SMT. SUBAIDA v. A.A. ABDUL NAZIR

PIUS C. KURIAKOSE,J. - - - - - - - - - - - - - - - - - - - - - - - - - A.R.No.27 of 2007 - - - - - - - - - - - - - - - - - - - - - - - - - Dated: 27th September, 2007ORDERThe petitioners and the respondent are partners of apartnership firm by name 'M/s.King Beedi Company'. Annexure A isthe deed of partnership. Clause 21 therein is an arbitration clausewhich provides that any dispute or question in connection with thepartnership deed or the carrying on of business or management ofthe partnership shall be decided by referring to arbitration of twoarbitrators appointed by the parties in dispute and that the awardgiven by the arbitrators shall be binding on all the parties in thepartnership deed. By Annexure B letter, the respondent expressedhis desire to retire from the partnership and through Annexure C, thepetitioners, the remaining partners accepted the retirement. Allegingthat in spite of his retirement, the respondent is trying to interferewith the day- to- day administration and affairs of the firm, thepetitioners moved the District Court, Thrissur by filing O.P.(Arb.)No.157 of 2006 under Section 9 of the Arbitration and ConciliationAct, 1996 for interim relief. Annexure D is the order of injunctionpassed by the District Court in that case. The petitioners point outthat Annexure D directs the parties to settle their disputes through A.R.No.27/07 - 2 -arbitration and that pursuant to Annexure D, they issued Annexure Eletter informing the respondent regarding the panel of arbitrators tobe selected for resolving the dispute. The panel contained the namesof three retired Judges of this court. On receiving Annexure E, therespondent has suggested the name of another retired Judge of thiscourt who was not agreeable to the petitioners. It is under suchcircumstances that the arbitration request has been filed by thepetitioners under Section 11 (4) and (5) of the Arbitration and Conciliation Act, 1996 seeking appointment of an independent andimpartial arbitrator.

A detailed counter affidavit has been filed by the respondent. It is contended therein that the A.R. is not maintainable in view ofthe conceded position that the respondent has already retired fromthe partnership. It is then contended that after obtaining Annexure Dorder, the petitioners did not move a little finger for initiating thearbitration proceedings. Therefore, the respondent filed O.S.No.96/07before the Sub Court, Thirunelveli for dissolution of the firm and forrendition of accounts relating to the firm. The petitioners contendedbefore that court that the suit is not maintainable. But that court byorder dated 16.7.2007 found that the suit is maintainable. In view of A.R.No.27/07 - 3 -the finding by a competent civil court that a suit for settlement of thedisputes which are now sought to be arbitrated is maintainable, thepresent A.R. is not maintainable. It is however conceded in thecounter affidavit that C.R.P.No.1300/07 has been filed by thepetitioners against the finding of the Sub Court, Thirunelveli that thesuit is maintainable, before the Madras High Court.

The petitioners have filed a reply affidavit producingAnnexure G order passed by the Madurai Bench of the Madras HighCourt. Under Annexure G, the entire proceedings in the suit beforethe Thirunelveli Sub Court including the order of injunction grantedby that court stand stayed. Annexure H order is also relied on in thisregard. Referring to Section 8 of the Arbitration and Conciliation Act,1996, the petitioners contend that the Thirunelveli Sub Court has nojurisdiction to proceed with the suit. The petitioners rely on AnnexureI judgment of this court in Arb.A.No.23 of 2006 which was filedagainst Annexure D order of the District Court, Thrissur.

I have heard the submissions of Mr.Tom K.Thomas, counselfor the petitioners and those of Mr.N.M.Madhu, counsel for therespondent. The counsel would address submissions on the basis ofthe pleadings raised by their respective parties. A.R.No.27/07 - 4 -5. Mr.Madhu would submit that the contentions of thepetitioners regarding the maintainability of the suit filed before the Thirunelveli Sub Court were repelled by that court and the findingthat suit is maintainable is yet to be vacated. In any event, accordingto the learned counsel, since the principal place of business of thepartnership even according to Annexure A is Thirunelveli, it is the Chief Justice of the Madras High Court who is to be approached forappointment of arbitrator in view of Section 11(12) (b) of the Arbitration and Conciliation Act, 1996.

I have considered the rival submissions addressed before mein the light of the pleadings, the documents and the statutoryprovisions. The District Court, Thrissur, a court subordinate to thiscourt was moved by the petitioners under Section 9 of the Arbitrationand Conciliation Act, 1996 and in that motion the respondentsubmitted to the jurisdiction of that court. Annexure D order passedby that court was confirmed by the Division Bench of this court by Annexure I judgment. Both under Annexure D and Annexure I, it hasbeen found that the disputes between the parties will have to beresolved through arbitration. It is true that Thirunelveli Sub Courtrepelled the contention of the petitioners regarding the A.R.No.27/07 - 5 -maintainability of the suit for dissolution of partnership and renditionof accounts virtually for settling the disputes which are now sought tobe arbitrated and found that the suit is maintainable. But that findinghas not attained finality. Having regard to the finality attained by Annexure D and Annexure I, it is too late in the day for therespondent to contend that the disputes are not arbitrable.

The contention that it is the Chief Justice of the Madras HighCourt who should be moved by the petitioners also cannot beaccepted. Section 11(12) of the Arbitration and Conciliation Act, 1996reads as follows: “(12)(a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in aninternational commercial arbitration, the reference to“Chief Justice” in those sub-sections shall be construed asa reference to the “Chief Justice of India”.(b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any otherarbitration, the reference to “Chief Justice” in those sub-sections shall be construed as a reference to the ChiefJustice of the High Court within whose local limits the A.R.No.27/07 - 6 -principal Civil Court referred to in clause (e) of sub-section(1) of Section 2 is situate and, where the High Court itselfis the Court referred to in that clause, to the Chief Justiceof that High Court.” Section 2(1) (e) of the Arbitration and Conciliation Act, 1996 definesthe term "court" as follows: “Court” means the principal Civil Court of originaljurisdiction in a district, and includes the High Court inexercise of its ordinary original civil jurisdiction, havingjurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been thesubject-matter of a suit, but does not include any civilcourt of a grade inferior to such principal Civil Court, orany Court of Small Causes.”

Though in Annexure A partnership deed the principal place ofbusiness is shown as Thirunelveli, it is not difficult to find that if aregular suit is to be instituted for settlement of the dispute regardingwhich the arbitration clause is being invoked, such suit will becertainly maintainable before the civil court at Thrissur in view of Section 20 (c) of the C.P.C. In fact this was why the District Court, A.R.No.27/07 - 7 -Thrissur was moved under Section 9 of the Arbitration and Conciliation Act, 1996 for interim measures against the respondent. Having conceded the jurisdiction of the District Court, Thrissur in theproceedings initiated by the petitioners under Section 9 of the Arbitration and Conciliation Act, 1996, the respondent is not entitledto contend that the Chief Justice of the High Court of Kerala or the Judge designated by that Chief Justice is not to be moved under Section 11(5) of the Arbitration and Conciliation Act, 1996.

It was conceded before me by both sides that in case thiscourt becomes inclined to appoint an arbitrator, it is not necessarythat a retired High Court Judge himself be appointed as Arbitrator. Atthe bar several other names were suggested and the name ofMr.P.Gopakumaran Nair, Advocate and Retired District and SessionsJudge was acceptable to both sides.

In the result, I allow the Arbitration Request and appointMr.P.Gopakumaran Nair, Advocate and Retired District and SessionsJudge, Kaloor-Kadavantra Road, Ernakulam as Arbitrator for settlingall the disputes arising out of Annexure A partnership deed relating tothe settlement of accounts of the respondent who retired from thepartnership on 25.2.2006. The Arbitrator is free to decide on the A.R.No.27/07 - 8 -venue of arbitration. The Arbitrator will enter on arbitration at theearliest and pass award without undue delay.srdPIUS C.KURIAKOSE, JUDGE