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2013 Supreme(Bom) 1761

HIGH COURT OF JUDICATURE AT BOMBAY
ROSHAN DALVI, J.

Mrs. Perin Hoshang Davierwalla & Another
Versus
Kobad Dorabji Davierwalla & Others
Arbitration Application No. 178 of 2013
Decided on: 04-09-2013

Advocate Appeared:
For the Applicants:Dinyar Madon, Sr. Advocate a/w. Akshay Patil, Vishesh Malviya, Ms. Shweta Jaydev i/b Federal Rashmikant, Advocates.
For the Respondents:R1, A. V. Anturkar, Sr. Counsel a/w. Ms. Kalyani Tulankar, Dormaan Dalal i/b S. Deshmukh, Gaurav Joshi a/w. Karzan Shroff, B.H. Antia, Mrs. S.K. Kapoor, H.N. Vakil, Sunil Chavan i/b Mulla & Mulla & CBC., Advocates.

Parties must adhere to the specific provisions of the arbitration agreement for the appointment of arbitrators.

Headnote:

Arbitration - Partnership Dispute - Arbitration and Conciliation Act, 1996, Section 11(6)

Fact of the Case:

Partnership dispute involving the dissolution of a partnership business and appointment of arbitrators as per the partnership agreement.

Finding of the Court:

The court found that the arbitration agreement specified the appointment of multiple arbitrators and did not permit a sole arbitrator. The court also held that the appointment of an even number of arbitrators was not against public policy.

Issues: Interpretation of the arbitration clause in the partnership agreement, determination of the number of arbitrators, and the requirement for mandatory registration of the partnership.

Ratio Decidendi: Parties must adhere to the arbitration agreement's provisions for the appointment of arbitrators. The appointment of an even number of arbitrators is not against public policy.

Final Decision: The application for the appointment of a sole arbitrator was rejected by the court.

JUDGMENT


1. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (the Act). The parties are partners in the partnership business of running IL PALAZZO HOTEL. There are 5 partners in the partnership. The parties entered into a Partnership Deed on 06.03.1992. The partnership is at will but if a partner desires to retire, he/she would require to give 3 months notice in writing to the other partners. The applicants have sought to dissolve the partnership. They have given notice of dissolution.

2. The partnership agreement contains an arbitration clause being clause No.29 thereof, the relevant part of which runs thus:

All disputed and differences whatsoever which shall either during the partnership or after the termination thereof arise, between the partners or their representative or between any partner and the legal heirs/representatives of the other partner touching these presents or the construction or application thereof, or any clause or thing herein contained, or any account, division, valuation debts or liabilities to be made hereunder or as to any other matter in or the rights, duties or liabilities of any persons under these presents shall be referred to arbitrators one to be appointed by each party to the difference in accordance with and subject to the provisions of the Indian Arbitration Act, 1940 …......

3. The applicants have claimed that they have sought arbitration with regard to the dissolution of the firm, its accounts and their share in the property.

4. The applicants have sought to appoint a sole arbitrator. The arbitration agreement clearly does not envisage or permit or allow a sole arbitrator. The agreement as cited above specifies arbitrators in the plural. These arbitrators are to be appointed, “one by each party to the difference”. There have been differences and disputes between the parties. Those differences would have to be adjudicated in the arbitration. There would be minimum two parties to any difference or dispute. Hence the arbitration clause contemplates two or more arbitrators depending upon how many specific differences and disputes each party, who would be each partner, may have. It is, therefore, a multiparty agreement as rightly contended by Mr. Anturkar as also Mr. Joshi on behalf of two sets of respondents who claim to have separate sets of differences and disputes and which could be adjudicated only in the arbitration.

5. The applicants have jointly appointed one arbitrator. The respondents have separately appointed one arbitrator each upon being given a notice to refer the disputes and differences to arbitration and upon being called upon to appoint an arbitrator thereunder. It is in view of this that this application would have to be considered.

6. Mr. Madon on behalf of the applicants contended that Section 10 requires the parties to determine the number of arbitrators which would be even numbers and failing such determination there would be a sole arbitrator. The applicants have applied for appointment of a sole arbitrator on the premise that no number of arbitrators is mentioned in Clause 29 of the Partnership Deed which is the agreement relating to arbitration entered into by and between the parties. Indeed the clause does not have the specification of the number of arbitrators by cardinal Nos. 1, 2, 3 etc. Nevertheless the arbitration agreement specifically contemplates one arbitrator each to be appointed by the party to the difference. The number though not specified is specifiable. It would vary and depend upon the parties between the difference being the groups of the partners to the difference. It would generally contemplate two parties to the difference or the dispute. Partners having the same interest may not be a separate party to the difference. They would be entitled to go together and from one group of a party to the difference or the dispute. This is much as the applicants have done. The partners may have separate differences or disput

















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