Disputes involving partnership property and third-party rights are non-arbitrable under the Arbitration and Conciliation Act, 1996.

Order

{Passed on 8 ^th Day of January, 2025}

1. Present application is preferred by the applicant under Section 11(4)

of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996') for appointment of Arbitrator.

2. Precisely stated facts of the case are that M/s Om Jai Gurudev is a partnership firm constituted on 07-11-2014 and partnership deed was executed on 18-07-2017. In the said registered partnership firm, initially 11 partners existed. However, with amended deed dated 20- 03-2019, the partnership firm was reconstituted and except the applicant and the non-applicants, other partners resigned from the said firm. Present applicant has 13% share in the partnership firm.

3. Firm is having an immovable property situate at Mahadik Ka Bada, Lohiya Bazar, Lashkar, Gwalior. The said property was purchased by the firm by various sale deeds and a commercial complex has been constructed over it.

4. Applicant repeatedly requested the non-applicants to bifurcate his share to the tune of 13% in the said property. In spite of repeated requests and reminders nothing affirmative came out. Therefore, this application has been filed for appointment of Arbitrator because according to clause 11 of the amended partnership deed dated 20-03- 2019, dispute is to be resolved through appointment of Arbitrator under the Act of 1996.

5. Notice dated 04-01-2021 was issued and non-applicants were informed about the intention. Non-applicants No.1 and 2 replied the notice vide reply dated 12-01-2021. Several objections were raised into it including the issue of tenancy. According to the said reply, there is no dispute in respect of partners and their working. Therefore, application has been filed by the applicant for appointment of Arbitrator.

6. It is the submission of learned counsel for applicant that Clause 11 indicates that dispute can be resolved through appointment of Arbitrator. Applicant wants property to be divided into metes and bounds and he seeks property correspondingly to his share in the partnership firm. Learned counsel for applicant also refers the fact that dispute involves tenancy rights also and fate of three parties (tenants) would affect the proceedings because they would not be before the Arbitrator. He relied upon a judicial pronouncement in the case of VGP Marine Kingdom Private Limited and Another Versus Kay Ellen Arnold, AIR 2022 SC 5474.

7. Learned counsel for non-applicants/respondents No.1 and 2 opposed the prayer on the ground that no dispute exists between the parties. Even if any dispute exists under the Indian Partnership Act, 1932 , appropriate remedy would be to approach Civil Court rather than appointment of Arbitrator because it would be beyond the domain of Arbitrator. He relied upon the judgment of Apex Court in the case of Vidya Drolia and Ors. vs. Durga Trading Corporation , (2021) 2 SCC 1. He referred para 51, 54 and 55 to assert his submission. He also relied upon judgment of Apex Court in the case of Addanki Narayanappa and another vs. Bhaskara Krishnappa (dead) and thereafter his heirs and others, AIR 1966 SC 1300 and refers para 5 of the said judgment to demonstrate that the whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. Therefore, during the subsistence of the partnership a partner can get share of property. Dissolution /retirement etc. as provided in Indian Partnership Act, 1932 are the means to get share.

8. He also relied upon the judgment of Arif Azim Co. Ltd. v. Aptech Ltd. AIR 2024 SC 1347