Allowed

Mr. Pawan Kumar v. Mr. Adithya Rathi

Karnataka HC25 Oct 2023CMP/32/2023

Case brief

AI extract

What is this about?

The High Court allowed a Civil Miscellaneous Petition filed under Section 11(5) of the Arbitration and Conciliation Act to appoint a sole arbitrator. The court resolved an ambiguity in a partnership deed by ruling that the onus to prove lack of an agreement for arbitration lies on the parties resisting the appointment.

What did the court decide?

Appointment of Sri. S.R. Somasekhara, a retired District Judge, as the sole arbitrator to adjudicate the dispute between the parties.

Mr. Pawan Kumar Vs Mr. Adithya Rathi — Arbitration | Karnataka HC (2023)

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NC: 2023:KHC:37835 CMP No. 32 of 2023

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 25^TH DAY OF OCTOBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE B M SHYAM PRASAD CIVIL MISC. PETITION NO. 32 OF 2023

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BETWEEN:

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MR. PAWAN KUMAR AGED ABOUT 61 YEARS S/O MR PURSHOTAM DASS

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MR PIYUSH NAGORI AGED ABOUT 33 YEARS S/O MR PAWAN NAGORI

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BOTH ARE R/AT HOUSE NO.1075, STREET NO.3, CIRCULAR ROAD ABOHAR FAZILKA DISTRICT PUNJAB-152116

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…PETITIONERS

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(BY SRI. SHIVAKUMAR., ADVOCATE)

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Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA

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AND:

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MR. ADITHYA RATHI S/O MR SHASHI KANT RATHI PARTNER, LAVINA ROCKS, R/AT L-69, FIRST FLOOR, 3RD MAIN, 15TH CROSS, SECTOR-6 HSR LAYOUT BENGALURU-560102

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ALSO AT PARTNER LAVINA ROCKS SURVEY NO.12/2, 12/3 AND 9/4

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NC: 2023:KHC:37835 CMP No. 32 of 2023

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VARALKONDA VILLAGE SOMENAHALLI HOBLI, GUDIBANDE TALUK

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CHIKKABALLAPURA DISTRICT-561209

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MR ABHISHEK RATHI S/O RAKESH RATHI PARTNER LAVINA ROCKS R/AT L-69, FIRST FLOOR, 3RD MAIN, 15TH CROSS, SECTOR-6 HSR LAYOUT BENGALURU-560102

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ALSO AT LAVINA ROCKS SURVEY NO.12/2, 12/3 AND 9/4 VARALKONDA VILLAGE SOMENAHALLI HOBLI, GUDIBANDE TALUK

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CHIKKABALLAPURA DISTRICT-561209

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…RESPONDENTS

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(BY SRI. DEEPAK BHASKAR., ADVOCATE)

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THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(5) OF THE ARBITRATION AND CONCILIATION ACT, 2015 PRAYING TO APPOINT SHRI.D.VENKATA SUDARSAHANA, RETD. DISTRICT AND SESSIONS JUDGE AS THE SOLE ARBITRATOR TO ADJUDICATE THE DISPUTES BETWEEN THE PETITIONER AND THE RESPONDENT, AS PER SEC. 11(5) AND (6) OF THE ARBITRATION AND CONCILIATION ACT, 1996, AND AS PER THE REGISTERED PARTNERSHIP DEED DATED 06.08.2015 ENTERED INTO BETWEEN THE PETITIONERS AND THE RESPONDENTS, VIDE ANNEXURE A.

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THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:

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NC: 2023:KHC:37835 CMP No. 32 of 2023

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ORDER

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The petitioners and the respondents are parties to the Deed of Partnership dated 06.08.2015 [ Annexure-A ] and they have agreed for settlement of the dispute/difference of opinion inter se by arbitration, and the agreement in this regard reads as hereunder:

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“That in case of any dispute or difference of opinion arising between the partners, the same shall be settled among the partners by way of arbitration without recourse to the Court of Law.”

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Sri. Shivakumar, the learned counsel for

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the petitioners, submits that the petitioners, after causing notice for dissolution of the Partnership Firm on 10.11.2021, have issued another notice dated 17.01.2022 to the respondents invoking the aforesaid agreement for the appointment of a sole arbitrator suggesting the name of a retired District and Sessions Judge from Punjab, but the respondents have issued reply on 21.01.2022 stating that the

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NC: 2023:KHC:37835 CMP No. 32 of 2023

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petitioners must necessarily invoke Section 11 of the Arbitration and Conciliation Act, 1996 in Bengaluru because the Deed of Partnership is executed and registered at Bengaluru. After receipt of this reply, the petitioners have filed a petition before this Court in CMP.No.774/2022 which is disposed of on 21.11.2022 with liberty to file a fresh petition and thereafter, the present arbitration notice dated 23.11.2022 is issued to the respondents suggesting the name of a retired District Judge from Karnataka as the sole arbitrator. However, the respondents have not issued any reply. Sri. Shivakumar argues that these circumstances demonstrate that the petitioners have established the necessary circumstances for the appointment of a sole arbitrator.

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Sri. Deepak Bhaskar, the learned counsel

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for the respondents, submits that the respondents, without prejudice to their other defense, would contend that the petitioners have not agreed for

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NC: 2023:KHC:37835 CMP No. 32 of 2023

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resolution of inter se dispute or difference of opinion by arbitration as is conventionally understood. The intention of the partners of the Firm was to provide for an internal mechanism for settlement to be worked out inter se , and this intention gets emphasized with the parties specifically agreeing that the General Commercial Principles and Practices shall prevail. Sri. Deepak Bhaskar further submits that if the parties are not at consensus on resolution of disputes by arbitration, the petition must fail.

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The records are perused, and the rival submissions are considered. The salient proposition is that when in doubt, there must be a reference for arbitration leaving open all questions to be decided in the arbitral proceedings, and to decide where there is any room for doubt, ex facie scale is applied. This Court is of the considered view that when Clause 20 of the Deed of Partnership is examined, it would not be reasonable to opine that the parties have not at all

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NC: 2023:KHC:37835 CMP No. 32 of 2023

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agreed for resolution of their dispute/difference of opinion by arbitration, and the respondents, who rely upon the contrary intention of the parties to be gathered from certain terms of the Deed of Partnership, must necessarily establish the same in the arbitral proceedings. This Court has also considered the petitioners’ response to the respondents’ defense based on the terms of the reply notice dated 21.01.2022.

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In the light of the afore, the petition must

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be favored appointing a retired District Judge as the sole Arbitrator leaving all questions open, including the question of the parties having agreed to resolve their inter se dispute/difference of opinion by an internal mechanism as against arbitration contemplated under the provisions of the Arbitration and Conciliation Act, 1996. Hence, the following:

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ORDER

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[a] The petition is allowed.

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NC: 2023:KHC:37835 CMP No. 32 of 2023

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[b] Sri. S.R. Somasekhara, a retired District Judge, is appointed as the sole arbitrator to enter reference of the dispute between

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the petitioners and respondents and conduct the proceeding at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru according to the Rules governing the Arbitration and Conciliation Centre (Domestic and International), Bengaluru.

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[c] The Registry is directed to communicate this order [through email] to the Arbitration and Conciliation Centre (Domestic and International), Bengaluru and Sri. S.R.Somasekhara, a retired District Judge, Address: No.H-802, Pride Enchanta, Opposite BHEL, Mysore Road, Bengaluru-560 026 [E-mail IDs:

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8 - NC: 2023:KHC:37835 CMP No. 32 of 2023

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(i) [email protected] (ii) [email protected]] as required under the Appointment of Arbitrators by the Chief Justice of

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Karnataka High Court Scheme, 1996.

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SD/JUDGE

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Mr. Pawan Kumar v. Mr. Adithya Rathi

Case brief

What is this about?

What did the court decide?

Mr. Pawan Kumar v. Mr. Adithya Rathi

Case brief

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