SUNDER KUKREJA & ORS.versusMOHAN LAL KUKREJA & ANR.

                          [2009] 4 S C.R. 1163


                     SUNDER KUKREJA & ORS .
                                 . v.
                   MOHAN LAL KUKREJA & ANR.
                    Civil Appeal No. 1910/2009
                          MARCH 26, 2009
                                                                     B
       [ MARKANDEY KATJU AND V.S. SIRPURKAR, JJ.]
           . Arbitration Act, 1940- s. 20 -Application forappointment
      of arbitrator- Objected to, by opposite party stating arbitration
      agreement did not su/,Jsist in view of retirement deed executed C
      by the applicant - Genuineness of the deed challenged by
      applicant - Forensic report that the deed was not genuine -
      Held: The dispute is referable to arbitrator in view of the ·
      retirement deed - The dispute between the parties had not
•   · become dead - Arbitrator appointed.
                                                                     D
           Appellant and respondent (two brothers) _were
     running a business. The rights and obligations thereof "'
     were governed by partnership deed. The disputes
     between the parties were to be resolved by arbitrator as
     per arbitration clause of the deed.
                                                                  E
        : Appellant filed application u/s 20 of Arbitration Act,
     1940 seeking direction for appointment of arbitrator.
     Respondent opposed the same stating that there was no
     subsisting arbitration agreement between the parties in
     the light of the retirement deed executed by the appellant. F
     Appellant denied to have executed the retirement deed.
     Single Judge of High Court referred the disputed deed to
     Forensic Science Laboratory {CFSL). Forensic expert
     gave the report that the signature of the app.ellant thereon
     was not genuine; Single Judge of High Court allowed the G
     petition permitting appointment of arbitrator. Division
     Bench of High Court set aside the order of Single Judge
     and remanded the matter to Single Judge for fresh

                                  1.163                              H
    1164      SUPREME COURT REPORTS               [2009] 4 S.C.R.


A   consideration of the question whether the retirement deed
    was never executed. Hence the present appeal.
           Allowing the appeal, the Court
          HELD : Division Bench of High Court was not correct
B   in holding that the dispute should not have been referred
    to the arbitrator in view of the alleged retirement deed.
    The very genuineness of he said retirement deed was
    challenged and in fact the forensic expert gave a report
    that it was not genuine. Single Judge of High Court has
c   recorded prima facie satisfaction that the dispute had not
    become dead. It would be appropriate to leave the
    question regarding the genuineness of the alleged
    retirement deed to be decided by the arbitrator. The sole
    arbitrator is appointed to decide the dispute between the
0   parties, including the dispute whether the alleged
    retirement deed was genuine or not. [Paras 17 and 18]
    [1169-F-H; 1170-A-C]
          Mis. Shree Ram Mills Ltd. vs. Mis Utility Premises (P)
    Ltd. JT 2007 (4) SC 501 - relied on.
E
         Damodar Valley Corporation vs. K.K. Kar AIR 1974 SC
    158 - distinguished.                                            •
        Erach FD. Mehta vs. Minoo FD. Mehta AIR 1971 SC
    1653; Mis. S. B.P and Co. vs. Mis. Patel Engineering Ltd. and
F   Anr JT 2005 (9) SC 219 - referred to.
                        Case Law Reference
           AIR 1971 SC 1653       referred to       Para 11
           JT 2005(9) SC 219      referred to       Para 13
G
           JT 2007 (4) SC 501     relied on         Para 13
           AIR 1974 SC 158        distinguished     Para 14
       CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1910
H of 2009
                        SUNDER KUKREJA & ORS. V.                   1165
                        MOHAN LAL KUKREJA & ANR.

             From the Judgement and Order dated 30.11.2007 of the A
        High Court of Delhi at New Delhi in FAO (OS) No. 469 of 2006.
             Arun Jaitley, Navin Chawla, with him for the Appellants.
             Neela Gokhale, Vijay Kumar, H.P. Singh, (for Dharam Bir
        Raj Vohra), Rajesh Prasad Singh, for the Respondents.        B

             Th~ Judgement of the Co~rt was delivered by

             MARKANDEY KATJU, J.
             1. Leave granted.
                                                                          c
            2. This 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.
            3. Heard Shri Arun Jaitley learned counsel for the appellants
        and Ms. Nita Go~hale learned counsel for the respondents.         D
              4. The dispute in this case is between brothers. The
    1
        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 E
        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 F
        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 G
             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."                           H
    1166     SUPREME COURT REPORTS                     [2009) 4 S.C.R.


A        5 It was contended by the respondent true that the
    partnership was dissolved by the parties with mutual consent in
    terms of the retirement deed dated 16.8.1990 alleged to have
    been executed by the appellant. However, the appellant denied
    executing any such retirement deed.
B
          6. Subsequently 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
C 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
D 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.

E       7. The 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
F executed by the petitioners by which the partnership 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
G retirement deed.
          8. The 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
H   been executed by them. According to the petitioners, the alleged
                      SUNDER KUKREJA & ORS. V            1167
            MOHAN LAL KUKREJA & ANR [MARKANDEY KATJU, J]

         retirement deed was a forged and fabricated document which A
         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.
               9. By an order dated 1.5.1996, the learned Single Judge B
         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.                                          C
               10. The 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 D
         be prima facie said that the dispute does not subsist. The report
         of the forensic expert creates a substantial ~oubt in the stand
         taken by the respondent of the alleged retirement of the appellant
         from the partnership.
               11. The learned Single Judge relied on the decision of E
         this Court in Erach FD. Mehta vs. Minoa FD. 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.
                                                                         F
               12. In 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 G
         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 to learned Single Judge
         for a fresh consideration of the question whether the alleged
         retirement deed was never executed between the parties.
                                                                         H
    1168        SUPREME COURT REPORTS                        [2009] 4 S.C.R.


A       13. In 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 Mis. S.B.P & Co. vs. Mis. 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
8 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 Mis. Shree Ram Mills Ltd. vs. Mis. 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
c 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 Mis. Shree Ram
  Mills Ltd. vs. Mis. Utility Premises (P) Ltd. (supra) this Court
0 observed:
        .................... "It 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.
E       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 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
F          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
                                                                                   t
G          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
H
                  SUNDER KUKREJA & ORS. V              1169
        MOHAN LAL KUKREJA & ANR. [MARKANDEY KATJU, J.]

         it would be appropriate sometimes to leave the question A
         regarding the live claim to be decided by the Arbitral
         Tribunal." ..... ; .............
                                               (emphasis supplied)

          14. It may be mentioned that the decision of this Court in B
    Mis. Patel Engineering case (supra) and Mis. 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      c
    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, D
    as is in the present case .
         . 15. In 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 E

.    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 arbitrator.
          16. There is no dispute in this case about the validity or
    existence of the partnership deed or the arbitration clause
                                                                       F
    therein.
           17. In 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 G
    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 Mis. Shree Ram
                                                                      H
    1170      SUPREME COURT REPORTS                -\ [2009] 4 S.C.R.

                                                                          -l
A   Mills Ltd. vs. Mis. Utility Premises (P) Ltd. (supra) it would have
    been· appropriate to have left the question regarding the
    genuineness of the alleged retirement deed to be decided by
    the arbitrator.
        18. In view of the above discussion, we_-set aside the
B 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         I
  the dispute whether the alleged retirement deed was genuine
  or not. Hon'ble Mr. Justice D.P. Wadhwa can fix his own terms
C of emoluments and other requirements._
           19. The 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..                                -

    K.K.T.                                           Appeal allowed. ·