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2013 Supreme(Bom) 1848
High Court of Judicature at Bombay
ROSHAN DALVI, J.
Yashvant Chunilal Mody
Versus
Yusuf Karmali Kerwala & Others
Arbitration Application (L.) No.859 of 2013
Decided On : 19-09-2013
For the Applicant:A. Anturkar, a/w. Vishal Thaker, i/b. V. Thakers, Advocates.
For the Respondents:R1 & R2, K.F. Merchant, a/w. Vinod Solanki, R3 to R5, J. Reis, Sr. Advocate, a/w. Ms. Anjali Trivedi, Advocates.
Headnote:Arbitration and Conciliation Act, 1996 - Sections 7 and 11 - Appointment of arbitrator. - Held, in absence of arbitration agreement in writing, appointment of arbitrator cannot be made. From such sketchy case of the execution of the deed of partnership, the applicant claims to have the arbitration agreement in writing. An arbitration agreement is mandatorily required to be in writing under Section 7(3) of the Act. It is stated to be an agreement in writing under partnership deed executed on 24th January, 1975 without any corroborative evidence. It is stated to contain a clause that in the event of a dispute and difference arising between the parties in respect of the erstwhile firm a sole arbitrator will be appointed.
An arbitration clause of the kind may give narrow as well as wide powers of the reference of the dispute to arbitration to the arbitrator. It may appoint one or more arbitrators. It may refer some or all of the disputes and differences. It may specify the kind of disputes to be referred. How the applicant has set out the kind of arbitration clause as is done in paragraph 4(k) is not explained and cannot be envisaged.
The purpose of this provision is specifically to exclude oral agreements unlike in a civil suit which can be filed on oral agreements so that an oral account of a written agreement can be tendered in evidence by way of secondary evidence. The purpose of having arbitration agreement only in writing rules out an oral agreement. The purpose would be wholly destroyed if parties are allowed to claim orally, as has been done in this case, that some agreement of some specific or vague nature was entered into and which the party can prove by oral evidence. This would open floodgates not only not contemplated but specifically excluded by the legislature. Consequently the observation of the Supreme Court in the case of M/s. SBP & Co., 2006 (1) All MR 156 (SC) (supra) with regard to whether there was arbitration agreement is upon the contention of the parties with regard to interpretation of whether or not a particular written document would constitute an arbitration agreement and not for allowing to prove a written agreement hitherto not produced. In view of the specific ambit of Section 7(4), the mandatory requirement of Section 7(3) must be read to require only a written agreement to be produced for commencing any arbitration proceeding. Hence an application under Section 11 for appointment of arbitrator cannot be made in case where an arbitration agreement is not in writing and is not produced at the first instance.
1. This is an application for appointment of a sole arbitrator U/s.11 of the Arbitration and Conciliation Act, 1997 (the Act) by the Applicant who is one of the eight partners of the partnership firm of which the arbitration agreement is alleged. Several of the partners have expired. Their heirs and legal representatives are some of the Respondents. The claim of the Applicant is of having entered into a partnership on 1st April, 1974 consequent upon the introduction of the partners in February, 1974 and their desire to carry on joint business since March, 1974.
2. It is the Applicant's case that initially the written agreement between the parties was not executed. It has been executed on 24th September, 1975 after the oral partnership without any formal document came into existence. In fact it is one of the claims that no formal partnership deed was initially executed upon certain advise (presumably legal). This is specifically stated in view of the facts which shall be considered presently. The partnership was to be between the parties and the joint business of the partners was to be the business of dairy farming. The Applicant had certain cattle. He wanted to expand his business. He wanted to purchase a farm and obtained new cattle and carry on dairy business.
3. In fact an agreement was entered into in the name of one V.Y. Shah and Co. for purchase of the land on which the business would be carried out. Earnest of Rs.20,000/- was paid out of the total consideration of Rs.1.76 lacs for the purchase of the land. The agreement was executed on 31st December, 1974. Thereafter a conveyance has been executed in 1975. The date of the execution of the conveyance is not shown in a photocopy of the unregistered conveyance produced by the Applicant. The conveyance is in the name of the partnership firm between the parties. It appears to be executed well after at least 19th July, 1975 which date is recited in the conveyance. The conveyance is for Rs.1.50 lacs, Rs.20,000/-being the earnest paid on 31st December, 1974, the date of the agreement. Rs.1.30 lacs is paid on 24th May, 1975 constituting the full consideration of Rs.1.50 lacs. The conveyance appears to have been lodged for registration on 29th July, 1976. The unregistered conveyance came to be registered under a deed of confirmation executed on 10th June, 1981 by the partnership firm as the purchaser. The Deed of confirmation shows the factum of the lodging of the conveyance for registration. There is no mention of the execution of the partnership deed in any of these documents.
4. The partnership, however, had come into existence. It has been registered with the Registrar of Firms on 22nd September, 1975. The fact of the partnership and the partners is admitted by Respondent Nos.1 and 2 who are the contesting Respondents.
5. The Respondents, however, claim that the there was no written partnership deed. The Applicant claims that the partnership agreement was executed on 24th January, 1975 inter-alia containing the arbitration clause.
6. Respondent Nos.1 and 2 have relied upon a very unique evidence to contradict the specific case of the execution of the written partnership deed and consequently the written partnership agreement containing as one of its clauses, the arbitration clause upon which the arbitration is sought and the application for appointment for an arbitrator is made. The Respondent Nos.1 and 2 have annexed to their affidavit in reply and a photocopy of an earlier notice given by six partners to Respondent Nos.1 and 2 through their Advocate Rajesh C. Shah on 6th March, 1998 claiming under a deed of partnership dated 1st April, 1974. It must be remembered that the present case of the Applicant is of the execution of the partnership deed on 24th January, 1975 upon a specific case that initially the parties were advised not to have any partnership deed executed. The difference in the dates is, therefore, not only an inadvertent error. The agreement for sale
