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Judgment
The present application has been filed by the petitioners for appointment of Arbitrator in terms of Section 11(6) of the Arbitration and Conciliation Act, 1996.
The facts in brief of the case are that the petitioners and the respondent constituted a Partnership Firm under the name of M/s JRG Reality vide agreement dated 20.09.2010. The business operations of the Partnership Firm commenced with effect from 01.09.2010.
The above-said Partnership Agreement was later on changed to the extent that the new address of the registered office of the firm was recorded in the Partnership Deed. As per the Partnership Deed, petitioner No.1 holds 30% share, petitioner No.2 holds 25% share and the respondent holds 45% share in the said Partnership Firm.The duration of the partnership, as per Clause 5 of the agreement, was 'At Will' of the partners.
It is stated in the application that according to the above-said Clause 5 of the agreement, public notice was issued on 23.06.2022 in newspaper to dissolve the Partnership Firm in terms of Section 72 of the Indian Partnership Act, 1932.
The petitioners had sent notice dated 21.06.2022 to the respondent in terms of Section 43 of the said Act for dissolution of the Partnership Firm, specifically mentioning discontinuation of business operations. The respondent was further called upon to provide detailed account of the profits, losses and assets of the Partnership Firm to enable settlement of accounts in terms of Section 48 of the said Act.
As the respondent did not advert to the notice given by the petitioners, the arbitration clause was invoked vide notice dated 21.06.2022, wherein the name of person was proposed for appointment as Arbitrator. As the respondent failed to submit consent pursuant to the said notice, the present application for appointment of Arbitrator has been filed.
3 Learned senior counsel in view of the above-said facts, submits that dispute is very much present between the parties. Despite notice of dissolution of the Partnership Firm, even though it is partnership 'At Will' in accordance with Clause 5 of Partnership Deed, the respondent has failed dissolve the first and also failed to discontinue the business of the Firm. Thus, the petitioners invoked the arbitration agreement as contained in Clause 22 of the Partnership Deed. As the respondent failed to give his consent to the proposed Arbitrator, the present application has been filed for appointment of Arbitrator. It is submitted that in view of the above facts, the present application deserves to be allowed.
The respondent initially filed preliminary objections against the maintainability of the application on account of the fact that the dispute involved is not arbitrable. It was also stated in the said objections that with respect to the present dispute Regular Civil Suit No. (A) 1376/2022 has already been filed by the respondent. In the said civil suit, the present petitioners have filed application under Section 8 of the Arbitration and Conciliation Act, 1996. Taking into account said fact, this Court vide order dated 07.02.2023 adjourned the proceedings of the present case sine die awaiting the outcome of the said application.
Subsequently, by way of additional reply filed vide document No.3131/2026, the respondent brought on record the fact that the concerned Civil Court has dismissed the said section 8 application of the petitioners vide its order dated 25.02.2023 in the above said civil suit. The learned Senior Counsel for the respondent submits that the order dated 25.02.2023 has become final as the same has not been challenged by the petitioners.
He further submits that in view of the law laid down by the Hon'ble Apex Court in the case of Anil and Others vs. Rajendra and Others reported in (2015) 2 SCC 583 , which has also been relied upon by the Delhi High Court in its recent judgment passed in the case of JSW MG Motors India Pvt. Ltd. vs. Tristar Auto Agencies (Vizag) Pvt. Ltd. reported in 2025 SCC OnLine Del 8453. He thus submits that considering the fact that the order dated 25.02.2023 has attained finality, the present application is no longer maintainable and thus deserves to be dismissed.
Heard learned counsel for the parties and perused the case file.
From perusal of the notice appended with the application as well as the documents regarding civil suit, it would come to the fore that the dispute in Civil Suit No.RCS (A) 1376/2022 and the dispute raised in the present proceedings pertain to the same subject matter.
It is also not under dispute that the petitioners had filed application under Section 8 of the Arbitration and Conciliation Act, 1996 before the Civil Court in the above-mentioned civil suit. The said application was rejected by the trial Court vide order dated 25.02.2023. While rejecting the said application, the trial Court observed as under :-
"प्रकरण के अवलोकन से प्रकट होता है कि उक्त आवेदनपत्र में प्रतिवादी क्र.01 व 02 की ओर से मुख्य रूप से यह आपत्ति ली गई है कि वादी क्र.01 फर्म एवं उसकी सम्पत्ति के संबंध में निष्पादित भागीदारी विलेख में मध्यस्थता का उपबंध रखे जाने से वादपत्र विधि द्वारा वर्जित है। इसी संदर्भ में वादपत्र का अवलोकन करने पर यह प्रकट होता है कि वादपत्र में वादीगण की ओर से वादी क्र.01 भागीदारी फर्म के भागीदार प्रतिवादी क्र.01 व 02 द्वारा कपटपूर्वक वादी फर्म की सम्पत्ति के संबंध में सम्पत्ति की कीमत से बहुत कम प्रतिफल पर प्रतिवादी क्र.03 लगायत 05 के पक्ष में 03 विक्रयपत्र निष्पादित करना कहा है, जिन्हें शून्य एवं प्रभावहीन घोषित करने का अनुतोष चाहा है। इसके अतिरिक्त यह भी उल्लेखनीय है कि वादपत्र में वादी क्र.02 ने वादी क्र.01 के वर्ष 2003 से निष्क्रिय खाते को पुनः सक्रिय कर विक्रयपत्रों के प्रतिफल स्वरूप प्राप्त राशि की सायफनिंग (हेराफेरी) किए जाने का भी आक्षेप है और उक्त समस्त आधारों के अभिवचन करते हुए विक्रयपत्रों को शून्य कराने की घोषणा के साथ साथ निषेधाज्ञा का अनुतोष भी चाहा है।
प्रस्तुत वादपत्र में किए गए उक्त अभिवचनों के संबंध में सर्वप्रथम यह लेख किया जाना प्रासंगिक है कि मध्यस्थ द्वारा सम्पत्ति के विक्रयपत्रों का कपटपूर्वक कराए जाने के कारण विक्रयपत्र शून्य घोषित करने के विवाद का निराकरण नहीं किया जा सकता है, जिसका विनिर्दिष्ट क्षेत्राधिकार व्यवहार न्यायालय को है। यह भी उल्लेखनीय है कि विक्रयपत्रों को निरस्त किए जाने की दशा में प्रतिवादी क्र.03 लगायत 05 के हित भी प्रभावित होंगे, जो कि भागीदारी विलेख में पक्षकार ही नहीं है। यह भी उल्लेखनीय है कि आवेदनपत्र के साथ मध्यस्थता एवं सुलह अधिनियम की धारा 08 (2) के अंतर्गत वांछित मूल मध्यस्थता करार अथवा उसकी सत्यापित प्रति भी प्रस्तुत नहीं की गई है। आवेदनपत्र में वादपत्र का विधि द्वारा वर्जित होना लेख किया है, किन्तु आदेश 07 नियम 11 व्य.प्र.सं. के प्रावधान के अंतर्गत वादपत्र नामंजूर किए जाने हेतु वादपत्र के अभिवचन मात्र को देखा जाता है, जबकि प्रस्तुत वादपत्र के अभिवचनों से ऐसी कोई स्थिति परिलक्षित नहीं होती है जिसमें कि वादपत्र का विधि द्वारा वर्जित होना प्रकट हो। अतः उक्त स्थिति में प्रतिवादी क्र.01 व 02 की ओर से प्रस्तुत आवेदनपत्र अंतर्गत धारा 08 मध्यस्थता एवं सुलह अधिनियम निरस्त किया जाता है।"
During the course of the arguments, it transpired that the said order of rejection of Section 8 application has not been put to challenge by the petitioners before any higher forum and thus the same has attained finality. The Hon'ble Apex Court in the case of Anil and Others (supra) has held in paras 12 and 15 as under :
"12.In the suit instituted by the firm and some of the respondents, the order passed by the civil court that it was well within its jurisdiction to try the suit, despite the objection regarding the existence of a clause for arbitration, has become final. Thereafter, Section 11(6) jurisdiction of the Chief Justice cannot be invoked by either party. The principle of res judicata will also be attracted in such a case.
1 5 . The principles as discussed above on res judicata have been consistently followed by this Court. And the recent judgments in that regard are in Subramanian Swamy v. State of T.N. [(2014) 5 SCC 75 : (2014) 3 SCC (Civ) 134] and in Surjit Singh v. Gurwant Kaur [(2015) 1 SCC 665 . Thus, once the judicial authority takes a decision not to refer the parties to arbitration, and the said decision having become final, thereafter Section 11(6) route before the Chief Justice is not available to either party."
The Delhi High Court in the case of JSW (supra) relying on the above-said judgment of the Hon'ble Apex Court, dismissed the application under Section 11 of the Act.
The Hon'ble Apex Court in the case of Balaji Steel Trade vs Fludor Benin S.A. and Others reported in 2025 SCC OnLine 2517 has recently in para 37 approvingly referred to its earlier judgment in Anil and Others (supra). In that case also, the application filed under Section 11 was dismissed.
It is thus clear that where application concerning the same subject matter has been filed before the civil Court in terms of Section 8 of the Arbitration and Conciliation Act, 1996 and such application has been considered and rejected by the trial Court, the provisions of Section 11 cannot thereafter be invoked by the unsuccessful party by moving the Chief Justice or his designate. In such case, the principles of res judicata would apply.
The Hon'ble Apex Court has categorically held that once judicial authority decides not to refer the parties to arbitration and such decision attains finality, recourse in terms of Section 11 before the Chief Justice or his designate is not available to either party.
It is thus clear that not only the petitioners but even the respondent are precluded from invoking the arbitration clause in view of the rejection of the application filed under Section 8, once the said order has attained finality. Resultantly, the present application is dismissed.
Certified copy as per rules.