Suresh Chandra Sharma @APPELLANT@Hash Smt. Anusuiya Sharma

This application under Section 11 of the Arbitration and Conciliation Act, 1996 (‘the Act’) has been filed by the applicant seeking appointment

of sole Arbitrator to resolve the dispute between the parties.

It is, inter alia, claimed in the application that industrial plot no. B & C situated at village Manpura, Tehsil & District Chittorgarh are properties of M/s.

Shilpi Marble, wherein, a Crusher Unit is established with machinery, quarters for servants etc. The said M/s Shilpi Marble is a partnership firm for

which, the partnershipdeed was executed between Rakesh Kumar Sharma, the applicant â€" Suresh Chandra Sharma and respondent - Smt.

Anusuiya Sharma.

It is claimed that applicant is having 15% share in the partnership firm. The deed of partnership dated 17.8.2015 contains Clause 10, which is an

arbitration agreement between the parties. It is also claimed that the three partners applied with the Registrar of Firms for registration of the

partnership firm, the firm was duly registered and a certificate of registration dated 26.8.2015 was issued.

One of the partners Rakesh Kumar Sharma expired on 20.4.2016, however, it is claimed that death of a partner did not result into the dissolution of

partnership and the same is in existence and continuing with its business.

After death of Rakesh Kumar Sharma, it is claimed that the respondent took actions seeking to disintegrate the partnership firm by writing letters to

the District Collector, the Registrar of Firms etc. In those circumstances, the applicant filed suit for permanent injunction in the Court of Senior Civil

Judge, Chittorgarh (‘the trial court’).

An application under Section 8 of the Act was filed by the respondent read with Order VII Rule 11 CPC. The application was allowed and the plaint

was rejected by the trial court by its order dated 30.5.2017.

Whereafter, applicant filed application under Section 9 of the Act and give a notice dated 12.6.2017 for appointment of Arbitrator in terms of the

arbitration agreement between the parties.

The notice was responded by denying the existence of the partnership deed / partnership firm.

In the above circumstances, the present application has been filed by the applicant seeking reference of the dispute between the parties to a sole

Arbitrator.

On notice being issued, a reply has been filed by the respondent, inter alia, denying the existence of an arbitration agreement as it is alleged that the

partnership deed itself is a forged document and, therefore, the application be dismissed. Further submissions have been made that FIR has been

lodged by the respondent alleging forgery committed by the applicant, in which, the police has given FR, wherein, a protest petition has been filed by

the respondent and the matter is pending adjudication before the Criminal Court and on that count also application deserves dismissal.

A rejoinder has been filed by the applicant attaching several documents seeking to establish the conduct of the respondent admitting the existence of

the partnership firm.

It is submitted by learned counsel for the applicant that existence of the partnership firm is firmly established in view of partnership deed as well as

certificate of registration issued by the Registrar of Firms and the conduct of the respondent in writing letters to the authorities seeking cancellation of

registration of firm etc. and, therefore, the submissions made by the respondent seeking to dispute the existence of he partnership deed itself is

baseless.

Further submissions were made that the applicant had filed suit for permanent injunction, in which, the respondent herself relied on the arbitration

agreement between the parties and based on that, the plaint filed by the applicant - plaintiff has been rejected by the trial court, now the respondent

can’t turn around and claim that even the said arbitration agreement doesn’t exist.

Further submissions were made that under provisions of Section 11(6A) of the Act this Court is only required to examine the existence of the

arbitration agreement and the defence sought to be raised by the respondent in this regard, cannot be examined at this stage and, therefore, the

application deserves to be allowed.

Reliance was placed on Duro Felguera, S.A. vs. Gangavaram Port Limited: (2017) 9 SCC 729.

Learned counsel for the respondent vehemently opposed the submissions made by learned counsel for the applicant. It was submitted that once the

arbitration agreement itself is under question, it is not open for the applicant to rely on the provisions of Section 11(6A) of the Act. It was submitted

that the fact whether the partnership deed in question is a genuine document having been executed between the parties has to first establish before

this Court before relying on the arbitration agreement contained therein and in absence thereof, the applicant is not entitled to any relief.

Further submissions were made that so far as the filing of the application under Section 8 of the Act in the suit filed by the applicant is concerned, the

said application was filed without admitting the execution of the partnership deed and, therefore, the applicant cannot rely on the said aspect.

Reliance was placed on National Insurance Company Limited v. Boghara Polyfab Private Limited: (2009) 1 SCC 267.

I have considered the submissions made by learned counsel for the parties and have perused the material available on record.

A bare perusal of the documents indicates that the applicant has filed a partnership deed dated 17.8.2015 said to have been executed among Rakesh

Kumar, respondent â€" Smt. Anusuiya Sharma and applicant â€" Suresh Chandra.

Clause 10 of the partnership deed reads as under:-

“10- fd bl Hkkxhnkjh QeZ esa fdlh Hkh fookn dks fuiVkus ds fy;s iap QSlys dk dkuwu izHkko’kkyh gksxk ,oa mDr le; Hkkjrh; iap fu.kZ;

dkuwu izHkko’kkyh gksxkAâ€​

A certificate of registration dated 26.8.2015 issued by the Registrar of Firms, Chittorgarh has also been placed on record. Besides the above, several

other documents have been placed on record concerning the partnership firm M/s. Shilpi Marble.

When the dispute arose between the parties, the respondent allegedly started taking steps for cancellation of the registration of the firm as well as

disowning the fact of existence of partnership between Lt. Rakesh Kumar, applicant and respondent.

The applicant filed a suit for permanent injunction in the Court of Senior Civil Judge, Chittorgarh. In the said suit, an application under Order VII Rule

11(d) read with Section 8 of the Arbitration and Conciliation Act, 1996 was filed with the following averments:-

“2- ;g fd mijksDr okni= ds vFkZiw.kZ iBu ,oa mlds lkFk layXu Hkkxhnkjh foys[k fnukad 17-08-2015 ftls fd izfroknh Lohdkj ugha djrs gSa] ijUrq

oknh ds vuqlkj Hkh mls rdZ ds fy, ekuk tkosa rc Hkh ml foys[k dh dye la[;k 10 esa iap QSlys ls fookn fuiVkus ds izko/kku fd;s x;s gSa tks fuEu

'kCnksa esa gS& ^^fd bl Hkkxhnkjh QeZ esa fdlh Hkh fookn dks fuiVkus ds fy, iap QSlys dk dkuwu izHkkoâ€khy gksxk ,oa mDr le; Hkkjrh; iap

fu.kZ; dkuwu izHkkoâ€​khy gksxk**

3- ;g fd mijksDr izHkkodkjh “krZ ds rgr Hkkxhnkjka ds e/; ds leLr fookn dk fofuâ€p; iap QSlys ls gh gksuk fufâ€pr gS] ijUrq fQj Hkh oknh us bl

“krZ dks njfdukj djrs gq, flfoy U;k;ky; esa mDr okn isâ€​k fd;k gSA

4- ;g fd vkfcZVªsâ€ku ,.M dalhfy,â€ku ,DV] 1995 dh /kkjk 8 ds rgr ftu ekeyksa esa i{kdkjksa ds e/; fu""ikfnr foys[k esa iap fu.kZ; dk izko/kku gks]

,sls ekeyksa es flfoy U;k;ky; dk {ks=kf/kdkj oftZr gSA

5- ;g fd mDr Hkkxhnkjh foys[k dh dye la[;k&10 esa tc i{kdkjksa ds e/; fookn ds laca/k esa iap fu.kZ; dk Li""V izko/kku gS rc ,sls fookn ds laca/k esa

flfoy U;k;ky; dh vf/kdkfjrk oftZr gSAâ€​

No doubt the said application was filed with a caveat that the respondent herein did not accept the partnership deed dated 17.8.2015, however, the

said application filed by the respondent was accepted by the trial court, the application under Order VII Rule 11 CPC was allowed and the plaint was

rejected.

Provision of Section 8 of the Act, insofar relevant, reads as under:-

“8. Power to refer parties to arbitration where there is an arbitration agreement.- [(1) A judicial authority, before which an action is brought in a

matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so

applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of

the Supreme Court or any court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.]â€​

A bare look at the above provision indicates that the application under Section 8 of the Act can be filed by a party to the arbitration agreement only or

any person claiming through or under him and the court is required to refer the parties to arbitration unless it finds that prima facie no valid arbitration

agreement exists. The very fact that respondent chose to file the application, which was entertained and the suit filed by the applicant was rejected,

necessarily means that the trial court came to the conclusion that the respondent was party to the arbitration agreement and that a valid arbitration

agreement exists between the parties.

Once the case / plea of the respondent was that there was no valid arbitration agreement between the parties, there was no necessity of the

respondent for filing the application under Section 8 of the Act as in that case, the applicant would have proved the existence of the partnership deed /

validity thereof in the suit filed for the purpose.

Once the plea raised by the respondent was accepted by the trial court, the consequence of acceptance of the application is that ‘parties are

referred to arbitration’ and now once the application has been filed for appointment of Arbitrator, the respondent is seeking to deny the existence

of arbitration agreement, which has formed the basis for acceptance of her application by the trial court.

It is well established that a party cannot blow hot and cold in the same breath. If the plea of the respondent is accepted, the result would be that the

applicant would be rendered remediless as his suit has already been rejected on account of existence of the arbitration agreement and if the

application for appointing the Arbitrator is rejected on account of dispute having been raised regarding existence of arbitration agreement, the same

would result in proverbial situation of ‘heads I win, tails you lose’, which cannot be permitted.

So far as the reliance placed by the respondent on the judgment in the case of Boghara Polyfab Private Limited (supra) is concerned, Hon’ble

Supreme Court in the case of Duro Felguera (supra) laid down that the said judgment dealt with situation pre 2015 amendment and situation has

changed after the amendment and, therefore, the said judgment has no application.

It was observed and laid down by Hon’ble Supreme Court in the case of Duro Felguera (supra) in para 18, 47, 48 & 59 as under:-

“18. The language in Section 11(6) of the Act ""the Chief Justice or any person or institution designated by him"" has been substituted by ""Supreme

Court or as the case may be the High Court or any person or institution designated by such Court"". Now, as per subsection (6A) of Section 11, the

power of the Court has now been restricted only to see whether there exists an arbitration agreement. The amended provision in sub-section (7) of

Section 11 provides that the order passed under Section 11(6) shall not be appealable and thus finality is attached to the order passed under this

Section.

What is the effect of the change introduced by theArbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as “the 2015

Amendmentâ€) with particular reference to Section 11(6) and the newly added Section 11(6A) of the Arbitration and Conciliation Act, 1996

(hereinafter referred to as “the 1996 Actâ€​) is the crucial question arising for consideration in this case.

Section 11(6A) added by the 2015 Amendment, reads as follows:

“11(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under subsection (4) or sub-section (5) or

subsection (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration

agreement.â€​Â

From a reading of Section 11(6A), the intention of the legislature is crystal clear i.e. the Court should and need only look into one aspect- the existence

of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to

that is simple - it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen

between the parties to the agreement.

The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. (supra) and Boghara

Polyfab (supra). This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an

arbitration agreement exists - nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court’s intervention at

the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected.â€​ (emphasis supplied)

From the above, it is apparent that post 2015 amendment in the Act, the Court while considering any application under Section 11 of the Act should

and needs to look into the existence of an arbitration agreement, nothing more or nothing less and that the Court only needs to see if the agreement

contains a clause, which provides for arbitration pertaining to the disputes, which have arisen between the parties to the agreement.

In view of the above, as it is apparent that a dispute has arisen between the parties and there exists an arbitration agreement between the parties, the

dispute between them, deserves to be referred for arbitration.

In view of the above discussion, the application is allowed. Mr. Shanti Lal Chhajerh (Retd. RHJS), residing at 200, Adarsh Colony, Nimbahera,

District Chittorgarh, is appointed as sole Arbitrator to adjudicate upon the disputes between the parties as per the Rajasthan Manual of Procedure for

Alternative Dispute Resolution, 2009 as amended up to date. The above appointment is subject to the necessary disclosure being made under Section

12 of the Act.