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TMI Blog2007 (2) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... nership firm and demanded payment of 50% share out of the proceeds and assets of the partnership firm. In para 12 of the notice, the respondent enlisted various machineries and equipments belonging to the partnership firm and desired that the value of the items be quantified and the proceeds shared equally between the partners. 4. In response, the petitioner vide a communication dated 10-04-02, while disputing various allegations made against him by the respondent agreed that the assets and the plant and machinery should be valued. He agreed that the partnership firm be dissolved w.e.f. 27-03-02. The petitioner also proposed mutual appointment of an arbitrator to resolve the disputes amicably at the earliest. The petitioner thereafter sent three communications dated 29-04-02, 04-05-02 and 08-05-02 reminding the respondent to respond to the request for arbitration and seeking her early response. The petitioner filed the present petition on 13-10-05. 5. The respondent filed her objections/reply to the present petition. While it is not disputed that an arbitration agreement exists between the parties under Clauses 16 and 17 of the partnership deed dated 13-10-97, the only objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, submission of learned Counsel for the respondent is that the limitation for filing the present petition arose immediately upon dissolution of the firm on 27-03-2002 or, in any event, when the first notice seeking appointment of an arbitrator was issued by the petitioner on 10-04-2002. The statutory period of 30 days for appointment of an arbitrator, by mutual consent expired on 10-05-2002, and the petitioner ought to have filed the present petition within three years from 10.05.2002. Learned Counsel for the respondent relying on the judgment of Hon'ble the Supreme Court in SBP & Co. v. Patel Engineering Ltd. and Anr. 2005 SCC 618, submitted that there has to be a "live claim" at the time when jurisdiction of the Court to appoint an arbitrator is invoked, to enable the Court to exercise its jurisdiction under Section 11 of the Act. He submits that the Hon'ble Supreme Court in that decision has also held that the appointment of an arbitrator, where such an appointment is not justified, would cause prejudice to the opposite party in terms of unnecessary costs and expense of time and money. It is, Therefore, submitted that the Court should reject t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a suit in respect of any right, upon acknowledgment of liability in respect of such right made in writing and signed by the party against whom such right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. An acknowledgment may be sufficient though it omits to specify the exact nature of the right or is accompanied by refusal to perform the obligation corresponding to the right claimed by the other party. 13. Every partner of a dissolved firm, is vested with the right as against all other partners of the firm, to have the property of the firm applied in the payment of the debts and liabilities of the firm, and to have the surplus distributed among the partners according to their rights. (Section 46 of the Indian Partnership Act). The Mode of settlement of the accounts is prescribed under Section 48 of the Partnership Act. It is these rights that a partner of a dissolved firm exercises, when he asks for rendition of accounts of the partnership business from the other partners. 14. To determine whether Section 18 of the Limitation Act applies to the present case, one has to determine, whether the respondent has acknowledg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nications issued by the petitioner on 7.11.2002 and 8.12.2002. It would Therefore be seen that both the parties acknowledged their respective liability in respect of the other to render accounts, in relation to the partnership business, by rendering accounts and offering to render further accounts. Both the parties also asserted their respective rights to demand the rendition of accounts from the other. 18. To my mind these communications on both sides constitute acknowledgment of liability to render accounts to the other within the meaning of Section 18 of the Partnership Act. I may refer to the decision rendered in Hukumat Sing Kundanmal v. Nenumal Rejhumal AIR 1928 Sind 45, wherein it was held that where the plaintiff in a suit for the making of accounts of a dissolved partnership relies on an acknowledgment, all that the plaintiff is required to prove is that the defendant has admitted, from time to time, the existence of the partnership accounts between the parties and his obligation to settle such accounts. It is not necessary for the acknowledgment to be operative, that he should go further and state that he was bound to pay any particular sum or such sum as may be found du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Sole Arbitrator. Sub-section (5) of Section 11 states that failing an agreement referred to Sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within 30 days from the receipt of a request by one party from the other, the appointment shall be made upon the request of a party by the Chief Justice or any person or institution designated by him. 23. The purpose of requiring the parties to first make an attempt to appoint a mutually agreeable sole arbitrator within a period of 30 days is to prevent the unnecessary rush by one of the parties to the Chief Justice or the person or institution designated by him to seek appointment of an arbitrator. The object is to prevent the unnecessary burdening of the Court's docket and also to save the unnecessary expense of time and money to the parties. This procedure provides an opportunity to the parties to mutually appoint an arbitrator. It is only upon their failure to mutually agree for appointment of a sole arbitrator within a period of 30 days that one of the parties may move the Chief Justice for appointment of a sole arbitrator. 24. In the present case, the petitioner issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot even be in consonance with the object and purpose of the Act, which is to have expeditious disposal of disputes between the parties to the Arbitration Agreement. Strict adherence to the said provision would only entail avoidable delays. 26. One cannot also loose sight of the fact that while exercising jurisdiction under Section 11(5) of the Act, all that the Court is doing is to appoint an Arbitrator. This is done after issuance of notice to the opposite parties and hearing them and after being satisfied that an arbitration agreement exists apart from a live claim that is referable to arbitration. Nothing prevents a respondent who is served with a notice issued by a Court under Section 11(5) of the Act, to even thereafter agree to a mutually agreeable arbitrator being appointed while the application is still pending in Court. In this case, the purpose of serving notice under Section 11(5) of the Act, namely, to give an opportunity to both the parties to concur in the appointment of a mutually acceptable arbitrator to resolve their disputes, had been achieved. However, the same had not borne any fruit. There was no necessity to once again trigger the same mechanism after the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be applied in the facts of this case. Mohta Alloys Steel Works (supra) was a case relating to objections under Section 33 of the Arbitration Act, 1940, and has no application to the present case. Similarly Pawan Aggarwal (supra) has no application to the facts of this case, since the claim of the petitioner has been held to be live in this case. 30. There is yet another alternative route which leads to some conclusion. Section 21 of the Act states that unless otherwise agreed by the parties (there is no agreement of the parties on this aspect), the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. Consequently, when the petitioner issued the notice dated 10.4.2002 raising the dispute regarding rendition of accounts of the partnership business, the arbitral proceedings commenced as soon as the communication dated 10.4.2002 was received by the respondent. It is not the respondent's case that he did not receive the communication dated 10.4.2002 sent by the petitioner and since it was sent by registered post (as appears from the postal receipt filed on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed by the petitioner on the decision of the Hon'ble Supreme Court in Hari Shankar Singhania and Ors. (supra) is well placed. In the present case, though the petitioner had invoked the arbitration agreement at the time of dissolution of the partnership firm, negotiations did continue between the parties till December 2002. There was acknowledgment of liability to render accounts on both sides. In October 2005 when the petition was filed, the claim was very much alive. 34. For the reasons aforesaid, I allow the present application and appoint Mr. K. C. Lohia, retired District Judge, Delhi as the sole arbitrator to adjudicate upon the claims and counter-claims of the parties. The fee of the sole arbitrator is fixed at ₹ 50,000/- apart from out of pocket expenses, to be shared between the parties equally. 35. The petitioner is directed to file its statement of claim before the sole arbitrator by 15-04-07. The respondent would file its reply and counter-claim, if any, by 15-05-07. The petitioner may file its rejoinder and reply to the counter-claim by 16-06-07. The parties should also file their respective original documents along with their pleadings and conduct the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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