s family will be shut down till the stocks of the partnership farm are divided equally. Both the parties will take half of the stocks available. As already noted, the petitioners have completely denied such agreement. 9. On 11.10.2020, another objection has been filed in this proceeding by the opposite parties No.1 & 2 stating that the parties have approached the Jharsuguda Chamber of Commerce & Industries for resolution of the dispute and in the proceeding, an agreement had been reached between the parties. That apart, a new objection has been raised regarding the maintainability of the petition under Section-11(6) of the
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Arbitration and Conciliation Act, 1996 stating that the deed of partnership is not properly stamped and as such under Section-35 of the Indian Stamp Act, 1989, the said instrument cannot be accepted for the purpose of any order and on the basis of unstamped and unregistered partnership, this Court may not pass any order appointing the arbitrator to resolve the dispute. 10. I have heard Mr. K.A. Guru, learned counsel appearing for the petitioners and Mr. Sanjib Udgata, learned counsel appearing for the opposite parties. Mr. Guru, learned counsel for the petitioners has quite emphatically stated that there is no record that the petitioners have agreed to appoint Jharsuguda Chamber of Commerce & Industries to arbitrate the dispute. As the opposite parties have been liquidating the assets by applying force and by adopting illegal means, the petitioners had to approach the learned District Judge, Jharsuguda by filing an application under Section-9 of the Arbitration and Conciliation Act, 1996. In that proceeding, it has been observed by the learned District Judge, Jharsuguda that the petitioners did not agree to appoint the Jharsuguda Chamber of Commerce & Industries to arbitrate the dispute. The said decision is under challenge before this Court.
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Mr. Guru, learned counsel has further submitted that the partnership deed is properly stamped but not registered. As such, the objection as raised by the opposite parties is absolutely unsustainable. That apart, Section-35 does not foreclose the relief. Rather, on payment of due stamp duty, the aggrieved person may approach again for the relief. 12. So far as the bar created under Section-69 of the Partnership Act, 1932 is concerned, Mr. Guru, learned counsel has stated that the said prohibition will not apply in case of proceeding under Section-11(6) of the Arbitration and Conciliation Act. In this regard, Mr. Guru, learned counsel has referred to the larger Bench decision of the apex court in N.N. Global Mercantile Private Limited vs. Indo Unique Flame Ltd. and others. It has been observed inter alia therein as follows:
“110. An instrument, which is exigible to stamp duty, may contain an Arbitration Clause and which is not stamped, cannot be said to be a contract, which is enforceable in law within the meaning of Section 2(h) of the Contract Act and is not enforceable Under Section 2(g) of the Contract Act. An unstamped instrument, when it is required to be stamped, being not a contract and not enforceable in law, cannot, therefore, exist in law. Therefore, we approve of paragraphs-22 and 29 of Garware (supra). To this extent, we also approve of Vidya Drolia (supra), insofar as the reasoning in paragraphs-22 and 29 of Garware (supra) is approved.”
Thereafter, in respect of filing of the original copy of the agreement, Mr. Guru, learned counsel has referred the following conclusions in N.N. Global Mercantile Private Limited (Supra):
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“111. The true intention behind the insertion of Section 11(6A) in the Act was to confine the Court, acting under Section 11, to examine and ascertain about the existence of an Arbitration Agreement.
The Scheme permits the Court, under Section 11 of the Act, acting on the basis of the original agreement or on a certified copy. The certified copy must, however, clearly indicate the stamp duty paid as held in SMS Tea Estates (supra). If it does not do so, the Court should not act on such a certified copy.
If the original of the instrument is produced and it is unstamped, the Court, acting under Section 11, is duty-bound to act under Section 33 of the Stamp Act as explained hereinabove. When it does so, needless to say, the other provisions, which, in the case of payment of the duty and penalty would culminate in the certificate under Section 42(2) of the Stamp Act, would also apply. When such a stage arises, the Court will be free to process the Application as per law.
An Arbitration Agreement, within the meaning of Section 7 of the Act, which attracts stamp duty and which is not stamped or insufficiently stamped, cannot be acted upon, in view of Section 35 of the Stamp Act, unless following impounding and payment of the requisite duty, necessary certificate is provided under Section 42 of the Stamp Act.
We further hold that the provisions of Sections 33 and the bar under Section 35 of the Stamp Act, applicable to instruments chargeable to stamp duty under Section 3 with the Schedule to the Stamp Act, would render the Arbitration Agreement contained in such instrument is being non-existent in law unless the instrument is validated under the Stamp Act.”
Mr. Guru, learned counsel has submitted that existence of Arbitration Clause and the agreement i.e. the partnership deed are not in dispute and from a copy of the deed as submitted along with the petition, it may be seen that the original was properly stamped. Moreover, as it has been already asserted that all the documents including the partnership deed are lying in the custody of the opposite
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party No.1 and the said opposite parties have not filed the original of the partnership deed, the objection relating to deficiency of stamp has not been proved by the opposite parties. 14. I have perused the copy of the reconstituted partnership deed, Annexure-1 and found that the instrument is duly stamped. However, the original has not been produced, but the claim of the petitioners in respect of existence of the arbitration clause has not been disputed by the opposite parties. 15. Mr. Guru, learned counsel has thereafter stated that the notice was tendered in the address of the opposite party No.1, but the said notice was not accepted by the said opposite party. As such, the service has to be deemed to be complete in view of Section-27 of the General Clauses Act, 1977 which provides as follows:
“27. Meaning of service by post.- Where any Act made after the commencement of this Act authorises or requires any document to be served by post, whether the expression “serve” or either of the expressions, “give” or “send” or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered, in the ordinary course of post.”
Further, regarding the prohibition under Section-69 of the Registration Act, Mr. Guru, learned counsel has referred the decision of the apex court in Jagdish Chander Gupta vs. Kajaria Traders
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(India) Limited: AIR 1964 SC 1882 where it has been held by the apex court that the words “other proceeding” in sub-section (3) must receive their full meaning untrammelled by the words - claim of set-off. The latter words neither intend nor can be construed to cut down the genuity of the words “other proceeding”. The sub-section provides for application of the provisions of sub-sections- (1) & (2) to claim the set- off and also to the other proceeding of any kind which can properly be said to be for enforcement of, any right arising from the contract except those expressly mentioned as exception in sub-section (3) and sub- section (4). This decision has also been referred by Mr. Sanjib Udgata, learned counsel appearing for the opposite parties to contend that the proceeding under Section-11(6) of the Arbitration and Conciliation Act, 1996 shall include within the “other proceeding”. Therefore, all rigours of Section-69, sub-section (1) & (2) will apply in the “other proceeding” as mentioned in sub-section (3) of Section- 69 of the Partnership Act. 17. It has been also held in Jagdish Chander Gupta (supra) as follows:
“This case cannot be said to interpret the sub-section correctly. Similarly Mahendra vs. Gurdayal, ILR 30 Patna 109: AIR 1951 Pat 196 which laid down that Section-69 does not bar partner of an unregistered partnership farm applying to the Court under Section-8 of the Arbitration Act for referring the dispute between the partners to arbitrate as provided in the condition of their agreement cannot be accepted as sound. The reason given by the Division Bench that as Section-69 allows
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dissolution and accounts of unregistered partnership, it cannot bar such an application appears to us to be not quite in point.”
Mr. Guru, learned counsel has submitted that this issue has been quite succinctly settled by the apex court in Kamal Pushpa Enterprises vs. D.R. Construction Company: AIR 2000 Supreme Court 2676. It has been held in Kamal Pushpa Enterprises (supra) as follows:
“ 9. The prohibition contained in Section 69 is in respect of instituting a proceeding to enforce a right arising from a contract in any Court by an unregistered firm, and it had no application to the proceedings before an Arbitrator and that too when the reference to the Arbitrator was at the instance of the appellant itself. If the said bar engrafted in Section 69 is absolute in its terms and is destructive of any and every right arising under the contract itself and not confined merely to enforcement of a right arising from a contract by an unregistered firm by instituting a suit or other proceedings in Court only, it would become a jurisdictional issue in respect of the Arbitrator’s power; authority and competency itself, undermining thereby the legal efficacy of the very award, and consequently furnish a ground by itself to challenge the award when it is sought to be made a rule of Court. The case before us cannot be said to be one such and the learned counsel for the appellant though was fully conscious of this fact, yet tried to asset that it is open to the appellant to take up the objection based upon Section 69 of the Partnership Act, at any stage – even during the post- award proceedings to enforce the award passed. The Award in this case cannot either rightly or legitimately said to be vitiated on account of the prohibition contained in Section 69 of the Partnership Act, 1932 since the same has no application to proceedings before an Arbitrator. At the stage of enforcement of the award by passing a decree in terms thereof what is enforced is the award itself which crystallise the rights of parties under the Indian Contract Act and the general law to be paid for the work executed and not any right arising only from the objectionable contract. It is useful in this connection to refer to the decision of this Court in Satish Kumar v. Surinder Kumar, AIR 1970 SC 833 wherein it has been stated in unmistakable terms that an Award is not a mere waste paper but does create rights and has some legal effect besides being final and binding on the parties. It has also been held that an award is, in fact, a final adjudication of a Court of the parties’ own choice and until impeached upon sufficient grounds in an
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appropriate proceedings, an award which is on the face of it regular, is conclusive upon the merits of the controversy submitted for arbitration. Consequently, the post-award proceedings cannot be considered by any means, to be a suit or other proceedings to enforce any rights arising under a contract. All the more so when, as in this case, at all stages the respondent was only on the defence and has not itself instituted any proceedings to enforce any rights of the nature prohibited under Section 69 of the Partnership Act, before any Court as such. We see no infirmity or error whatsoever in the decision of the Courts below to call for our interference in this appeal. The appeal fails and shall stand dismissed.”
Mr. Guru, learned counsel has referred another decision of the apex court in Anantesh Bhakta vs. Nayana S. Bhakta & others : AIR 2016 Supreme Court 5359, where the apex court has observed as follows:
“28. The submission by the petitioner is that partnership being an unregistered partnership, no reference can be made to the arbitration. In the present case there is no dispute between the parties that both Retirement deed and Partnership deed contain an arbitration clause. In Retirement deed which had been signed by retiring partners, continuing partners and concurring partners, following was stated in clause 8:
“…In case of any dispute or difference arising between the parties, regarding the interpretation of the contents of this Deed of Retirement or any other matter of transactions touching the said retirement, it shall be referred to an arbitration under the provisions of the Arbitration & Conciliation Act, 1996…”
Further, in partnership deed which was 05.04.2006, clause 26 contains an arbitration clause which is to the following effect:
“26. ALL DISPUTES arising between the partners or their legal representatives about the interpretation of this Deed or their rights and liabilities there under or in relation to any other matters whatsoever touching the partnership affairs shall be decided by an Arbitration as provided by the Arbitration & Conciliation Act, 1996.”
When the partners and those who claim through partners agreed to get the dispute settled by arbitration, it is not open for the appellants to contend that partnership being unregistered partnership, the dispute cannot be referred.”
[Emphasis added]
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That apart, Mr. K.A. Guru, learned counsel has relied on the decision of the apex court in Jupudi Kesava Rao vs. Pulavarthi Venkata Subbarao and others: AIR 1971 Supreme Court 1070 where the apex court has observed inter alia that Section- 35 of the Indian Stamp Act is not concerned with any copy of an instrument and a party can only be allowed to rely on a document which is an instrument for the purpose of Section-35. “Instrument” as defined in Section-2 (14) has included every document by which any right or liability is or purports to create transfer limited, extended, extinguished or recorded. There is no scope for inclusion of a copy of the document as an instrument for the purpose of the Stamp Act. Section-35 only deals with the original instrument, not the copies.
Section-35 according to Mr. Guru, learned counsel cannot be applied in the present case, as the petitioner has submitted a copy of the partnership deed and there is no dispute regarding that copy and the opposite parties have not raised further dispute regarding the existence of the arbitration clause.
It has been observed in Jupudi Kesava Rao (supra) as follows:
“24. As we have expressed our view already Section 35 imposed a bar on the reception of any but the original instrument and forbade the reception of secondary evidence. Section 36 only lifted that bar in the case of an original unstamped or insufficiently stamped document to which no exception as to admissibility was taken at the
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first stage. It did not create any exemption in the case of secondary evidence which a copy would undoubtedly be. In the case before the Judicial Committee the copy was one other than the final draft of the original document which had been lost through no fault on the part of the person intending to prove it and yet it was held that the Stamp Act ruled out its admissibility in evidence.”
Mr. Guru, learned counsel has submitted that before this Court, there is no dispute relating to admissibility of any evidence as the execution of the partnership deed is not questioned, rather acceded to, by the opposite parties. 23. Mr. S. Udgata, learned counsel appearing for the opposite parties has stated that no reference should be made for three reasons viz. (a) the Partnership deed is not properly stamped and the original has not been filed, (b) the partnership farm is unregistered and therefore prohibition under Section- 69 of the Partnership Act would apply & (c) Once the arbitration has been taken on by the Jharsuguda Chamber of Commerce & Industries, no further reference will be legally valid. 24. In this regard, Mr. Udgata, learned counsel has relied on a few decisions of various Courts. He has also referred to the Constitutional Bench decision in M/s. SBPL Company vs. M/s. Petal Engineering which in my consideration does not have any relevance in the present context. Mr. Udgata, learned counsel has also referred to a decision of the Bombay High Court in Ram Nandan Prasad Sinha vs. K.M.
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Consultants: AIR 2002 Bombay 90 to contend that the proceeding under Section- 69(3) of the Partnership Act means and imply something in the nature of a suit, that is a proceeding, which is instituted or initiated in Court. This is clear from the language of sub-Section (3) that it extends the provision of sub-Section (1) & (2) to a claim of set-off or to that other proceeding, to enforce a right. Therefore, in a case covered under sub-Section-3, non-registration of a farm entails that the farm is debarred from instituting a proceeding in any Court. 25. It may not at the same time be overlooked that the word proceeding of Section- 69(3) does not cover a reference to arbitration when the disputes are relatable to the division of assets or dissolution of the partnership farm is concerned. 26. Mr. Udgata, learned counsel has stated that the proceeding before the non-judicial forum cannot be hit under Section- 69(3) of the Partnership Act even though the partnership farm is not registered. Mr. Udgata, learned counsel having referred to a decision of this Court in M/s. Technofab Engineering Limited vs. M/s. National Aluminium Company Limited: AIR 2019 ORISSA 94, has stated that in view of the provisions of the Arbitration and Conciliation Act, the second
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arbitration is not permissible. In M/s. Technofab Engineering Limited (supra) this Court has observed as follows:
“21. In that view of the matter and in view of the basic principle of law, I am of the considered opinion that second arbitration is not permissible as the application under Section 16(2) of the Act, is appellable under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996.”
Mr. Udgata, learned counsel has referred a decision of the apex court in Nathan Steel Ltd. vs. Associate Construction: 1995 Supp(3) SCC 324, where it has been held by the apex court that once the dispute is amicably settled between the parties finally, the arbitration clause cannot be invoked by a party to resolve the same on the ground of mistake by settlement (calculation) or mistake in regard to the amount payable under the settlement in the said case, unless the settlement is first set-aside in the proper proceeding. Mr. Udgata, learned counsel has placed his reliance on a decision of the apex court in Aravali Power Company Pvt. Ltd. vs. M/s. Era Infra Engineering Ltd.: AIR 2017 Supreme Court 4450 to contend that unless the cause of action for invoking jurisdiction under Clause(a), Clause(b) or Clause (c) of sub- section (6) of Section-11 of the 1996 Act arises, there is no question of the Chief Justice or his designate exercising power under sub-section(6) of Section-11. For purpose of reference, Clauses-(a), (b) & (c) of sub- section (6) of Section-11 is gainfully reproduced below:
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“6. Where, under an appointment procedure agreed upon by the parties, a party fails to act as required under that procedure or (b) the parties or the two appointed arbitrators fails to reach an agreement expected that under that procedure or (c) a person including an institution fails to perform any function entrusted to him that procedure the appointment shall be made on an application of the party by the arbitral institution designated by the Supreme Court in case of International Commercial Arbitration or by the High Court in the case of arbitration other than the International Commercial Arbitration where the case may be to take necessary measure unless an agreement on the appointment procedure provides other means for securing the appointment.”
Section-6(A) of the Arbitration and Conciliation Act, 1996 is still in force as the notification by which the Amendment Act 33 of 2019 was enforced partly, leaves the Section 6 A. The said notification did not include Section-6(A) which was incorporated by Amendment Act, 2016. It came into force on 23.10.2015. Section-6(A) provides as follows:
“The Supreme Court or as the case may be the High Court while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any court confines to the examination of the existence of an arbitration agreement. Therefore, it is apparent that for purpose of reference under Section- 11(6) of the Arbitration and Conciliation Act, 1996 which the Chief Justice or the designate Court will examine in respect of existence of an arbitral agreement.”
In this case, it has been undisputedly established that there is an Arbitration Clause and according to the opposite parties, the said Arbitration Clause was acted upon when the matter was taken by the Jharsuguda Chamber of Commerce & Industries. Even, in the counter affidavit filed by the opposite parties, there is no denial. On the
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contrary, there is admission of existence of the arbitration clause in the reconstituted partnership deed. 30. So far as the objection that once the said arbitration clause has been invoked and the Jharsuguda Chamber of Commerce & Industries had made several interim arrangements, no reference can be made to arbitration. I am of the view that the petitioners have not acceded to the said ‘arbitration’ and even the Jharsuguda Chamber of Commerce & Industries has questioned why the petitioners had approached the Court of the District Judge, Jharsuguda under Section-9 of the Arbitration and Conciliation Act for interim measures to secure the assets etc. of the said partnership farm. 31. It is apparent that the opposite parties have failed to name the arbitrator when the notice was tendered. Even the opposite parties have not produced any records of the purported arbitration proceeding, taken up in the Jharsuguda Chamber of Commerce & Industries, except a letter which is absolutely unilateral whereby the petitioners were asked why they have approached the Court of the District Judge under Section-9 of the Arbitration and Conciliation proceeding. Thus, the opposite parties have failed to prove that the proceeding taken up by the
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Jharsuguda Chamber of Commerce and Industries was an arbitration proceeding. 32. Therefore, that was not an arbitration proceeding but an attempt to conciliate the dispute between the parties. The said conciliation has failed, as the petitioners have served the notice seeking reference to the arbitrator or the arbitration Tribunal for getting the dispute arising out of the reconstituted partnership agreement resolved. Therefore, the decision as relied on the second arbitration is, in my opinion, inapplicable in the present case. 33. So far as the question has been raised regarding the deficiency of the stamp in the original agreement i.e. the reconstituted partnership deed, it is seen that the petitioners did not file the original deed which according to them is in the custody of the opposite parties. Section-35 of the Indian Stamp Act will have no application so far a copy of the instrument is concerned. I have taken note of the admission on existence of an arbitration agreement as well as the copy of the reconstituted partnership deed, which contains the arbitration clause. Hence, the said objection is discarded. 34. The objection based on Section 69(3) read with Section-69(1) & (2) is concerned, this Court is of the view that this proceeding is merely
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for reference and does not determine the respective liabilities. But the opinion expressed in Sukanti Barik vs. Bedabyas Barik: AIR 2021 ORISSA 66, cannot be applied in the present case, inasmuch as, the said decision did not survey the effects of Section-11(6)(A) of the Arbitration and Conciliation Act. In that case, this High Court held that since the agreement was not properly stamped in view of Section-35 of the Indian Stamp Act, the reference cannot be made. But in the present case, we have noticed that it cannot be disputed that the reconstituted partnership deed (the agreement) was duly stamped. 35. That apart, both the parties have agreed that they have acted upon the said agreement for enforcement. Therefore, the decision of the Gareware Wall Ropes Ltd. vs. Coastal Marine Constructions & Engineering Ltd: AIR 2019 Supreme Court 2053 is not relevant for the present purpose. Moreover, in Gareware Wall Ropes Ltd. (supra), the apex court has categorically stated that the reference court shall not wait for any decision regarding the adequacy of stamp in view of Section- 11(6A) of the Arbitration and Conciliation Act, 1996. 36. In Sundaram Finance Limited vs. NEPC India Limited: 1999 (2) SCC 479, the apex court in paragraph-12 of the said judgment has
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constructed that Section-20 of the old Act as equivalent to Section-11 of the new Act in the following terms:
“Under the 1996 Act appointment of arbitrators is made as per the provision of Section-11 which does not require the Court to pass a judicial order appointing arbitrator/(s). The High Court was therefore wrong in referring to the said provision of 1940 Act while interpreting Section-9 of the new Act.”
In Mohd. Monirul Hasan and others vs. Mohd. Iftikar Ahmed and others: AIR 2000 Gauhati 108, it has been observed that for the purpose of the bar under Section 69 of the Partnership Act, what will be relevant is as to whether it is a suit or claim of set-off or the other proceeding for enforcement of a right arising out of a contract or not. A judicial order, strictu sensu, may not be called for, for appointment of an arbitrator as observed by the apex court in the context of the controversy indicated above. None the less, the fact remains that a petition is to be moved to the designated authority to appoint an arbitrator in view of the arbitration clause contained in the agreement. This is a right provided by the statute to get the dispute settled through arbitration by appointment of an arbitrator. That provision is invoked and enforced against a party who is not acting in consonance with the terms of the agreement and avoiding to discharge his duty under the contract. On a petition moved under Section 11 of the new Act, notices are issued and the parties are heard. The matter is examined for purpose whether an arbitrator is to be
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appointed or not, in terms of the agreement. After hearing the parties on the question, a decision is taken and the due order is passed. The remedy is to get arbitration clause enforced in the matter of appointment of an arbitrator. 38. In this case, we do find that the parties have agreed to reference to arbitration, as stated by the opposite parties. In their counter affidavit, they have averred that they had approached the Jharsuguda Chamber of Commerce & Industries for resolution of their dispute through the proceeding. When the parties have no inhibition, the Court may waive the objection on technical ground inasmuch as it is on the basis of their own agreement, the Court may refer the matter to an arbitrator, as it has been held that the proceeding before the Jharsuguda Chamber of Commerce and Industries was in the nature of conciliation proceeding. 39. Apart that, the dispute is clearly covered by Section-69(3)(a) of the Partnership Act, 1932, which exempts the prohibition in cases of enforcement of any right to sue for the dissolution of a farm or dissolution of farm or any right or power to realize the property of a dissolved farm. 40. It has been agreed by the parties that the partnership farm has by effects been dissolved and it is no more carrying on business. As such,
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for all purposes the dispute relates to dissolution of the farm for settlement of the account and for sharing of the assets. The objection as raised by the opposite parties are, therefore, not tenable. Hence, the dispute should be referred to an arbitrator. Mr. Gautam Misra, learned Senior Advocate of this Court is appointed as arbitrator to arbitrate the dispute under the aegis of the High Court of Orissa Arbitration Center. 41. In terms of the above, this petition stands allowed. 42. A copy of this order be transmitted to the Coordinator, High Court of Orissa Arbitration Center. The parties shall appear before the Coordinator on 31.10.2023. A copy of this order shall also be transmitted to Mr. Gautam Misra, learned Senior Advocate forthwith.
(S. Talapatra)
Chief Justice
Orissa High Court, Cuttack. The 22nd September, 2023/Subhasis Mohanty, P.A. Digitally Signed Signed by: SUBHASIS MOHANTY Designation: P.A. I/C Secretary Reason: Authentication Location: High Court of Orissa, Cuttack. Date: 26-Sep-2023 19:05:44 Signature Not Verified