Shri Shiv Shankar Tiwari vs. M/S Tiwari Construction

Facts

Shri Shiv Shankar Tiwari, a partner in M/s Tiwari Construction, filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. The partnership firm was constituted in 2013 and reconstituted in 2014 and 2017. Clause 20 of the 2017 Partnership Deed stipulated dispute settlement through arbitration. The applicant alleged that Respondent No. 2, Chandra Kishore Tiwari, stalled payments to suppliers, leading the applicant to freeze the firm's bank accounts. Subsequently, a fabricated minutes of meeting dated 28.11.2023 was created, purportedly showing the applicant's willingness to retire. The applicant also alleged the execution of a new partnership deed dated 08.07.2024, excluding him, and its registration with the Sub-Registrar Office Ambikapur instead of the Registrar of Firms and Societies. A criminal case was registered regarding the forged minutes but was later quashed by the High Court and upheld by the Supreme Court, with liberty to pursue civil proceedings. The applicant sought arbitration due to the alleged betrayal and exclusion from the firm.

Held

The Court held that the application under Section 11(6) of the Arbitration and Conciliation Act, 1996, is maintainable. The Court found that a valid arbitration clause (Clause 20) exists in the Partnership Deed dated 11.12.2017, which clearly mandates the resolution of disputes through arbitration. The Court noted that the applicant had invoked this clause and nominated arbitrators, but the respondents had not agreed to appoint one, thus justifying the Court's intervention. The Court also confirmed its territorial jurisdiction as the firm and respondents are located within its purview and the disputes fall within the scope of the arbitration clause. The Court further acknowledged that the disputes arise from and are connected to the Partnership Deed. In view of the consensus between the parties, the Court appointed Hon'ble Mr. Justice Deepak Kumar Tiwari, a retired Judge of the High Court, as the Sole Arbitrator to resolve the disputes. The arbitration request petition was accordingly allowed.

Key Issues

1. Whether the application under Section 11(6) of the Arbitration and Conciliation Act, 1996, is maintainable before this Court for the appointment of an Arbitrator, considering the arbitration clause in the Partnership Deed dated 11.12.2017? The applicant argued that a valid arbitration clause exists and the respondents have failed to appoint an arbitrator, necessitating court intervention. The applicant also contended that the High Court has territorial jurisdiction as the firm and respondents are located within its jurisdiction, and the disputes fall within the arbitration clause. The respondents, while opposing the application, submitted they would not object if the Court appointed an arbitrator. 2. Whether the disputes arising from the partnership deed and subsequent events, including alleged fraud and exclusion, are arbitrable? The applicant asserted that the disputes arise out of and are in connection with the Partnership Deed dated 11.12.2017 and are therefore arbitrable. The respondents did not explicitly argue on this point, other than generally opposing the arbitration request.