Mr. Rajesh Kumar Bhalekar vs. Mr. Lalit Kumar

Facts

The petitioner and respondent entered into a partnership on June 12, 2019. The petitioner alleges that after the firm's registration, the respondent maintained all accounts and had complete control over net banking and cheque issuance. The petitioner claims the respondent fraudulently transferred funds from the partnership account to his private firms, using forged GST certificates and partnership deeds with fabricated photographs and signatures. Disputes arose, leading the petitioner to invoke arbitration clause 21 of the partnership deed on April 28, 2023, seeking an independent sole arbitrator. As the respondent did not agree to an arbitrator, the petitioner filed this petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. The respondent, through counsel, stated no objection to the appointment of an arbitrator, acknowledging the arbitration agreement.

Held

The Court held that an arbitration agreement exists between the parties and the petitioner has invoked it. The respondent has not disputed the arbitration agreement and has no objection to the appointment of an arbitrator. Therefore, the Court proceeded to appoint a sole Arbitrator to adjudicate all disputes arising between the parties. The Court appointed Sh. Hilal Haider as the sole Arbitrator. The Arbitrator is required to give a declaration under Section 12(1) of the 1996 Act before entering upon the reference. The arbitration proceedings will be conducted under the aegis of the Delhi International Arbitration Centre, and the Arbitrator's fees will be regulated as per the Fourth Schedule of the 1996 Act. The Court explicitly stated that it had not expressed any opinion on the merits of the case, and all rights and contentions of the parties are left open to be decided by the learned Arbitrator in accordance with law. No specific GST provisions were discussed or decided upon by the High Court.

Key Issues

1. Whether the Court should appoint a sole Arbitrator to adjudicate the disputes between the petitioner and respondent, as per Section 11(6) of the Arbitration and Conciliation Act, 1996, given the existence of an arbitration agreement and the petitioner's invocation thereof. Petitioner's contentions: The petitioner argued that disputes have arisen between the parties concerning alleged fraudulent activities by the respondent, including misappropriation of funds and forgery. The petitioner invoked the arbitration clause in the partnership deed, but the respondent failed to agree to the appointment of an arbitrator, necessitating the present petition for the Court to appoint one under Section 11(6) of the 1996 Act. Respondent's contentions: The respondent, through counsel, stated that they have no objection to the appointment of an arbitrator as the arbitration agreement between the parties is not disputed. No specific arguments were made regarding the merits of the disputes or the applicability of any specific provisions of GST law.