Point of Law: It must be noted that Section 16 of Arbitration Act, necessarily mandates that issue of jurisdiction must be dealt first by tribunal, before court examines same under Section 34.

JUDGMENT :

The original petition is filed aggrieved by Exhibit P9 passed by the sole Arbitrator in A.R.C No.112/2019 under Section 16 of the Arbitration and Conciliation Act, 1996 (in short ‘Act’), ruling that he has the jurisdiction to adjudicate the claim petition.

2. The skeletal facts relevant for the determination of the original petition are :

(i) The petitioner is the respondent in A.R.C No.112/2019, filed by the respondent before the sole Arbitrator. The petitioner and the respondent had entered into Exhibit P1 deed of partnership. The respondent had filed O.S No.64/2017 (Exhibit P2) before the Court of the Subordinate Judge, Kozhikode, alleging that the petitioner had to pay him an amount of Rs.17,50,000/-. The petitioner appeared in the suit and filed I.A No.1781/2017, under Sec.8 (1) of the Act, contending that in view of Clause 17 (e) of Exhibit P1 deed of partnership, the parties had agreed to resolve their disputes through arbitration. Hence, the suit was not maintainable. The civil court, by Exhibit P3 order, allowed the application and by Exhibit P4 judgment referred the parties to arbitration.

(ii) The respondent approached this Court and filed A.R No.112/2019 to appoint an Arbitrator. By Exhibit P5 judgment, this Court had appointed a sole Arbitrator to adjudicate the disputes between the parties.

(iv) Consequently, the respondent has filed Exhibit P6 claim petition before the sole Arbitrator. The petitioner has appeared and filed Exhibit P7 statement challenging the maintainability of the claim petition on the ground that the sole Arbitrator does not have the jurisdiction to order the dissolution of the firm.

(v) The petitioner then filed O.P(C)No.101/2022 before this Court to direct the sole Arbitrator to decide his own jurisdiction as a preliminary issue. By Exhibit P8 judgment, this Court directed the sole Arbitrator to rule on his own jurisdiction as a preliminary issue.

(vi) The sole Arbitrator by the impugned Exhibit P9 order has held that the dispute is arbitrable. Exhibit P9 is patently erroneous. Hence, the original petition.

3. Heard; Sri.Premnath, the learned counsel appearing for the petitioner.

4. Sri.Premnath argued that in the light of the law laid down by this Court in Kadeeja vs Manjusha [2018 (2) KLT 145], wherein a learned Single Judge of this Court has held that the dissolution of partnership firm is a statutory remedy and a declaration to the effect is a judgment in rem. In such matters, only the civil court has the jurisdiction. Even though the respondent had sought the realisation of Rs.17,50,000/-from the petitioner, his entitlement to the amount can be decided only after the dissolution of the firm. Hence, the Arbitrator does not have jurisdiction to adjudicate the said dispute. Thus, Exhibit P9 is wrong and liable to be set aside.

5. The respondent had instituted Exhibit P2 before the civil court for a decree for recovery of Rs.17,50,000/-from the petitioner, on the allegation that the petitioner had agreed to pay him an amount of Rs.19,50,000/-for retiring from the firm, but the petitioner paid him only an amount of Rs.2,00,000/-and refused to pay the balance amount. On receipt of the summons from the civil court, the petitioner filed I.A.No.1781/2017, contending that the petitioner and respondent had agreed to resolve their disputes through arbitration as per Clause 17(e) of Exhibit P1. The civil court accepted the plea and relegated the parties to arbitration. Thereafter, this Court, by Ext P5 order, appointed the sole Arbitrator to adjudicate the dispute between the parties. Accordingly, the respondent has filed Exhibit P6 claim petition before the sole Arbitrator. Then, the petitioner has objected to the claim petition by filing Exhibit P7 statement stating that the dispute is not arbitrable because the amount can be paid to the respondent only after the firm is dissolved, which is beyond the jurisdiction of the Arbitrator. However, by Ext P9 order, the Arbitrator has ruled that he has