Point of Law: Arbitration and Conciliation - Jurisdiction of Arbitration - Interference under Section 37 of Act - Court cannot undertake an independent assessment of merits of award and must only ascertain that exercise of power under Section 34 has not exceeded scope of provisions; in case an arbitral award has been confirmed by court under Section 34, in an appeal under Section 37 appellate court must be extremely cautious and slow in disturbing such concurrent findings.

JUDGMENT :

K. HARIPAL, J.

1. Whether an Additional District Court has jurisdiction to entertain a petition touching the matters falling under the Arbitration and Conciliation Act; Can a party to an arbitration dispute challenge the jurisdiction of the Arbitrator for the first time before the court in a petition filed under Section 34 of the Act, are the two questions posed for consideration in this appeal.

2. This is an appeal preferred under Section 37 of the Arbitration and Conciliation Act, 1996, hereinafter referred to as the Act, challenging the correctness of the order of the III Additional District Judge, Kozhikode in OP (Arbitration) No. 270/2018. That was a petition filed by the appellant before the District Court, under Section 34 of the Act seeking to set aside the award of the Arbitrator, dated 29.09.2018.

3. It is the common case that the appellant and the respondent were partners in M/s. Shalimar Jewellery, a partnership concern dealing in the sale of gold. The partnership agreement was executed on 28.10.2013. Before the execution of that agreement, there were three partners in the firm, the appellant, the respondent and one V.K. Moidu. When Moidu chose to move out, the agreement dated 28.10.2013 was brought in existence. During the course of business the appellant and the respondent could not move on and thus, by a lawyer notice, the respondent notified the appellant his intention to dissolve the partnership. Thus he informed that the partnership stood dissolved with effect from 01.05.2015. In the matter of settlement of accounts the partners could not reach a consensus and that led to the appointment of two Arbitrators at the instance of the parties. The appellant nominated Sri. K. Aravindakshan as Arbitrator who dismissed the claim of the respondent. On the other hand, one Sri. Abdulla Manapurath was nominated by the respondent as Arbitrator who found that, at the time of dissolution of the partnership, 6481.580 grams of gold was the stock-in-trade, the value of which was estimated to be Rs. 1,91,85,476.80/- and thus the respondent was found entitled half of the said amount, i.e. Rs. 95,92,738.40/-. In the light of divergent finding of the respective Arbitrators, both the Arbitrators jointly nominated Adv. Sri. A.K. Rajeev as the third Arbitrator, who, after taking evidence, passed an award to the effect that the respondent is entitled to claim Rs. 1,13,77,405/- with interest at the rate of 11% on Rs. 87,03,427/-. Aggrieved by the said award of the third umpire, the appellant moved the District Court with the above stated Original Petition under Section 34 of the Act. By the impugned order, on 02.03.2020, the learned III Additional District Judge dismissed the petition. Aggrieved by the same, the appellant has moved this Court under Section 37 of the Act.

4. We heard Advocate Sri. B. Krishnan for the appellant and Advocate Sri. Mohammed Nias for the respondent. The records leading to the award and the order passed by the learned Additional District Judge were also summoned and perused.

5. The point arising for consideration is whether the appellant could make out valid reasons for interference under Section 37 of the Act.

6. As mentioned earlier, it is the common case that both the appellant and the respondent were partners of a partnership firm by name M/s. Shalimar Jewellery doing business in gold at Nadapuram in Kozhikode district. The partnership agreement was executed on 28.10.2013 in continuation of the earlier business run by the parties themselves along with one V.K. Moidu. Clause 17 of the partnership agreement reads thus:-

“17. Any dispute or difference of opinion that may arise between the partners or their heirs or their legal representatives with regard to this partnership agreement or any other matter relating to this firm shall be mutually discussed and settled. If not settled, the dispute shall be referred to two arbitrators by common agreement of the partners. Where these arbitrators are themselves di