The main legal point established in the judgment is that the dispute amongst the partners regarding the dealings of the firm could be referred to arbitration as per the partnership deed, but once the partnership was dissolved, the dispute arising thereunder could not be referred to arbitration.

ORDER :

1. Both these petitions are filed under Sec.11(6) of the Arbitration Act for appointment of an arbitrator in context of a dispute. For the purposes of this order, facts of Arbitration Petition No. 116 of 2020 are taken into consideration.

2. The case of the arbitration petitioner is that a firm was formed by original partnership deed dated 13.07.1999 for the purposes of engaging in the business of manufacturing, purchase and sale of all types of pump, motor and their spare parts. The partnership was reconstituted by a partnership deed dated 01.04.2002. It is the case of the petitioners that petitioner Nos. 1 and 2 held 17% and 34% share in the firm, whereas respondents Nos. 1 and 2 held 34% and 15% respectively. The case of the petitioners further is that despite they holding majority share of 51%, the respondent No.1 started conducting business affairs without consent and knowledge of the petitioners and further from the year 2010-2011, he started going in a unilateral manner. An application, therefore, was filed under Sec.9 of the Arbitration and Conciliation Act before the City Civil Court being Civil Misc. Application No. 489 of 2012. The application is still pending.

2.1 An arbitration notice at the relevant point of time was given on 21.09.2012 for appointment of an arbitrator. The respondent No.1 having disagreed in response to the notice, by its reply dated 14.10.2012, a furthernotice was given on 18.12.2018 which met the same fate at the hands of the respondents by a response dated 22.12.2018. Section 11 was invoked and arbitration petitions were filed before this Court being Arbitration Petitions Nos. 88 and 89 of 2019 respectively. It appears that the firm was subsequently dissolved pursuant to a notice of dissolution at the hands of the arbitration petitioner.

2.2 The present petitions have been filed invoking the arbitration clause pursuant to the notice under the Act dated 24.02.2021. This notice too was disputed by the respondents.

3. Mr.Kunal Vyas, learned counsel for the petitioners would submit drawing the Court’s attention to Clause 24 of the partnership deed and submit that the disputes amongst the partners was a subject matter of a dispute which was arbitrable under the Arbitration Act, and therefore, invoking the clause in terms of the Act, this Court ought to appoint an arbitrator under Sec.11(6) of the Act.

4. Mr.Shashvat Shukla, learned counsel appearing for respondent No.1 would submit that apart from the contention that there is no valid clause of arbitration in the partnership deed, he would also submit that the partnership firm has been closed since the year 2006 and no business has been done on and from 01.04.2006. The arbitration notice of 2012 and 2018 failed to suggest appointment of arbitrator and this is one more shot at appointment of an arbitrator when it is not possible to do so post dissolution of partnership.

4.1 In support of his submissions that once the partnership has been dissolved, it is not open for the Court to appoint an arbitrator, Mr.Shashvat Shukla, learned counsel, would rely on a decision of this Court in the case of Mohanlal Sajandas vs. Hareshkumar Narandas & Ors., reported in 2001 (3) GLH 532. He would draw support on this submission also by relying on a decision in the case of Manibhai Shankerbhai Patel vs. Swashray Construction Co. & Ors., which was followed by a co-ordinate Bench of this Court in the case of Hemendra Babulal Shah vs. Dilipkumar Babulal Shah & Anr., reported in 2006 (2) GLH 498.

4.2 Adverting to the Clause of the partnership agreement, Mr.Shukla, learned counsel, would submit that the disputes that can be resolved were in context of the dealings of the firm and once the firm has been dissolved, in light of the decision of the Bombay High Court in the case of M.W.Pradhan vs. M/s. Panchal Engineering Works., reported in AIR 1967 BOM 48, he would submit that the arbitration petitions need not be entertained. Disputing these decisions, learned counsel for