Allahabad High Court
Gyanendra Kumar Gandhi And Another vs Prashant Tyagi And Another on 12 October, 2020
Author: Rohit Ranjan Agarwal
Bench: Rohit Ranjan Agarwal
HIGH COURT OF JUDICATURE AT ALLAHABAD Court No. - 10 Case :- Arbitration & Conciliation Application U/S11(4) No. - 104 of 2019 Applicant :- Gyanendra Kumar Gandhi And Another Opposite Party :- Prashant Tyagi And Another Counsel for Applicant :- Akanksha Mishra,Kshitij Shailendra Counsel for Opposite Party :- Ram Krishna Mishra,Ras Bihari Pandey Hon'ble Rohit Ranjan Agarwal,J.
1. By the order dated 02.09.2020, the consent of the Arbitrator was required in terms of Sub-section (8) of Section 11 of the Arbitration & Conciliation Act, which has been received in the Registry of this Court on 29.09.2020 and has been brought on record.
2. Arbitrator to proceed with the matter and shall be paid fee according to the Fourth Schedule of the Arbitration & Conciliation Act.
3. Application stands disposed of.
Order Date :- 12.10.2020 Shekhar Court No. - 10 Case :- Arbitration & Conciliation Application U/S 11(4) No. - 104 of 2019 Applicant :- Gyanendra Kumar Gandhi And Another Opposite Party :- Prashant Tyagi And Another Counsel for Applicant :- Akanksha Mishra, Kshitij Shailendra Counsel for Opposite Party :- Ram Krishna Mishra, Ras Bihari Pandey Hon'ble Rohit Ranjan Agarwal,J.
[Civil Misc. Recall Application No. 05 of 2020]
1. Present recall application has been filed on behalf of opposite party nos. 1 and 2 for recalling the order dated 02.09.2020 passed by this Court appointing Hon. Mr. Justice B.K. Narayana, a former Judge of this Court, as an Arbitrator. The said order is reproduced as under;
"Heard Miss. Akanksha Mishra, learned counsel for the applicants and Sri Ram Krishna Mishra, learned counsel for the opposite parties.
This application has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator, who may settle the dispute between the parties.
Learned counsel for the applicants submits that there is a partnership deed between the parties and in view of clause 14 of the partnership deed dated 29.6.2012 all disputes which may arise at any time amongst the partners and their respective executors or administrators relating to the partnership affairs or the constructions of this agreement, shall be referred to Arbitrator mutually appointed by them and his/her decision shall be binding on all the partners. Learned counsel further submits that despite notice the respondents have not appointed an arbitrator to resolve the dispute.
In view of the aforesaid facts, with the consent of the learned counsel for the parties, let Hon'ble Mr. Justice B.K. Narayana, a former Judge of this Court residing at Vindhya, 26/5 Muir Road, Allahabad/Prayagraj, (Mob. No. 9839175855), be appointed as an Arbitrator to resolve the dispute subject to consent of his Lordship in terms of Sub-Section (8) of Section 11 of the Act.
The Registry is directed to obtain consent of the proposed arbitrator in terms of amended provisions contained in Sub-Section (8) of Section 11 of the Act within a period of two weeks from today.
List this case on 30.9.2020 "
2. Sri R.K. Mishra, learned counsel appearing for the opposite parties, has contended that on 29.07.2020 this Court had directed for production of the original copy of the partnership deed but on 02.09.2020 the Court had passed a consent order appointing one of former Judge of this Court as an Arbitrator in the above matter and without production of copy of the partnership deed.
3. Before proceeding to decide the recall application a cursory glance of the facts of the case are necessary to the decision of the application.
4. The applicants had moved this application under Section 11 (6) of the Arbitration & Conciliation Act, 1996 invoking the arbitration clause 14 as provided in the partnership deed dated 29.06.2012. According to the applicants, son of applicant no. 1 Late Gaurav Gandhi, applicant no. 2 and opposite parties on 08.02.2011 had constituted a partnership deed for starting a business of manufacturing, purchase and sale of bread and bakery products in the name and style of M/s. Gandhi Food Products. Unfortunately son of applicant no. 1 Gaurav Gandhi died on 28.06.2012, as such, a new partnership deed was executed between the present applicants and the opposite parties, a copy of which has been brought on record as annexure No. 2 to the application. Clause 14 of the said deed provides for arbitration in case of any dispute which arises between the parties. The arbitration clause was invoked on 11.07.2019 and the notice being served on 13.07.2019 but the opposite parties failed to respond to the said notice, as such, the present application was filed for appointment of the Arbitrator.
5. A counter affidavit was filed on behalf of the opposite parties by one Ajay Bhatnagar, who is doing pairvy in the present case. In paragraph no. 4 of the affidavit it is averred that Late Gaurav Gandhi and opposite parties were close friends and they had invested money in the business started by Late Gaurav Gandhi and partnership deed dated 08.02.2011 was prepared for the purpose of submitting the same before the government department for taking the registration. However, the death of Gaurav Gandhi is admitted to the opposite parties and in paragraph no. 6 and 7 of the counter affidavit it is submitted that the applicants had prepared the present partnership deed dated 29.06.2019 on their own without taking consent of opposite parties and they had not signed the said deed. All the averments made in the counter affidavit sworn on personal knowledge of the Pairokar Ajay Bhatnagar.
6. In the rejoinder affidavit filed by the applicants it is stated that after the death of Gaurav Gandhi the earlier partnership deed stood automatically dissolved and a new partnership deed was executed between the applicants and the opposite parties on 29.06.2012 and up till now they have not raised any objection regarding the said deed while dealing with the banks for taking loan or before any other statutory authority. In paragraph no. 6 of the rejoinder affidavit it has been categorically stated that a notice under Section 13 (2) of SARFAESI Act, 2002 was issued on 21.06.2015 by the Allahabad Bank against both the applicants as well as the opposite parties and all the four have been shown to be the partners of M/s. Gandhi Food Products (Borrower), copy of the same has been brought on record as annexure no. 1 to the application.
7. Further in paragraph no. 8 of the rejoinder affidavit it is stated that the loan was discharged by the applicant no. 1 in the capacity of partner of the firm and a compromise settlement was entered between the firm and the bank on 19.02.2016, copy of the same has also been brought on record. In paragraph no. 10 of the rejoinder affidavit several correspondence made between partners of the firm and the bank has been brought on record to prove the fact that the firm M/s. Gandhi Food Products was working under the new partnership deed.
8. A supplementary affidavit was filed on behalf of the applicants, wherein in paragraph no. 4 it was stated that the earlier partnership deed dated 08.02.2011 as well as new partnership deed are in possession of the opposite parties right from its execution. Apart from the said fact in paragraph no. 7 it has been categorically stated that the returns of the firm was submitted before the Trade Tax department as well as Income Tax Department alongwith partnership deed dated 29.06.2012. Further, in paragraph no. 9 it is stated that the notice under Section 13 (2) of SARFAESI Act, 2002 was issued by the Allahabad Bank against the applicants as well as the opposite parties being the partners of the firm.
9. A supplementary counter affidavit was filed sworn by one Ajay Bhatnagar as the Pairokar of the opposite parties and replying the contents of paragraph no. 7 and 9 of the supplementary affidavit no denial has been made in paragraph no. 8 and 10 of the supplementary counter affidavit to the averments so made by the applicants as far as the submission of returns before the Trade Tax department as well as the Income Tax department on the basis of the partnership deed dated 29.06.2012 and the notice issued by the Allahabad Bank under Section 13 (2) of the SARFAESI Act, 2002. All the contents made in the supplementary counter affidavit have been sworn by Ajay Bhatnagar on the basis of personal knowledge.
10. Sri R.K. Mishra, learned counsel appearing for the opposite parties, has submitted that the order dated 02.09.2020 appointing Arbitrator by this Court be recalled as the applicants had failed to comply the earlier order passed by this Court on 29.07.2020 for production of original partnership deed for the appointment of Arbitrator. He further submitted that no partnership deed was ever executed on 29.06.2012 between the applicants and opposite parties, though the earlier partnership deed was executed between Late Gaurav Gandhi and opposite parties on 08.02.2011.
11. Replying to the arguments made by learned counsel for the opposite parties Ms. Akansha Mishra, learned counsel for the applicants, submitted that the order dated 02.09.2020 was a consent order and was passed in the presence of the learned counsel for the parties and now no occasion arises for resiling from the said order. She further pointed out that no personal affidavit of the opposite parties has been filed in the present case and the facts mentioned in the counter affidavit have been sworn by the Pairokar Ajay Bhatnagar on the basis of personal knowledge which he could not have and has not been explained as to how he has personal knowledge of the fact that the said deeds were not executed by the opposite parties.
12. Having heard learned counsel for the parties on the recall application and from perusal of the record the question which emerges to be decided is whether the order dated 02.09.2020 is a consent order and is passed after hearing the parties, and whether any interference can be made by the Court at the stage of the appointment of Arbitrator pursuant to the partnership deed between the parties where there exist an arbitration clause.
13. From the perusal of the pleadings of the parties the fact which emerges out is that undisputedly a partnership deed was executed between one Gaurav Gandhi son of the applicant no. 1 and the opposite parties on 08.02.2011, the said fact is accepted to both the parties. However, after the death of Gaurav Gandhi the firm stood dissolved and as per the applicants the same was reconstituted on 29.06.2012 but in the counter affidavit the opposite parties claimed that they had not signed the said partnership deed and it has been fabricated and manufactured by the applicant no. 1. In the counter affidavit the opposite parties had accepted the fact that certain land was purchased jointly in the name of opposite parties and Gaurav Gandhi and the dispute relating to the said land was however settled between them. The only dispute is in regard to the partnership. Further the opposite parties had denied the possession of the partnership deed of the year 2012.
14. The applicants in their rejoinder affidavit had categorically denied regarding the fabrication of another partnership deed dated 29.06.2012, and it is their case that the new partnership deed is in possession of the opposite parties and no objections were ever raised while taking loan from the bank or placing this new partnership deed before various government authorities. The notice under Section 13 (2) of the SARFAESI Act, 2002 issued on 21.06.2015 by Allahabad Bank has been brought on record alongwith rejoinder affidavit as well as the supplementary affidavit to demonstrate the fact that the bank had registered and acknowledged the factum of new partnership deed in the name of M/s. Gandhi Food Products being borrower consisting of four persons, the present two applicants and the opposite parties and guarantor of the loan being Smt. Radhika Gandhi, widow of Late Gaurav Gandhi. This clearly proves the fact beyond doubt that new partnership deed was in existence which in itself from constitution provides that the same was being executed on 29.06.2012. It seems that Allahabad Bank while extending the loan to the firm acknowledged the two persons alongwith the opposite parties as its partner and loan was guaranteed by the widow of Late Gaurav Gandhi.
15. Similarly, the specific averment made in the supplementary affidavit in paragraph no. 7 and 9 to the effect that new partnership deed dated 29.06.2012 was used by the partners for submitting the returns before the taxing authorities as well as for taking the loan from the bank has not been denied by the opposite parties in their supplementary counter affidavit and in paragraph no. 8 and 10 it has only been stated that they have no concern and the applicants are misleading the Court, meaning thereby they are accepting and acknowledging the fact as far as the submission of tax returns before the income tax authorities as well as trade tax authorities on behalf of firm on the basis of partnership deed dated 29.06.2012, as well as also acknowledging the fact that all the four persons had taken loan from the Allahabad Bank placing the partnership deed in question and notice being issued under Section 13 (2) of the SARFAESI Act, 2002 in the year 2015 by the bank. Thus, denial by the opposite parties through counter affidavit as well as supplementary counter affidavit has been evasive to the specific averment made by the applicants and the documents brought on record to substantiate those averments.
16. As the Arbitration & Conciliation Act, 1996 was amended in the year 2015 (23.10.2015), whereby Sub-section 6-A of Section 11 was inserted, which reads as under;
"(6A) 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."
17. The Supreme Court while dealing with 2015 amendment in the case of Duro Felguera, S.A. Vs. Gangavaram Port Ltd. 2017 (9) SCC 729 held that the Court should not look into one aspect and i.e. existence of arbitration agreement and held as under;
"48. Section 11(6-A) added by the 2015 Amendment, 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) From a reading of Section 11(6-A), the intention of the legislature is crystal clear i.e. the Court should and need only look into one aspect- the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple - it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement.
59. The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. v. Patel Enggg. Ltd. (2005) 8 SCC 618 and National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267. This position continued till the amendment brought about in 2015. After the amendment, all that the courts need to see is whether an arbitration agreement exists - nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6-A) ought to be respected."
18. In case of M/S Mayavati Trading Pvt. Ltd. vs. Pradyut Deb Burman, Civil Appeal No. 7023 of 2019, decided on 05.09.2019, relying upon decision of Duro Felguera, S.A. (Supra) held as under:-
"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 containing in the aforesaid judgment as Section 11(6A) is confined to the examination of the existence of and arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment Duro Felguera, S.A. (supra)- see paras 48 and 59."
19. Likewise in the case of M/s. Uttarakhand Purva Sainik Kalyan Nigam Ltd. Vs. Northern Coal Fields decided on 27.11.2019, Special Leave Petition (C) No. 11476 of 2018 the Supreme Court had followed the decision of Duro Felguera, S.A. (Supra) and held that after the amendment of 2015 only the existence of arbitration clause has to be seen.
20. In the present case the applicants had brought before the Court the partnership deed dated 29.06.2012, clause 14 of which provided for arbitration in case of dispute between the partners but the opposite parties have failed to convince that the said agreement was never executed between the parties and the documents relied upon by the applicants proving the existence of partnership deed dated 29.06.2012 was never denied in their pleadings, thus, no occasion arises for disbelieving the partnership deed dated 29.06.2012.
21. Moreso the Apex Court in catena of cases right from the case of Duro Felguera, S.A. (Supra) to Mayavati Trading Company Ltd. (Supra) is of the view that after insertion of Section 11 (6-A) the Court has to only see the existence of arbitration agreement, no more no less. In the present case the opposite parties except the denial of the factum in their counter affidavit for partnership deed of 2011 which they have accepted was never reconstituted in 2012, have failed to establish that the said deed was a forged or a manufactured document, as they themselves had been placing the same before the various government authorities and the financial institution. The partnership deed dated 29.06.2012 finds its existence from the notice under Section 13 (2) of SARFAESI Act, 2002 issued by Allahabad Bank.
22. The earlier order dated 02.09.2020 passed by this Court was based on the consent of both the parties and a former Judge of this Court was appointed as Arbitrator, and now after his consent being received, this recall application has been filed on the ground that the order dated 29.07.2020 provided for the production of original copy of the partnership deed by the applicants, has not been complied with. It has always been the case of the applicants that the partnership deed was in possession of the opposite parties and it is only the opposite parties who can produce the same.
23. The pleadings of the parties itself makes out for the appointment of Arbitrator as nothing has been brought on record by the opposite parties to demonstrate the fact that the partnership deed was never executed between the parties nor there is denial of the documents placed before the Court by the applicants wherein the various financial institution have accepted the partnership deed dated 29.06.2012 and the opposite parties had been summoned, nor personal affidavits of the opposite parties were filed before this Court and only affidavit of Pairokar has been filed which has been sworn on personal knowledge. As all the facts cannot be said to be in the personal knowledge of a Pairokar and can only be sworn on the information received by him from the opposite parties.
24. Considering the facts and circumstances of the case, I find that the recall application is totally misconceived and no interference is required for recalling the order dated 02.09.2020 appointing a former Judge of this Court Hon'ble Mr. Justice B.K. Narayan as Arbitrator.
25. Recall Application stands rejected, however, no order as to costs.
Order Date :- 12.10.2020 Shekhar