Partner claims no notice of arbitration petition. Supreme Court says: your lawyer was there.

He said he never got court notice of the arbitration petition. But his lawyer had already argued before the arbitrator. By the time the appellant reached the Supreme Court, his own advocate had attended preliminary meetings, raised objections, and lost — all while the appellant insisted he had been kept in the dark.

Could a business partner really claim ignorance of arbitration proceedings when his own lawyer was sitting across the table from the arbitrator? The Supreme Court had to decide whether a party could play both sides — participating in the process while simultaneously denying it ever began.

When the retirement deed turned sour

Several partners ran three partnership firms under the M.M. Developers banner. In September 2014, one partner — the respondent — retired from the firms under a formal retirement deed. The document, signed by all parties, contained clause 19, an arbitration clause that would later become the battlefield.

For years, the arrangement held. Then, in February 2019, the retiring partner invoked that arbitration clause through a lawyer's notice. He wanted to arbitrate disputes that had arisen after his exit. The other partners did not respond.

The High Court appoints an arbitrator

Silence from the other side pushed the retiring partner to file a petition under Section 11 of the Arbitration and Conciliation Act, 1996 (the provision that allows a party to ask a court to appoint an arbitrator when the other side refuses to cooperate). He approached the Bombay High Court on its Original Side — the division that handles commercial disputes originating in Mumbai.

In March 2020, the High Court appointed a sole arbitrator. The appellant later claimed he was never properly served notice of this petition. He said the court notice never reached him.

The lawyer who showed up anyway

But something odd happened next. The appellant's own advocate appeared before the arbitrator in preliminary meetings. That lawyer supported objections under Section 16 of the Arbitration Act (the provision that lets a party challenge the arbitrator's jurisdiction — arguing, for instance, that no valid arbitration agreement exists or that the claim is too old to be arbitrated). The advocate filed an affidavit of service — a sworn statement confirming that notice had been delivered — and the court acted upon it.

The appellant's counsel argued that clause 19 of the retirement deed did not cover disputes between retiring and continuing partners. He also argued the claim was time-barred — that too many years had passed since the retirement deed was signed. The arbitrator rejected both objections on 25 May 2021. Then, on 24 June 2021, the arbitrator granted interim directions to the retiring partner under Section 17 of the Arbitration Act (the provision that allows an arbitrator to issue temporary orders to preserve assets or evidence during the proceedings).

The appellant then filed appeals before the Supreme Court. At the same time, he pursued petitions under Section 34 of the Arbitration Act (the provision that allows a party to challenge an arbitral award before a court) before the High Court — without disclosing that he had already participated in the arbitral proceedings.

What the appellant argued

Before the Supreme Court, the appellant raised three main points. First, he said no court notice of the Section 11 petition was served on him — the appointment was made without hearing him. Second, he argued that clause 19 of the retirement deed did not cover disputes between a retiring partner and continuing partners; it only covered disputes among continuing partners. Third, he said the claim was barred by limitation — too much time had passed since the retirement.

The retiring partner countered that the appellant's own advocate had received notice of the Section 11 petition. Under the Bombay High Court's Original Side practice, advocates serve notice of proceedings before the matter comes up in court. The court acts on proof of such service through an affidavit of service (a sworn statement confirming that notice was delivered). The appellant's advocate had been served that way.

Why the Supreme Court called the bluff

The bench — Justice Abhay S. Oka and Justice Indira Banerjee — found no merit in the appeals. The court held that the appellant's participation in the arbitral proceedings through his counsel was decisive. His lawyer had appeared before the arbitrator, raised Section 16 objections, and argued them. You cannot participate in a process and then claim you never knew it existed. The courtroom fell silent as the bench noted the contradiction: the appellant's own advocate had been present at the preliminary meetings, yet the appellant insisted the proceedings were a surprise.

The court also relied on the long-standing practice of the Bombay High Court's Original Side. Service through an advocate's notice, followed by an affidavit of service, is valid and sufficient. The appellant could not claim ignorance when his own lawyer had been served.

On the question of whether clause 19 covered the dispute, the court applied the principle from Vidya Drolia & Others v. Durga Trading Corporation (2021) 2 SCC 1. The ratio was clear: "While dealing with a petition under Section 11 of the Arbitration Act, the Court by default would refer the matter to arbitration when contentions relating to non-arbitrability are plainly arguable." That precedent holds that when a court is dealing with a petition under Section 11 of the Arbitration Act, it should by default refer the matter to arbitration if the contentions about non-arbitrability (the argument that a dispute cannot be arbitrated) are plainly arguable — not obviously frivolous or impossible. The issue is left open for the Arbitral Tribunal to decide.

The court found that the appellant's arguments about the scope of clause 19 and limitation were plainly arguable. That meant they should go to the arbitrator, not be decided by the Supreme Court at the Section 11 stage.

What the court left open

The Supreme Court dismissed the appeals. But it left all the appellant's contentions open — meaning they could still be raised in the pending Section 34 petitions before the Bombay High Court. The court did not rule on whether clause 19 actually covered the dispute or whether the claim was time-barred. Those questions remain alive for the High Court to decide when it hears the challenge to the arbitrator's interim orders.

The court also made no order on costs — each side bore its own expenses. The citation for the judgment is 2022 LiveLaw (SC) 120.

THE PLAY: If your lawyer appears before an arbitrator and argues objections, you cannot later claim you were never served notice — participation in proceedings waives the right to challenge service.

The court ended where it began: with a lawyer who showed up, and a client who pretended he didn't.