Rajasthan High Court - Jaipur
Akshay Verma Son Of Late Shri Dinesh ... vs Late Smt. Sita Devi Verma Wife Of Late ... on 25 April, 2024
Author: Manindra Mohan Shrivastava
Bench: Manindra Mohan Shrivastava
[2023:RJ-JP:41479]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Arbitration Application No. 104/2022
Akshay Verma Son Of Late Shri Dinesh Kumar Verma, Aged 36
Years, Resident Of G-51 Vaishali Nagar, Anasagar Circular Road,
Ajmer Partner Of M/s Verma & Company, Jaipur Road, Ajmer.
----Applicant
Versus
1. Late Smt. Sita Devi Verma Wife Of Late Shri Bhim Singh
Verma, Resident Of Ghee Mandi, Ajmer At Present 346,
Gyatri Nagar-A Durgapura, Near Railway Bridge, Jaipur
Now Deceased through her Legal Heir:-
1/1. Smt. Shankuntala Verma Wife Of Shri Atual Karel
Daughter Of Late Smt. Sita Devi Verma, 346, Gyatri
Nagar-A Durgapura, Near Railway Bridge, Jaipur.
1/2. Late Shri Rajendar Verma, Resident Of 614, Saket Nagar,
Anasagar Circular Road, Ajmer Through its Legal Heirs-
1/2/1. Smt. Rajni Verma Wife Of Late Rajendar Verma, Aged
About 60 Years,
1/2/2. Smt. Kirti Verma Daughter Of Late Shri Rajendar Verma,
Aged About 32 Years,
1/2/3. Smt. Tripati Verma Daughter Of Late Shri Rajendar Verma,
Aged About 30 Years,
1/2/4. Kumari Gini Verma Daughter Of Late Shri Rajendar Verma,
Aged About 21 Years.
All resident of 614, Saket Nagar, Anasagar Circular Road,
Ajmer.
----Respondents/Non-Applicants.
For Petitioner(s) : Mr. Ashish Kishore Saksena Advocate Mr. Harshit Mittal Advocate.
For Respondent(s) : Mr. Manoranjan Singh Kanak Advocate.
HON'BLE THE CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA (Through V.C.) (Downloaded on 29/04/2024 at 08:42:31 PM) [2023:RJ-JP:41479] (2 of 37) [ARBAP-104/2022] Order Reportable Pronounced on: 25/04/2024
1. Applicant has filed this application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996') for appointment of an arbitrator in the matter of alleged dispute between the parties to a contract providing for adjudication of disputes through the process of arbitration.
2. As pleaded by the applicant, M/s. Verma & Company, 214, Jaipur Road, Ajmer is a registered firm under the provisions of Indian Partnership Act, 1932 (hereinafter referred to as 'the Act of 1932').
After the death of one of the two partners namely; Dinesh Kumar Verma, his son Akshay Verma was admitted as partner w.e.f.
24.12.2013 and new partnership was constituted which came into existence vide partnership deed executed on 24.12.2013 between Sita Devi Verma and Akshay Verma, which is duly signed by each of them. Clause-9 of the partnership deed provided that all the disputes shall be settled by the arbitration according to the provisions of the Act of 1996.
3. On 14.03.2022, one of the partners Sita Devi Verma addressed a communication to the Branch Manager, Bank of Baroda stating therein that the accounts in the name of the firm be stopped/closed and she also informed that she had executed a Power of Attorney in the name of her son-in-law Atul Karel. The Branch Manager of the Bank informed the other partner Akshay Verma regrading letter of Sita Devi Verma for freezing of the accounts of the firm. On 21.03.2022, Akshay Verma replied that the firm had been a very old customer of the bank, therefore, no action or cognizance should be taken on the basis of the communication sent by the other partner (Downloaded on 29/04/2024 at 08:42:31 PM) [2023:RJ-JP:41479] (3 of 37) [ARBAP-104/2022] Sita Devi Verma. This was followed by another communication dated 26.03.2022 through the advocate repeating request not to initiate any action or take cognizance of the communication sent to the bank by Sita Devi Verma. Sita Devi Verma again sent a letter on 21.04.2022 to the Branch Manager of the bank with a request to restart overdraft account of the firm in the name of M/s. Verma & Company.
It is further averred that Akshay Verma had submitted an affidavit stating therein that misunderstanding between the parties had been cleared and, therefore, consent was given to operate the overdraft account. It was also stated in the application that Sita Devi Verma vide communication dated 29.06.2022, addressed to the Marketing Division, Indian Oil Corporation Ltd., stated that she was an illiterate lady of 89 years, thus, she had forwarded the nomination of her daughter Shakuntala Karel for partnership. In the meanwhile, Sita Devi Verma expired on 12.07.2022.
4. In the aforesaid background, Bank of Baroda sent a legal notice on 04.08.2022 to the firm M/s. Verma & Company, Akshay Verma, legal representatives of deceased Sita Devi Verma and legal representatives of deceased Rajendar Verma for execution of necessary documents in favour of the firm by reconstituting the firm or repay outstanding amount of Rs.1,75,33,186/- along with interest and other expenses, failing which appropriate legal action would be taken.
5. As dispute had already arisen between applicant-Akshay Verma and Sita Devi Verma (since deceased), the applicant requested the non-applicants, i.e., legal representatives of deceased Sita Devi Verma to settle the dispute, but despite repeated requests, non-
(Downloaded on 29/04/2024 at 08:42:31 PM)[2023:RJ-JP:41479] (4 of 37) [ARBAP-104/2022] applicants have not taken any step for settlement, therefore, application has been filed for appointment of an arbitrator.
6. By filing reply to the application, the legal representative of deceased Respondent No.1/1-Shakuntala Verma, daughter of deceased partner Sita Devi Verma, while denying all the allegations, opposed the application as misconceived and not maintainable. In reply, it has been stated that present is not a case of any financial dispute or any other kind of dispute between the partners of the firm as one of the partners had died. Legal representatives of Sita Devi Verma are being pressurized to become partners. As they are not partners either by operation of law or the act of parties, the dispute, if any, cannot be said to be a dispute between the partners of the firm.
The terms of the partnership deed regarding appointment of an arbitrator in case of dispute have no legal existence as the partnership itself stands dissolved on account of death of one of the two partners. Respondent No.1/1-Shakuntala Verma is not even a partner in the firm, nor has ever been associated with the firm. She cannot be forced to enter into a contract or become a partner in the firm against her will, therefore, there is no dispute between the parties to a contract containing an arbitration clause. The applicant has no cause of action against Respondent No.1/1-Shakuntala Verma, who is nowhere concerned with day-to-day operation of the partnership firm. Once one of the partners out of the two partners of a partnership firm dies, the firm stands automatically dissolved under the law and there is no partnership in existence. The partnership deed, as existed between the applicant and deceased Sita Devi Verma, did not have any clause that upon death of one of the partners, the legal representatives of the deceased shall be inducted (Downloaded on 29/04/2024 at 08:42:31 PM) [2023:RJ-JP:41479] (5 of 37) [ARBAP-104/2022] as partners in the firm. Therefore, there is no automatic induction of legal representatives of deceased Sita Devi Verma in the partnership firm, as existed between the applicant and Sita Devi Verma, while Sita Devi Verma was alive. The arbitration clause in the partnership deed between applicant-Akshay Verma and Sita Devi Verma can no longer be invoked against legal representative of deceased Smt. Sita Devi Verma. Answering Respondent No.1/1-Shakuntala Verma, daughter of Sita Devi Verma was neither a partner, nor has constituted any new partnership with applicant-Akshay Verma, nor she has any intention of getting inducted as partner. The applicant is forcing the answering Respondent No.1/1-Shakuntala Verma to enter into a partnership firm and forestall recovery of bank dues by liquidating security in the form of equitable mortgage of a residential property. It is further stated that not only Sita Devi Verma gave her consent while she was alive, to the bank to liquidate the security and recover the amount due, but later on Respondent No.1/1-Shakuntala Verma has also given similar consent. The consent also states that if excess money realises, the same be given to Respondent No.1/1- Shakuntala Verma. As the liability of the firm was increasing day by day due to overdraft facility, Sita Devi Verma wrote to the bank to stop overdraft facility.
7. Learned counsel for the applicant would submit that notwithstanding death of one of the partners Sita Devi Verma, dispute which existed as between the applicant, one of the partners in the firm, with the deceased partner, is an arbitrable dispute in view of arbitration clause contained in the partnership deed between the applicant and deceased Sita Devi Verma. Even after death of Sita Devi Verma, the dispute between the partners of the firm may be referred (Downloaded on 29/04/2024 at 08:42:31 PM) [2023:RJ-JP:41479] (6 of 37) [ARBAP-104/2022] to arbitration as the legal representative of deceased partner Smt. Sita Devi Verma represents the estate of the deceased, which is a secured asset against loan advanced by the bank to the firm. He would further submit that vide communication dated 29.06.2022, Sita Devi Verma had forwarded nomination of her daughter Shakuntala (Respondent No.1/1) to the Indian Oil Corporation Ltd. in respect of dealership of M/s Verma & Company. He would further submit that death of one of the partners does not necessarily follow that the firm is also dissolved. Dissolution of firm in such a contingency subject to contract between the parties and intention to continue business in partnership with legal representatives may be gathered from the contract of the parties. He would further submit that the rule that the partnership would be dissolved by the death of one of the partners, is subject to a contract between the parties, which may be expressed or implied. In the absence of any agreement to the contrary, share of deceased partner in assets including goodwill devolves upon his/her legal representatives, therefore, the dispute is clearly arbitrable and an arbitrator may be appointed to adjudicate the dispute between the applicant and the legal representative of the deceased partner.
8. Per-contra, leaned counsel appearing for the respondents would submit that the partnership firm in the name of M/s Verma & Company consisted of only two partners namely; the applicant and deceased Sita Devi Verma. Though partnership deed as between the applicant and deceased Sita Devi Verma contained an arbitration clause to the effect that the dispute shall be referred to arbitrator under the Act of 1996, upon death of one of the two partners, the firm stood automatically dissolved by operation of law. Neither before death of Sita Devi Verma, Respondent No.1/1-Shakuntala Verma was (Downloaded on 29/04/2024 at 08:42:31 PM) [2023:RJ-JP:41479] (7 of 37) [ARBAP-104/2022] inducted as partner in the then existed firm, nor thereafter, any new partnership firm had been reconstituted between applicant-Akshay Verma and Shakuntala Verma, or any other legal representatives of deceased Sita Devi Verma. There is no agreement between the parties, i.e., between the applicant and Shakuntala Verma, or other legal representatives of deceased Sita Devi Verma to resolve their dispute through the process of arbitration. The agreement between applicant-Akshay Verma and Sita Devi Verma to resolve their dispute through the process of arbitration attained its natural demise upon death of Sita Devi Verma on account of automatic dissolution of the partnership firm. The said agreement cannot be enforced against the legal representatives of deceased Sita Devi Verma. Even if it is assumed, though not admitted that there existed a dispute between present applicant-Akshay Verma with the legal representatives of deceased Sita Devi Verma, insofar as liquidation of secured assets towards realisation of the bank loan and respective claims qua the secured assets and in the absence of there being any agreement, to refer the dispute through the process of arbitration as between the present applicant and the legal representatives of deceased Sita Devi Verma, no recourse could be availed to arbitration proceeding at the instance of the applicant. Leaned counsel for the respondents would further submit that even if it is assumed that Sita Devi Verma, when she was alive, had sent a letter to the Indian Oil Corporation Ltd. on 29.06.2022 expressing her intention to induct non-applicant Respondent No. 1/1 namely; Shakuntala Verma as one of the partners, the fact remains that Shakuntala Verma was never inducted as partner in the firm during life time of Sita Devi Verma. It is not the case of the applicant that after death of Sita Devi Verma, a new (Downloaded on 29/04/2024 at 08:42:31 PM) [2023:RJ-JP:41479] (8 of 37) [ARBAP-104/2022] partnership had been constituted between present applicant- Akshy Verma and Shakuntala Verma, the daughter of deceased Sita Devi Verma. Therefore, it is contended, the dispute is non arbitrable.
9. The non-applicants, opposing the application for reference of dispute by appointing an arbitrator, has denied existence of an agreement between the parties mainly on the ground that upon death of one of the partners, the partnership firm stood dissolved and there exists no agreement between the parties containing a clause that in the event of any dispute between the parties, it shall be referred to arbitration. Secondly, respondents have raised an issue regarding non arbitrability of the dispute sought to be raised by the applicant.
Therefore, the two aforesaid issues are required to be decided before granting applicant's application.
10. Before I deal with the factual aspects of the case, it is apposite to refer to recent judicial pronouncements of the Hon'ble Supreme Court both on the aspects of existence of arbitration agreement and non-arbitrability of the dispute.
11. A Larger Bench of the Hon'ble Supreme Court in the case of Vidya Drolia & Others Versus Durga Trading Corporation, (2021) 2 Supreme Court Cases 1, while deciding a reference made to it, has examined in great details the legal position with regard to scope of judicial review at the referral stage both on the aspects of existence of agreement and non arbitrability. Navigating through various provisions of the Act of 1996, amendments made from time to time and survey of earlier decisions dealing with the aforesaid aspects, the Hon'ble Supreme Court examined legal position as below:-
(Downloaded on 29/04/2024 at 08:42:31 PM)[2023:RJ-JP:41479] (9 of 37) [ARBAP-104/2022] "26. Questions as to the existence of an arbitration agreement also arise when a party opposing the reference raises plea of novation of contract by entering into a new contract in substitution of the original or 'accord and satisfaction' by acceptance of modified obligations in discharge of the contract by performance or simple termination by express or implied consent. Similar plea of discharge can be raised opposing an application for reference on the ground that the claim is long barred and dead or there are no outstanding disputes as the parties have accepted part performance or have absolved the other side from performance, fully or partly, on account of frustration or otherwise. The contention is that once the original contract stands extinguished, abandoned, repudiated or substituted, the arbitration clause in the underlying/original contract perishes with it.
27. ................
31. We are clearly bound by the dictum of the Constitutional Bench judgment in Patel Engineering Ltd. that the scope and ambit of court's jurisdiction under Sections 8 or 11 of the Arbitration Act is similar. An application under Section 11 of the Arbitration Act need not set out in detail the disputes or the claims and may briefly refer to the subject matter or broad contours of the dispute. However, where judicial proceedings are initiated and pending, specific details of the claims and disputes are normally pleaded and, therefore, the court or the judicial authority has the advantage of these details. There is a difference between a non-arbitrable claim and non-arbitrable subject matter. Former may arise on account of scope of the arbitration agreement and also when the claim is not capable of being resolved through arbitration. Generally non-arbitrability of the subject matter would relate to non-
arbitrability in law. Further, the decision in Sukanya Holdings (P) Ltd. has to be read along with subsequent judgment of this Court in Chloro Controls India Private Limited v. Severn Trent Water Purification Inc. (2013) 1 SCC 641.
32. ............
71. Complexity is not sufficient to ward off arbitration. In terms of the mandate of Section 89 of the Civil Procedure Code and the object and purpose behind the Arbitration Act and the mandatory language of Sections 8 and 11, the mutually agreed arbitration clauses must be enforced. The language of Sections 8 and 11 of the Arbitration Act are peremptory in nature. Arbitration Act has been enacted to promote arbitration as a transparent, fair, and just alternative to court adjudication. Public policy is to encourage and strengthen arbitration to resolve and settle economic, commercial and civil disputes. Amendments from time to time have addressed the issues and corrected the inadequacies and flaws in the arbitration procedure. It is for the stakeholders, including the arbitrators, to assure that (Downloaded on 29/04/2024 at 08:42:31 PM) [2023:RJ-JP:41479] (10 of 37) [ARBAP-104/2022] the arbitration is as impartial, just, and fair as court adjudication. It is also the duty of the courts at the post- award stage to selectively yet effectively exercise the limited jurisdiction, within the four corners of Section 34(2)
(b)(ii) read with Explanations 1 and 2 and check any conflict with the fundamental policy of the applicable law. We would subsequently refer to the 'second look' principle which is applicable in three specific situations dealing with arbitrability as per the mandate of Section 34 of the Arbitration Act.
72. Recently, the Supreme Court of Canada in TELUS Communications Inc. v. Avraham Wellman, (2019) SCC 19 while conceding that arbitration as a method of dispute resolution was met with "overt hostility" for a long time on public policy grounds as it ousts jurisdiction of courts, observed that the new legislation, the Arbitration Act of 1991, marks a departure as it encourages parties to adopt arbitration in commercial and other matters. By putting party autonomy on a high pedestal, the Act mandates that the parties to a valid arbitration agreement must abide by the consensual and agreed mode of dispute resolution. The courts must show due respect to arbitration agreements particularly in commercial settings by staying the court proceedings, unless the legislative language is to the contrary. The principle of party autonomy goes hand in hand with the principle of limited court intervention, this being the fundamental principle underlying modern arbitration law. Party autonomy is weaker in non-negotiated "take it or leave it" contracts and, therefore, the legislature can through statutes shield the weakest and vulnerable contracting parties like consumers. This is not so in negotiated agreements or even in adhesion contracts having an arbitration clause in commercial settings. Virtues of commercial and civil arbitration have been recognised and accepted and the courts even encourage the use of arbitration.
73 ...............
76. In view of the above discussion, we would like to propound a four-fold test for determining when the subject matter of a dispute in an arbitration agreement is not arbitrable:
76.1 (1) when cause of action and subject matter of the dispute relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem.
76.2 (2) when cause of action and subject matter of the dispute affects third party rights; have erga omnes effect;
require centralized adjudication, and mutual adjudication would not be appropriate and enforceable.
76.3 (3) when cause of action and subject matter of the dispute relates to inalienable sovereign and public interest functions of the State and hence mutual adjudication would be unenforceable.
(Downloaded on 29/04/2024 at 08:42:32 PM)[2023:RJ-JP:41479] (11 of 37) [ARBAP-104/2022] 76.4 (4) when the subject-matter of the dispute is expressly or by necessary implication non-arbitrable as per mandatory statute(s).
76.5 These tests are not watertight compartments; they dovetail and overlap, albeit when applied holistically and pragmatically will help and assist in determining and ascertaining with great degree of certainty when as per law in India, a dispute or subject matter is non-arbitrable. Only when the answer is affirmative that the subject matter of the dispute would be non-arbitrable.
76.6. However, the aforesaid principles have to be applied with care and caution as observed in Olympus Superstructures (P) Ltd.: (SCC p.669, para 35) "35...Reference is made there to certain disputes like criminal offences of a public nature, disputes arising out of illegal agreements and disputes relating to status, such as divorce, which cannot be referred to arbitration. It has, however, been held that if in respect of fats relating to a criminal matter, say, physical injury, if there is a right to damages for personal injury, then such a dispute can be referred to arbitration (Keir v. Leeman). Similarly, it has been held that a husband and a wife may refer to arbitration the terms on which they shall separate, because they can make a valid agreement between themselves on that matter (Soilleux v. Herbst, Wilson v. Wilson and Cahill v. Cahill)."
77. Applying the above principles to determine non- arbitrability, it is apparent that insolvency or intracompany disputes have to be addressed by a centralized forum, be the court or a special forum, which would be more efficient and has complete jurisdiction to efficaciously and fully dispose of the entire matter. They are also actions in rem. Similarly, grant and issue of patents and registration of trademarks are exclusive matters falling within the sovereign or government functions and have erga omnes effect. Such grants confer monopoly rights. They are non- arbitrable. Criminal cases again are not arbitrable as they relate to sovereign functions of the State. Further, violations of criminal law are offenses against the State and not just against the victim. Matrimonial disputes relating to the dissolution of marriage, restitution of conjugal rights etc. are not arbitrable as they fall within the ambit of sovereign functions and do not have any commercial and economic value. The decisions have erga omnes effect. Matters relating to probate, testamentary matter etc. are actions in rem and are a declaration to the world at large and hence are non-arbitrable.
78. ............
82. Issue of non-arbitrability can be raised at three stages. First, before the court on an application for reference under Section 11 or for stay of pending judicial proceedings and reference under Section 8 of the (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (12 of 37) [ARBAP-104/2022] Arbitration Act; secondly, before the arbitral tribunal during the course of the arbitration proceedings; or thirdly, before the court at the stage of the challenge to the award or its enforcement. Therefore, the question - 'Who decides non- arbitrability?' and, in particular, the jurisdiction of the court at the first look stage, that is, the referral stage.
83. .............
84. Under the Arbitration Act, 1940, the jurisdiction to settle and decide non-arbitrability issues relating to existence, validity, scope as well as whether the subject matter was capable of arbitration, with possible exception in case of termination, novation, frustration and 'accord and satisfaction' when contested on facts, was determined and decided at the first or at the reference stage by the courts. The principle being that the court should be satisfied about the existence of a valid arbitration agreement and that the disputes have arisen with regard to the subject matter of the arbitration agreement. At this stage, the court would be, however, not concerned with the merits or sustainability of the disputes. Despite best efforts to contain obstructive tactics, adjudication and final decision of non-arbitrability issues at the reference stage would invariably stop, derail and thwart the proceedings in the courts for years.
85. ...............
103. On the ambit of the Court's jurisdiction at the reference stage, it was observed in Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. and Another (2005) 7 SCC 234 that the correct approach to the review of the arbitration agreement would be restricted to prima facie finding that there exists an arbitration agreement that is not null and void, inoperative or incapable of being performed. The key rationale for holding that the courts' review of the arbitration agreement should be limited to a prima facie standard is the principle of competence- competence. Further, were the courts are to be empowered to fully scrutinize the arbitration agreement an arbitral proceeding would have to be stayed until such time that the court seized of the matter renders a decision on the arbitration agreement. If the finding of the courts would be a final and determinative conclusion, then it is obvious that, until such a pronouncement is made, the arbitral proceedings would have to hang in abeyance. This evidently would defeat the credo and ethos of the Arbitration Act, which is to enable expeditious arbitration without avoidable intervention by the judicial authorities. As a result, the approach to be adopted at the reference stage is whether it is 'plainly arguable' that the arbitration agreement is in existence. The judgment laid emphasis on the fact that the rule of priority in favour of the arbitrators is counter-balanced by the courts' power to review the existence and validity of the arbitration agreement at the end of the arbitral (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (13 of 37) [ARBAP-104/2022] process. It was elucidated: (Shin-Etsu Chemical Co. Ltd, Supra).
"74..... Even if the court takes the view that the arbitral agreement is not vitiated or that it is not invalid, inoperative or unenforceable, based upon purely a prima facie view, nothing prevents the arbitrator from trying the issue fully and rendering a final decision thereupon ....
75..... Even after the court takes a prima facie view that the arbitration agreement is not vitiated on account of factors enumerated in Section 45, and the arbitrator upon a full trial holds that there is no vitiating factor in the arbitration agreement and makes an award, such an award can be challenged under Section 48(1)(a). The award will be set aside if the party against whom it is invoked satisfies the court inter alia that the agreement was not valid under the law to which the parties had subjected it or under the law of the country where the award was made. The two basic requirements, namely, expedition at the pre-reference stage, and a fair opportunity to contest the award after full trial, would be fully satisfied by the interpreting Section 45 as enabling the court to act on a prima facie view.
* * *
105. ..... [T]he object of the Act would be defeated if the proceedings remain pending in the court even after commencing of the arbitration. It is precisely for this reason that I am inclined to the view that at the pre-reference stage contemplated by Section 45, the court is required to take only a prima facie view for making the reference, leaving the parties to a full trial either before the Arbitral Tribunal or before the court at the post-award stage."
104. ...........
132. The courts at the referral stage do not perform ministerial functions. They exercise and perform judicial functions when they decide objections in terms of Sections 8 and 11 of the Arbitration Act. Section 8 prescribes the courts to refer the parties to arbitration, if the action brought is the subject of an arbitration agreement, unless it finds that prima facie no valid arbitration agreement exists. Examining the term 'prima facie', in Nirmala J. Jhala v. State of Gujarat, (2013) 4 SCC 301, this Court had noted:
(SCC p.320, para 48) "48. '27.... A prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the case were [to be] believed. While determining whether a prima facie case had been made out or not the relevant consideration is whether on the evidence led it was possible to arrive at the conclusion in question and not whether that was the only (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (14 of 37) [ARBAP-104/2022] conclusion which could be arrived at on that evidence.' "
133. Prima facie case in the context of Section 8 is not to be confused with the merits of the case put up by the parties which has to be established before the arbitral tribunal. It is restricted to the subject matter of the suit being prima facie arbitrable under a valid arbitration agreement. Prima facie case means that the assertions on these aspects are bona fide. When read with the principles of separation and competence-competence and Section 34 of the Arbitration Act, the referral court without getting bogged-down would compel the parties to abide unless there are good and substantial reasons to the contrary.
134. Prima facie examination is not full review but a primary first review to weed out manifestly and ex facie non-existent and invalid arbitration agreements and non- arbitrable disputes. The prima facie review at the reference stage is to cut the deadwood and trim off the side branches in straight forward cases where dismissal is barefaced and pellucid and when on the facts and law the litigation must stop at the first stage. Only when the court is certain that no valid arbitration agreement exists or the disputes/subject matter are not arbitrable, the application under Section 8 would be rejected. At this stage, the court should not get lost in thickets and decide debatable questions of facts. Referral proceedings are preliminary and summary and not a mini trial. This necessarily reflects on the nature of the jurisdiction exercised by the court and in this context, the observations of B.N. Srikrishna, J. of "plainly arguable" case in Shin-Etsu Chemical Co. Ltd. (Supra) are of importance and relevance. Similar views are expressed by this Court in Vimal Kishor Shah v. Jayesh Dinesh Shah (2016) 8 SCC 788 wherein the test applied at the pre-arbitration stage was whether there is a "good arguable case" for the existence of an arbitration agreement.
135. ..........
139. We would not like be too prescriptive, albeit observe that the court may for legitimate reasons, to prevent wastage of public and private resources, can exercise judicial discretion to conduct an intense yet summary prima facie review while remaining conscious that it is to assist the arbitration procedure and not usurp jurisdiction of the arbitral tribunal. Undertaking a detailed full review or a long-drawn review at the referral stage would obstruct and cause delay undermining the integrity and efficacy of arbitration as a dispute resolution mechanism. Conversely, if the court becomes too reluctant to intervene, it may undermine effectiveness of both the arbitration and the court. There are certain cases where the prima facie examination may require a deeper consideration. The court's challenge is to find the right amount of and the context when it would examine the prima facie case or (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (15 of 37) [ARBAP-104/2022] exercise restraint. The legal order needs a right balance between avoiding arbitration obstructing tactics at referral stage and protecting parties from being forced to arbitrate when the matter is clearly non-arbitrable.
140. ............
143. We would now examine Section 11 of the Arbitration Act. As noticed above sub-section (6-A) was inserted by the Act 3 of 2016 with retrospective effect from 23-10- 2015 and omitted by Act 33 of 2019. Section 11 (6) requires the court to appoint an arbitrator on an application made by a party. Section (6-A) to Section 11 stipulates that the court shall, at the stage of appointment under sub- sections (4), (5) or (6), confine itself to the examination of the existence of an arbitration agreement. Sub-section (6- A) was omitted by Act 33 of 2019, but the omission is in view of the introduction of a new regime of institutionalised arbitration as per the report of the committee headed by Justice B. N. Srikrishna, dated 30-07-2017 which records for the reason of recommending the omission as:
"Thus, it can be seen that after the Amendment Act of 2019, Section 11 (6-A) has been omitted because appointment of arbitrators is to be done institutionally, in which case the Supreme Court or the High Court under the old statutory regime are no longer required to appoint arbitrators and consequently to determine whether an arbitration agreement exists."
144. As observed earlier, SBP & Co. v. Patel Engineering Ltd. (2005) 8 SCC 618 explains and holds that Sections 8 and 11 are complementary in nature as both relate to reference to arbitration. Section 8 applies when judicial proceeding is pending and an application is filed for stay of judicial proceeding and for reference to arbitration. Amendments to Section 8 vide Act 3 of 2016 have not been omitted. Section 11 covers the situation where the parties approach a court for appointment of an arbitrator. Mayavati Trading Private Ltd. v. Pradyuat Deb Burman, (2019) 8 SCC 714 in our humble opinion, rightly holds that Patel Engineering Ltd. (Supra) has been legislatively overruled and hence would not apply even post omission of Sub- section (6-A) to Section 11 of the Arbitration Act. Mayavati Trading Private Ltd. (Supra) has elaborated upon the object and purposes and history of the amendment to Section 11, with reference to Sub-section (6-A) to elucidate that the Section, as originally enacted, was facsimile with Article 11 of the UNCITRAL Model of law of arbitration on which the Arbitration Act was drafted and enacted. Referring to the legislative scheme of Section 11, different interpretations, and the Law Commission's Reports, it has been held that the omitted Sub-section (6-A) to Section 11 of the Arbitration Act would continue to apply and guide the courts on its scope of jurisdiction at stage one, that is, the pre-arbitration stage.
(Downloaded on 29/04/2024 at 08:42:32 PM)[2023:RJ-JP:41479] (16 of 37) [ARBAP-104/2022]
145. Omission of Sub-section (6-A) by Act 33 of 2019 was with the specific object and purpose and is relatable to by substitution of Sub-sections (12), (13) and (14) to Section 11 of the Arbitration Act by Act 33 of 2019, which, vide Sub-section (3A) stipulates that the High Court and this court shall have the power to designate the arbitral institutions which have been so graded by the Council under Section 43-I, provided where a graded arbitral institution is not available, the concerned High Court shall maintain a panel of arbitrators for discharging the function and thereupon the High Court shall perform the duty of an arbitral institution for reference to the arbitral tribunal. Therefore, it would be wrong to accept that post omission of Sub-section (6-A) to Section 11 the ratio in Patel Engineering Ltd. (Supra) would become applicable.
146. We now proceed to examine the question, whether the word 'existence' in Section 11 merely refers to contract formation (whether there is an arbitration agreement) and excludes the question of enforcement (validity) and therefore the latter falls outside the jurisdiction of the court at the referral stage. On jurisprudentially and textualism it is possible to differentiate between existence of an arbitration agreement and validity of an arbitration agreement. Such interpretation can draw support from the plain meaning of the word "existence'. However, it is equally possible, jurisprudentially and on contextualism, to hold that an agreement has no existence if it is not enforceable and not binding. Existence of an arbitration agreement presupposes a valid agreement which would be enforced by the court by relegating the parties to arbitration. Legalistic and plain meaning interpretation would be contrary to the contextual background including the definition clause and would result in unpalatable consequences. A reasonable and just interpretation of 'existence' requires understanding the context, the purpose and the relevant legal norms applicable for a binding and enforceable arbitration agreement. An agreement evidenced in writing has no meaning unless the parties can be compelled to adhere and abide by the terms. A party cannot sue and claim rights based on an unenforceable document. Thus, there are good reasons to hold that an arbitration agreement exists only when it is valid and legal. A void and unenforceable understanding is no agreement to do anything. Existence of an arbitration agreement means an arbitration agreement that meets and satisfies the statutory requirements of both the Arbitration Act and the Contract Act and when it is enforceable in law.
147. We would proceed to elaborate and give further reasons:
147.1. In Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd. (2019) 9 SCC 209, this Court had examined the question of stamp duty in an underlying contract with an arbitration clause and in the context had (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (17 of 37) [ARBAP-104/2022] drawn a distinction between the first and second part of Section 7(2) of the Arbitration Act, albeit the observations made and quoted above with reference to 'existence' and 'validity' of the arbitration agreement being apposite and extremely important, we would repeat the same by reproducing para 29 thereof: (SCC p.238) "29. This judgment in United India Insurance Co.
Ltd. v. Hyundai Engg. & Constructions Co. Ltd. (2018) 17 SCC 607 is important in that what was specifically under consideration was an arbitration clause which would get activated only if an insurer admits or accepts liability. Since on facts it was found that the insurer repudiated the claim, though an arbitration clause did "exist", so to speak, in the policy, it would not exist in law, as was held in that judgment, when one important fact is introduced, namely, that the insurer has not admitted or accepted liability. Likewise, in the facts of the present case, it is clear that the arbitration clause that is contained in the sub-contract would not "exist" as a matter of law until the sub-contract is duly stamped, as has been held by us above. The argument that Section 11(6-A) deals with "existence", as opposed to Section 8, Section 16 and Section 45, which deal with "validity" of an arbitration agreement is answered by this Court's understanding of the expression "existence" in United India Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd., (Supra), as followed by us." Existence and validity are intertwined, and arbitration agreement does not exist if it is illegal or does not satisfy mandatory legal requirements. Invalid agreement is no agreement.
147.2. The court at the reference stage exercises judicial powers. 'Examination', as an ordinary expression in common parlance, refers to an act of looking or considering something carefully in order to discover something (as per Cambridge Dictionary). It requires the person to inspect closely, to test the condition of, or to inquire into carefully (as per Merriam-Webster Dictionary). It would be rather odd for the court to hold and say that the arbitration agreement exists, though ex facie and manifestly the arbitration agreement is invalid in law and the dispute in question is non-arbitrable. The court is not powerless and would not act beyond jurisdiction, if it rejects an application for reference, when the arbitration clause is admittedly or without doubt is with a minor, lunatic or the only claim seeks a probate of a will.
147.3. Most scholars and jurists accept and agree that the existence and validity of an arbitration agreement are the same. Even Starvos Brekoulakis accepts that validity, in terms of substantive and formal validity, are questions of contract and hence for the court to examine.
(Downloaded on 29/04/2024 at 08:42:32 PM)[2023:RJ-JP:41479] (18 of 37) [ARBAP-104/2022] 147.4. Most jurisdictions accept and require prima facie review by the court on non-arbitrability aspects at the referral stage.
147.5. Sections 8 and 11 of the Arbitration Act are complementary provisions as was held in Patel Engineering Ltd.(Supra). The object and purpose behind the two provisions is identical to compel and force parties to abide by their contractual understanding. This being so, the two provisions should be read as laying down similar standard and not as laying down different and separate parameters. Section 11 does not prescribe any standard of judicial review by the court for determining whether an arbitration agreement is in existence. Section 8 states that the judicial review at the stage of reference is prima facie and not final. Prima facie standard equally applies when the power of judicial review is exercised by the court under Section 11 of the Arbitration Act. Therefore, we can read the mandate of valid arbitration agreement in Section 8 into mandate of Section 11, that is, 'existence of an arbitration agreement'. 147.6. Exercise of power of prima facie judicial review of existence as including validity is justified as a court is the first forum that examines and decides the request for the referral. Absolute "hands off" approach would be counterproductive and harm arbitration, as an alternative dispute resolution mechanism. Limited, yet effective intervention is acceptable as it does not obstruct but effectuates arbitration.
147.7. Exercise of the limited prima facie review does not in any way interfere with the principle of competence- competence and separation as to obstruct arbitration proceedings but ensures that vexatious and frivolous matters get over at the initial stage.
147.8. Exercise of prima facie power of judicial review as to the validity of the arbitration agreement would save costs and check harassment of objecting parties when there is clearly no justification and a good reason not to accept plea of non-arbitrability. In Subrata Roy Sahara v. Union of India, (2014) 8 SCC 470, this Court has observed: (SCC p.642, para 191) "191. The Indian judicial system is grossly afflicted with frivolous litigation. Ways and means need to be evolved to deter litigants from their compulsive obsession towards senseless and ill-considered claims. One needs to keep in mind that in the process of litigation, there is an innocent sufferer on the other side of every irresponsible and senseless claim. He suffers long-drawn anxious periods of nervousness and restlessness, whilst the litigation is pending without any fault on his part. He pays for the litigation from out of his savings (or out of his borrowings) worrying that the other side may trick him into defeat for no fault of his. He spends invaluable time briefing counsel and preparing them for his claim. Time which he (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (19 of 37) [ARBAP-104/2022] should have spent at work, or with his family, is lost, for no fault of his. Should a litigant not be compensated for what he has lost for no fault? The suggestion to the legislature is that a litigant who has succeeded must be compensated by the one who has lost. The suggestion to the legislature is to formulate a mechanism that anyone who initiates and continues a litigation senselessly pays for the same. It is suggested that the legislature should consider the introduction of a "Code of Compulsory Costs"." 147.9 Even in Duro Felguera, S.A. v. Gangavaram Port Ltd. (2017) 9 SCC 729, Kurian Joseph, J., in para 52, had referred to Section 7(5) and thereafter in para 53 referred to a judgment of this Court in M.R. Engineers and Contractors (P) Limited v. Som Datt Builders Limited, (2009) 7 SCC 696 to observe that the analysis in the said case supports the final conclusion that the Memorandum of Understanding in the said case did not incorporate an arbitration clause. Thereafter, reference was specifically made to SBP & Co. v. Patel Engineering Ltd. (Supra) and National Insurance Co. Ltd. v. Boghara Polyfab (P) Limited (2009) 1 SCC 267 to observe that the legislative policy is essential to minimise court's interference at the pre-arbitral stage and this was the intention of sub-section (6) to Section 11 of the Arbitration Act. Paragraph 48 in Duro Felguera, S.A. (Supra) specifically states that the resolution has to exist in the arbitration agreement, and it is for the court to see if the agreement contains a clause which provides for arbitration of disputes which have arisen between the parties. Para 59 is more restrictive and requires the court to see whether an arbitration agreement exists - nothing more, nothing less. Read with the other findings, it would be appropriate to read the two paragraphs as laying down the legal ratio that the court is required to see if the underlying contract contains an arbitration clause for arbitration of the disputes which have arisen between the parties - nothing more, nothing less. Reference to decisions in Patel Engineering Ltd. (Supra) and Boghara Polyfab Private Limited (Supra) was to highlight that at the reference stage, post the amendments vide Act 3 of 2016, the court would not go into and finally decide different aspects that were highlighted in the two decisions.
147.10. In addition to Garware Wall Ropes Ltd. (Supra), this Court in Oriental Insurance Co. Ltd. v. Narbheram Power & Steel (P) Ltd. (2018) 6 SCC 534 and Hyundai Engg. & Construction Co. Ltd. (Supra), both decisions of three Judges, has rejected the application for reference in the insurance contracts holding that the claim was beyond and not covered by the arbitration agreement. The court felt that the legal position was beyond doubt as the scope of the arbitration clause was fully covered by the dictum in Vulcan Insurance Co. Ltd v. Maharaj Singh (1976) 1 SCC (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (20 of 37) [ARBAP-104/2022]
943. Similarly, in M/s. PSA Mumbai Investments PTE. Limited v. Jawaharlal Nehru Port Trust, (2018) 10 SCC 525, this Court at the referral stage came to the conclusion that the arbitration clause would not be applicable and govern the disputes. Accordingly, the reference to the arbitral tribunal was set aside leaving the respondent to pursue its claim before an appropriate forum.
147.11. The interpretation appropriately balances the allocation of the decision-making authority between the court at the referral stage and the arbitrators' primary jurisdiction to decide disputes on merits. The court as the judicial forum of the first instance can exercise prima facie test jurisdiction to screen and knockdown ex facie meritless, frivolous and dishonest litigation. Limited jurisdiction of the courts ensures expeditious, alacritous and efficient disposal when required at the referral stage.
148. ............
153. Accordingly, we hold that the expression 'existence of an arbitration agreement' in Section 11 of the Arbitration Act, would include aspect of validity of an arbitration agreement, albeit the court at the referral stage would apply the prima facie test on the basis of principles set out in this judgment. In cases of debatable and disputable facts, and good reasonable arguable case, etc., the court would force the parties to abide by the arbitration agreement as the arbitral tribunal has primary jurisdiction and authority to decide the disputes including the question of jurisdiction and non-arbitrability.
154. Discussion under the heading "Who decides Arbitrability?" can be crystallized as under:
154.1. Ratio of the decision in Patel Engineering Ltd.
(Supra) on the scope of judicial review by the court while deciding an application under Sections 8 or 11 of the Arbitration Act, post the amendments by Act 3 of 2016 (with retrospective effect from 23-10-2015) and even post the amendments vide Act 33 of 2019 (with effect from 09- 08-2019), is no longer applicable.
154.2. Scope of judicial review and jurisdiction of the court under Section 8 and 11 of the Arbitration Act is identical but extremely limited and restricted.
154.3. The general rule and principle, in view of the legislative mandate clear from Act 3 of 2016 and Act 33 of 2019, and the principle of severability and competence- competence, is that the arbitral tribunal is the preferred first authority to determine and decide all questions of non- arbitrability. The court has been conferred power of "second look" on aspects of non-arbitrability post the award in terms of sub-clauses (i), (ii) or (iv) of Section 34(2)(a) or sub-clause (i) of Section 34(2)(b) of the Arbitration Act. 154.4. Rarely as a demurrer the court may interfere at the Sections 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are non-arbitrable, though the (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (21 of 37) [ARBAP-104/2022] nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny. The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably 'non-arbitrable' and to cut off the deadwood. The court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable; when consideration in summary proceedings would be insufficient and inconclusive; when facts are contested; when the party opposing arbitration adopts delaying tactics or impairs conduct of arbitration proceedings. This is not the stage for the court to enter into a mini trial or elaborate review so as to usurp the jurisdiction of the arbitral tribunal but to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism."
In the case of Indian Oil Corporation Limited Versus NCC Limited, (2023) 2 Supreme Court Cases 539, the Hon'ble Supreme Court, after survey of its earlier judicial pronouncements, particularly the decision in the case of Vidya Drolia & Others (Supra), observed as below:-
"73. In the recent decision of this Court in DLF Home Developers Ltd. v. Rajapura Homes (P) Ltd (2021) 16 SCC
743) in which this Court also had an occasion to consider Section 11(6-A) of the Arbitration Act and ultimately has observed, after referring to and considering the decision of the three-Judge Bench of this Court in Vidya Drolia (supra) that the jurisdiction of the Court under Section 11 of the Arbitration Act is primarily to find out whether there existed a written agreement between the parties for resolution of the dispute and whether the aggrieved party has made out a prima facie arguable case, it is further observed that limited jurisdiction, however, does not denude the Court of its judicial function to look beyond the bare existence of an arbitration clause to cut the deadwood. In the said decision, this Court had taken note of the observations made in the case of Vidya Drolia (supra) that with a view to prevent wastage of public and private resources, the Court may conduct 'prima facie review' at the stage of reference to weed out any frivolous or vexatious claims."
12. In another decision in the case of NTPC Limited Versus SPML Infra Limited, (2023) 9 Supreme Court Cases 385, the Hon'ble Supreme Court considered the legal position with (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (22 of 37) [ARBAP-104/2022] regard to the non-arbitrability of the dispute. It was explained by the Hon'ble Supreme Court as below:-
"Position of Law
16. In the present case, we are concerned with the pre- referral jurisdiction of the High Court under Section 11 of the Act and would like to underscore the limited scope within which an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 has to be considered.
17. The position of law with respect to the pre-referral jurisdiction, as it existed before the advent of Section 11(6- A) in the Act, was based on a well-articulated principle formulated by this Court in National Insurance Co. Ltd. v.
Boghara Polyfab (P) Ltd (2009) 1 SCC 267. In Boghara Polyfab, this Court held that the issue of non-arbitrability of a dispute will have to be examined by the Court in cases where accord and discharge of the contract is alleged. Following the principle in Boghara Polyfab, this Court in Union of India v. Master Construction Co. (2011) 12 SCC 349 observed that when the validity of a discharge voucher, no-claim certificate or a settlement agreement is in dispute, the Court must prima facie examine the credibility of the allegations before referring the parties to arbitration. Yet again in New India Assurance Co. Ltd. v. Genus Power Infrastructure Ltd. (2015) 2 SCC 424, this Court observed that allegations of fraud, coercion, duress or undue influence must be prima facie substantiated through evidence by the party raising the allegations.
18. In a legislative response to these precedents, through the Arbitration and Conciliation (Amendment) Act 2015, sub-section (6-A) was added to Section 11 of the Act, which reads as follows:
11. (6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-
section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement."
(emphasis supplied)
19. Taking cognizance of the legislative change, this Court in Duro Felguera, SA Versus Gangavaram Port Ltd., (2017) 9 SCC 729 noted that post the 2015 Amendments, the jurisdiction of the Court under Section 11(6) of the Act is limited to examining whether an arbitration agreement exists between the parties-"nothing more, nothing less"
20. However, in the year 2019, in United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd. (2019) 5 SCC 362, this Court had nevertheless accepted an objection of (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (23 of 37) [ARBAP-104/2022] "accord and satisfaction" in opposition to an application for reference to arbitration.
21. It did not take much time for this Court to reverse the approach in Antique Art Exports (P) Ltd. (Supra). A three- Judge Bench in Mayavati Trading (P) Ltd. Versus Pradyuat Deb Burman (2019) 8 SCC 714 expressly overruled the abovereferred decision in Antique Art Exports, observing that: (Mayavati Trading case, SCC pp. 724-25, Para-10)
"10. This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgment, as Section 11(6- A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment in Duro Felguera, SA."
(emphasis in original) Having navigated through various judicial pronouncements and the common thread of prima-facie test, it was authoritatively held as below:-
"24. Following the general rule and the principle laid down in Vidya Drolia (Supra) this Court has consistently been holding that the Arbitral Tribunal is the preferred first authority to determine and decide all questions of non- arbitrability. In Pravin Electricals (P). Ltd. v. Galaxy Infra and Engg. (P). Ltd. (2021) 5 SCC 671, Sanjiv Prakash v. Seema Kukreja (2021) 9 SCC 732 and Indian Oil Corporation Ltd. v. NCC Ltd (2023) 2 SCC 539., the parties were referred to arbitration, as the prima facie review in each of these cases on the objection of non-arbitrability was found to be inconclusive. Following the exception to the general principle that the Court may not refer parties to arbitration when it is clear that the case is manifestly and ex facie non-arbitrable, in BSNL v. Nortel Networks (India) (P) Ltd. (2021) 5 SCC 738 (hereinafter "Nortel Networks") and Secunderabad Cantonment Board v. B. Ramachandraiah & Sons (2021) 5 SCC 705, arbitration was refused as the claims of the parties were demonstrably time-barred.
Eye of the needle
25. The above-referred precedents crystallise the position of law that the pre-referral jurisdiction of the courts under Section 11(6) of the Act is very narrow and inheres two inquiries. The primary inquiry is about the existence and the validity of an arbitration agreement, which also (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (24 of 37) [ARBAP-104/2022] includes an inquiry as to the parties to the agreement and the applicant's privity to the said agreement. These are matters which require a thorough examination by the referral court. The secondary inquiry that may arise at the reference stage itself is with respect to the non-arbitrability of the dispute.
26. As a general rule and a principle, the arbitral Tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. As an exception to the rule, and rarely as a demurrer, the Referral Court may reject claims which are manifestly and ex-facie non-arbitrable. Explaining this position, flowing from the principles laid down in Vidya Drolia & Others (supra), this Court in a subsequent decision in Nortel Networks (Supra) held:
(Nortel Networks case, SCC p.764, para 45) "45. ..45.1. ... While exercising jurisdiction under Section 11 as the judicial forum, the court may exercise the prima facie test to screen and knockdown ex facie meritless, frivolous, and dishonest litigation. Limited jurisdiction of the courts would ensure expeditious and efficient disposal at the referral stage. At the referral stage, the Court can interfere "only" when it is "manifest" that the claims are ex facie time-barred and dead, or there is no subsisting dispute."
27. The standard of scrutiny to examine the non- arbitrability of a claim is only prima facie. Referral courts must not undertake a full review of the contested facts; they must only be confined to a primary first review and let facts speak for themselves. This also requires the Courts to examine whether the assertion on arbitrability is bona fide or not. The prima facie scrutiny of the facts must lead to a clear conclusion that there is not even a vestige of doubt that the claim is non-arbitrable. On the other hand, even if there is the slightest doubt, the rule is to refer the dispute to arbitration."
13. In yet another recent judicial pronouncement in the case of Magic Eye Developers Private Limited Versus M/s. Green Edge Infrastructure Private Limited & Others, (2023) 8 Supreme Court Cases 50, following pertinent observations were made by the Hon'ble Supreme Court:-
"8. While considering the aforesaid issue, Section 11(6-A) of the Arbitration Act which has been added through the Arbitration and Conciliation Amendment Act, 2015 is required to be read, which reads as follows:
"11. (6-A) The Supreme Court or, as the case may be, the High Court, while considering any application (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (25 of 37) [ARBAP-104/2022] under sub-section (4) or sub-section (5) or sub- section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement"
(emphasis supplied)
9. Thus, post Arbitration and Conciliation Amendment Act, 2015, the jurisdiction of the court under Section 11(6) of the Act is limited to examining whether an arbitration agreement exists between the parties- "nothing more, nothing less". Thus, as per Section 11(6-A) of the Act, it is the duty cast upon the Referral Court to consider the dispute/issue with respect to the existence of an arbitration agreement.
10. At this stage, it is required to be noted that as per the settled position of law, pre-referral jurisdiction of the court under Section 11(6) of the Arbitration Act is very narrow and inheres two inquiries. The primary inquiry is about the existence and the validity of an arbitration agreement, which also includes an inquiry as to the parties to the agreement and the applicant's privity to the said agreement. The said matter requires a thorough examination by the Referral Court. (para 25 of the decision in NTPC). The Secondary inquiry that may arise at the reference stage itself is with respect to the non-arbitrability of the dispute. Both are different and distinct."
14. Keeping in forefront the above settled legal position with regard to existence of an arbitration agreement, non-
arbitrability and the scope of judicial review at the referral stage while dealing with the application under Section 11 (6) of the Act of 1996 seeking appointment of an arbitrator, I shall now deal with the issues raised in the present application.
15. The pleadings of the parties reveal an admitted position to the effect that M/s Verma & Company was a registered firm under the Act of 1932 and after the death of one of the two partners namely; Dinesh Kumar Verma, his son Akshay Verma (applicant herein) was admitted as partner w.e.f. 24.12.2013 and new partnership was constituted which came into existence vide partnership deed executed on 24.12.2013 between Sita (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (26 of 37) [ARBAP-104/2022] Devi Verma and Akshay Verma, which is duly signed by each of them. It is not in dispute that Clause-9 of the partnership deed provided that all the disputes shall be settled by the arbitration according to the provisions of the Act of 1996. Clause-9 of the Partnership deed reads as under:-
"9. All disputes shall be settled by arbitration according to the provisions of the Indian Arbitration Act."
16. However, a dispute arose when Sita Devi Verma addressed a communication to the Bank on 14.03.2022 requesting closer of the accounts in the name of the firm. When Bank informed the other partner Akshay Verma regrading request of Sita Devi Verma for freezing of the accounts of the firm, the other partner requested the bank not to proceed with the request. It is also the case of the applicant that later on Sita Devi Verma sent a letter on 21.04.2022 to the Branch Manager of the bank with a request to restart overdraft account of the firm followed by a letter of applicant-Akshay Verma that misunderstanding between the parties has been cleared. In the meanwhile, Sita Devi Verma expired on 12.07.2022. The bank, however, sent a legal notice on 04.08.2022 to the firm M/s. Verma & Company, Akshay Verma, legal representatives of deceased Sita Devi Verma and legal representatives of deceased Rajendar Verma for execution of necessary documents in favour of the bank by reconstituting the firm or repay outstanding amount of Rs.1,75,33,186/- along with interest and other expenses, failing which appropriate legal action would be taken.
(Downloaded on 29/04/2024 at 08:42:32 PM)[2023:RJ-JP:41479] (27 of 37) [ARBAP-104/2022]
17. A legal issue, therefore, which arises for consideration is as to whether the firm stood dissolved, there being only two partners and one partner having died.
The legal position in this regard was examined by the Hon'ble Supreme Court in the case of Mohd. Laiquiddin & Anr. Versus Kamla Devi Mishra (Dead) By L.Rs & Ors.
(2010) 2 Supreme Court Cases 407. One of the issues which arose for consideration was whether the partnership firm stood dissolved by virtue of Section 42(c) of the Act of 1932 on account of the death of one of the partners, on facts, that being a case where partnership consisted of only two partners and one of them died.
18. In the light of the provisions contained in Section 42 of the Act of 1932 and despite there being a clause in the partnership deed to keep the same alive despite death of any partner, legal position was examined as below:-
"22. The sole issue raised by the Respondents in this appeal, who are the appellants in Appeal No. 4411-12 of 2002, is whether the finding of the Courts below that the Partnership firm stood dissolved on account of death of one of the partners was correct in the light of the express provisions of the Partnership Act, namely, Section 42 (c) of the same.
23. Before we proceed to examine the correctness of this concurrent findings arrived at by the Courts below, it is necessary to examine the relevant provisions of the Partnership Act, 1923 and the relevant clauses of the partnership deed entered between the original plaintiff and the original defendant. "Partnership" is defined under Section 4 of the Act which reads as under:
"4. Definition of 'partnership', 'partner', 'firm' and 'firm name.- "Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all."
24. Section 42 of the Act reads as under:
(Downloaded on 29/04/2024 at 08:42:32 PM)[2023:RJ-JP:41479] (28 of 37) [ARBAP-104/2022] "42. Dissolution on the happening of certain contingencies:- Subject to contract between the partners a firm is dissolved-
(a) if constituted for a fixed term, by the expiry of the term;
(b) if constituted to carry out one or more
adventures or undertakings, by the
completion thereof;
(c) by the death of a partner; and
(d) by the adjudication of a partner as an
insolvent."
(emphasis supplied)
25. Dissolution of a partnership firm on account of death of one of the partners is subject to the contract entered into by the parties. In this context, it is pertinent to refer to the terms of the deed of partnership. Clause 22 of the Partnership deed reads as follows:
"The partnership shall be in force for a period of 42 years certain from this date and the death of any partner shall not have the effect of dissolving the firm."
This clause clearly states that death of any partner shall not have the effect of dissolving the firm. However, in the facts and circumstances of the case, we are not in a position to give absolute effect to this clause of the deed of partnership.
26. The learned counsel for the Respondents contended that since the parties agreed that in spite of the death of any of the partners, the firm shall continue for 42 years irrespective of the death of the original plaintiff (since deceased). They further, argued that it clearly contemplates that the legal representative of the partner, who dies, would be under a duty to enter into a fresh deed of partnership. The legal representatives were precluded from claiming benefits if they deny entering into a fresh partnership agreement.
27. In order to arrive at the conclusion that the partnership firm stood dissolved on account of death of one of the partners, the High Court had rightly placed reliance on Smt. S. Parvathammal v. CIT (1987) 163 ITR 161 (Mad.), wherein this Court held that in a firm consisting of two partners on account of death of one of the partners, the firm automatically dissolved and observed as follows: (ITR pp.161-62) ".... a partnership normally dissolves on the death of the partner unless there was an agreement in the original partnership deed. Even assuming that there was such an agreement in a partnership consisting of two partners, on the death of one of them the partnership automatically comes to an end and there is no partnership which survives and into which a third party can be introduced. Hence on the death of S, the original partnership was dissolved. The subsequent (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (29 of 37) [ARBAP-104/2022] taking in of the assessee as a partner was only as a result of entering into of a new partnership between R and the assessee. Partnership was not a matter of heritable status but purely one of contract." In the light of aforementioned case, it is clear that when there are only two partners constituting the partnership firm, on the death of one of them, the firm is deemed to be dissolved despite the existence of a clause which says otherwise. A partnership is a contract between the partners. There cannot be any contract unilaterally without the acceptance by the other partner.
28. The Appellants, the legal representatives of original plaintiff (since deceased) was not at all interested in continuing the firm or constitute a fresh firm and they cannot be asked to continue the partnership, as there is no legal obligation upon them to do so as partnership is not a matter of heritable status but purely one of contract, which is also clear from the definition of partnership under Section 4. Therefore, the trial court was justified in holding that the firm dissolved by virtue of death of one of the partners and the first appellate court as well as the High Court have taken the correct view in upholding the same."
19. In view of the aforesaid decision, the legal position is crystal clear that irrespective of any clause in the partnership deed between the two partners, to keep alive the partnership even after death of one of the partners, upon death of one of the partners, the partnership stands dissolved by operation of law.
20. However, the crucial question for determination would be whether despite dissolution of the firm, the arbitration clause contained in the partnership deed would still survive and binding on the legal representatives of the deceased partner, for the purposes of the Act of 1996. The legal position in this regard is fully explained by the Hon'ble Supreme Court in the case of Ravi Prakash Goel Versus Chandra Prakash Goel & Another, (2008) 13 Supreme Court Cases 667. The issues which arose for consideration and answered, were as below:-
(Downloaded on 29/04/2024 at 08:42:32 PM)[2023:RJ-JP:41479] (30 of 37) [ARBAP-104/2022] "16. On the above pleadings, the following questions of law emerge for our consideration:
(a) Where right to sue for rendition of accounts survives on the legal legal representative of a deceased partner, are the legal representatives not entitled to invoke arbitration clause contained in the Partnership Deed?
(b) Whether the arbitration can be commenced by the heirs after the death of partner especially where the dispute had arisen already during the life time of the partner?
(c) Whether in view of section 46 read with section 48 of the Indian Partnership Act as well as section 40 of the Arbitration Act, 1999, the petitioner is entitled to claim appointment of arbitrator under the arbitration clause of the Partnership Deed and the Hon'ble Chief Justice of the Allahabad High Court has erred in overlooking these provisions?"
The legal position with reference to provisions contained both in the Act of 1932 and the Act of 1996 was examined by the Hon'ble Supreme Court which reads as below:-
"17. Before we proceed further, it is useful to reproduce Section 40 of the Arbitration Act and Sections 46, 47 and 48 of the Indian Partnership Act:
"40. Arbitration agreement not to be discharged by death of party thereto.- (1) An arbitration agreement shall not be discharged by the death of any party thereto either as respects the deceased or as respects any other party, but shall in such event be enforceable by or against the legal representative of the deceased.
(2) The mandate of an arbitrator shall not be terminated by the death of any party by whom he was appointed. (3) Nothing in this section shall affect the operation of any law by virtue of which any right of action is extinguished by the death of a person."
* * * * "46. Right of partners to have business wound up after dissolution.- On the dissolution of a firm every partner or his representative is entitled, as against all the other partners or their representatives, to have the property of the firm applied in payment of the debts and liabilities of the firm, and to have the surplus distributed among the partners or their representatives according to their rights.
47. Continuing authority of partners for purposes of winding up.- After the dissolution of a firm the authority of each partner to bind the firm, and the other mutual rights and obligations of the partners, continue notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the firm and to (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (31 of 37) [ARBAP-104/2022] complete transactions begun but unfinished at the time of the dissolution, but not otherwise:
Provided that the firm is in no case bound by the acts of a partner who has been adjudicated insolvent; but this proviso does not affect the liability of any person who has after the adjudication represented himself or knowingly permitted himself to be represented as a partner of the insolvent.
48. Mode of settlement of accounts between partners.- In settling the accounts of a firm after dissolution, the following rules shall, subject to agreement by the partners, be observed :-
(a) losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, and lastly, if necessary, by the partners individually in the proportions in which they were entitled to share profits;
(b) the assets of the firm, including any sums contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order-
(i) in paying the debts of the firm to third parties;
(ii) in paying to each partner rateably what is due to him from the firm for advances as distinguished from capital;
(iii) in paying to each partner rateably what is due to him on account of capital; and
(iv) the residue, if any, shall be divided among the partners in the proportions in which they were entitled to share profits."
18. It is clear from Section 40 of the Arbitration Act that an arbitration agreement is not discharged by the death of any party thereto and on such death it is enforceable by or against the legal representatives of the deceased, nor is the authority of the arbitrator revoked by the death of the party appointing him, subject to the operation of any law by virtue of which the death of a person extinguishes the right of action of that person.
19. Section 2(1)(g) defines "legal representative" which reads thus:
"2. (1)(g) "Legal Representative" means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased person, and, where a party acts in a representative character, the person on whom the estate develops on the death of the party so acting;"
20. The definition of 'legal representative' became necessary because such representatives are bound by and also entitled to enforce an arbitration agreement. Section 40 clearly says that an arbitration agreement is not discharged by the death of a party. The agreement remains enforceable by or against the legal representatives of the deceased. In our opinion, a person who has the right to represent the estate of deceased (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (32 of 37) [ARBAP-104/2022] person occupies the status of a legal person (sic representative). Section 35 of the 1996 Act which imparts the touch of finality to an arbitral award says that the award shall have binding effect on the "parties and persons claiming under them". Persons claiming under the rights of a deceased person are the personal representative of the deceased party and they have the right to enforce the award and are also bound by it. The arbitration agreement is enforceable by or against the legal representative of a deceased party provided the right to sue in respect of the cause of action survives.
21. We have already extracted Sections 46, 47 & 48 of the Partnership Act. Section 46 provides two things, namely, first is to realize the assets of the business and then to apply the same for discharge of liabilities and finally to distribute the surplus, if any, among the partners. All that Section 46 empowers is that every partner shall claim that this is to be done for ultimate distribution of the surplus to the partners according to their shares. A suit to enforce the latter right relating to the distribution of surplus is generally called a suit for an account which means account taken up accordingly. This right to a partner to file a suit for account is not affected by the fact that the retiring partner has already inspected the accounts of the firm. Section 46 is, however, merely declaratory of the rights of the partners or their legal representatives in the surplus and does not set out the mode of calculating the surplus. The share of a partner upon the winding up of a dissolved firm, is only in the residue which is left after the liabilities mentioned in the various clauses of Section 48 have been paid out. Payment of capital and advances to partners is not out of the residue. The amount paid as capital investment to a partner will have to be deducted in order to find the value of the residue, because the value of a partner's share is only his proportion of the residue.
22. "Right of Representative of a Partner.- The right of a representative of a partner is really a claim against the surplus assets on realisation-whether the surplus consists entirely of the proceeds of realisation or whether they include some specific items of property, which existed on the death of the partner. The proper remedy of a partner in the circumstances is to have accounts taken to ascertain his share and if the right to sue for accounts is barred by limitation, the partner cannot sue any partner in possession of the assets for a share therein, and the limitation will be governed by Art.5 of the Limitation Act."
23. On the dissolution of the firm, the arbitration clause does not come to an end and so if a dispute had arisen during the lifetime of the deceased partner, his legal representatives would be entitled to take proceedings under Section 20 of the Arbitration Act, 1940.
24. When a partner dies and the partnership comes to an end it is not only right but also the duty of the surviving partner to realize the assets for the purpose of winding up of the partnership affairs including the payment of the (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (33 of 37) [ARBAP-104/2022] partnership debts. However, it is true that in a general sense the executors or administrators of the deceased partner may be said to have a lien upon the partnership assets in respect of his interest in the partnership and taking the partnership account.
25. Section 47: It is clear that the commencement of the dissolution does not at once terminate the authority of the partners. Such authority continues at least for 2 purposes, namely, (1) so far as necessary to wind up the affairs of the firm; and (2) to complete the transaction begun but had not yet been completed.
26. Section 48: It lays down two fundamental propositions which are in line of the provisions of Section 46 of the Partnership Act, namely, (1) as to the payment of the losses; and (2) as to the application of the assets. It is to be noted that the provisions of Section 48 are the culmination of the provisions of Section 46 of the Partnership Act. Therefore, both the sections have to be harmoniously read together and interpreted.
27. We are of the opinion that in view of the provisions of Section 46 read with Section 48 of the Indian Partnership Act as well as Section 40 of the Arbitration and Conciliation Act, 1996, the application for appointment of an arbitrator under the arbitration clause of the partnership deed was liable to be allowed and the learned Chief Justice has erred in overlooking the said provisions. While right to sue for rendition of accounts of partnership firm survives on the legal representative of a deceased partner, he is also entitled to invoke the arbitration clause contained in the partnership deed."
21. Though decisions of various High Courts on this aspect have also been cited before this Court, it is not necessary to burden the view of this Court with other authorities in view of authoritative pronouncement of the Hon'ble Supreme Court in the case of Ravi Prakash Goel (Supra). Therefore, the submissions of learned counsel for the respondents that after the death of Sita Devi Verma, there does not exist any arbitration agreement so as to entitle the applicant to seek appointment of an arbitrator in the matter of dispute fails and is hereby rejected, particularly when no other ground to assail existence and/or validity of the (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (34 of 37) [ARBAP-104/2022] agreement has been put forth by the respondent except death of Sita Devi Verma.
22. The next issue arising for consideration would be whether the dispute is non-arbitrable. Contents of the application seeking appointment of arbitrator and the notice for appointment of arbitrator reveal that even while Sita Devi Verma was alive, a dispute in relation to operation of the accounts of the firm M/s.
Verma & Company had arisen on account of letter sent by Sita Devi Verma to the bank to freeze the accounts of the firm though according to the applicant later on, she had withdrawn such a request and consented for operation of the accounts. It is also revealed that the bank has also given legal notice to the firm and the legal representatives of the deceased Sita Devi Verma. The applicant seeks adjudication on mutual rights and duties of the partnership firm and determination thereof as the bank has sent a legal notice for realisation of the loan advanced to the bank. The applicant's claim is that all the partners are entitled to equal share in the loss and profit in the absence of there being any agreement in that regard and partners are jointly and severely liable for all acts of the firm done. According to the applicant, all the disputes with regard to the rights and liabilities are required to be determined through appropriate proceedings and, therefore, legal notice was given seeking appointment of an arbitrator. The legal representatives of the deceased are in possession of the estate of the deceased Sita Devi Verma.
23. Applying test of non-arbitrability as laid down succinctly by the Hon'ble Supreme Court in plethora of decisions referred to (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (35 of 37) [ARBAP-104/2022] herein above, and applying "Eye of the needle" test, it cannot be held that the present case is classifiable as "non-arbitrable dispute".
24. In a recent judicial pronouncement in the case of VGP Marine Kingdom Private Limited and Another Versus Kay Ellen Arnold, (2023) 1 Supreme Court Cases 597, the legal position, as discussed in detailed herein above was reiterated as below:-
"11. ...............As per the decision of this Court in the case of Vidya Drolia & Others (supra) unless on the facet it is found that the dispute is not arbitrable and if it requires further/deeper consideration, the dispute with respect to the arbitrability should be left to the arbitrator. The decision of this Court in the case of Vidya Drolia & Others (supra) is a three judges' bench subsequent decision in which the entire law on the scope and ambit of the Court at the stage of application under Section 11(6) of the Act, 1996 has been dealt with and considered by the Court."
In another recent judicial pronouncement in the case of Meenakshi Solar Power Pvt. Ltd. Versus Abhyudaya Green Economic Zones Pvt. Ltd, 2022 SCC OnLine SC 1616, the legal position, relying upon dictum in Vidya Drolia & Others (Supra), was reaffirmed as below:-
"17. Further, this Court observed that the court at the referral stage can interfere only when it is manifest that the claims are ex facie time-barred and dead, or there is no subsisting dispute. In the context of issue of limitation period, it should be referred to the Arbitral Tribunal for decision on merits. Similar would be the position in case of disputed "no-claim certificate" or defence on the plea of novation and "accord and satisfaction"
25. The legal position that when contention relating to non-
arbitrability are plainly arguable or when facts are contested, Court would prefer to refer the matter for arbitration while (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (36 of 37) [ARBAP-104/2022] considering an application for appointment of an arbitrator under Section 11 of he Act of 1996 has been authoritatively settled in not only Vidya Drolia & Others (Supra), but also many other decisions including Mohammed Masroor Shaikh Versus Bharat Bhushan Gupta & Others, (2022) 4 Supreme Court Cases 156 wherein, following pertinent observations were made:-
"19. Thus, this Court held that while dealing with petition under Section 11, the Court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable. In such case, the issue of non-arbitrability is left open to be decided by the Arbitral Tribunal. On perusal of the impugned order, we find that the issues of non- arbitrability and the claim being time barred have not been concluded by the learned Single Judge of the Bombay High Court. In fact, in clause (vii) of the operative part of the impugned Order, the learned Single Judge has observed that the contentions of the parties have been kept open. The petitions filed by the appellant under Section 34 of the Arbitration Act, challenging the Order dated 25-5-2021 are pending before the High Court in which the appellant can raise all permissible contentions."
Similar are the observations made in plethora of decisions which were quoted with approval in the case of Sanjiv Prakash Versus Seema Kukreja and Others, (2021) 9 Supreme Court Cases 732, which reads as below:-
"20. The Court in Vidya Drolia & Others (supra) then concluded, on the facts of that case, that it would be unsafe to conclude one way or the other that an arbitration agreement exists between the parties on a prima facie review of facts of that case, and that a deeper consideration must be left to an arbitrator, who is to examine the documentary and oral evidence and then arrive at a conclusion.
21. Likewise, in Bharat Sanchar Nigam Ltd. v. Nortel Networks India Pvt. Ltd., (2021) 5 SCC 738, another Division Bench of this Court referred to Vidya Drolia & Others (supra) and concluded:(BSNL) (Supra), SCC pp. 765-66, paras 46-
47) (Downloaded on 29/04/2024 at 08:42:32 PM) [2023:RJ-JP:41479] (37 of 37) [ARBAP-104/2022] "46.The upshot of the judgment in Vidya Drolia & Others v. Durga Trading Corporation, (2021) 2 SCC 1 is affirmation of the position of law expounded in Duro Felguera, S.A. (Supra) and Mayavati Trading (P) Ltd. (Supra), which continue to hold the field. It must be understood clearly that Vidya Drolia & Others (Supra) has not resurrected the pre-amendment position on the scope of power as held in SBP & Co. v. Patel Engineering SBP & Co. v. Patel Engg. Ltd., (Supra).
47. It is only in the very limited category of cases, where there is not even a vestige of doubt that the claim is ex facie time- barred, or that the dispute is non-arbitrable, that the court may decline to make the reference. However, if there is even the slightest doubt, the rule is to refer the disputes to arbitration, otherwise it would encroach upon what is essentially a matter to be determined by the tribunal."
22. On the contrary, a Section 11 court would refer the matter when contentions relating to non-arbitrability are plainly arguable, or when facts are contested. The court cannot, at this stage, enter into a mini trial or elaborate review of the facts and law which would usurp the jurisdiction of the arbitral tribunal."
26. Resultantly, the application seeking appointment of an arbitrator is required to be allowed and the same is, accordingly, allowed. Hon'ble Mr. Justice P.K. Agarwal (Retd.), C-82, Ram Nagar, Shastri Nagar, Jaipur is appointed as the Sole Arbitrator to adjudicate upon the dispute between the parties and pass an award. The Sole Arbitrator shall be entitled to fee, as provided under Fourth Schedule appended to the Act of 1996.
27. The Registry is directed to intimate Hon'ble Mr. Justice P.K. Agarwal (Retd.) regarding his appointment as Sole Arbitrator. The parties are also directed to intimate the Sole Arbitrator towards commencement of arbitral proceedings in accordance with law.
(MANINDRA MOHAN SHRIVASTAVA),CJ SANJAY KUMAWAT-15 (Downloaded on 29/04/2024 at 08:42:32 PM) Powered by TCPDF (www.tcpdf.org)