Bombay High Court
Dilip Velji Shah vs Anup Velji Shah And 3 Ors on 26 November, 2019
Equivalent citations: AIRONLINE 2019 BOM 2335
Author: G. S. Patel
Bench: G.S. Patel
907-CARBPL1297-19.DOC
Arun
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION (L) NO. 1297 OF 2019
Dilip Velji Shah ...Petitioner
Versus
Anup Velji Shah And Ors ...Respondents
WITH
COMM ARBITRATION APPLICATON NO. 403 OF 2019
Dilip Velji Shah ...Applicant
Versus
Anup Velji Shah And Ors ...Respondents
WITH
COMM ARBITRATION APPLICATION (L) NO. 459 OF 2019
Anup Shah ...Applicant
Versus
Chandra Kumar Mehta And Ors ...Respondents
Priya Rombade, with J Shah, i/b Deven Dwarkadas & Partners, for
the Petitioner.
Mr Shyam Kapadia, with Mr Aamir Sheikh, Anisha Agarwal, Dimple
Merchant and Nikita Isai, i/b IV Merchant & Co, for
Respondent No.1 in CARBPL/1297/2019 and
CARAP/403/2019 and for the Petitioner in CARAPl/459/2019
Mr Kunal Kanugo, with Ms Rhea Garg, i/b S Venkateshwar, for
Respondent No.2 in CARAP/403/2019 and for Respondent No.1
in CARAPl/459/2019.
Page 1 of 12
26th November 2019
::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 :::
907-CARBPL1297-19.DOC
CORAM: G.S. PATEL, J.
DATED: 26th November 2019 PC:-
1. This is a partnership dispute. I have before me two commercial arbitration applications under Section 11 and a commercial arbitration petition under Section 9 of the Arbitration and Conciliation Act 1996.
2. This is how the parties are arrayed. The partnership frm in question, Shah Originals, is the 4th respondent to commercial arbitration application No. 403 of 2019 and commercial arbitration petition (L) No. 1297 of 2019. The petitioner in these two proceedings is Dilip Velji Shah. The 1st respondent in both these matters is Anup Velji Shah. The 2nd respondent is Chandrakumar Mehta. The 3rd respondent is Samyak Pradip Shah. The Shahs are one side of the dispute and Mehta is on the other. There may be other diferences between the Shah members themselves but for the purposes of the Section 11 they are together. The Shahs are from Mumbai. Mehta is from Jaipur.
3. Commercial arbitration application (L) No. 459 of 2019 is fled by Anup Shah, the 1st Respondentss in Dilipss petition and application. Mehta, Dilip and Samyak are the three respondents to Anupss arbitration application.
4. There is no dispute between the parties that there were two partnership deeds dated 1st June 1992 and 10th April 2014. Copies Page 2 of 12 26th November 2019 ::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 ::: 907-CARBPL1297-19.DOC of these are at pages 11 and 16 of commercial arbitration application No. 403 of 2019 fled by Dilip Shah. The relevant arbitration clause is in the second partnership agreement at clause 16 at page 21 and this is how it reads:
"16. All disputes and questions whatsoever which may during the subsistence of partnership or afterwards arise between the partners and or their respective legal representatives of the other partner touching these presents or the construction or application thereof or of any other clauses or thins herein contains or any account or valuation or division of assets, debts, or liabilities to be made or as to any act, deed or omission of any partners or as to any other matter in any way relating to the partnership business or the afairs thereof or the rights, duties or liabilities of any partner under these presents shall be referred to a single arbitrator appointed mutually agreed by the parties. Arbitration proceedings shall be governed by the provision of Arbitration and Conciliation Act 1996 or any statutory modifcation or substitution thereof for the time being in force."
5. As the extract says, there is no provision for either seat or venue. Mehta is opposing the arbitration application to the extent that he maintains that the arbitration must be seated in Jaipur and cannot be in Mumbai. To begin with, he says that there are signifcant assets and properties in Jaipur. For the purposes of the Arbitration Act that is irrelevant.
6. The second contention is based on the sequence in which certain events took place. Dilip Shahss arbitration application seems to have been lodged in this Court on 22nd October 2019. Anup Page 3 of 12 26th November 2019 ::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 ::: 907-CARBPL1297-19.DOC lodged his commercial arbitration application (L) No. 459 of 2019 in this Court on 19th October 2019. It was afrmed on 18th October 2019. Mehta maintains that he moved the High Court of Rajasthan at its Jaipur Bench prior to either of these dates. He says that he presented an arbitration application No. 91 of 2019 in that Court on 19th October 2019.
7. First, as to the factual accuracy of this statement, and whether it is sufciently established. I am shown a photocopy of the frst page (and only the frst page) of Mehtass application in the Rajasthan High Court. This is annexed as Exhibit "A" at page 61 to Mehtass afdavit in reply to Dilip Shahss commercial arbitration application No. 403 of 2019. On this document there is a stamp at the top. It says this is a 'certifed copy of a memo of civil arbitration application along with original stamp reporter presentation page dated 19th October 2019 (page 4)s. It is on this basis that is urged that Mehta presented his Section 11 application in Jaipur on 19th October 2019. There is some difculty about this because there is a hand written endorsement with a number and a date. The number is 55222 and date is 22nd October 2019. Mr Kapadia for Anup Shah points out on the basis of a printout of the case status from the Rajasthan High Court website that Mehtass fling number is 55222 of 2019. The registration number is 91 of 2019 but the fling date in that system is 22nd October 2019 with a registration date of 23rd October 2019. Mehta cannot simultaneously maintain that his petition was fled on 19th October 2019 and yet not explain the High Courtss ofcial record of 22nd October 2019.
Page 4 of 1226th November 2019 ::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 ::: 907-CARBPL1297-19.DOC
8. This is important to Mehtass argument. Mr Kanugo for Mehta draws attention to Section 42 of the Arbitration and Conciliation Act:
"42. Jurisdiction.-- Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court."
9. This is to be read with Section 11 and Section 2. Mr Kanugo relies on the 2014 decision of the Supreme Court in State of West Bengal And Others vs Associates Contractors.1 The relevant portion regard to Section 2(1)(e) and Section 42 is in paragraph 25:
"25. Our conclusions therefore on Section 2(1)(e) and Section 42 of the Arbitration Act, 1996 are as follows:
(a) Section 2(1)(e) contains an exhaustive defnition marking out only the Principal Civil Court of Original Jurisdiction in a district or a High Court having original civil jurisdiction in the State, and no other court as "court" for the purpose of Part I of the Arbitration act, 1996.
(b) The expression "with respect to an arbitration agreement" makes it clear that Section 42 will apply to all applications made whether before or during arbitral proceedings or after an award is pronounced under Part I of the 1996 Act.
1 (2015) 1 SCC 32.
Page 5 of 1226th November 2019 ::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 ::: 907-CARBPL1297-19.DOC
(c) However, Section 42 only applies to applications made under Part I if they are made to a court as defned. Since applications made under Section 8 are made to judicial authorities and since applications under Section 11 are made to the Chief Justice or his designate, the judicial authority and the Chief Justice or his designate not being court as defned, such applications would be outside Section 42.
(d) Section 9 applications being applications made to a court and Section 34 applications to set aside arbitral awards are applications which are within Section 42.
(e) In no circumstances can the Supreme Court be "court" for the purposes of Section 2(1)
(e), and whether the Supreme Court does or does not retain seisin after appointing an arbitrator, applications will follow the frst application made before either a High Court having original jurisdiction in the State or a Principal Civil Court having original jurisdiction in the district, as the case may be.
(f ) Section 42 will apply to applications made after the arbitral proceedings have come to an end provided they are made under Part I.
(g) If a frst application is made to a court which is neither a Principal Court of Original Jurisdiction in a district or a High Court exercising original jurisdiction in a State, such application not being to a court as defned would be outside Section 42. Also, an application made to a court without subject- matter jurisdiction would be outside Section 42.
Page 6 of 1226th November 2019 ::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 ::: 907-CARBPL1297-19.DOC The reference is answered accordingly."
(Emphasis added)
10. This decision was rendered on a reference made to the Court. The submission is that this decision was rendered on 10th September 2014. It made a reference to Section 11 of the Arbitration Act as it stood before the 2015 amendment. Prior to the amendment, Section 11 had a reference to the Chief Justice. This was replaced by the 2015 amendment with efect from 23rd October 2015 with the words 'Supreme Courts and 'High Courts replacing 'Chief Justices. Therefore, the jurisprudential scenario as refected in the ratio of Associated Contractors, the submission goes, has altogether changed after the 2015 amendment. Now even a Section 11 application is made to a 'courts (the Supreme Court or the High Court), not to a judicial authority. Therefore, Section 42, after the 2015 amendment, also applies to a Section 11 application -- such an application is now being made not to the Chief Justice but to a court. Therefore the Court to which the application was frst made under Section 11 would be that Court that has exclusive jurisdiction.
11. This argument will not assist Mehta in the facts and circumstances of the case. The solitary basis of the claim -- that his application to the Rajasthan High Court was prior in time -- is, as I noted, the handwritten endorsement on the incomplete document at page 61 of the afdavit in reply in commercial arbitration application No. 403 of 2019. As against this, the ofcial record of the Rajasthan High Court shows the fling date as 22nd October 2019 and not 19th October 2019. Mehta cannot explain where his 'fling dates of 19th Page 7 of 12 26th November 2019 ::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 ::: 907-CARBPL1297-19.DOC October 2019 has come from. On the other hand, at least Anup Shahss Section 11 commercial arbitration application (L) No. 459 of 2019 has an ofcial stamp of this Court which shows that it was lodged on 19th October 2019. It was certainly afrmed a day earlier.
12. I do not know why Mehta has chosen to only partly annexed a document and not placed before the Court a certifed copy of the entire application. Whatever his reasons, I do not think it is possible to proceed on this basis. It is simply not possible to accept Mr Kanugoss submission on behalf of Mehta that his application has been demonstrated to be prior in time. Therefore, even if Mehtass formulation (which he canvasses on afdavit too) is accepted, the result is against him. For there is more than enough material to indicate that it was Anup Shah who lodged his application prior in point of time before this Court. Mehta can only succeed if he shows incontrovertibly as a matter of fact from an ofcial record that his application preceded Anup Shahss in Mumbai. It is simply not enough to leave this to my conjecture that 'it must have been sos. Mehtass 'instructionss to Mr Kanugo are not substitute for hard evidence.
13. In this view of the matter, there is no substance to the opposition to the Section 11 application. Indeed I am unable to understand why on any other consideration -- convenience of forum, for instance -- an order should not be made referring to parties to arbitration in Mumbai. Apart from anything else, of the four partners, three are in Mumbai, and only Mehta is in Jaipur. The partnership deeds were executed in Mumbai. The partnership itself Page 8 of 12 26th November 2019 ::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 ::: 907-CARBPL1297-19.DOC is registered in Mumbai. The fact that it may have done business either in whole or in part elsewhere is almost entirely irrelevant. A party in a litigation does not actually have to sit on an asset to conduct his case and arbitration.
14. In the arbitration petition, there is an ad-interim order dated 31st October 2019 granted by the Vacation Bench in terms of prayer clauses (a) and (b).
15. That arbitration petition is to be treated as an application under Section 17 of the Arbitration and Conciliation Act. The ad- interim order will continue until the disposal of the Section 17 application. If this Section 17 application is dismissed it will continue for a period of three weeks thereafter.
16. The two arbitration applications are disposed of by referring the disputes and diferences between the parties to the sole arbitration of Dr Abhinav Chandrachud, learned advocate of this Court.
(a) Appointment of Arbitrator: By consent, Dr Abhinav Chandrachud, is hereby nominated to act as a Sole Arbitrator to decide the disputes and diferences between the parties.
(b) Communication to Arbitrator of this order:
(i) A copy of this order will be communicated to the learned Sole Arbitrator by the Advocates Page 9 of 12 26th November 2019 ::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 ::: 907-CARBPL1297-19.DOC for the Applicant within one week from today of the order being uploaded.
(ii) In addition, within one week of this order being uploaded, the Registry will forward an ordinary copy of this order to the learned Sole Arbitrator at the following postal and email addresses:
Arbitrator/s Dr Abhinav Chandrachud Address 131, Mehr Naz, Cufe Parade Mumbai 400 005 Mobile 75066 41199 Email [email protected]
(c) Disclosure: The learned Sole Arbitrator is requested to forward his statement of disclosure under Section 11(8) read with Section 12(1) of the Arbitration Act to the Prothonotary and Senior Master of this Court, referencing this arbitration application, as soon as possible, and in any case sufciently in advance of his entering upon the reference to his arbitration. That statement will be retained by the Prothonotary & Senior Master on the fle of this application. Copies will be given to both sides.
(d) Appearance before the Arbitrator: Parties will appear before the learned Sole Arbitrator on such date and at such place as he nominates to obtain appropriate Page 10 of 12 26th November 2019 ::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 ::: 907-CARBPL1297-19.DOC directions in regard to fxing a schedule for completing pleadings, etc.
(e) Contact/communication information of the parties:
Contact and communication particulars are to be provided by both sides to the learned Sole Arbitrator within one week of this order being uploaded. The information is to include a valid and functional email address.
(f ) Interim Application/s:
(i) Commercial Arbitration Petition (L) No.
1297 of 2019 is to be treated as an application under Section 17 of the Arbitration and Conciliation Act. All afdavits fled in the Section 9 petition will be treated as afdavits fled in the Section 17 application. If no afdavits are fled in the Section 9, they will be fled in the Section 17 application in accordance with the learned Sole Arbitratorss directions.
(ii) The learned Sole Arbitrator is requested to dispose of the interim application at the earliest.
(iii) The ad-interim order of 31st October 2019 will continue until the disposal of the Section
17 application. If this Section 17 application is Page 11 of 12 26th November 2019 ::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 ::: 907-CARBPL1297-19.DOC dismissed it will continue for a period of three weeks thereafter.
(g) Fees: The arbitral tribunalss fees shall be governed by the Bombay High Court (Fee Payable to Arbitrators) Rules, 2018.
(h) Sharing of costs and fees: Parties agree that all arbitral costs and the fees of the arbitrator will be borne by the two sides in equal shares in the frst instance.
(i) Consent to an extension if thought necessary. Parties immediately consent to a further extension of up to six months to complete the arbitration should the learned Sole Arbitrator fnd it necessary.
(j) Venue and seat of arbitration: Parties agree that the venue and seat of the arbitration will be in Mumbai.
17. The commercial arbitration petition and commercial arbitration application are to be fnal numbered within two weeks from today for statistical purposes.
18. The commercial arbitration petition and the two commercial applications are disposed of in these terms. No costs.
(G. S. PATEL, J) Page 12 of 12 26th November 2019 ::: Uploaded on - 27/11/2019 ::: Downloaded on - 28/11/2019 00:19:56 :::