ARB.P./111/2024 of NIRMAL KUMAR Vs DINESH KUMAR & ORS.

IN THE HIGH COURT OF DELHI AT NEW DELHI+ARB.P. 111/2024NIRMAL KUMAR..... PetitionerThrough:Mr. Vinam Gupta and Mr. AamirSiraj, Advs.NIRMAL KUMAR..... PetitionerThrough:Mr. Vinam Gupta and Mr. AamirSiraj, Advs.

versus

DINESH KUMAR & ORS...... RespondentThrough:Mr. Dayan Krishnan, Sr. Adv. withMr. Ashwath Sitaraman, Mr. SridharKale and Ms. B. Gupta, Advs. for R-1.Mr. Ishan Jain, Adv. for R-2 & 3.Through:Mr. Dayan Krishnan, Sr. Adv. withMr. Ashwath Sitaraman, Mr. SridharKale and Ms. B. Gupta, Advs. for R-1.Mr. Ishan Jain, Adv. for R-2 & 3.

CORAM:HON'BLE MR. JUSTICE JASMEET SINGHO R R%08.04.2024

1.This is petition filed under Section 11(6) of the Arbitration andConciliation Act, 1996 (hereinafter, “the Act”) seeking appointment of anArbitrator to adjudicate the disputes between the parties.

2.At the outset, Mr. Krishnan, learned senior counsel on instructions ofthe respondent No. 1 states that he does not wish to file reply and will onlyrely on the documents filed in the petition.

3.On the last date of hearing, respondent Nos. 2 and 3 had already giventheir no objection for appointment of an Arbitrator.

4.TheArbitrationAgreementiscontainedinthee-maildated18.07.2020, which reads as under:-

“Mr. Nirmal Kumar,

S/O Late Shri Prem Sagar Goel,

R/O H-7, Ashok Vihar, Phase 1,

This is digitally signed order.

Delhi-110052.

I am writing this letter solely to request for peaceful closure ofdivision of joint business and Joint Properties.

Papaji expired on 14th October 2019 and thereafter, I have beenrequesting for the resolution and division of joint Business beingrun pursuant to Partnership Firms, Companies and other jointProperties. The joint Properties are those Properties which arejointly in the name of the persons of your family along withpersons of my family or jointly owned amongst our parents. Allsuch Properties along with joint Business is to be dividedamongst us.

For some reason or the other, we have not been able to reach onan amicable solution. You will appreciate that ultimately, thedivision is to be fair and rightful.

I am requesting you to consider that it is absolutely necessarybetween two of us to resolve the matter and taking any action,which would result in court proceedings, is neither beneficial toyou nor to me. We will end up paying lawyers and other expensesand I will again like to stress that ultimately, the settlement is tohappen between two of us. There is an Arbitration Clause inPartnership Deed and I am agreeable to have division ofBusiness and Properties decided by single Arbitrator asagainst three Arbitrators if we fail to divide the Assets in anamicable manner.

In the event you are agreeable on this course of action, I inviteyour suggestion as to how you intend to resolve this long pendingissue. If you ask as to how I would propose the division tohappen, in my opinion, the joint business as well as immoveablejoint properties are to be divided in the manner so as to giveexclusively to each of the family without interference of eachother.

In the event you are not agreeable for amicable resolution, then Iwill have no option but to approach the Court for division of theassets in accordance with law at your cost and expense, whichstep I would surely like to avoid and request you to look for theresolution of division of the joint properties in the manner, whichis rightful to both brothers.

I am expecting reply from you in the next seven days’ time.

Regards

Dinesh KumarS/O Late Shri Prem Sagar Goel,R/O H-6, Ashok Vihar, Phase 1,Delhi-110052”

5.The said proposal was duly responded by the petitioner vide e-maildated 25.07.2020, which reads as under:-

“Respected Mr Dinesh Goel

We have had two Phone conversations with Mr Tushar Goelregarding all the pending issues (on 21.7.20 and 23.7.20).

We are awaiting your response on the steps to be taken goingforward”

6.Again, on 29.07.2020, the respondent wrote an e-mail which reads asunder:-

“Respected Mr. Nirmal Kumar,

Phone calls will not get any solution. We need to draw aconclusive settlement. Let us be concrete and formalise asettlement where both the brothers get their share and also thepersonalaccountsaresquaredsoastohavecompleteindependent existence and severance of Business.

Iwouldliketoemphasisethatlegalbattlewouldbedisadvantageous to both the families. If you desire, we can take

professional services at our own cost who can help us achievesettlement.

Regards,

Dinesh Kumar”

7.There are series of e-mails thereafter between the parties for settlingthe issues involved. The parties were also in Pre-Institution Mediationbefore the Delhi High Court Mediation and Conciliation Centre from06.09.2022 to 06.12.2023.

8.Since the Pre-Institution Mediation could not result in settlement,the petitioner issued notice invoking arbitration under Section 21 of theAct on 19.12.2023.

9.Hence the present petition.

10.Mr. Krishnan, learned senior counsel appearing for the respondent

No.1 has relied upon Jagdish Chander v. Ramesh Chander, (2007) 5 SCC

719, the operative portion of which reads as under:-

“8. This Court had occasion to refer to the attributes or essentialelementsofanarbitrationagreementin K.K.Modi v. K.N.Modi [(1998) 3 SCC 573] , Bharat Bhushan Bansal v. U.P. SmallIndustries Corpn. Ltd. [(1999) 2 SCC 166] and Bihar State MineralDevelopment Corpn. v. Encon Builders (I) (P) Ltd. [(2003) 7 SCC418] In State of Orissa v. Damodar Das [(1996) 2 SCC 216] thisCourt held that clause in contract can be construed as an“arbitration agreement” only if an agreement to refer disputes ordifferences to arbitration is expressly or impliedly spelt out from theclause. We may at this juncture set out the well-settled principles inregard to what constitutes an arbitration agreement:

(i) The intention of the parties to enter into an arbitrationagreement shall have to be gathered from the terms of theagreement. If the terms of the agreement clearly indicate anintention on the part of the parties to the agreement to refer theirdisputes to private tribunal for adjudication and willingness to

be bound by the decision of such tribunal on such disputes, it isarbitration agreement. While there is no specific form of anarbitrationagreement,thewordsusedshoulddiscloseadetermination and obligation to go to arbitration and not merelycontemplate the possibility of going for arbitration. Where there ismerely possibility of the parties agreeing to arbitration in future,as contrasted from an obligation to refer disputes to arbitration,there is no valid and binding arbitration agreement.

(ii) Even if the words “arbitration” and “Arbitral Tribunal (orarbitrator)” are not used with reference to the process ofsettlement or with reference to the private tribunal which has toadjudicate upon the disputes, in clause relating to settlement ofdisputes, it does not detract from the clause being an arbitrationagreement if it has the attributes or elements of an arbitrationagreement. They are: (a) The agreement should be in writing. (b)The parties should have agreed to refer any disputes (present orfuture) between them to the decision of private tribunal. (c) Theprivate tribunal should be empowered to adjudicate upon thedisputes in an impartial manner, giving due opportunity to theparties to put forth their case before it. (d) The parties should haveagreed that the decision of the private tribunal in respect of thedisputes will be binding on them.(iii) Where the clause provides that in the event of disputesarising between the parties, the disputes shall be referred toarbitration, it is an arbitration agreement. Where there is aspecific and direct expression of intent to have the disputes settledby arbitration, it is not necessary to set out the attributes of anarbitration agreement to make it an arbitration agreement. Butwhere the clause relating to settlement of disputes, contains wordswhich specifically exclude any of the attributes of an arbitrationagreement or contains anything that detracts from an arbitrationagreement, it will not be an arbitration agreement. For example,where an agreement requires or permits an authority to decide aclaim or dispute without hearing, or requires the authority to actin the interests of only one of the parties, or provides that thedecision of the authority will not be final and binding on theparties, or that if either party is not satisfied with the decision of

the authority, he may file civil suit seeking relief, it cannot betermed as an arbitration agreement.

(iv) But mere use of the word “arbitration” or “arbitrator” ina clause will not make it an arbitration agreement, if it requires orcontemplates further or fresh consent of the parties for referenceto arbitration. For example, use of words such as “parties can, ifthey so desire, refer their disputes to arbitration” or “in the eventof any dispute, the parties may also agree to refer the same toarbitration” or “if any disputes arise between the parties, theyshould consider settlement by arbitration” in clause relating tosettlement of disputes, indicate that the clause is not intended to bean arbitration agreement. Similarly, clause which states that “ifthe parties so decide, the disputes shall be referred to arbitration”or “any disputes between parties, if they so agree, shall bereferred to arbitration” is not an arbitration agreement. Suchclauses merely indicate desire or hope to have the disputessettled by arbitration, or tentative arrangement to explorearbitration as mode of settlement if and when dispute arises.Such clauses require the parties to arrive at further agreement togo to arbitration, as and when the disputes arise. Any agreementor clause in an agreement requiring or contemplating furtherconsent or consensus before reference to arbitration, is not anarbitration agreement, but an agreement to enter into anarbitration agreement in future.”

11.Mr. Krishnan states that at best, there was only an intention of therespondent No.1 to refer the disputes to arbitration, but there was noarbitration agreement.

12.I am unable to agree.

13.Section 7 of the Act reads as under:-

“7. Arbitration agreement.—(1) In this Part, “arbitration agreement”means an agreement by the parties to submit to arbitration all orcertain disputes which have arisen or which may arise between themin respect of defined legal relationship, whether contractual or not.(2) An arbitration agreement may be in the form of an arbitrationclause in contract or in the form of separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in—

(a)a document signed by the parties;

(b)an exchange of letters, telex, telegrams or other means oftelecommunication[includingcommunicationthroughelectronic means] which provide record of the agreement; ortelecommunication[includingcommunicationthroughelectronic means] which provide record of the agreement; or

(c) an exchange of statements of claim and defence in which theexistence of the agreement is alleged by one party and notdenied by the other.existence of the agreement is alleged by one party and notdenied by the other.

(5) The reference in contract to document containing anarbitration clause constitutes an arbitration agreement if the contractis in writing and the reference is such as to make that arbitrationclause part of the contract.”

14.As per sub-section (4)(b), an arbitration agreement would mean andinclude clause for arbitration contained in an exchange of letters, telex,telegrams or other means of telecommunication (including communicationthrough electronic means) which provide record of the agreement.

15.According to me, prima facie, the said communication clearly showsthat it has all the elements of the arbitration agreement, namely; a) theagreement is in writing b) the respondent agreed to refer the disputesbetween them to private tribunal, c) the tribunal would be empowered toadjudicate upon the disputes in an impartial manner; and d) the decision ofthe tribunal would be binding.

16.The very fact that the respondent No. 1 suggested arbitration meansand would mean that the parties would have agreed to be bound by thedecision of that arbitral tribunal.

17.For the said reasons, the petition is allowed. Since the parties are stillhaving disputes between them, the following directions are issued:-

i)Ms. Anita Sahni, (Advocate) (Mob. No. [REDACTED]) is

appointed as Sole Arbitrator to adjudicate the disputes

between the parties.

ii)The arbitration will be held under the aegis of the DelhiInternational Arbitration Centre, Delhi High Court, Sher ShahRoad, New Delhi hereinafter, referred to as the ‘DIAC’). Theremuneration of the learned Arbitrator shall be in terms of theFourth Schedule of the Arbitration & Conciliation Act, 1996.iii)ThelearnedArbitratorisrequestedtofurnishadeclaration in terms of Section 12 of the Act prior to enteringinto the reference.

iv)It is made clear that all the rights and contentions of theparties, including as to the arbitrability of any of the claim, anyother preliminary objection, as well as claims on merits of thedispute of either of the parties, are left open for adjudicationby the learned arbitrator.

v)The parties shall approach the learned Arbitrator withintwo weeks from today.

18.The petition is allowed and disposed of in the aforesaid terms.

19.The respondent No. 1 has also stated that the disputes are notarbitrable. The respondent No. 1 shall have all rights available in law to raiseissues before the learned Arbitrator, including the issue of jurisdiction of thelearned Arbitrator and the issue that the respondent No. 1 has also instituteda suit for partition which is yet to be listed.

APRIL 8, 2024/NG

JASMEET SINGH, JClick here to check corrigendum, if any