Arbitration Application No. 27 of 2008

1. This application has been preferred under Sub-section 6 of Section 11 of the Arbitration and Conciliation Act, 1996 (for the sake of brevity hereinafter to be referred to as the “Act, 1996”) for the appointment of an Arbitrator.

2. Factual Matrix:

In the year 1955, partnership was entered into between Thakur Prasad Sao, Lakshmi Prasad Sao and Sheo Shankar Prasad Sao. This partnership deed is dated 1st April, 1995. Clause 16 and Clause 20 thereof reads as under:

“16. That the firm will not be dissolved on the death of any of the partners, if any partner dies his heirs or other legal representatives will be considered to be taken in as a partner in his place or give the benefit of the partnership if a minor. In case his heirs or other legal representative do not agree to continue as partner of the deceased partner will be considered to have retired from the partnership as from the date of his death and the partnership will continue with only the surviving partner.

Provided always that in such event or in the even of the partnership being determined by any of the provisions hereinbefore contained or under any provision of the Indian Partnership Act, 1932, then and in any such cases other Partner shall subject to the terms hereinafter mentioned purchase at their option the shares of deceased, insolvent or retiring partner or partners, as the case may be, in the business and property of the Firm and the Firm and the Partnership constituted under these presents shall continue with the necessary alteration in the shares and capital of the remaining partners.

20. Any difference which may arise between the partner or their representatives regarding interpretation of these presents or regarding the rights and liabilities of any partner arising hereunder or any other matter or thing concerning the Firm or the affairs thereof shall be referred to arbitration under the provisions of the Indian Arbitration Act, 1940.”

Lakshmi Prasad Sao expired in the year 1982 and Thakur Prasad Sao expired in the year 1983 and, therefore, partnership was reconstituted and all the legal heirs of Lakshmi Prasad Sao (three in number), Sheo Shankar Prasad Sao and Sandeep Kumar Sao, S/o Sheo Shankar Prasad Sao were the partners of fresh partnership firm in the year 2004.

Thereafter, Sheo Shankar Prasad Prasad Sao expired in the year 2010 and again there was reconstitution of the partnership firm in the year 2010. From the aforesaid partnership firm of the year 2004, Sheo Shankar Prasad Sao was dropped and rests of the partners i.e. all the legal heirs of Lakshmi Prasad Sao (three in number) and Sandeep Kumar Sao were the partners of reconstituted partnership firm in the year 2010.

Revenue notices were issued upon the partnership firm viz. M/s Thakur Prasad Sao and upon their partners for the payment of the revenues. The notices were issued by the State Government. The legal heirs of Thakur Prasad Sao who are the applicants in this Arbitration Application have denied their liability for the payment of the revenues to the State Government on the ground that they were never inducted as partners in the partnership firm viz. M/s Thakur Prasad Sao, after the death of Thakur Prasad Sao in the year 1983. The partnership firm was run by Sheo Shankar Prasad Sao and others and, therefore, it has been stated on oath by the legal heirs of Thakur Prasad Sao (who are applicants in this case) that they are denying their liabilities. There are similar allegations by Sheo Shankar Prasad Sao about the liabilities of these applicants for the payment of the revenues to the State. The allegations and counter allegations are of the year 1993 to 1999 for the dues of the year 1977-78. Various annexures have been annexed with the memo of this application and various annexures have been annexed with the affidavits filed by the parties to this litigation.

After the year 1983 i.e. after the death of Thakur Prasad Sao, for the first time in the year 20