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(2) of the Indian Partnership Act, 1932. The court admitted the petition and heard it finally with consent. The sole issue was whether the bar under Section 69(2) applies to a petition under Section 11(6) of the Arbitration Act. The court, relying on the Supreme Court decision in U.P. Rajkiya Nirman Nigam Ltd. v. Indure Pvt. Ltd. (1996) 2 SCC 667, held that the bar under Section 69(2) applies only to suits or proceedings to enforce a right arising from a contract. A petition under Section 11(6) is not a suit or proceeding to enforce a right; it is merely a step towards arbitration, which is a mode of dispute resolution agreed upon by the parties. Therefore, the petition is maintainable. The court allowed the petition and appointed a retired District Judge as the sole 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 - Petition by unregistered partnership firm for appointment of arbitrator under Section 11(6) is maintainable despite bar under Section 69(2) of Indian Partnership Act, 1932 - Held that the bar under Section 69(2) applies only to suits or proceedings to enforce a right arising from a contract, but a petition under Section 11(6) is not a suit or proceeding to enforce a right; it is a step towards arbitration, which is a mode of dispute resolution agreed upon by parties. (Paras 4-6)
Issue of Consideration
Whether a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, for appointment of an arbitrator is maintainable by an unregistered partnership firm in view of the bar under Section 69(2) of the Indian Partnership Act, 1932.
Final Decision
The court allowed the petition and appointed a retired District Judge as the sole arbitrator to adjudicate the disputes between the parties, with the arbitrator to be paid fees as per the Karnataka High Court Rules.
Law Points
- Section 11(6) of Arbitration and Conciliation Act
- 1996
- Section 69(2) of Indian Partnership Act
- 1932
- Unregistered partnership firm
- Appointment of arbitrator
- Bar under Section 69(2) not applicable to arbitration proceedings
