Sunder Kukreja &
Ors. Vs. Mohan Lal Kukreja & ANR.  INSC 630 (26 March 2009)
REPORTABLE IN THE
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1910 of
2009 (Arising out of Special Leave Petition(Civil) No.1342 of 2008) Sunder
Kukreja and others .. Appellants -versus- Mohan Lal Kukreja and another
MARKANDEY KATJU, J.
appeal by special leave has been filed against the impugned judgment dated
30.11.2007 of the Delhi High Court FAO(OS) No.469 of 2006.
Shri Arun Jaitley learned counsel for the appellants and Ms. Nita Gokhale
learned counsel for the respondents.
dispute in this case is between brothers. The appellant Sunder Kukreja filed a
petition under Section 20 of the Arbitration Act, 1940 praying for an
appointment of an Arbitrator. The parties are real brothers and were carrying
on business with each other in the name and style of M/s. D.R. Kukreja and
Company. Their mutual rights and obligations were governed by partnership
deeds, the last of which was executed on 10.7.1984. In terms of Clause 11 of
the said deed, disputes arising between the parties had to be resolved by way
of arbitration before a sole arbitrator to be nominated by the parties. Clause
11 reads as follows:
"11. In the
event of any dispute or disputes arising between the parties in the running of
the partnership business or any matter relating to partnership it shall be
referred to a sole arbitrator, agreed to in writing by the parties and the
award given by the sole arbitrator shall be binding on all the parties. In
case, the parties cannot agree to a sole arbitrator, the matter will be decided
in accordance with the Indian Arbitration Act, 1940."
was contended by the respondent true that the partnership was dissolved by the
parties with mutual consent in terms of the retirement deed 3 dated 16.8.1990
alleged to have been executed by the appellant. However, the appellant denied
executing any such retirement deed.
the petition under Section 20 of the Arbitration Act was filed by the
appellants seeking a direction for filing the arbitration agreement dated
10.7.1984 in the Court and for reference of the dispute between the parties to
arbitration in terms of Clause 11 thereof. It was alleged in the petition under
Section 20 that disputes relating to payment of profits earned by the
partnership firm and the interest on the said amount had arisen between the
parties which called for adjudication by the arbitrator under Clause 11. The
petitioner further alleged that the respondent had been mismanaging the affairs
of the partnership by employing undesirable elements and other dubious means,
thereby disentitling himself to remain in control of the partnership.
said petition under Section 20 was opposed by the respondent herein who filed a
written statement contending that the petitioner has misrepresented the true facts
and that there was no subsisting arbitration agreement between the parties in
the light of the retirement deed dated 16.8.1990 allegedly executed by the
petitioners by which the partnership 4 between the parties stood dissolved and
all claims stood completely satisfied. It was also alleged that the petitioners
had not come to the Court with clean hands and had deliberately omitted to
mention the fact of their retirement from the business under the retirement
genuineness of the retirement deed was, however, challenged by the appellants
herein (the petitioners in the petition under Section 20) who asserted that no
retirement deed has been executed by them. According to the petitioners, the
alleged retirement deed was a forged and fabricated document which was never
executed by the petitioners, and which was prepared to somehow usurp the share
belonging to the other partners in the firm without settling the accounts.
an order dated 1.5.1996, the learned Single Judge hearing the arbitration
petition referred the disputed deed of retirement for examination and opinion
to the Central Forensic Science Laboratory (CFSL). The document in question was
accordingly examined by the CFSL who reported that the alleged signatures of
the petitioners on the alleged retirement deed were not genuine.
learned Single Judge held that the plea that there was no dispute because of
the alleged retirement deed and receipts can be easily gone into by the
arbitrator, and in view of the report of the forensic expert between the
parties it cannot be prima facie said that the dispute does not subsist. The
report of the forensic expert creates a substantial doubt in the stand taken by
the respondent of the alleged retirement of the appellant from the partnership.
learned Single Judge relied on the decision of this Court in Erach F.D. Mehta
vs. Minoo F.D. Mehta AIR 1971 SC 1653 and held that the arbitration clause in
the present case is wide enough to include all the disputes sought to be
referred. Hence the learned single Judge allowed the petition under Section 20.
appeal, however, the Division Bench of the High Court was of the view that in
case there is a dispute as to the very existence of an arbitration clause by
reason of supersession of the agreement in which the same is contained by
another subsequent agreement arrived at between the parties, the said dispute
cannot be referred to arbitration. The Division Bench hence set aside the
judgment of the learned Single Judge and remanded the matter 6 to learned
Single Judge for a fresh consideration of the question whether the alleged
retirement deed was never executed between the parties.
our opinion the judgment of the Division Bench cannot be sustained. It is true
that as held by the seven Judge Full Bench decision of this Court in M/s.
S.B.P. & Co. vs. M/s. Patel Engineering Ltd. and Anr. JT 2005(9) SC 219
(vide para 46) the Chief Justice or the designated Judge has the right to
decide the question of the existence of a valid agreement and the existence or
otherwise of a live claim. However, as pointed out by this Court in M/s. Shree
Ram Mills Ltd. vs. M/s. Utility Premises (P) Ltd. JT 2007(4) SC 501 (vide para
27) the Chief Justice or his designate Judge has to examine the claim as to
whether the dispute is a dead one in the sense whether the parties have already
concluded the transaction and have recorded satisfaction of their mutual rights
and obligations, or whether it is still alive. In the same judgment in M/s.
Shree Ram Mills Ltd. vs. M/s. Utility Premises (P) Ltd. (supra) this Court
is in this sense that the Chief Justice has to examine as to whether their
remains anything to be decided between the parties in respect of the agreement
and whether the parties are still at issue on any such matter. If the Chief
Justice does not, in the strict sense, decide the issue, in that event it is
for him to locate such issue and record his satisfaction that such issue
exists 7 between the parties. It is only in that sense that the finding on a
live issue is given. Even at the cost of repetition we must state that it is
only for the purpose of finding out whether the arbitral procedure has to be
started that the Chief Justice has to record satisfaction that their remains a
live issue in between the parties. The same thing is about the limitation which
is always a mixed question of law and fact. The Chief Justice only has to
record his satisfaction that prima facie the issue has not become dead by the
lapse of time or that any party to the agreement has not slept over its rights
beyond the time permitted by law to agitate those issues covered by the
agreement. It is for this reason that it was pointed out in the above para that
it would be appropriate sometimes to leave the question regarding the live
claim to be decided by the Arbitral Tribunal."...................
may be mentioned that the decision of this Court in M/s. Patel Engineering case
(supra) and M/s. Shree Ram Mills Ltd. case (supra) pertained to the Arbitration
and Conciliation Act, 1996 and not to the Arbitration Act of 1940. The present
case is governed by the Arbitration Act of 1940, but in our opinion even if it
is governed by the 1940 Act that will not make any difference in the present
case. We are only adopting the logic in those decisions. The decision of this
Court in Damodar Valley Corporation vs. K.K. Kar AIR 1974 SC 158 (vide para 7)
is in our opinion distinguishable on facts because in that case there was no
report of an expert that the subsequent deed was fake, as is in the present
the present case the learned Single Judge had referred the matter to a forensic
expert who gave a report that the alleged retirement deed dated 16.8.1990 was
not genuine and had not been executed by the appellant. On the basis of this
report of the forensic expert, the learned Single Judge recorded a prima facie
satisfaction that the dispute is still alive and deserved to be referred to the
is no dispute in this case about the validity or existence of the partnership
deed or the arbitration clause therein.
our opinion the learned Division Bench was not correct in holding that the
dispute should not have been referred to the arbitrator in view of the alleged
retirement deed dated 16.8.1990. The very genuineness of the said retirement
deed was challenged and in fact the forensic expert gave a report that it was
not genuine. The learned Single Judge has recorded prima facie satisfaction
that the dispute had not become dead. Hence, in view of the decision of this
Court in M/s. Shree Ram Mills Ltd. vs. M/s. Utility Premises (P) Ltd. (supra)
it would have been appropriate to have left the 9 question regarding the
genuineness of the alleged retirement deed to be decided by the arbitrator.
view of the above discussion, we set aside the decision of the Division Bench
and we appoint Mr. Justice D.P. Wadhwa, retired Judge of the Supreme Court as
the sole Arbitrator to decide the dispute between the parties, including the
dispute whether the alleged retirement deed was genuine or not. Hon'ble Mr.
Justice D.P. Wadhwa can fix his own terms of emoluments and other requirements.
appeal is allowed. No order as to costs. Copy of this judgment shall be sent
forthwith by the Registry of this Court to Hon'ble Mr. Justice Wadhwa.