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TMI Blog2014 (5) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... can be no appointment of an arbitrator. - We therefore allow this appeal, set aside the order of the High Court appointing an arbitrator and remit the matter to the High Court for deciding the questions whether the deed dated 19.5.2000 was forged or fabricated and whether there is a valid and enforceable arbitration agreement between the parties - Decided in favour of appellant. - CIVIL APPEAL NO.7334 OF 2011 - - - Dated:- 25-8-2011 - R.V. Raveendran, A.K. Patnaik, JJ. JUDGMENT Leave granted. Heard. 2. The appellant and first respondent are brothers. A deed of partnership dated 12.6.1988 was entered among Mr. Kanji Pitamber Ashra and his two grandsons (appellant and first respondent) to carry on the business under the name and style of M/s. Kanji Pitamber Co., their shares being 40%, 30% and 30% respectively. Clause 10 provided that death of any partner shall not dissolve the partnership firm as to the surviving partners. Clause 11 of the said agreement provided that all disputes between the partners regarding the rights and liabilities of partners or in regard to the transactions or accounts of the partnership shall be referred to arbitration. 3. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of appointing an arbitrator in terms of the said documents did not arise. 5. The first respondent filed an application under section 11 of the Arbitration and Conciliation Act, 1996 (`Act' for short) alleging that disputes had arisen between appellant and first respondent, who were the partners of the second respondent firm governed by partnership deed dated 19.5.2000; and that clause 12 thereof provided for settlement of disputes by arbitration. He therefore prayed that the person named in his notice dated 19.8.2010, as his arbitrator, be appointed as the sole arbitrator in terms of the arbitration agreement contained in the partnership deed dated 19.5.2000. The appellant resisted the said petition by filing detailed objections denying the existence of the partnership deeds dated 6.9.1991 and 19.5.2000. The appellant asserted that they were governed by the partnership deed dated 12.6.1988 and therefore question of appointment of arbitrator in terms of the arbitration clause contained in the alleged partnership deed dated 19.5.2000 did not arise. 6. The learned designate of the Chief Justice made an order dated 11.2.2011 for appointing a Commissioner for recording the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his designate, in exercise of power under section 11 of the Act, can appoint an arbitrator without deciding the question whether there was an arbitration agreement between the parties, leaving it open to be decided by the arbitrator? 8. The question is covered by the decisions of this Court in S.B.P. Co. vs. Patel Engineering Ltd. [2005 (8) SCC 618] and National Insurance Co. Ltd. vs. Boghara Polyfab Pvt. Ltd. [2009 (1) SCC 267]. In S.B.P. Co., a Constitution Bench of this court held that when an application under section 11 of the Act is filed, it is for the Chief Justice or his designate to decide whether there is an arbitration agreement, as defined in the Act and whether the party who has made a request before him, is a party to such an agreement. The said decision also made it clear as to which issues could be left to the decision of the arbitrator. Following the decision in S.B.P. Co., this court in National Insurance Co. Ltd. held as follows : 17. Where the intervention of the court is sought for appointment of an Arbitral Tribunal under section 11, the duty of the Chief Justice or his designate is defined in SBP Co. This Court identified and segregated the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re allegations of forgery or fabrication are made in regard to the documents, it would be appropriate for the Chief Justice or his designate to decide the issue. In view of this settled position of law, the issue whether there was an arbitration agreement ought to have been decided by the designate of the Chief Justice and only if the finding was in the affirmative he could have proceeded to appoint the Arbitrator. 10. Learned counsel for the first respondent submitted that the appellant has already agreed for the appointment of Mr. Ketan Parekh as the arbitrator in the application filed by their grandmother under section 11 of the Act, with respect to her claim for a share in the firm; and the dispute between the two brothers also being in regard to the extent of the shares in the firm, it would be proper to have it decided by the same arbitrator. Disagreeing with the said submission, learned counsel for the appellant submitted that his grandmother's claim was with reference to the partnership deed dated 12.6.1988 and as the said deed contained an arbitration agreement, he had agreed for appointment of an arbitrator. He submitted that merely because he had consented for app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration agreement. 13. The apprehension that such contentions are likely to be raised frequently to protract the proceedings under section 11 of the Act or to delay the arbitration process, thereby defeating the purpose of section 11 of the Act is also without basis. Where agreements have been performed in part, such a contention will not be entertained. It is only in a very few cases, where an agreement which had not seen the light of the day is suddenly propounded, or where the agreement had never been acted upon or where sufficient circumstances exist to doubt the genuineness of the agreement, the Chief Justice of his designate will examine this issue. This course has repeatedly held that on the ground of termination, performance or frustration of the contract, arbitration agreement cannot be avoided. The legislature has entrusted the power of appointment of an arbitrator to the holders of high judicial offices like the Chief Justice or Judge of the Supreme Court/High Court, with a view that they can identify and effectively deal with false or vexatious claims made only to protract the proceedings or defeat arbitration. If a party is found to have falsely contended that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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