Madrasdated High Court · 2025

Arb O.P No. 13 of 20255. C.Kaliraj, 41 years S/o.T.Chidambaram, 4/326-10, Karpagavinayakar Street, Amathur, Virudhunagar 626 0056. C.Thangathai, 39 years W/o. Prabhu Prasath No.36, Sri Ram Nagar Chetty Thangal Road Ranipet 632 401 RespondentsArb O.P No. 13 of 2025PRAYERTo Appoint a Sole Arbitrator to hear and decide the Arbitral dispute between the Petitioner and the Respondents, arising out of the Partnership deed, Dated 21.02.2008.A No. 3709 of 2025PRAYERTo permit the applicant to bring on record the Respondents 2 to 6 / Proposed Respondents 3 to 7 who are Legal Representatives of the Petitioner in above O.P. 13 of 2025.Arb O.P No. 13 of 2025For Petitioner:Mr.Sunny Sheen for M/s.Kingsly Solomon JFor Respondents :Mr.S.M.AnanthamuruganORDERThis petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of a sole Arbitrator to hear and decide the dispute between the petitioner and the respondents arising out of the https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025Partnership Deed dated 21.02.2008. 2. The case of the petitioner is that the petitioner and the respondents entered into a partnership deed dated 21.02.2008 for the firm with the name and style “Aravind Paper Caps”. The firm was engaged in the manufacture, purchase and sale of all types of paper caps, amorces and other allied products as well as dealing in fireworks raw materials and related goods. The further case of the petitioner is that he along with his father had contributed a sum of Rs.25,00,000/- towards the construction and establishment of the firm. That part, the petitioner has also personally contributed a sum of Rs.10,000/- as capital investment for the firm. 3. The respondents issued a legal notice accompanied by the demand draftfor Rs.10,000/- and informed the petitioner that the partnership firm stood terminated with effect from 19.11.2024. The respondents also proceeded to unilaterally issue the paper publication dated 22.12.2024 and publicly declared that the partnership between the petitioner and the respondents stood dissolved as of 19.11.2024. 4. The petitioner, aggrieved by the same, issued a reply notice dated 05.12.2024 and thereafter issued the trigger notice under Section 21 of the Arbitration and Conciliation Act on 31.03.2025 by proposing the name of retired District Judge to act as Arbitrator at Madurai. The respondents received https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025the same and there was no response from them. Hence the present petition has been filed before this Court to refer the dispute for arbitration. 5. The learned counsel for respondents submitted that the second respondent died during the pendency of the proceedings on 03.06.2025. The learned counsel further submitted that the firm stood dissolved by operation of law and pursuant to the same, the arbitration clause in the agreement cannot stand independently, since the rights of third parties qua the firm and its partners can never be decided by the Arbitrator. To substantiate his submission, the learned counsel relied upon the judgment of this Court in R.Subbulakshmi and others v. R.Venkitapathy and others made in O.P.Nos.40 of 2019 etc dated 10.08.2023. The learned counsel submitted that this Court framed a specific issue as to whether after the dissolution of the firm, the Arbitrator can proceed further and act as a liquidator for the dissolved firm. It was submitted that this Court specifically took note of the effect of Section 43 of the Partnership Act and came to a conclusion that once the firm is dissolved, the subsequent proceedings with respect to liquidation has to happen in accordance with law and the Arbitrator cannot adorn that role.6. In the case on hand, it is admitted that it is a Partnership at Will and hence, once the notice is being served terminating the partnership and public notice has also been issued, the firm does not exist and the subsequent settlement of shares and the rights that are claimed by the third parties, cannot https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025be done by the Arbitrator. In view of the same, the learned counsel sought for the dismissal of this petition. 7. Per contra, the learned counsel for petitioner submitted that the dispute in the present case pertains to the salary payable to the petitioner and the share that has to be given to the petitioner. The learned counsel submitted that the Arbitrator can always deal with the inter-se rights of the partners with respect to the salary payable and share that is sought for by the petitioner and the Arbitrator can also get into the issue as to whether there was proper dissolution of the firm. If ultimately the Arbitrator comes to a conclusion that the firm has been dissolved, he cannot take over as liquidator and the process of law has to take the dispute to its logical end.8. This Court has carefully considered the submissions made on either side and the materials available on record. 9. The scope of the petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 was gone into in extenso in a recent judgment in Arb.O.P.(Com.Div.)No.319 of 2025 dated 16.09.2025. This Court, after considering all the judgments on the issue, came to the following conclusions:-“28. The result of the discussions is that the wheel has now come a full circle. The test formulated by the Hon'ble Supreme Court in the decision in Duro Felguera, S.A., departed from the decision of the Hon'ble Supreme Court in Hyundai https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025Engineering & Construction Co.Ltd., has now been reinstated in the decision of the Hon'ble Supreme Court in Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act, 1899. Consequently, it must follow that the jurisdiction of the Court under Section 11(6A) is confined to examining the existence of an arbitration agreement. Nothing more and nothing less.29. As the Hon'ble Supreme Court pointed out in the decision in Managing Director, Bihar State Food and Civil Supply Corporation Limited, it is just as necessary to follow a precedent as it is to make one. The objections of the respondent on grounds of limitation and accord and satisfaction must, therefore, necessarily await adjudication before the Arbitral Tribunal.”10. In view of the above, the scope of the present petition confines itself only to examination of the existence of arbitration agreement in line with Section 7 of the Arbitration and Conciliation Act. Nothing more and nothing less. 11. In the course of arguments, the learned counsel for respondents, by pointing out to Section 10 of the Commercial Courts Act, 2015, submitted that all applications or appeal arising out of the matters other than commercial arbitration, can only lie before the Principal Civil Court of Original Jurisdiction in a District. Admittedly, in the present case, the dispute had arisen within the jurisdiction of Virudhunagar. Therefore, application can be filed only before the Principal District Judge, Virudhunagar and not before this Court. https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 202512. The above preliminary objection that was raised by the learned counsel for respondents cannot be sustained, for the simple reason that a petition under Section 11 for appointment of Arbitrator can be filed only before the High Court or before the Supreme Court, as the case may be, and it cannot lie before a Principal District Court. Since the present case involves appointment of Arbitrator, the provisions under the Arbitration and Conciliation Act, 1996 will get precedence over the Commercial Courts Act, 2015. Therefore, the present petition filed under Section 11 before this Court is certainly maintainable. 13. The next issue pertains to the ground raised by the learned counsel for respondents to the effect that the partnership firm has already been dissolved and therefore the Arbitrator cannot adorn the role of liquidator to decide the rights of the third parties qua the partnership firm and its partners.14. The basis of the above submission made by the learned counsel for respondents is Section 43 of the Partnership Act. Section 43 talks about the rights of the partners to seek for dissolution in a Partnership at Will. According to the learned counsel for respondents, once the dissolution is sought for and notice of dissolution has been issued, the firm stands dissolved from the date specified in the notice. Under such circumstances, the partnership deed comes to an end and the arbitration clause in the deed cannot have effect in appointing an Arbitrator to decide the issue. This is more so since third party rights will get https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025in after the dissolution of the firm. 15. There are basically two issues that are involved in this case. The first issue is with respect to the inter-se dispute between the partners and the settlement of their shares, income, etc. The other issue is with respect to whether there was a proper dissolution of the firm. Insofar as the former is concerned, the dispute can always be decided by the Arbitrator. Even assuming that the partnership firm has come to an end, it is not possible to accept that the arbitration clause will cease to exist. There is a valid arbitration agreement between the parties and the disputes have arisen between the parties and the parties are bound to resolve their dispute only before the Arbitrator. To that extent, the inter-se dispute has to go only before the Arbitrator. Insofar as the latter issue is concerned, it is always left open to the Arbitrator to decide as to whether there was a valid dissolution of the firm. If ultimately the Arbitrator finds that the firm has been properly dissolved, he cannot thereafter continue as liquidator, since the Arbitrator cannot decide the third parties' rights qua the firm and its partners. That is an issue which cannot be considered by this Court while dealing with a petition under Section 11(5) & (6) of the Arbitration and Conciliation Act. It has to be left open to the Arbitrator to deal with this issue, since the Arbitral Tribunal is entitled to decide on its jurisdiction under Section 16 of the Arbitration and Conciliation Act. 16. In the light of the above discussion and in the light of the limited https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025jurisdiction that is available to this Court, all the objections that have been raised on the side of respondents can always be raised before the learned Arbitrator, who will decide the same on its own merits and in accordance with law. 17. The upshot of the above discussion is that there is a partnership deed between the parties and it contained an arbitration clause and this agreement is in line with Section 7 of the Arbitration and Conciliation Act. All the other objections have to be raised only before the learned Arbitrator. Hence, this Court is inclined to appoint a sole Arbitrator to decide the disputes between the parties. On carefully reading the partnership deed and also after taking into consideration the fact that the cause of action had arisen at Virudhunagar, this Court can safely conclude that the seat of Arbitrator can be placed at Madurai. Accordingly, Mr.S.Srinivasa Raghavan, Advocate, residing at No.2/583 Alli Street East, First Floor, Sixth Main Road, Gomathipuram, Madurai 626 020 (Mobile No.94423 62835) (email: [email protected]) is appointed as the sole Arbitrator in this case. The learned Arbitrator is requested to enter upon reference qua the partnership deed dated 21.02.2008 containing the arbitration clause and adjudicate upon the disputes that have arisen between the parties by holding the sittings in any venue at Madurai to the convenience of all concerned and render an award. The fees of the learned Arbitrator shall be in accordance with the Madras High Court Arbitration Centre (MHCAC)(Administrative Cost and Arbitrator's Fees) Rules, 2017. The learned Arbitrator, after issuing notice https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025to both the parties and upon hearing them, is requested to pass an award as expeditiously as possible as the partnership deed is of the year 2008. 18. This original petition stands allowed in the above terms. Consequently, A.No.3709 of 2025 stands closed.22-09-2025Index:Yes/NoSpeaking/Non-speaking orderInternet:YesNeutral Citation:Yes/NoRegistry is directed to communicatethe copy of order forthwith ss https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025To1. Mr.S.Srinivasaraghavan No.2/583 Alli Street East First Floor, Sixth Main Road Gomathipuram Madurai 626 020 (Mobile No.94423 62835) (email: [email protected])2. The Director Tamil Nadu Mediation and Conciliation Centre-cum-Ex-Officio Member Madras High Court Arbitration Centre Chennai – 600 104 https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025N.ANAND VENKATESH J.ssArb O.P No.13 of 2025and A.No.3709 of 202522-09-2025

Arb O.P No. 13 of 20255. C.Kaliraj, 41 years S/o.T.Chidambaram, 4/326-10, Karpagavinayakar Street, Amathur, Virudhunagar 626 0056. C.Thangathai, 39 years W/o. Prabhu Prasath No.36, Sri Ram Nagar Chetty Thangal Road Ranipet 632 401 RespondentsArb O.P No. 13 of 2025PRAYERTo Appoint a Sole Arbitrator to hear and decide the Arbitral dispute between the Petitioner and the Respondents, arising out of the Partnership deed, Dated 21.02.2008.A No. 3709 of 2025PRAYERTo permit the applicant to bring on record the Respondents 2 to 6 / Proposed Respondents 3 to 7 who are Legal Representatives of the Petitioner in above O.P. 13 of 2025.Arb O.P No. 13 of 2025For Petitioner:Mr.Sunny Sheen for M/s.Kingsly Solomon JFor Respondents :Mr.S.M.AnanthamuruganORDERThis petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of a sole Arbitrator to hear and decide the dispute between the petitioner and the respondents arising out of the https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025Partnership Deed dated 21.02.2008. 2. The case of the petitioner is that the petitioner and the respondents entered into a partnership deed dated 21.02.2008 for the firm with the name and style “Aravind Paper Caps”. The firm was engaged in the manufacture, purchase and sale of all types of paper caps, amorces and other allied products as well as dealing in fireworks raw materials and related goods. The further case of the petitioner is that he along with his father had contributed a sum of Rs.25,00,000/- towards the construction and establishment of the firm. That part, the petitioner has also personally contributed a sum of Rs.10,000/- as capital investment for the firm. 3. The respondents issued a legal notice accompanied by the demand draftfor Rs.10,000/- and informed the petitioner that the partnership firm stood terminated with effect from 19.11.2024. The respondents also proceeded to unilaterally issue the paper publication dated 22.12.2024 and publicly declared that the partnership between the petitioner and the respondents stood dissolved as of 19.11.2024. 4. The petitioner, aggrieved by the same, issued a reply notice dated 05.12.2024 and thereafter issued the trigger notice under Section 21 of the Arbitration and Conciliation Act on 31.03.2025 by proposing the name of retired District Judge to act as Arbitrator at Madurai. The respondents received https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025the same and there was no response from them. Hence the present petition has been filed before this Court to refer the dispute for arbitration. 5. The learned counsel for respondents submitted that the second respondent died during the pendency of the proceedings on 03.06.2025. The learned counsel further submitted that the firm stood dissolved by operation of law and pursuant to the same, the arbitration clause in the agreement cannot stand independently, since the rights of third parties qua the firm and its partners can never be decided by the Arbitrator. To substantiate his submission, the learned counsel relied upon the judgment of this Court in R.Subbulakshmi and others v. R.Venkitapathy and others made in O.P.Nos.40 of 2019 etc dated 10.08.2023. The learned counsel submitted that this Court framed a specific issue as to whether after the dissolution of the firm, the Arbitrator can proceed further and act as a liquidator for the dissolved firm. It was submitted that this Court specifically took note of the effect of Section 43 of the Partnership Act and came to a conclusion that once the firm is dissolved, the subsequent proceedings with respect to liquidation has to happen in accordance with law and the Arbitrator cannot adorn that role.6. In the case on hand, it is admitted that it is a Partnership at Will and hence, once the notice is being served terminating the partnership and public notice has also been issued, the firm does not exist and the subsequent settlement of shares and the rights that are claimed by the third parties, cannot https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025be done by the Arbitrator. In view of the same, the learned counsel sought for the dismissal of this petition. 7. Per contra, the learned counsel for petitioner submitted that the dispute in the present case pertains to the salary payable to the petitioner and the share that has to be given to the petitioner. The learned counsel submitted that the Arbitrator can always deal with the inter-se rights of the partners with respect to the salary payable and share that is sought for by the petitioner and the Arbitrator can also get into the issue as to whether there was proper dissolution of the firm. If ultimately the Arbitrator comes to a conclusion that the firm has been dissolved, he cannot take over as liquidator and the process of law has to take the dispute to its logical end.8. This Court has carefully considered the submissions made on either side and the materials available on record. 9. The scope of the petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 was gone into in extenso in a recent judgment in Arb.O.P.(Com.Div.)No.319 of 2025 dated 16.09.2025. This Court, after considering all the judgments on the issue, came to the following conclusions:-“28. The result of the discussions is that the wheel has now come a full circle. The test formulated by the Hon'ble Supreme Court in the decision in Duro Felguera, S.A., departed from the decision of the Hon'ble Supreme Court in Hyundai https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025Engineering & Construction Co.Ltd., has now been reinstated in the decision of the Hon'ble Supreme Court in Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act, 1899. Consequently, it must follow that the jurisdiction of the Court under Section 11(6A) is confined to examining the existence of an arbitration agreement. Nothing more and nothing less.29. As the Hon'ble Supreme Court pointed out in the decision in Managing Director, Bihar State Food and Civil Supply Corporation Limited, it is just as necessary to follow a precedent as it is to make one. The objections of the respondent on grounds of limitation and accord and satisfaction must, therefore, necessarily await adjudication before the Arbitral Tribunal.”10. In view of the above, the scope of the present petition confines itself only to examination of the existence of arbitration agreement in line with Section 7 of the Arbitration and Conciliation Act. Nothing more and nothing less. 11. In the course of arguments, the learned counsel for respondents, by pointing out to Section 10 of the Commercial Courts Act, 2015, submitted that all applications or appeal arising out of the matters other than commercial arbitration, can only lie before the Principal Civil Court of Original Jurisdiction in a District. Admittedly, in the present case, the dispute had arisen within the jurisdiction of Virudhunagar. Therefore, application can be filed only before the Principal District Judge, Virudhunagar and not before this Court. https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 202512. The above preliminary objection that was raised by the learned counsel for respondents cannot be sustained, for the simple reason that a petition under Section 11 for appointment of Arbitrator can be filed only before the High Court or before the Supreme Court, as the case may be, and it cannot lie before a Principal District Court. Since the present case involves appointment of Arbitrator, the provisions under the Arbitration and Conciliation Act, 1996 will get precedence over the Commercial Courts Act, 2015. Therefore, the present petition filed under Section 11 before this Court is certainly maintainable. 13. The next issue pertains to the ground raised by the learned counsel for respondents to the effect that the partnership firm has already been dissolved and therefore the Arbitrator cannot adorn the role of liquidator to decide the rights of the third parties qua the partnership firm and its partners.14. The basis of the above submission made by the learned counsel for respondents is Section 43 of the Partnership Act. Section 43 talks about the rights of the partners to seek for dissolution in a Partnership at Will. According to the learned counsel for respondents, once the dissolution is sought for and notice of dissolution has been issued, the firm stands dissolved from the date specified in the notice. Under such circumstances, the partnership deed comes to an end and the arbitration clause in the deed cannot have effect in appointing an Arbitrator to decide the issue. This is more so since third party rights will get https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025in after the dissolution of the firm. 15. There are basically two issues that are involved in this case. The first issue is with respect to the inter-se dispute between the partners and the settlement of their shares, income, etc. The other issue is with respect to whether there was a proper dissolution of the firm. Insofar as the former is concerned, the dispute can always be decided by the Arbitrator. Even assuming that the partnership firm has come to an end, it is not possible to accept that the arbitration clause will cease to exist. There is a valid arbitration agreement between the parties and the disputes have arisen between the parties and the parties are bound to resolve their dispute only before the Arbitrator. To that extent, the inter-se dispute has to go only before the Arbitrator. Insofar as the latter issue is concerned, it is always left open to the Arbitrator to decide as to whether there was a valid dissolution of the firm. If ultimately the Arbitrator finds that the firm has been properly dissolved, he cannot thereafter continue as liquidator, since the Arbitrator cannot decide the third parties' rights qua the firm and its partners. That is an issue which cannot be considered by this Court while dealing with a petition under Section 11(5) & (6) of the Arbitration and Conciliation Act. It has to be left open to the Arbitrator to deal with this issue, since the Arbitral Tribunal is entitled to decide on its jurisdiction under Section 16 of the Arbitration and Conciliation Act. 16. In the light of the above discussion and in the light of the limited https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025jurisdiction that is available to this Court, all the objections that have been raised on the side of respondents can always be raised before the learned Arbitrator, who will decide the same on its own merits and in accordance with law. 17. The upshot of the above discussion is that there is a partnership deed between the parties and it contained an arbitration clause and this agreement is in line with Section 7 of the Arbitration and Conciliation Act. All the other objections have to be raised only before the learned Arbitrator. Hence, this Court is inclined to appoint a sole Arbitrator to decide the disputes between the parties. On carefully reading the partnership deed and also after taking into consideration the fact that the cause of action had arisen at Virudhunagar, this Court can safely conclude that the seat of Arbitrator can be placed at Madurai. Accordingly, Mr.S.Srinivasa Raghavan, Advocate, residing at No.2/583 Alli Street East, First Floor, Sixth Main Road, Gomathipuram, Madurai 626 020 (Mobile No.94423 62835) (email: [email protected]) is appointed as the sole Arbitrator in this case. The learned Arbitrator is requested to enter upon reference qua the partnership deed dated 21.02.2008 containing the arbitration clause and adjudicate upon the disputes that have arisen between the parties by holding the sittings in any venue at Madurai to the convenience of all concerned and render an award. The fees of the learned Arbitrator shall be in accordance with the Madras High Court Arbitration Centre (MHCAC)(Administrative Cost and Arbitrator's Fees) Rules, 2017. The learned Arbitrator, after issuing notice https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025to both the parties and upon hearing them, is requested to pass an award as expeditiously as possible as the partnership deed is of the year 2008. 18. This original petition stands allowed in the above terms. Consequently, A.No.3709 of 2025 stands closed.22-09-2025Index:Yes/NoSpeaking/Non-speaking orderInternet:YesNeutral Citation:Yes/NoRegistry is directed to communicatethe copy of order forthwith ss https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025To1. Mr.S.Srinivasaraghavan No.2/583 Alli Street East First Floor, Sixth Main Road Gomathipuram Madurai 626 020 (Mobile No.94423 62835) (email: [email protected])2. The Director Tamil Nadu Mediation and Conciliation Centre-cum-Ex-Officio Member Madras High Court Arbitration Centre Chennai – 600 104 https://www.mhc.tn.gov.in/judis Arb O.P No. 13 of 2025N.ANAND VENKATESH J.ssArb O.P No.13 of 2025and A.No.3709 of 202522-09-2025