HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT JAMMU (THROUGH VIRTUAL MODE) CJ Court Case: Arb P No. 11/2021 Mukesh Sharma and anr. .....Appellant/Petitioner(s) Through :- Ms. Deepali Arora, Advocate. v/s Sanjeev Bhasin .....Respondent(s) Through :- None. CORAM: HON’BLE THE CHIEF JUSTICE ORDER 19.05.2023 (Oral) 01. The present petition has been filed seeking appointment of an arbitrator under Section 11 of the Central Arbitration and Conciliation Act, 1996. It is the case of the petitioners that the petitioners and respondent had entered into a partnership business by executing a deed on 30th September 2014. According to the petitioners, the Deed of Partnership contains an arbitration clause which provides that in case of any dispute between the partners or their representatives either on the construction of these presents, or in respect of the accounts, transaction, profits or losses of the business or otherwise in relation to the partnership, every such dispute, doubt or question shall be referred to arbitrators chosen by each of the partners as provided by law and such reference shall, in all respect, as to the mode and consequence thereof, confirm to the provisions in that behalf contained in the Arbitration and Conciliation Act, 1996 or any statutory modification thereof. Sr. No. 3 -2 02. According to the petitioners, the petitioners had approached the Court of 3rd Additional Munsiff Jammu by filing a civil suit for rendition of the accounts and also for dissolution of the Deed of Partnership which, however, was rejected/dismissed by the Court on an application made by the respondent that the dispute between the parties arising out of the Deed of Partnership has to be resolved by way of arbitration as provided under Clause 10 of the Deed of Partnership and Civil Court would have no jurisdiction. The 3rd Additional Munsiff Jammu, accordingly, by order dated 21st February 2017 dismissed the said writ petition with the following observation. “In the case in hand, the allegations leveled against the defendant /applicant by the plaintiffs/non-applicants is related to the accounts which can be looked into and found out even by arbitrator as it does not involve any complex issue. Likewise, the allegations that the defendant/applicant didn’t deposit the daily collections and sale proceeds in the bank account of the firm on numerous occasions, is again a matter of accounts. I am therefore, of the opinion that allegations of purported fraud by the plaintiffs/non-applicants are not so serious which cannot be taken care by the arbitrator. What emerges from the above discussion and in view of the legal position, I reject the contentions of Ld. Counsel for the plaintiffs/non-applicants and accept the contentions raised by the Ld. Counsel for defendant/non-applicant. This court lacks jurisdiction to adjudicate upon the matter in presence of an Arbitration/Agreement /clause. Application moved under section 8 of the Arbitration and Conciliation Act1996 by the defendant/non-applicant is allowed, necessarily fall out of which is that plaint filed by the plaintiffs/non-applicants is rejected and consequently, application for grant of interim injunction is also dismissed and interim directions dated 05.07.2016 is hereby vacated. The present suit is accordingly disposed of along with interim applications and form part of the record under rules after its due compilation under rules”. 03. According to the petitioners, the respondent was a party before the learned 3rd Additional Munsiff, Jammu, however there was no action from the respondent, after the disposal of the said suit for appointment of arbitrator, and, accordingly, the petitioners have been compelled to approach this Court by filing this petition. -3 04. Since there is no representation on behalf of the respondent despite proper service of notice as mentioned in office noting dated 18th March 2021, and also reflected in order dated 2nd July 2021, the matter is proceeded on the basis of the available material on record. 05. As far as existence of arbitration Clause 10 in the Deed of Partnership is concerned, it is quite evident from Clause 10 which reads as follows. “In case of any dispute between the partners or their representatives either on the construction of these presents, or in respect of the accounts, transaction, profits or losses of the business or otherwise in relation to the partnership, every such dispute, doubt or question shall be referred to arbitrators chosen by each of the partners as provided by law and such reference shall, in all respect, as to the mode and consequence thereof, confirm to the provisions in that behalf contained in the Arbitration and Conciliation Act, 1996 or any statutory modification thereof. 06. In absence of any response filed by the respondent, the Court would accept the plea taken by the petitioners that a dispute has arisen between the partners which is also evident from the suit filed by the petitioners before the 3rd Additional Munsiff Jammu and, as such, if the dispute has arisen between the parties, it has to be referred to the arbitration as provided under Para 10 of the Deed of Partnership. 07. The next question which arises for consideration is whether the parties have taken steps for appointment of an arbitrator as provided under Para 10 of the Deed of Partnership. In this regard, learned counsel for the petitioners has submitted that a notice was served by the petitioners to the respondents prior to institution of the suit before the Court of 3rd Additional Munsiff Jammu, which can be treated as a notice for referring the matter to arbitration in terms of Para 10 of the Deed of Partnership. -4 08. There is nothing on record to indicate that after the suit was dismissed by 3rd Additional Munsiff Jammu, any fresh notice has been issued by the petitioners to the respondent for referring the dispute to the arbitration. 09. Learned counsel for the petitioners has submitted before this Court that the notice served by the petitioners to the respondent before filing the suit before the 3rd Additional Munsiff Jammu can be treated as a notice contemplated under Para 10 of the Deed of Partnership. Counsel for the petitioners has produced a copy of the letter of Demand Notice issued to the respondents before filing of the suit, which is kept on record. 10. What is required is the service of notice to the respondents before filing of this application under Section 11 of the Act. In this regard, it can be said that the intention of the petitioners to invoke arbitration clause was very much evident by their filing of the suit which however, was dismissed by the 3rd Additional Munsiff Jammu on the ground that the dispute cannot be decided by the Civil Court but by an arbitrator in terms of Para 10 of the Deed of Partnership. But it is also on record that the petitioners did serve notice on the respondents before filing of the suit for resolution of the dispute. 11. Under these circumstances, it can be inferred that the respondent was quite aware about the existence of the dispute regarding resolution and after the suit was dismissed, the respondent had also an obligation to propose the name of the arbitrator which he has not done which was required to constitute the Arbitral Tribunal. Hence, this Court is satisfied that the petitioners have made out a case for appointment of an arbitrator. 12. Accordingly, keeping in mind that Para 10 of the Deed of Partnership provides for the resolution of the dispute by arbitration, I appoint Sh. Kartar Singh (Retd. District Judge) R/o House no. 121, Phase-II, Housing colony, Udhampur -5 as the sole Arbitrator who shall proceed in the matter in accordance with the provisions of the Act to make an award within the time provided in the Act itself after charging the prescribed fee along with incidental expenses to be shared by the parties. 13. Registry to inform Sh. Kartar Singh about his appointment as an arbitrator. 14. Arbitration Application stands disposed of. (N. KOTISWAR SINGH) CHIEF JUSTICE SRINAGAR 19.05.2023 SUNITA/PS