TMI Blog2007 (4) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Chief Justice of the High Court of Delhi, allowing Arbitration Application No.284 of 1997 filed under section 11 (5) and (6) of the Arbitration and Conciliation Act, 1996 ( the Act for short). 2. The appellant and first respondent entered into a Partnership as per deed dated 9.1.1964 to carry on the business under the name and style of Empire Art Industries . Clause 16 of the said Deed relates to settlement of disputes. The said clause is extracted below : "16) If during the continuance of the partnership or at any time afterwards any dispute touching the partnership arises between the partners, the same shall be mutually decided by the partners or shall be referred for arbitration if the parties so determine." (Emphasis supplied) 3. The first respondent filed the application for appointment of an Arbitrator to decide the disputes in regard to dissolution of the said partnership firm and for rendition of accounts. In the said application, the first Respondent arrayed the appellant herein as the first respondent. Respondents 2 to 6 herein were also impleaded as respondents alleging that the two partners entered into an arrangement/agreement with Respondents 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to arbitration in pursuance of the Arbitration Act, 1940 by each party appointing one arbitrator and the arbitrator so appointed selecting an Umpire. The venue of the arbitration shall be at Bombay." He also held that the use of the word "may" could not be construed as "shall" and that the clause was only an enabling provision and a fresh consent was necessary to go to arbitration. The decision of the Calcutta High Court in Jyoti Bros vs. Shree Durg Mining Co. [AIR 1956 Cal 280] was also cited with approval. 6. Therefore, the only question that arises for consideration in this case is whether clause 16 of the Deed of Partnership dated 9.1.1964 is an arbitration agreement within the meaning of section 7 of the Act. 7. Sub-section (1) of Section 7 of the Act defines arbitration agreement as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. Sub-section (2) provides that an arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. Sub-section (3) requires an arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The agreement should be in writing. (b) The parties should have agreed to refer any disputes (present or future) between them to the decision of a private tribunal. (c) The private tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to the parties to put forth their case before it. (d) The parties should have agreed that the decision of the Private Tribunal in respect of the disputes will be binding on them. (iii) Where the clause provides that in the event of disputes arising between the parties, the disputes shall be referred to Arbitration, it is an arbitration agreement. Where there is a specific and direct expression of intent to have the disputes settled by arbitration, it is not necessary to set out the attributes of an arbitration agreement to make it an arbitration agreement. But where the clause relating to settlement of disputes, contains words which specifically excludes any of the attributes of an arbitration agreement or contains anything that detracts from an arbitration agreement, it will not be an arbitration agreement. For example, where an agreement requires or permits an authority to decide a claim or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to reach a decision by application of mind. Therefore, when clause 16 uses the words "the dispute shall be referred for arbitration if the parties so determine", it means that it is not an arbitration agreement but a provision which enables arbitration only if the parties mutually decide after due consideration as to whether the disputes should be referred to arbitration or not. In effect, the clause requires the consent of parties before the disputes can be referred to arbitration. The main attribute of an arbitration agreement, namely, consensus ad idem to refer the disputes to arbitration is missing in clause 16 relating to settlement of disputes. Therefore it is not an arbitration agreement, as defined under section 7 of the Act. In the absence of an arbitration agreement, the question of exercising power under section 11 of the Act to appoint an Arbitrator does not arise. 10. Learned counsel for the first respondent next contended that clause 16 of the deed of partnership discloses a clear intention on the part of the partners to settle their dispute relating to partnership by an alternative dispute resolution process. He pointed out that clause 16 required the partners ..... X X X X Extracts X X X X X X X X Extracts X X X X
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