IMPORTANT POINT
The main legal point established is that the mere existence of a clause referred to as an ‘Arbitration Clause’ does not necessarily indicate an agreement to refer disputes to arbitration, and an arbitration agreement cannot be implied from correspondence between the parties.

JUDGMENT :

1. This petition seeks appointment of an arbitrator under Section 11 of the Arbitration & Conciliation Act, 1996 (“Act”) to adjudicate disputes arising between the parties out of the partnership deed dated 23rd October 1992.

2. The Petitioner claims to be one of the partners of the Respondent No.1-Partnership firm while she says that Respondents No.2 to 7 are partners of the said firm. The business of the partnership firm is to manage portfolios, equity participation share, stock trading and other related financial dealings and other allied business that may be decided by the partners from time to time.

3. Mr. Sarthak Utangale, learned counsel appearing for the Petitioner, draws to my attention clause 12 of the agreement. It reads as thus:

“12) Arbitration: If during the continuance of the said partnership or at any time afterwards any difference shall arise between the said partners or their executors or of the administrators in regard to the construction of any division, act or thing to be made or done in pursuance thereof or to any matter or thing related to the said partnership or the affairs thereof, such difference shall be deemed to partners. Majority decision will be final & binding.”

4. It is on the basis of this clause that the Petitioner issued notice dated 6th September 2018 to the firm and rest of the partners informing them of having appointed Justice J.N.Patel (Retd. Chief Justice of Kolkata High Court) as a sole arbitrator to adjudicate the disputes between the parties. By the said notice, the Respondents were also called upon to concur upon the appointment of the nominated arbitrator. Replies dated 24th September 2018 and 29th September 2018 respectively were issued by the Respondents No.3 and 6 denying the very existence of the partnership deed. Both the partners also denied the claim of the Petitioner as well as the arbitration clause in the agreement. Thus, the Petitioner filed the present Arbitration Petition.

5. Upon private service by the Petitioner, the Respondents have appeared and a reply has been filed on behalf of the Respondents No.2,3,4 and 6 denying the contents of the application.

6. Mr. Utangale tried to pursue the Court that since all the Respondents in their notice-replies had not denied the reference to arbitration, consent to arbitration has to be presumed. He relies upon a decision of the Karnataka High Court dated 1st August 2022 in the matter of S.R. Ravi v. Karnataka State Tourism Development Corporation, Civil Miscellaneous Petition No.180 of 2020. He drew my attention to paragraph 13 of the judgment, which reads as thus:

"13. In S.N. Prasad's case supra, the Apex Court held as under:

"11. What therefore remains to be considered is whether there is an arbitration agreement as contemplated under Section 7(4)(c) of the Act, which provides that an arbitration agreement in writing can be said to exist, if it is contained in an exchange of statements of claim and defence in which the existence of the arbitration agreement is alleged by one party and not denied by the other. The statement of claim filed by the first respondent before the arbitrator does not contain an allegation or assertion of an arbitration agreement between the first respondent and the appellant. Nor has the appellant accepted the existence of any arbitration agreement by not denying such arbitration agreement in the defence filed before the arbitrator. On the other hand, the appellant specifically contended before the arbitrator that there was no arbitration agreement between them (the first respondent and the appellant) and therefore the arbitrator did not have jurisdiction.

12. But the words, "statements of claim and defence" occurring in Section 7(4)(c) of the Act, are not restricted to the statements of claim and defence filed before the arbitrator. If there is an assertion of existence of an arbitration agreement in any suit, petition or application filed before any court, and if there is no denial thereof