1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF JANUARY, 2025 BEFORE THE HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM CIVIL MISC. PETITION NO.246 OF 2024 BETWEEN: M/S SREE GANGADHARESHWARA REAL ESTATE AGENCY AN UNREGISTERED PARTNERSHIP FIRM HAVING ITS OFFICE AT NO.323, KUNIGAL ROAD, MARALURU, TUMKUR TOWN-572105 REPRESENTED BY ITS JOINT MANAGING PARTNERS, SMT. PREMALATHA AND SMT. VASANTHI MURUGESH. ...PETITIONER (BY MS. ANAGA N. SHARMA, ADVOCATE FOR SRI. S. RAJENDRA, ADVOCATE) AND: SRI. K.G. RAJANNA AGED ABOUT 72 YEARS, SON OF LATE KUNIGAL H. GANGAPPA, RESIDING AT GANGADARESWARA NILAYA, 3RD MAIN ROAD, SADASHIVANAGAR, TUMAKURU-572103 …RESPONDENT (BY SRI. SUNIL KUMAR PATEL, ADVOCATE FOR SRI. S.K.VENKATA REDDY, ADVOCATE) 2 THIS CIVIL MISC. PETITION IS FILED UNDER SECTION 11(6) OF ARBITRATION AND CONCILIATION ACT, 1996 PRAYING TO APPOINT AN ARBITRATOR TO ADJUDICATE THE DISPUTE BETWEEN THE PARTIES UNDER SECTION 11 OF ARBITRATION AND CONCILIATION ACT, 1996, AS PER CLAUSE 31 OF THE RECONSTITUTION DEED (ANNEXURE B) DATED 20.10.1994. THIS CIVIL MISC. PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 24.01.2025, THIS DAY ORDER WAS PRONOUNCED THEREIN, AS UNDER: CORAM: HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM C.A.V. ORDER This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1966 (for short 'the Act') between the parties in terms of the reconstitution deed of partnership dated 20.10.1994 executed by respondent. 2. The petitioner asserts that it is an unregistered partnership firm established for the primary purpose of promoting and developing real estate ventures. The petitioner further claims that the respondent retired from the firm pursuant to the terms outlined in a retirement- 3 cum-reconstitution deed of partnership dated 20.10.1994. This deed, executed by the respondent, formalized his exit from the firm. According to Clause (6) of the said reconstitution deed, the respondent expressly agreed to accept his share in the form of a portion of the developed sital land as full and final settlement of his entitlement from the firm. Subsequently, invoking Clause 31 of the reconstitution deed, the petitioner issued a notice to the respondent under Section 21 of the Act alleging that the respondent has raised a demand for a higher share than what was mutually agreed upon under Clause (6) of the reconstitution deed. 3. Upon receiving the notice from the petitioner, the respondent entered appearance through learned counsel and filed a statement of objections. The respondent has raised a preliminary objection, asserting that since the partnership firm is unregistered, the dispute cannot be referred to arbitration. In support of this contention, the 4 respondent has invoked the provisions of Section 69 of the Indian Partnership Act, 1932 (for short "Act, 1932"). Specifically, the respondent relies on the bar imposed under Section 69(1) and (2) of Act, 1932, against the enforcement of contractual rights by unregistered firms. However, in addressing this contention, the petitioner has drawn attention to the judgment of the Hon’ble Supreme Court in Umesh Goel vs. Himachal Pradesh Cooperative Group Housing Society Limited1. In the said judgment, the Apex Court clarified the scope of Section 69(3) of the Act, 1932, holding that the prohibition under Section 69 of the Act, 1932 does not extend to arbitration proceedings initiated under the Arbitration and Conciliation Act, 1996. 4. The issue of whether the statutory bar under Section 69(3) of the Act, 1932, applies to the initiation of arbitral proceedings remains a contentious matter. This 1 (2016) 11 SCC 313 5 Court finds it appropriate to leave this question open to be determined by the arbitrator during the course of arbitral proceedings. Upon thorough examination of the petition, its annexures, and the supporting documents, this Court is satisfied that the petitioner has complied with the procedural requirements prescribed under Section 11(4) of the Act, for invoking the arbitration clause. Therefore, the present petition merits consideration for appointment of an arbitrator to adjudicate the dispute between the parties. 5. In the light of the aforesaid clause of arbitration and the contentions advanced by the petitioner and respondent, this Court proceeds to pass the following: ORDER (i) This civil miscellaneous petition is allowed appointing Sri H.R. Srinivas, Retired District Judge, as the sole Arbitrator to enter reference of the disputes between the petitioner and the respondents and conduct proceeding at the Arbitration and Conciliation Centre (Domestic 6 and International), Bengaluru according to the Rules governing the said Arbitration Centre; (ii) All contentions inter se parties are left open for adjudication in the arbitration proceedings; (iii) Office is directed to communicate this order to the Arbitration and Conciliation Centre and to Sri. H.R. Srinivas, Retired District Judge as required under the Arbitration and Conciliation Centre Rules, 2012; (iv) Registry is directed to forthwith return the original agreement of sale furnished along with this petition after obtaining Photostat copy of the same. Sd/- (SACHIN SHANKAR MAGADUM) JUDGE ALB