The Calcutta High Court in the case Md. Wasim and Another v. M/S Bengal Refrigeration and Company and Others observed while hearing an application filed under Section 11 of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’) for appointment of an arbitrator to resolve the dispute between the parties, wherein it was held that the bars for instituting a suit or any other proceeding under Section 69 of the Indian Partnership Act, 1932 (‘Partnership Act’) shall not be applicable to arbitral proceedings under Section 11 of the Arbitration Act.
The present case of the applicants was that, although unregistered, a partnership deed was executed between the applicants and the respondents containing an Arbitration Clause mandating the referral of all disputes and questions to a person who ahs been appointed unanimously to act as an arbitrator.
However, a dispute arose between the parties, subsequent to which, the applicants sent a notice to the respondents invoking the arbitration clause and proposing the name of an advocate as sole arbitrator to resolve the dispute. The respondent denied the appointment of an arbitrator alleging that the allegations raised by the applicants in their initial notice were false. The applicants filed the application under Section 11 of the Arbitration Act for appointment of an arbitrator, aggrieved in these circumstances,
The application was filled by the applicants and it was argued by the respondents that since the partnership firm was ‘unregistered,’ the dispute could not be referred to an arbitrator in view of the application of and the bar created by Section 69 of the Partnership Act, 1932. Further, their case was that since sub-sections (1) and (2) read with sub-section (3) of Section 69 of the Partnership Act restrict the filing of suit by any person as a partner of an unregistered firm including by means of a claim under ‘other proceedings,’ the appointment of an arbitrator could not be seek by the applicant, the partnership deed in their case being ‘unregistered.’
It was observed that Chief Justice Prakash Shrivastava relied on the Supreme Court decision in Umesh Goel v. Himachal Pradesh Cooperative Group Housing Society Limited and on the Madras High Court decision in the case M/s. Jayamurugan Granite Exports v. M/s. SQNY Granites, wherein both of which held that arbitral proceedings shall not come under the expression ‘other proceedings’ of Section 69(3) of the Partnership Act, 1932 and that the ban imposed under Section 69 can have no application to arbitration proceedings and as well of the arbitral award under Section 11 of the Arbitration Act.
Accordingly, it was held by the Calcutta High Court that non-registration of the partnership firm would not attract the bar under Section 69 of the Partnership Act, so far as institution of proceedings as stated under the provision of Section 11 of the Arbitration Act is concerned.
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