(1.) These two Applications are filed, under Section 11 of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as the Act), read with clauses 2 and 3 of the Scheme of appointment of Arbitrators, 1996, for appointment of an Arbitrator. Both Sri V. Hariharan, learned Counsel for the Applicant, and Sri G. Ramagopal, learned Counsel for the respondent, would agree that, in order to decide the questions raised in both these Applications, it would suffice if the facts in Arbitration Application No. 15 of 2007 are noted. The Applicant is the proprietor of M/s. Able Associates, (earlier a partnership firm), engaged in the business of manufacturing, assembling and trading in water treatment equipment, filtrations etc. Applicant would submit that both he and the respondent, hitherto partners of the said firm having entered into a partnership deed on 18.04.2002, had decided to dissolve the partnership, that the respondent retired from the business of the partnership, that a deed of dissolution dated 03.11.2003 was executed between the parties whereby the partnership was held to have been dissolved on 31.10.2003, that the deed, which the respondent had signed in token of his acceptance of the terms stipulated therein, records that he was liable to pay a sum of Rs.1,37,000/-. Applicant would contend that, despite his repeated demands, the respondent was avoiding making payment on one pretext or the other. The Applicant, vide registered notice dated 18.10.1996, called upon the Respondent to pay the amount due and informed him that he would, otherwise, be constrained to institute legal proceedings for redressal of his grievance and for recovery of the amounts due. Placing reliance on the arbitration clause in the dissolution deed, Applicant would seek appointment of an Arbitrator.
(2.) The Respondent, in his counter affidavit, would submit that as he did not receive any amount, either from M/s. Hindusthan Engineers or M/s. Secure Net Appliances, the question of his making payment did not arise, that these facts were to the knowledge of the Applicant and, as M/s. Able Associates was not a registered firm, legal proceedings were barred under Section 69(1) of the Partnership Act. Respondent would deny receipt of the notice dated 18.10.2006 and would submit that, even otherwise, the alleged notice dated 18.10.2006 was a notice demanding payment of Rs.1,37,000/- together with Rs.5,000/- towards costs of the notice and not a request of consent for appointment of an Arbitrator. Respondent would contend that, even if it was held to be such a notice, the Application filed on 02.11.2006, even before expiry of the prescribed thirty day period, was not maintainable.
(3.) Sri V. Hariharan, learned counsel for the Applicant, would contend that though the notice dated 18.10.2006 is a demand for payment of the amounts due, the requirements of Section 11(5) were nonetheless satisfied and, even otherwise, the Arbitration Application could itself be treated as a notice of request for appointment of an Arbitrator. Learned Counsel would submit that since the Court is empowered, under Section 8 of the Act, to appoint an Arbitrator even without the consent of the suitor, this Court could do likewise under Section 11(5) of the Act. According to the Learned Counsel, as no orders could be passed in the Arbitration Application without the respondent being put on notice, and given an opportunity of being heard, the requirement of seeking his written consent prior to the filing of the Application was a mere ritual and a needless formality. Learned Counsel would submit that the respondent cannot, therefore, be said to have suffered prejudice and, failure to strictly adhere to the stipulations of Section 11(5), would not necessitate rejection of the Application. Learned counsel would submit that since the present arbitral proceedings is, in effect, for enforcement of a right for the accounts of the dissolved firm, and for payments agreed upon in the dissolution deed, the Applicant was entitled for protection under Section 69(3)(a) and the bar under Section 69(1) of the Partnership Act would not apply. Sri G. Ramagopal, learned Counsel for the respondent, on the other hand, would submit that non-compliance with the statutory requirements of Section 11(5) of the Act, in not issuing notice to the Respondent seeking his consent to the appointment of an arbitrator, and waiting for thirty days, before filing the Application, was fatal. Learned Counsel would submit that, since compliance with the conditions prescribed under Section 11(5) is a pre-requisite for conferring jurisdiction on the Chief Justice's designate to appoint an Arbitrator, the provision necessitates strict adherence and non-compliance thereof must result in dismissal of the Application. Learned Counsel would place reliance on Datar Switchgears Ltd. Vs. Tata Finance Ltd in this regard. Learned Counsel would rely on U.P. State Sugar Corpn. Ltd. Vs. Jain Construction Co.2 and on Section 69(1) of the Indian Partnership Act, to contend that arbitral proceedings cannot be maintained by an unregistered firm or any person suing as a partner thereof against any person who is, or has been, a partner of the firm. While contending that the claim itself was barred by limitation, learned Counsel would submit that, since the question of limitation can be adjudicating by the Arbitrator, the respondent was not seeking a decision on this question in the present application and it would suffice if this Court were to decide on the consequences of non-compliance with Section 11(5) of the Act and Section 69(1) of the Partnership Act. Before examining the consequences, of non-compliance of Section 11(5) of the Act, it is useful to extract the arbitration clause in the deed of dissolution dated 03.11.2003 and the relevant portions of the registered notice sent by the Applicant to the Respondent on 18.10.1996. Clauses 14 of the deed of dissolution dated 03.11.2003 reads thus: