IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
T. Vinod Kumar, J.
Mrs. Sonali Ahuja – Petitioner
Versus
M/s Yuva Fashions and others – Respondents
Arbitration Application No. 31 of 2022
Decided On : 02-01-2023
Arbitration and Conciliation Act, 1996 – Section 11(2), (6) – Seeking for appointment of arbitrator for resolving – Arbitrator for resolving disputes – Held, Court is of view that dispute should be referred to an Arbitrator appointed by this Court – In so far as objection of respondent with regard to both partnership deed being insufficiently stamped, said objection cannot be adjudicated by this Court while considering application filed under Section 11 of Act for appointment of an Arbitrator – Supreme Court in N.N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd., (2021) 4 SCC 379 held that non-payment of deficiency of stamp duty does not invalidate contract. In view of same, objection of respondent is liable to be rejected – Arbitration allowed.
ORDER :
This Arbitration Application is filed under Section 11(2) & (6) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) read with Scheme of Appointment of Arbitrators, 1996 seeking for appointment of arbitrator for resolving the disputes that have arisen between the applicant and the respondent named in the application.
2. Heard Sri Mohammad Adnan, learned Counsel for the applicant and the Sri P. Vidhyadhar Goud, learned Counsel appearing for the respondent and perused the record.
3. Petitioner/Applicant contends that she along with the respondent Nos.2 and 3 have entered into a partnership business under a deed of partnership dated 11.10.2007 to carry on business under the name and style of 1st respondent i.e., M/s. Yuva fashions; that the petitioner/applicant had retired from the partnership business on 30.09.2018 and the partnership was reconstituted under deed of partnership dated 01.10.2018; that upon retirement of the petitioner, the respondents were required to settle the accounts of the petitioner, which the petitioner claims to be in a sum of Rs.30,00,000/-; and that on account of non-payment of the said sum, disputes have arisen between the petitioner and the respondents being the continuing partners of the firm.
4. Petitioner contends that in order to resolve the disputes between the parties in terms of partnership deed dated 11.10.2007 and the partnership deed reconstituting the partnership on account of retirement of petitioner dated 01.10.2018 by way of arbitration in terms of Clause 12 of the original partnership deed and also Clause 11 of the deed of partnership dated 01.10.2018, she had issued legal notice dated 10.12.2021. The respondent though having received the same, did not agree to the arbitrator named by the petitioner in the said notice. Aggrieved by the same, the present application is filed.
5. Learned Counsel appearing on behalf of the respondent does not dispute the fact of the respondent entering into an agreement to carry on the business of partnership, vide partnership deed dated 11.10.2007, containing an Arbitration Clause for resolving the dispute by reference to Arbitration, so also the deed of partnership under which the petitioner herein had retired from the partnership deed and the consequential reconstitution of the partnership, vide deed dated 11.10.2018.
6. Learned Counsel appearing on behalf of the respondent would however submit that both the partnership deed dated 11.10.2007 as well as the retirement deed dated 01.10.2018 are insufficiently stamped and, therefore, the petitioner ought to have taken steps for getting them sufficiently stamped before invoking the Clause thereunder, as such the present application cannot be considered.
7. I have taken note of the submissions of the respective Counsel appearing for the parties.
8. The factum of the parties entering into partnership business initially under the partnership deed dated 11.10.2007 which provided for resolution of disputes by reference to arbitration under Clause 12 thereof and also under the deed of partnership dated 01.10.2018 whereunder the petitioner herein having retired from the partnership deed leading to reconstitution of the partnership business carried on in the name of ‘Yuva fashions’ between the remaining partners also containing arbitration under Clause 11 thereof is not in dispute. The Arbitration Clauses under both the Agreements read as under:-
Clause 12 of Partnership Deed dated 11.10.2007 : In case of dispute arising between the partners, it shall be referred to arbitration and the decision of such arbitration shall be final and binding on all the partners.
9. Since under both the partnership deeds by which the petitioner joined as partner and exited therefrom, provides that the dispute
The court upheld the validity of an arbitration clause in a partnership agreement, enabling resolution of disputes through arbitration.
The main legal point established in the judgment is that the bar imposed under Section 69 of the Partnership Act, 1932, does not apply to arbitration proceedings under the Arbitration and Conciliatio....
The civil court must refer disputes to arbitration as per Section 8 of the Arbitration Act when an arbitration clause exists, focusing on jurisdiction ouster rather than civil jurisdiction retention.
The main legal point established in the judgment is that the dispute amongst the partners regarding the dealings of the firm could be referred to arbitration as per the partnership deed, but once the....
Court empowered to appoint an arbitrator under Arbitration Act based on partnership agreement.
Login now and unlock free premium legal research
Login to SupremeToday AI and access free legal analysis, AI highlights, and smart tools.
Login
now!
India’s Legal research and Law Firm App, Download now!
Copyright © 2023 Vikas Info Solution Pvt Ltd. All Rights Reserved.