Punjab and Haryana High Court: In an application filed under Section 11 of the Arbitration and Conciliation Act, 1996 (‘the Act’) for adjudication of the disputes between the parties, the Single Judge Bench of Suvir Sehgal, J., allowed the petition while holding that the pendency of civil and criminal litigation inter se partners, could not estop one of the partners from invoking the arbitration clause or bar the reference of dispute for adjudication to an arbitration.
Background
The application was filed under Section 11(6) of the Act to adjudicate the disputes and differences between the parties. The petitioners and respondent established a Chartered Accountancy partnership firm. The partnership deed provided that disputes would be resolved through arbitration.
Petitioner 1 contended that the respondent committed various acts detrimental to the interest of the firm and started a proprietorship CA firm with a similar name. Due to this dispute, the respondent allegedly dissolved the partnership firm without settling accounts.
The respondent contended that the dispute could not be referred to arbitration since the partnership firm was dissolved and other civil and criminal litigation was pending between the parties.
Analysis and Decision
Regarding the objection of non-service of notice by petitioner 1, the Court stated that evidently, Section 21 of the Act was incorporated primarily with the objective of determining the date of the commencement of the arbitral proceedings. The proceedings are deemed to have been initiated from the date the notice invoking the arbitration clause “is received by the respondent”. The Court stated that the Section 21 did not require the notice to be served by all the parties to the agreement. Notice by one of the parties would be a sufficient compliance of the statutory provision.
The Court added that giving of such a notice was purely a procedural step and not a decisive one. There was no need for a strict scrutiny of its form and terms. The Court further stated that technicality could not be attached with a notice served under Section 21 as that would defeat the objective of the statute, which provided for a speedy resolution of the disputes. Thus, the Court held the contested notice valid and rejected the objection.
Regarding the other objections raised by the respondent, the Court relied on the case of Ravi Prakash Goel v. Chandra Prakash Goel (2008) 13 SCC 667, wherein the Supreme Court held that on the dissolution of a partnership firm, the arbitration clause did not come to an end. It was further held that the dispute relating to the accounts of a partnership firm was a dispute, which touched the affairs of the firm and was referable to an Arbitrator and the parties could not be compelled to take a recourse to the civil courts.
Noting the above, the Court held that pendency of civil and criminal litigation inter se partners, could not estop one of the partners from invoking the arbitration clause or bar the reference of dispute for adjudication to an arbitration.
Thus, allowing the petition, the Court appointed Ravinder Kumar Kaushik, IAS (Retd.) as an Arbitrator to adjudicate dispute between the parties and provided directions for the arbitration accordingly.
[Prikshit Wadhwa v. Vinod K Wadhwa, Arbitration Application 241 of 2022 (O&M), decided on 07-01-2025]
Advocates who appeared in this case :
For the petitioner: Dheeraj Mahajan
For the respondent: Vaibhav Sehgal
Buy Arbitration and Conciliation Act, 1996 HERE
