The Chief Justice or his designate in an application under Section-11 of the Act has to satisfy himself that the conditions for exercise of power to appoint an arbitrator are present and once the appointment is made after such satisfaction, the arbitral tribunal could not go behind such decision or rule on its own jurisdiction.

1. The Appellants/Petitioners challenge an order passed by a Sole Arbitrator under Section-16 of the Arbitration and Conciliation Act, 1996 (“Act”) upholding the Respondents' objection to the jurisdiction of the Arbitrator to adjudicate upon the disputes referred to arbitration. For the sake of convenience, parties are referred to in this order with reference to their respective designations in Arbitration Petition No.257 of 2013.

2. The Petitioner and Respondents were partners in a firm by the name of M/s Laxmi Centre. The firm was constituted under a Deed of Partnership dated 25 June 1976, a further Deed of Partnership dated 7 September 1985 and a Supplementary Deed of Partnership dated 4 March 1997. The partnership was at will. There was an arbitration clause in the Deed. Disputes and differences arose between the parties. A dissolution notice was served by the Petitioner on the Respondents. Subsequently, the Petitioner invoked the arbitration agreement between the parties and appointed her nominee arbitrator. Respondent No.1 did not accept the nomination and instead filed an application under Section 11 for appointment of arbitrator. By its order dated 29 July 2010, this court appointed Mr. Snehal Shah, Advocate, as the Sole Arbitrator. Statement of Claim was filed by Respondent No.1 before the Arbitrator. The Petitioner filed her Statement of Defence and Counter-claim. A few hearings were held and directions were issued by the Arbitrator. Thereafter, Respondent No.1 filed an application under Section-16 of the Act contesting the jurisdiction of the Arbitrator to entertain the Counter-claim. The alternative prayers claimed in that application were (a) a declaration that the Counterclaim was not arbitrable in view of the allegations of fraud and forgery therein and a direction to continue with the arbitration proceedings based on the Statements of Claim and Defence alone, and (b) in the alternative, a direction to the Respondent (i.e. Petitioner herein) to give particulars of fraud and forgery and a permission to the Claimant (i.e. Respondent No.1 herein) to amend his pleadings after such particulars were furnished.

3. The basis of the application under Section-16 was stated to be as follows:

The parties were doing business in partnership since 1976. The Petitioner started creating problems in the running of the business and filed a false criminal complaint that her signature on a certain document was forged by Respondent No.1. As a result disputes arose between the parties, which were referred to arbitration. In her Counter-claim, the Petitioner alleged forgery of her signature and a fraud and manipulation of records by Respondent No.1. In view of these allegations of forgery and fraud, the arbitral tribunal was not competent to entertain the Counterclaim.

4. At the hearing of the application before the learned Arbitrator, Counsel for Respondent No.1 submitted that the entire dispute between the parties (i.e. the dispute raised in the Statement of Claim as well as Counterclaim) was not arbitrable having regard to the various judgments of the Supreme Court and our Court.

5. The learned Arbitrator held that the disputes between the parties ought not to be decided by arbitration as they involved determination of a dispute which “gives rise to or arises out of criminal offences”, namely, forgery, manipulation of records and fraud. The learned Arbitrator also held that in any event, determination of this dispute would involve voluminous evidence, which “cannot be properly dealt with by the Arbitrator”. In this view of the matter, though the learned Arbitrator recorded his satisfaction that the application under Section 16 was not moved by Respondent No.1 bona fide, he proceeded to hold that the disputes could not be decided by arbitration. The application was accordingly allowed.

6. Mr. Dhond and Mr. Andhyarujina, the learned Counsel appearing for the Petitioners in Arbitration Petitions No.257 of 2013 and 258 of 2013 r