Raj Kumari Taneja v. Rajinder Kumar & Ors.

1. This is a petition under Section 11(5) of the Arbitration and Conciliation Act, 1996[1] for reference of the disputes between the parties to arbitration.

2. The dispute arises in the context of a Partnership Deed dated 25 February 2017, relating to Respondent 3 partnership firm, of which the petitioner and Respondents 1 and 2 are partners.

3. The Partnership Deed envisaged resolution of disputes by arbitration, vide Clause 15, which read thus: “the 1996 Act” hereinafter

4. As disputes arose between the petitioner and the respondents and there is no pre-arbitral protocol envisaged in the afore-extracted arbitration clause, the petitioner, on 13 May 2023, addressed a legal notice to the respondents proposing reference of the disputes between them to arbitration.

5. The respondents replied by a communication dated 27 June 2023, disputing any liability towards the petitioner.

6. As the parties, therefore, have not been able to arrive at a consensus regarding arbitration, despite the existence of an arbitration clause in the Partnership Deed dated 25 February 2017, the petitioner has instituted the present petition under Section 11(5) of the 1996 Act for reference of the disputes to arbitration.

7. Notice, in this petition, was issued as far back as on 22 August

2023. There is, till date, no response to the petition from any of the respondents.

8. During the pendency of these proceedings, IA 1249/2024 was filed by Respondent 2 Mr. Vinay Kumar under Order XXXII Rule 3 of the Code of Civil Procedures, 1908 seeking to represent Respondent 1 as his next friend, on the ground that Respondent 1, owing to a prevailing psychological ailment, is unable to prosecute his interest. This application was opposed by the petitioner, whereupon this Court, by order dated 14 May 2024, called for a report from the doctor at the Lady Hardinge Medical College, who was attending to Respondent l, regarding the particulars of his ailment and whether he was physically and mentally in a position to enter appearance in Court. Respondent 2 was also directed to place on record an affidavit stating that he had no conflict of interest or any adverse interest with the rights and interests vis-à-vis Respondent 1.

9. Four weeks were granted for submission of the requisite report from the doctor and affidavit of Respondent 2.

10. Neither is the report of the doctor, nor the affidavit of Respondent 2, is forthcoming, despite 5 months having elapsed since then. Given the limited scope of examination by this Court under Section 11(6) or Section 11 (5) of the 1996 Act as delineated by the Supreme Court in its recent judgment in SBI General Insurance Ltd v Krish Spinning[2], I am not inclined to grant any further time in that regard. The interests of justice would, rather, be satisfied if Respondent 2 is permitted to advance the plea for being permitted to represent Respondent 1 before the learned Arbitrator.

11. Mr. Ashwani Kumar, learned Counsel for Respondent 2 advances, as the only ground to oppose this petition, a contention that the disputes between the parties stand settled, as recorded by this 2024 SCC OnLine SC 1754 Court in the order dated 9 May 2022 in Arb. P. 855/2019 and Arb. P. 856/2019. Mr. Gurpreet Singh, learned Counsel for the petitioner acknowledges that the said arbitration petitions had been filed by his client and that on 9 May 2022 they were dismissed as withdrawn. He, however, submits that this was because his client had been assured by the respondents that the disputes would be settled, but submits that no formal settlement agreement was ever drawn up, as the parties were not able to arrive at a negotiated settlement. Mr. Ashwani Kumar, learned Counsel for Respondent 2 acknowledges that there is no written settlement, but submits that there was an oral settlement between the parties.

12. The Supreme Court in SBI General Insurance has held that, while exercising jurisdiction under Section 11(6) of the 1996 Act, the Court is required to examine only whether there exists an arbitration agreement between the parties and whether the Section 11(6) petition has been filed within three years of the Section 21 notice. Both these conditions stand satisfied in the present case.

13. Nonetheless, I have considered the submissions advanced by learned Counsel for the parties, as it is the respondents’ contention that no dispute survives. Mr. Gurpreet Singh submits that the petitioner had, in good faith withdrawn Arb. P. 855/2019 and Arb. P. 856/2019, as he had been promised by the respondents that they would settle the matter out of Court. However, as no such settlement took place, he had no option but to seek recourse of the disputes to arbitration.