- 1 - NC: 2025:KHC:6116 CMP No. 476 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM CIVIL MISC. PETITION NO. 476 OF 2024 BETWEEN: 1. B.H. KEMPARAJ S/O HANUMANTHAIAH AGED ABOUT 54 YEARS RESIDING AT SHOURYA FARM STUDIO ROAD, BETTAHALLI VILLAGE KADABAGERE POST, DASANAPURA HOBLI BENGALURU NORTH TALUK BENGALURU-562 130. 2. SMT. BINDYA W/O B.H. KEMPARAJ AGED ABOUT 43 YEARS RESIDING AT SHOURYA FARM STUDIO ROAD, BETTAHALLI VILLAGE KADABAGERE POST, DASANAPURA HOBLI BENGALURU NORTH TALUK BENGALURU-562 130. …PETITIONERS (BY SRI. S. HEMANTH BHARADWAJ, ADVOCATE) AND: 1. B.H. NAGARAJU S/O HANUMANTHAIAH AGED ABOUT 38 YEARS RESIDING AT NO 46 BETTAHALLI MAIN ROAD KADABAGERE POST DASANAPURA HOBLI Digitally signed by AL BHAGYA Location: HIGH COURT OF KARNATKA - 2 - NC: 2025:KHC:6116 CMP No. 476 of 2024 BENGALURU NORTH TALUK BENGALURU-562 130. 2. M/S MITHILA LAND DEVELOPERS A REGISTERED PARTNERSHIP FIRM REPRESENTED BY ITS PARTNERS A. B.H. KEMPARAJ B. B.H. NAGARAJU C. SMT. BINDYA HAVING OFFICE AT NO. 46 BETTAHALLI MAIN ROAD KADABAGERE POST DASANAPURA HOBLI BENGALURU NORTH TALUK BENGALURU-562 130. …RESPONDENTS (BY SRI. PAVANA CHANDRA SHETTY, ADVOCATE FOR R1; R2 SERVED) THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(5) OF THE ARBITRATION AND CONCILIATION ACT, 1996 PRAYING TO APPOINT ANY FORMER JUDGE OF THIS HONBLE COURT TO ACT AS THE SOLE ARBITRATOR TO ADJUDICATE UPON THE DISPUTES THAT HAVE ARISEN BETWEEN THE PETITIONERS AND RESPONDENT NO.1 IN RELATION TO THE AFFAIRS OF THE RESPONDENT NO.2 PARTNERSHIP FIRM AS PER THE ARBITRATION AGREEMENT CONTAINED WITHIN CLAUSE 18 OF THE PARTNERSHIP DEED DATED 14/03/2017 VIDE ANNEXURE- A AND ETC. THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM - 3 - NC: 2025:KHC:6116 CMP No. 476 of 2024 ORAL ORDER This civil miscellaneous petition is filed under Section 11(5) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') seeking appointment of a sole Arbitrator to resolve the dispute and difference between the parties in terms of partnership deed dated 14.03.2017 evidenced at Annexure-A. 2. On receipt of notice, the respondents have contested the petition by engaging a counsel. 3. The petitioners, who are parties to the partnership deed dated 14.03.2017, have raised serious allegations against the respondents, claiming that they have misused and misappropriated the firm's funds on a large scale. The petitioners contend that, upon discovering significant financial irregularities, they confronted the respondents regarding the same. However, despite multiple communications and attempts to seek an - 4 - NC: 2025:KHC:6116 CMP No. 476 of 2024 explanation, the respondents failed to provide any satisfactory response or justification for the discrepancies. As a result of the financial misconduct and the lack of accountability from the respondents, the petitioners found it necessary to reconstitute the partnership deed. Consequently, the reconstitution led to the formal registration of a new partnership deed. Furthermore, the petitioners allege that the respondents, acting with malafide intent and in collusion with the sub-Registrar, have wrongfully and unlawfully revoked the General Power of Attorney dated 15.02.2018. This unilateral revocation was done without obtaining the consent of the other General Power of Attorney (GPA) holders, thereby causing substantial financial loss and operational disruptions to the partnership firm. Given the escalating disputes and irreconcilable differences between the parties, the petitioners invoked Clause 18 of the partnership deed dated 14.03.2017 and unilaterally nominated an arbitrator to resolve the dispute. However, in the absence of any response from the respondents, the petitioners were left - 5 - NC: 2025:KHC:6116 CMP No. 476 of 2024 with no alternative but to approach this Hon’ble Court by filing the present petition. 4. In response, the respondents have contested the allegations and filed a detailed statement of objections, vehemently disputing the claims of the petitioners. The respondents assert that, contrary to the allegations made by the petitioners, it is the petitioners who have engaged in fraudulent conduct by registering a second partnership firm without the knowledge or consent of the respondents. According to the respondents, the petitioners have deliberately opened new bank accounts under the name of the second partnership firm with the intent to divert the original firm’s funds and defraud the respondents. In support of their claims, the respondents have produced copies of the partnership deed of the newly constituted firm dated 06.09.2023, along with the corresponding certificate of registration. The respondents further argue that the alleged financial misappropriation is not one-sided and counter-allege that the petitioners - 6 - NC: 2025:KHC:6116 CMP No. 476 of 2024 themselves have engaged in misusing the firm's finances. Additionally, the respondents contend that since respondent No.1 has already initiated legal proceedings before a competent civil court regarding the same subject matter, the dispute is currently sub judice. They argue that, under such circumstances, the petitioners are not entitled to invoke the arbitration clause, as the matter is already under adjudication before the civil court. Accordingly, the respondents seek the dismissal of the present petition on these grounds. 5. Having heard learned counsel on record, this Court has meticulously examined the annexures and supporting documents annexed to the civil miscellaneous petition. 6. On closer examination of the records, this Court is of the view that petitioners have succeeded in substantiating the existence of arbitration clause in the deed of partnership. Petitioners have also fulfilled the - 7 - NC: 2025:KHC:6116 CMP No. 476 of 2024 requirements of Section 11(4) of the Act and therefore, this Court is of the view that the matter needs to be referred to an Arbitrator. 7. For the foregoing reasons and having examined the arguments advanced by the petitioners and the respondents, this Court proceeds to pass the following: ORDER (i) Civil Miscellaneous Petition is allowed appointing Sri. Justice V.Jagannathan, Former Judge, High Court of Karnataka as the sole Arbitrator to enter reference of the disputes between the petitioners and the respondents and conduct proceeding at the Arbitration and Conciliation Centre (Domestic 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. Justice V.Jagannathan, Former Judge, - 8 - NC: 2025:KHC:6116 CMP No. 476 of 2024 High Court of Karnataka as required under the Arbitration and Conciliation Centre Rules, 2012. SD/- (SACHIN SHANKAR MAGADUM) JUDGE CA List No.: 2 Sl No.: 2