LexTARUN DHAMEJA versus SUNIL DHAMEJA & ANR.
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[2024] 12 S.C.R. 987 : 2024 INSC 973 Tarun Dhameja v. Sunil Dhameja & Anr. (Civil Appeal No. 14005 of 2024) 06 December 2024 [Sanjiv Khanna,* CJI and Sanjay Kumar, J.] Issue for Consideration Whether the arbitration clause between the parties is non-existent or requires agreement of all the parties to the dispute to refer the dispute to arbitration? Interpretation and construction of arbitration clause discussed. Headnotes† Arbitration and Conciliation Act, 1996 – Arbitration clause in a partnership deed invoked by Appellant who is the legal representative of a deceased partner – Arbitration clause reads as: “That if at any time either during the continuance of the partnership or after the retirement of any partner, any dispute or difference shall arise between the partners or their respective heirs or any one claiming through or under them, the same shall be referred to arbitration. Arbitration shall be optional & the arbitrator will be appointed by partners with their mutual consent. In any case of dispute arise then the Jurisdiction of Indore Civil Court shall be applicable & acceptable by the partners” – Appellant filed a petition U/s.11(6) of the Arbitration and Conciliation Act, 1996 that was dismissed by the impugned order. Held: Cannot be said that arbitration clause is optional in the sense that the arbitration clause is non-existent or that the matter would be referred to arbitration only if all the parties to the dispute agree – First portion of the arbitration clause is clear – Legal representatives or anyone claiming through a partner is entitled to invoke the arbitration clause – Reliance placed on second portion not to be read in isolation but in context of earlier portion of the * Author 988 [2024] 12 S.C.R. Supreme Court Reports arbitration clause – The arbitration clause can be invoked by an aggrieved party who wants to take recourse to arbitration and mutual agreement exists to this extent – Absence of mutual consent by parties to appoint arbitrator does not obliterate or write off the arbitration clause – In terms of the Arbitration and Conciliation Act, 1996 where parties cannot agree upon a common name as to who will act as an arbitrator, the court can appoint the arbitral tribunal. Reliance placed on Vidya Drolia v. Durga Trading Corpn. which in turn refers to the judgments in Fili Shipping Co. Ltd. v. Premium Nafta Products Ltd. and Oriental Insurance Co. Ltd. v. Narbheram Power & Steel (P) Ltd. on the issue of interpretation and construction of an arbitration clause – Arbitration clauses to be read in a pragmatic manner. Case Law Cited Vidya Drolia v. Durga Trading Corpn. [2020] 11 SCR 1001 : [2021] 2 SCC 1; Oriental Insurance Co. Ltd. v. Narbheram Power & Steel (P) Ltd [2018] 4 SCR 826 : [2018] 6 SCC 534 – relied on. Wellington Associates Ltd. v. Mr. Kirit Mehta [2000] 4 SCC 272; Jagdish Chander v. Ramesh Chander & Ors., [2007] 5 SCR 720 : [2007] 5 SCC 719 – distinguished Fili Shipping Co. Ltd. v. Premium Nafta Products Ltd., 2007 UKHL 40 – referred to. List of Acts Arbitration and Conciliation Act, 1996 List of Keywords Arbitration and Conciliation Act, 1996: Interpretation of arbitration clause; Pragmatic construction; Existence of arbitration clause; Mutual consent; Appointment of arbitrator; Appointment of arbitral tribunal. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 14005 of 2024 From the Judgment and Order dated 31.05.2024 of the High Court of Madhya Pradesh at Indore in ARBC No. 19 of 2024 [2024] 12 S.C.R. 989 Tarun Dhameja v. Sunil Dhameja & Anr. Appearances for Parties Ravindra Singh Chhabra, Sr. Adv., Mudit Maheshwari, Aman Arora, Ms. Praneesha Nayyar, Sahil Monga, Advs. for the Appellant. Puneet Jain, Sr. Adv., Soumitra Chatterjee, Mrs. Sriparna Chatterjee, Anant Kumar Vatsya, Ms. Christi Jain, Advs. for the Respondents. Judgment / Order of the Supreme Court Order Leave granted. In the present case, the arbitration clause in the Deed of Partnership dated 16.07.2016 reads as under:- “23. Arbitration That if at any time either during the continuance of the partnership or after the retirement of any partner, any dispute or difference shall arise between the partners or their respective heirs or any one claiming through or under them, the same shall be referred to arbitration. Arbitration shall be optional & the arbitrator will be appointed by partners with their mutual consent. In any case of dispute ari
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