Indra Sharma W/o Babulal Sharma, Spouse/o Babulal Sharma v. Priti Agarwal W/o Ashok Kumar Agarwal, Spouse/o Ashok Kumar

: Mr. Asad Sheikh For Respondent(s) : Mr. Akash Gupta HON'BLE MR. JUSTICE SUDESH BANSAL Order 17/01/2025

1. Applicant has filed this arbitration application under Section 11(5) & (6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator in view of Arbitration Agreement contained in Clause 19 of the Deed of Partnership dated

09.10.2015, to resolve/ settle the dispute which have arisen between the parties in respect of settlement of accounts of partnership business.

3. Heard counsel for both parties and perused the record. It is not in dispute that both parties started a business of finance and advancement of short term and long term loan and credit to the individual, companies and associations under the terms and conditions arrived at between parties and reduced in writing in the form of Deed of Partnership dated 09.10.2015. The [2025:RJ-JP:2527] (2 of 7) [ARBAP-129/2024] execution of Partnership Deed dated 09.10.2015 between the parties is an admitted fact and copy of same has been placed on record as Annexure-1.

4. As per Partnership Deed, the place of business of partnership was determined at Near Khandelwal Bhawan, Balaji Bazar, Kuchaman City, District Nagaur and both parties agreed to share profit/ loss of partnership business in ratio of 50:50 per cent. In Clause 19 of the Partnership Deed, an Arbitration Agreement was entered into to resolve the dispute and differences, if any, between the parties through arbitration. For ready reference, Clause 19 of the Partnership Deed reads as under:- “Arbitration:- In the event of any dispute or difference arising between partners at any time in respect of the partnership account or any matter relating to or concerning the partnership business of the interpretation of these present, the same shall be resolved by reference to an arbitrator according to the Indian Arbitration Act.”

5. It appears that the partnership business commenced but after some time, dispute in respect of sharing of profit/ loss of the income of partnership business has arisen. Applicant filed one civil suit for injunction before the Court of Civil Judge, Kuchaman City, which came to be rejected vide order dated 10.03.2022 in view of existence of Arbitration Agreement between the parties to resolve the dispute.

6. Applicant issued one Legal Notice dated 05.09.2024 (Ann-5) invoking the Arbitration Agreement and suggesting the name of Arbitrator which was replied by the respondents on 27.09.2024, and did not agree on the name of Arbitrator suggested by the [2025:RJ-JP:2527] (3 of 7) [ARBAP-129/2024] applicant, and simultaneously, the issue of limitation was raised. In the reply notice, non-applicant took a stand to have no dues of the applicant against non-applicant.

7. Reply to the arbitration has not been filed by the respondent and counsel for respondent, raised an oral objection that the subject matter of dispute is barred by limitation, submitted that the place of partnership business was at Kuchaman City, District Nagaur, and if this Court appoints an arbitrator, then same may be appointed of that area.

8. In that view of the matter, this Court finds that the dispute in respect of profit/ loss of the income of the partnership business subsists between parties and the Arbitration Agreements also exists between the parties to resolve such dispute.

9. As far as this Court is concerned, being a referral Court, the jurisdiction under Section 11(6) is limited and confined to look into the existence of a dispute between the parties and existence of an arbitration agreement resolve/ settle the same through Arbitrator.

10. As far as objection of submitted matter of dispute is barred by limitation is concerned, the issue is left open to consider and decide the same on merits by the Arbitrator after recording evidence of parties.

11. This Court finds support to its conclusion in view of the judgment of the Supreme Court in case of Arif Azim Company Limited Vs. Aptech Limited [(2024) 5 SCC 313] and further by the recent judgment of Hon'ble Supreme Court in case of SBI General Insurance Co. Ltd. Vs. Krish Spinning: [Civil Appeal No.7821/2024 arising out of SLP (C) No.3792/2024] [2025:RJ-JP:2527] (4 of 7) [ARBAP-129/2024] delivered on 18th July, 2024, in respect of scope of the High Court while dealing with the arbitration application in context of Section 11(6A) of the A&C Act, 1996, it has been held and observed by Hon'ble Supreme Court in following paras as under:- "110. The scope of examination under Section 11(6-A) is confined to the existence of an arbitration agreement on the basis of Section 7. The examination of validity of the arbitration agreement is also limited to the requirement of formal validity such as the requirement that the agreement should be in writing.

111. The use of the term 'examination' under Section 11(6- A) as distinguished from the use of the term 'rule' under Section 16 implies that the scope of enquiry under section 11(6-A) is limited to a prima facie scrutiny of the existence of the arbitration agreement, and does not include a contested or laborious enquiry, which is left for the arbitral tribunal to 'rule' under Section 16. The prima facie view on existence of the arbitration agreement taken by the referral court does not bind either the arbitral tribunal or the court enforcing the arbitral award.

112. The aforesaid approach serves a two-fold purpose - firstly, it allows the referral court to weed out non-existent arbitration agreements, and secondly, it protects the jurisdictional competence of the arbitral tribunal to rule on the issue of existence of the arbitration agreement in depth.

113. Referring to the Statement of Objects and Reasons of the Arbitration and Conciliation (Amendment) Act, 2015, it was observed in In Re: Interplay (supra) that the High Court and the Supreme Court at the stage of appointment of arbitrator shall examine the existence of a prima facie arbitration agreement and not any other issues. The relevant observations are extracted hereinbelow: "209. The above extract indicates that the Supreme Court or High Court at the stage of the appointment of an arbitrator shall "examine the existence of a prima facie arbitration agreement and not other issues". These other issues not only pertain to the validity of the arbitration agreement, but also include any other issues which are a consequence of [2025:RJ-JP:2527] (5 of 7) [ARBAP-129/2024] unnecessary judicial interference in the arbitration proceedings. Accordingly, the "other issues" also include examination and impounding of an unstamped instrument by the referral court at the Section 8 or Section 11 stage. The process of examination, impounding, and dealing with an unstamped instrument under the Stamp Act is not a timebound process, and therefore does not align with the stated goal of the Arbitration Act to ensure expeditious and time-bound appointment of arbitrators.[...]" (Emphasis supplied) 114. In view of the observations made by this Court in In Re: Interplay (supra), it is clear that the scope of enquiry at the stage of appointment of arbitrator is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else. For this reason, we find it difficult to hold that the observations made in Vidya Drolia (supra) and adopted in NTPC v. SPML (supra) that the jurisdiction of the referral court when dealing with the issue of "accord and satisfaction" under Section 11 extends to weeding out ex-facie non-arbitrable and frivolous disputes would continue to apply despite the subsequent decision in In Re: Interplay (supra)." (Emphasis supplied)

12. The net outcome of above discussion is that the arbitration application deserves to be allowed and same is hereby allowed. The Arbitral Tribunal of sole Arbitrator Mr. Rajendra Kumar Pareek (Retd. District Judge); Address:-New Colony, Kuchaman City, District Nagaur, Rajasthan; Phone No. 9414465885; E-mail ID:- [email protected], as a sole Arbitrator is constituted to adjudicate the dispute between parties in accordance with provisions of the Arbitration and Conciliation Act, 1996.

13. The appointment of the Sole Arbitrator is subject to the declarations being made under Section 12 of the Arbitration & Conciliation Act, 1996 with respect to independence and [2025:RJ-JP:2527] (6 of 7) [ARBAP-129/2024] impartiality, and the ability to devote sufficient time to complete the arbitration within the prescribed period.

14. The arbitration fee of the Sole Arbitrator shall be payable in accordance with the provisions contained in the Manual of Procedure for Alternative Dispute Resolution, 2009 as amended by the Manual of Procedure for Alternative Dispute Resolution (Amendment), 2017 vide notification dated 23.03.2017 read with 4th Schedule appended to the Act of 1996 or as determined by the Arbitrator with consensus of parties.

15. The Registry is directed to intimate Arbitrator Mr. Rajendra Kumar Pareek (Retd. District Judge), for his approval and consent to act as Arbitrator.

16. All other issues may be raised by the parties before the Arbitrator, which shall be considered in accordance with law.

17. Since as per Section 29A of the Arbitration and Conciliation Act, 1996, the arbitration proceedings are required to be concluded within scheduled time as stipulated therein, it is expected from the parties to appear before the Arbitrator on

09.02.2025 or any other date as informed by the Arbitrator to parties or agreed between parties with the consent of Arbitrator, and further parties shall provide their respective E-mail/ Contact Number/ Mobile Number as also of their authorized representatives/lawyers, appearing on their behalf before the Arbitration Tribunal, in order to facilitate the Arbitrator to send information to the parties, whenever required. The information send by the Arbitrator, on such address/ E-mail/ cellphone of the [2025:RJ-JP:2527] (7 of 7) [ARBAP-129/2024] parties/ their authorized representatives/lawyers, shall be treated as sufficient unless same is not changed.

18. The Arbitration Application stands disposed of accordingly. NITIN /272 (SUDESH BANSAL),J