Case Note & Summary
The petitioners, M/s. Sri Vishal Bhavan (an unregistered partnership firm) and its partner H.N. Jayaprakash, filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator to resolve disputes arising from a partnership agreement dated 01.04.1994. The respondent, H.N. Jayashankar, opposed the petition primarily on the ground that the firm being unregistered, the petition was barred under Section 69 of the Partnership Act, 1932. The court admitted the petition and heard it finally with consent. The core legal issue was whether an unregistered partnership firm can maintain a petition under Section 11(6) of the Arbitration Act. The court analyzed the scope of Section 69 of the Partnership Act, which prohibits unregistered firms from enforcing rights arising from a contract in a suit. However, the court held that the right to seek appointment of an arbitrator stems from the arbitration agreement contained in the partnership deed, not from the partnership itself. The bar under Section 69 applies only to suits or proceedings to enforce rights under the partnership deed, not to applications under the Arbitration Act. The court relied on the principle that arbitration proceedings are distinct and the arbitration agreement is separable. Consequently, the court allowed the petition and appointed an arbitrator to adjudicate the disputes between the parties.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) of Arbitration and Conciliation Act, 1996 - Maintainability of Petition by Unregistered Firm - The court considered whether an unregistered partnership firm can file a petition under Section 11(6) for appointment of an arbitrator. Held that the bar under Section 69 of the Partnership Act, 1932 does not apply to proceedings under the Arbitration Act as the right to seek appointment of an arbitrator arises from the arbitration agreement, not from the partnership deed. The petition is maintainable. (Paras 4-6) B) Partnership Law - Unregistered Firm - Section 69 of Partnership Act, 1932 - Bar on Enforcement of Rights - The court examined the scope of Section 69 which bars unregistered firms from enforcing rights arising from a contract. Held that the bar applies only to suits or proceedings to enforce rights under the partnership deed, but not to applications under Section 11(6) of the Arbitration Act which are based on the arbitration agreement. (Paras 5-6)
Issue of Consideration
Whether an unregistered partnership firm can maintain a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator.
Final Decision
The court allowed the petition and appointed an arbitrator to adjudicate the disputes between the parties.
Law Points
- Section 11(6) of Arbitration and Conciliation Act
- 1996
- Appointment of arbitrator
- Existence of arbitration agreement
- Partnership Act
- 1932
- Unregistered firm
