Allowed

Vinod Kumar Bothra Son of Late Shri Mal Chand Bothra, v. Kamal Kumar Bothra Son of Late Shri Nemi Chand Bothra

Rajasthan HC17 Feb 2023ARBAP/123/2021

Case brief

AI extract

What is this about?

This application for appointment of an arbitrator under Section 11 of the Arbitration Act arose from a partnership dispute. The court held that while unilateral appointment is illegal, the court can appoint an independent arbitrator under Section 11 despite the rejection of a prior Section 14/15 application.

What did the court decide?

Appointed Hon'ble Mr. G.R. Moolchandani (Rtd.) as the sole Arbitrator to adjudicate the dispute between the parties.

Vinod Kumar Bothra Son of Late Shri Mal Chand Bothra, Vs Kamal… — Arbitration | Rajasthan HC (2023)

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[2023/RJJP/003169]

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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

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S.B. Arbitration Application No. 123/2021

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Vinod Kumar Bothra Son Of Late Shri Mal Chand Bothra, Aged About 62 Years, R/o 136, First Floor, Rfc Colony, Vaishali Nagar, Jaipur, Rajasthan. Partner M/s Jain Industries, Jaipur.

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----Petitioner

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Versus

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Kamal Kumar Bothra Son Of Late Shri Nemi Chand Bothra, R/o 53, Anand Nagar, Khatipura, Sirsi Road, Near 200 Ft. Bye Pass, Jaipur, Rajasthan, Partner M/s Jain Industries, Jaipur.

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Mool Chand Bothra Son Of Late Shri Nemi Chand Bothra, R/o 53, Anand Nagar, Khatipura, Sirsi Road, Near 200 Ft. Bye Pass, Jaipur, Partner M/s Jain Industries Jaipur.

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Trilochan Dass Ahuja Son Of Shri Jawala Dass Ahuja, R/o 395, Office Campus Extension, Khatipura Sirsi Road, Near 200 Ft Bye Pass, Jaipur Partner M/s Jain Industries Jaipur.

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----Respondents

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For Petitioner(s) : Mr. Nitin Jain For Respondent(s) : Mr. D.S. Bagadiya for Mr. Chandrashekhar

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HON'BLE MR. JUSTICE ASHOK KUMAR GAUR

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Order

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17/02/2023

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The present application has been filed by the petitionerapplicant for appointment of an Arbitrator under Section 11 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to “as the Act of 1996”).

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Counsel for the petitioner-Mr. Nitin Jain submits that a partnership deed was executed on 01.04.1999 between the applicant and respondent Nos.2 & 3 to carry out the business in the partnership under the name and style of M/s. Jain Industries.

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Counsel submits that the last amended partnership deed was executed on 01.04.2011, wherein the respondent Nos.2 & 3, with consent of the applicant, admitted a new partner i.e. respondent No.1 (Kamal Kumar Bothra) and as such the new partnership deed was executed on 01.04.2011 to carry on the business of partnership firm.

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Counsel submits that in the partnership deed dated 01.04.2011, Clause-25 relating to Arbitrator was subsequently inserted to sort-out the differences which may arise at between the partners. Counsel submits that the partners of the firm though initially worked for some time, however, later on due to mismanagement of accounts and other affairs of the firms, dispute arose between the partners. Counsel submits that there was misappropriation of funds and siphoning off the huge amount by the respondents and as such, the relation between the partners became strained.

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Counsel further submits that the respondents in collusion with certain officials of financial institutions have taken loan after mortgaging the property of the firm and as such through manipulation and fraudulent method, respondents even signed the loan document on behalf of the applicant. Counsel submits that a criminal complaint was registered at Police Station Bhankrota, Jaipur on 25.12.2019.

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Counsel further submits that petitioner was surprised to see letter dated 15.04.2021 sent by one-Mr. Parvez Chugh, Advocate from Gurugram, Haryana purporting himself to be an

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Arbitrator regarding arbitration proceedings in the matter of Jain Industries.

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Counsel further submits that the petitioner immediately on receipt of such letter, replied back and submitted before the Arbitrator that initiation of arbitration proceedings unilaterally at the behest of the respondents was not justified and the same was against the clause of arbitration as was agreed by both the parties.

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Counsel for the petitioner further submits that petitioner in order to terminate the arbitral proceedings, approached the Civil Court by filing application under Section 14 & 15 of the Act, 1996. Counsel submits that the Court of Additional District Judge, Jaipur Metropolitan-II vide order dated 12.08.2021, has rejected the application filed by the petitioner. Counsel submits that petitioner has challenged the said order before this Court by filing S.B. Civil Writ Petition No.10802/2021 and this Court on order dated 24.09.2021, has stayed the further proceedings before the Arbitrator.

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Counsel further submits that the unilateral appointment of an Arbitrator by the respondents is not only contrary to the clause of agreement, which was agreed between the parties, but the same is also in violation of the Law as declared by the Supreme Court in Perkins Eastmen Architects DPC and Anr. Vs. HSCC (India) Ltd.: 2019 SCC OnLine SC 1517.

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Learned counsel on the strength of said judgment submitted that interested person cannot be an Arbitrator and as such, an independent Arbitrator is required to be appointed and

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respondents should not be permitted to appoint an Arbitrator unilaterally.

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Per contra , learned counsel appearing for the respondents submitted that the application filed by the petitioner may not be entertained by this Court.

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Learned counsel submits that there is already a finding in respect of appointment of Arbitrator as the application filed by the petitioner under Sections 14 & 15 of the Act, has already been dismissed by the Competent Court and merely on account of an interim order passed in the writ petition, appointment of an Arbitrator cannot be terminated.

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Learned counsel further submitted that in Clause 25 relating to appointment of Arbitrator, it is nowhere reflected that both the parties had to agree for appointment of Arbitrator and only requirement is that in respect of dispute between the partners, the matter shall be referred to the arbitration.

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Learned counsel further submits that the dispute between the parties can be decided in the arbitration proceedings which have been initiated with the appointment of an Arbitrator and such a person will give an independent arbitral award in respect of claims of the rival parties and as such, the petitioner will not suffer any loss.

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I have heard learned counsel for the parties and have perused the material available on record.

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This Court deems it proper to quote Clause 25 in the agreement relating to appointment of Arbitrator:-

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“Any differences which may arise between the partners or their representatives regarding the interpretation of theses presents or regarding the rights and liabilities of either partner arising hereunder or nay other matter or thing concerning the firm or the affairs thereof shall be referred to the arbitration. No partner shall take any legal action without exhausting the arbitration proceedings.”

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This Court, on perusal of the Clause 25 relating to appointment of Arbitrator, finds that the dispute which may arise between the parties or partners regarding their rights and liabilities, can be referred to Arbitration. This clause, however, does not give a right to a party to unilateral appoint an Arbitrator of his own choice.

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This Court further finds that appointment of an independent Arbitrator has been approved by the Apex Court in the case of Perkins (supra) , the Apex Court has emphasized that the party should not unilaterally appoint an Arbitrator and an independent Arbitrator is the best person to decide the dispute between the parties.

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This Court finds little substance in the submission of learned counsel for the respondents that appointment of Arbitrator by the respondents will not cause any prejudice to the interests of the petitioner.

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This Court also finds that only on account of an application filed by the applicant under Sections 14 & 15 of the Act of 1996 and same being dismissed, this Court can be restrained to exercise its power of appointment of Arbitrator under Section 11 of the Act of 1996.

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This Court accordingly finds that the dispute between the petitioner and the respondents may be resolved by way of appointment of an independent Arbitrator and as such, this Court, while exercising its power under Section 11 of the Act of 1996, deems it proper to appoint Hon'ble Mr. G.R. Moolchandani (Rtd.) Plot No.213, Taru Chhaya Nagar, Tonk Road, Jaipur as the sole Arbitrator to adjudicate the present dispute between the parties. The payment of cost of arbitration proceedings and arbitration fee shall be made as per the 4^th Schedule appended to the Act of 1996.

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The intimation of appointment, as aforesaid, may be given by counsel for the parties as well as by the Registry to Hon'ble Mr. G.R. Moolchandani (Rtd.) Plot No.213, Taru Chhaya Nagar, Tonk Road, Jaipur.

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(ASHOK KUMAR GAUR),J

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chandan/100

Vinod Kumar Bothra Son of Late Shri Mal Chand Bothra, v. Kamal Kumar Bothra Son of Late Shri Nemi Chand Bothra

Case brief

What is this about?

What did the court decide?

Vinod Kumar Bothra Son of Late Shri Mal Chand Bothra, v. Kamal Kumar Bothra Son of Late Shri Nemi Chand Bothra

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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