Parties to a Partnership Deed are bound by the arbitration clause in the original contract, and the legislative policy aims to minimize court intervention in appointing arbitrators.

JUDGMENT :

(Prayer: Original Petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking to appoint an independent qualified Sole Arbitrator to hear and decide the claims of the petitioner arising out of the Partnership Deed Contract dated 24.04.2000; and to direct the respondents to pay the cost of this petition.)

1. This Original Petition is filed for appointment of Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

2. The petitioner seeks to appoint an Arbitrator with regard to the disputes between the petitioner and the respondents who are partners in business pursuant to a Partnership Deed dated 24.04.2000.

3. Controverting the claim, the first respondent would contend that the application is bad for not impleading the erstwhile Partners of the Partnership and for suppressing the same. However, he would suggest for appointing a retired Judge of this Court as Sole Arbitrator.

4. The second respondent would oppose the very maintainability of the above application on the ground that he is not a party to the Partnership deed dated 24.04.2000 and the conditions incorporated in the deed would not bind him. According to him he was inducted as Partner by way of an amended Partnership Deed dated 01.10.2016, in which there is no arbitration clause to refer the matter to arbitration. Relying on the judgments of the Hon’ble Supreme Court in M.R.ENGINEERS AND CONTRACTORS PVT. LTD., VS. SOM DATT BUILDERS LTD., [2009 (7) SCC 696] and A.AYYASAMY VS. A.PARAMASIVAM [CIVIL APPEAL NOS.8245-8246 OF 2016 DECIDED ON 04.10.2016]..

5. I have gone through the materials placed before this Court.

6. Originally the Petitioner and the first respondent have commenced a construction business on commercial basis and entered into a Partnership Deed dated 24.04.2000. Clause 28 of the deed specifies resolution of disputes through Arbitration. There were induction of new partners and retirement of partners over the years in their business. As such, the second respondent was inducted as an incoming partner in the business on 1.10.2016. After his induction into partnership, an amendment was made to the partnership deed.

7. Even though the first respondent denied the averments would agree for appointment of an Arbitrator from among three names of the retired High Court Judges suggested by him to be appointed as Sole Arbitrator.

8. However, the Second respondent would resist the appointment of Arbitrator on the ground that there is no arbitration clause in the partnership entered by him. It is an admitted fact that the Second respondent was inducted as an incoming partner upon retirement of an erstwhile partner. In effect the second respondent joined the partnership business and became a partner of the petitioner and first respondent. It is also not in dispute that he was inducted by a resolution passed by the partners. On his induction certain conditions were incorporated by way of amendment. It is natural that the quantum of investment of the incoming partner, percentage of profit sharing, his role in the business are to be carved out and such incorporation can be made by amendment. Only because the second respondent has signed only in the deed of amendment or reconstitution does not mean that he is not governed by the clauses of the original contract. In effect he is bound by the same and acquires all rights and liabilities of Partner in the Partnership business. Therefore the contentions of the second respondent is not sustainable. He is entitled to raise all the points before the Arbitrator.

9. Further as contended by him the deed of amendment of reconstitution is not separate and distinct contract. His reliance on the judgment of M.R. Engineers and Contractors Pvt. Ltd cited supra, will not apply to this case. In the above case a Sub Contractor sought to apply the terms and conditions entered into between the Principal and the Main Contractor into the Sub Contract. The Hon’ble Supreme Court has held the contra