IMPORTANT POINT
The existence of an arbitration agreement continues even after the dissolution of a partnership firm, and the right to sue accrues when a party abandons efforts for settlement, from which the limitation period starts.

JUDGMENT

1. This Arbitration Application is filed under Sec. 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter 'the Act, 1996') for appointment of an arbitrator to resolve the disputes between the parties.

2. Heard Mr. M.A. Basith, learned counsel for the Applicant and Mr. B.Anil, learned counsel for Respondent.

3. Case of the Applicants:

i. The Applicants entered into an agreement of sale dtd. 18/1/2016 with the Respondents herein to purchase Flat No.301 on 3rd Floor, with plinth area of 1710 Sq.Ft, in the premises bearing H.No.12-2- 799/3, Ayodhya Nagar Colony, Gudimalkapur, Hyderabad (for short 'subject property) for a total sale consideration of Rs.60.00 lakhs. The applicants had paid an amount of Rs.12.00 Lakhs towards part sale consideration. As per the terms of the agreement dtd. 18/1/2016, the execution, registration of sale deed along with handing over the possession of the subject property was agreed to be completed within 12 months extendable with a grace period of 2 months from the date of the agreement of sale.

ii. When the applicants approached the respondents for title documents and building permission of the subject property, in order to obtain a housing loan, they came to know that as per the Development Agreement dtd. 18/10/2014, the 3rd floor in the subject property fell to the share of the land owners therein.

iii. The Applicants approached the respondents herein for a refund of the Rs.12.00 Lakhs paid by them. As the same was refused by the respondents, they lodged a complaint registered as F.I.R. No. 298/2017 dtd. 28/12/2017 with the Asif Nagar Police Station.

iv. It is contended that the respondents herein issued legal notice dtd. 7/2/2018, expressing their intention to complete the construction of the subject property and calling the applicants herein to pay the balance sale consideration. The applicants in their reply notice dtd. 21/2/2018 refused to pay the balance sale consideration in light of the Development Agreement dtd. 18/10/2014, and demanded the respondents to refund the amount paid by them.

v. Thereafter the applicants issued notices dtd. 22/9/2020 invoking the arbitration clause in the agreement dtd. 18/1/2016. As the same were returned unserved. The present arbitration application is filed seeking appointment of sole arbitrator to resolve the disputes between the parties.

4. Case of the Respondents: The respondents resist the appointment of arbitrator on the following grounds:

i. It is contended that the Respondent No.1 firm, run by the Respondent No.2 and his brother S.Ahmed was dissolved on account of his brother's demise on 31/1/2019. It is contended that, the applicants herein despite being aware of the same instituted the present application against a firm which is no longer in existence. By placing reliance on Mohd. Laiquiddin Vs. Kamala Devi Misra (Dead) by Lrs,2010 (2) SCC 407. it is contended that the present claims are ex-facie barred as there is no privity of contract between the remaining partners after the dissolution of the partnership.

ii. It is contended that the period of limitation to refer the disputes was 3 years from the date when cause of action first arose. In the present case since the agreement of sale was executed on 18/1/2016, the period of limitation would extinguish on 18/1/2019 and that mere correspondences between the parties would not extend the period of limitation. In support of his contention, reliance is placed on the decision of the Supreme Court in Secunderabad Cantonment Board Vs. B. Ramachandraiah,2021 (5) SCC 705.

iii. The disputes between the respondents herein and the Applicant No.1 cannot be referred to arbitration as he is neither a party to the agreement dtd. 18/1/2016 nor the respondents herein received any consideration in relation to the said agreement from the applicant No.1 herein.

Consideration by the Court:

5. The dispute resolution clause in the agreement of sale dtd. 18/1/2016 is as under:

"I. That the purchaser further a