The main legal point established is that the ban under Section 69 of the Partnership Act, 1932 does not apply to arbitration proceedings, and the existence of a dispute and the invocation of the arbitration clause establish a prima facie case for arbitration.

JUDGMENT

Prakash Shrivastava, CJ. - This application under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act') has been filed for appointment of Arbitrator to resolve the dispute between the parties.

2. The case of the applicants is that the partnership deed dated 4th of May, 1992 was executed between the parties which contained the following Arbitration Clause:

'13. That all disputes and questions whatever, which arise during the partnership or afterwards between the partners shall be referred to a person unanimously appointed to act as Arbitrator and in such case his verdict shall be binding on all the partners.'

3. It is alleged in the AP that the respondent no. 2 had started running parallel business and that the respondent nos. 2 and 3, in order to suppress the illegal activities, had intentionally taken control of the books of accounts and other relevant documents. It is also the case of the applicant that the sale proceeds of the daily sales were also usurped by the respondents in complete deprivation of the applicant. Hence, applicant had sent the notice dated 8th of September, 2021 to the respondents invoking the Arbitration Clause and proposing the name of Mrs. Rajesh Ghosh, Advocate as sole Arbitrator to resolve the dispute. Respondents had sent the reply dated 17th of September, 2021 denying the appointment of the proposed Arbitrator and taking the stand that the applicants had made false allegations in the notice.

4. The applicants in order to safeguard the interest had filed the application under Section 9 of the Act which was registered as Miscellaneous Case No. 39 of 2022. Learned Judge, 12th Bench, City Civil Court, Calcutta on 7th of January, 2022 had passed the ad-interim order of injunction restraining the respondent nos. 2 and 3 from interfering and/or creating any obstruction to the applicants from participating in the day to day affairs of the firm.

5. It is also disclosed in the AP that respondent no. 3 had filed a suit for partition before the learned Civil Judge (Senior Division) at Sealdah which was registered as T.S. No. 101 of 2009 wherein the counter claim was filed by the applicants. The inclusion has been challenged by the respondent no. 3 by filing an application under Sections 5 and 8 of the Act indicating that the affairs of the respondent no. 1 cannot be challenged by way of suit owing to the existence of an Arbitration Clause in the partnership business.

6. In the present AP filed before this Court under Section 11 of the Act, the prayer is to appoint the sole Arbitrator to resolve the dispute.

7. Respondent no. 2 has filed their affidavit-in-opposition denying the factual averment made in the AP and also raising an objection that the dispute of an unregistered partnership firm cannot be referred to an Arbitrator in view of the bar contained under Section 69 of the Partnership Act, 1932 (for short, 'the Act of 1932).

8. I have heard the learned counsel for the parties and perused the record.

9. The partnership deed containing the Arbitration Clause has not been disputed by the respondents. It is also not in dispute that it is an unregistered partnership deed.

10. The objection of the respondents is in respect of the bar contained under Section 69 of the Act of 1932. Sub-sections (1) and (2) of Section 69 of the Act of 1932 restrict filing of suit by any person as a partner of unregistered firm. Sub-section (3) of Section 69 of the Act of 1932 makes the provisions of Sub-sections (1) and (2) applicable also to a claim of suit of or 'other proceedings' to enforce a right arising from a contract. Hon'ble Supreme Court in the matter of Umesh Goel vs. Himachal Pradesh Cooperative Group Housing Society Limited reported in (2016) 11 SCC 313 has settled that the arbitral proceedings will not come under the expression 'other proceedings' of Section 69(3) of the Act of 1932 and that the ban imposed under Section 69 can have no application to arbitration proceedings as well as the arb