1. The present application has been filed in terms of Section 11(6) of the Arbitration and Conciliation Act for appointment of arbitrator.

          1.1 The applicant is a company incorporated in terms of the provisions of the Companies Act 2013 having its registered Office at 7, Nargarchi Bakhal, Indore, Madhya Pradesh. The respondent is a partnership firm having its registered Office at PH- 1/A, 7th Floor, Corporate House, 169, RNT Marg, Indore Madhya Pradesh.

          1.2 It is stated in the application that the respondent through one of its partner Vijay Mahore executed a loan agreement with the applicant on 08.12.2017 for the extension of a loan facility amounting to Rs.6,50,00,000/- at an agreed rate of compound interest of 12% per annum.

          1.3 In furtherance of the above agreement, the applicant disbursed a total amount of Rs.3,75,76,000/- to the respondent during the period from 18.12.2017 to 22.02.2019.

          1.4 As the respondent started defaulting in the repayment of the 2 AC-66-2025 aforesaid loan, only an amount of Rs.76,99,800/- was repaid through multiple delayed payments, the applicant demanded repayment of the loan and when the same was not repaid, the applicant vide notice dated 21.02.2025, called upon the respondent to clear all outstanding dues within 14 days from the date of receipt of the said notice. On the date of notice, an amount of Rs.8,13,69,696/- was outstanding.

          1.5 In the aforesaid notice, on failure to clear the dues, invocation of the arbitration clause was also mentioned. However, the respondent failed to clear the outstanding amount within the stipulated period.

          1.6 As a consequence, the applicant sent notice dated 12.03.2025 invoking the arbitration clause and for initiation of arbitration proceedings. The applicant proposed the name of a person for appointment as the arbitrator. However, the respondent neither accepted nor denied the said proposal. In such circumstances, the present application for appointment of arbitrator came to be filed.

          1.7 On receipt of notice of the present application, the respondent filed its reply and asserted that the present application has been filed on the basis of a loan agreement purportedly executed between the applicant and the respondent. According to the respondent, the signatures on the loan agreement were never made or authorised by any partner of the firm. It is therefore contended that the agreement is fabricated and bears forged signatures.

2. The respondent while plainly denying the execution of the agreement by alleging that the signatures thereon are forged, has also taken 3 AC-66-2025 an alternate plea that under the law, one partner alone in a partnership firm cannot enter into any financial or contractual arrangement with a third party without the prior consent and authority of all the partners. It is contended that any such unilateral act cannot bind the firm or the other partners. Consequently, the alleged agreement, if any, having been signed by only one person without such authority is void and unenforceable against the respondent firm.

          2.1 The respondent further stated in its reply that the loan agreement has been executed on an insufficiently stamped document rendering the agreement unenforceable in law and on this ground alone, the present application is liable to be dismissed. In support of this contention, reliance has been placed on the judgment of the Hon'ble Apex Court in the case of N.N. Global Mercantile (P.) Limited Vs. Indo Unique Flame Limited in (2023) 7 SCC 1 .

          2.2 It has also been argued that the clause in the agreement providing for appointment of arbitrator solely by the applicant company is void ab initio, as the appointment procedure cannot be vested unilaterally in one party. For this proposition, reliance has been placed in the case of Central Organization for Railway Electrification Vs. M/s ECI SPIC SMO (J.V.) A Joint Venture Company in 2024 INSC 857 .

3. Apart from this, the respondent has also stated that since the very existence of the agreement is denied, the dispute cannot be referred to arbitration in view of the law laid down by the Hon'ble Apex Court in the case of Magic Eye Developer Pvt. Ltd. Vs. Green Edge Infrastructure Pvt. 4 AC-66-2025 Ltd. in (2023) 8 SCC 50 .

          3.1 Reliance has also been placed on the judgment of the Hon'ble Apex Court in the case of Vidhya Drolia and Others Vs. Durga Trading Corporation in (2021) 2 SCC 1 .

4. The applicant by way of rejoinder, denied the assertions made in the reply and stated that not only the loan agreement was duly executed, but that several promissory notes were also issued by the respondent in favour of the applicant, promising repayment of the said loan amount. The said promissory notes have been placed on record along with rejoinder as Annexure A-1.

          4.1 It has further been stated that in view of the clear provisions of the Partnership Act 1932, particularly Sections 18, 19, 20, 21, 22, and 23, the act of a partner binds all the partners of partnership firm. It has also been stated that the respondent had issued several cheques towards partial repayment of the loan in favour of the applicant which were dishonoured due to insufficiency of funds, thereby establishing that the loan agreement was duly executed.

          4.2 It has also been stated that the respondent filed its tax audit report dated 22.12.2020, wherein the dues payable to the applicant and the repayments made have been duly reflected.

5. Apart from this, it has also been mentioned that the loan agreement dated 08.12.2017 was executed on a stamp of Rs.500/- which as per the provisions of the Indian Stamp Act is sufficient compliance as the said agreement is a general loan agreement between the applicant and the respondent.

6. Heard learned counsel for the parties and perused the case file.

7. First and foremost, the existence of arbitration agreement has to be examined. The arbitration agreement is contained in Clause 13 of the loan agreement (Annexure A-1) which provides as under :-

          "13. Arbitration, Law and Jurisdiction

          All disputes, difference, and / or claim arising out of this agreement whether during the subsistence or thereafter shall be settled by arbitration in accordance with the provisions of the Arbitration and Conciliation Act 1996 or any statutory amendments thereto and shall be referred to the arbitration by a sole Arbitrator, nominated by the Company. The award given by such an Arbitrator shall be final and binding on the parties to this agreement. "

8. It is thus clear from the language of the said clause that provision has been made for resolution of disputes by resorting to arbitration and that the place of arbitration has been agreed to be Indore.

9. As regards the allegation of forged signature on the agreement, it is pertinent to note that the respondent in its reply has not denied receipt of advance of Rs.3,75,76,000/-, pursuant to the loan agreement. It has also not denied repayment of Rs.76,99,800/-. Further, when the applicant by way of rejoinder, pointed out that promissory notes were executed for repayment of the loan and cheques were issued towards payment which were dishonoured, these assertions were also not denied by the respondent. It has further not been denied that in the tax audit report of respondent dated 22.12.2020, part repayment of the loan amount has been mentioned.

10. All these facts, coupled with the circumstance that the respondent on one hand, asserts that no agreement was executed and on the other hand, contends that the agreement executed by one partner cannot bind the firm or 6 AC-66-2025 the other partners clearly demonstrate that two inconsistent please have been taken. Moreover, the conduct of the respondent itself shows that while a substantial amount was accepted as a loan and partial repayments were made, the very agreement on the basis of which such amounts were received is now being denied.

11. As it can be seen, the stand taken by the respondent is being contradicted by its pleadings in the reply itself. In view of the facts of the present case this court is prima facie is of the view that there is a valid agreement which also contain arbitration clause.

12. As far as the question of acts of one partner can bind the partnership firm and other partners is concerned. The provisions of Partnership Act are to be looked into, Section 18 of the Partnership Act provides that a partner is the agent of the firm for the purposes of the business of the firm.

13. Section 19 further provides that subject to the provisions of Section 22, the act of a partner done in the usual course of the business carried on by the firm binds the firm and such authority has been termed as implied authority. Section 22, in turn, provides the mode of doing an act to bind the firm. Significantly, it is not the case of the respondent that the partner, who signed the agreement did not act in the manner required to bind the firm.

14. A perusal of the agreement would show that it has been executed in the name of the firm and thus satisfies the requirement of Section 22 of the Partnership Act. Significantly, while the authority of a partner can be 7 AC-66-2025 restricted, no such restriction has been pleaded by the respondent.

15. The respondent by placing on record the report of handwriting expert, sought to demonstrate that the signatures on the agreement are not those of their partner Vijay Mahore. However, the expert report relied upon the admitted signatures on the instrument of modification of the partnership deed dated 29.12.2015 and compared them with photocopy of the agreement, rather than the original document. In any case, the opinion of the handwriting expert carries little weight and is not binding on the court. In any case, this inquiry as per settled position of law has to be done by the learned Arbitrator, in case any such objection is raised before him. This Court has to hold only a limited review.

16. The Hon'ble Apex Court in a recent decision in the case of Office for Alternative Architecture v. Ircon Infrastructure & Services Ltd., 2025 SCC OnLine SC 1098 held as under :

          4. Per contra, the learned counsel for the respondent submitted that the High Court is empowered to exclude non-arbitrable claims in light of the decision of this Court in "Emaar India Limited v. Tarun Aggarwal Projects LLP".

          5. We have considered the rival submissions and have perused the materials on record.

          6. The short question that falls for our consideration is whether while exercising power under Section 11 of the 1996 Act, the Court has to confine its consideration as to the existence of an arbitration agreement between the parties. If so, whether it would be permissible, while exercising jurisdiction under Section 11, to hold that some of the claims raised are non-arbitrable or fall within excepted category.

          7. Sub-section (6A) of Section 11, which was inserted by Act 3 of 2016, with effect from 23.10.2015, makes it clear that while considering an application under sub- section (4) or sub-section (5) or sub-section (6), the Supreme Court or the High Court, as the case may be, 8 AC-66-2025 shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.

          8. Act 33 of 2019 omitted sub-section (6A) but the amending Act has not been notified thus far. In consequence, sub-section (6A) of Section 11 of the 1996 Act remains in the statute book.

          9. The statement of objects and reasons of the 2015 amendment with reference to insertion of sub-section (6A) in Section 11 of the 1996 Act, reads thus:

          "(iii) an application for appointment of an Arbitrator shall be disposed of by the High Court or the Supreme Court, as the case may be, as expeditiously as possible and an endeavour should be made to dispose of the matter within a period of 60 days.

          (iv) to provide that while considering any application for appointment of Arbitrator, the High Court or the Supreme Court shall examine the existence of a prima facie arbitration agreement and not other issues."

          10. The significance of the use of the expression "not other issues" in the statement of objects and reasons of the 2015 amendment was noticed by a seven-Judge bench of this Court in In Re : Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Indian Stamp Act, 1899, and it was observed:

          "209. The above extract indicates that the Supreme Court or High Court at the stage of the appointment of an Arbitrator shall 'examine the existence of prima facie arbitration agreement and not other issues'. These other issues not only pertain to the validity of the arbitration agreement, but also include any other issues which are a consequence of unnecessary judicial interference in the arbitration proceedings."

          11. Relying on the above observations made by this Court in In Re : Interplay (supra), a three-judge bench of this Court in "SBI General Insurance Co. Ltd. v. Krish Spinning" observed:

          "114. .... that the scope of enquiry at the stage of appointment of Arbitrator is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else. For this reason, we find it difficult to hold that the observations made in 'Vidya Drolia v. Durga 9 AC-66-2025 Trading Corporation (supra) and adopted in 'NTPC v. SPML Infra Limited (supra) that the jurisdiction of the referral court when dealing with the issue of "accord and satisfaction" under section 11 extends to weeding out ex-facie non-arbitrable and frivolous disputes would continue to apply despite the subsequent decision in In Re : Interplay (supra)". Emphasis Supplied

          12. As the above decision has been rendered by a three- Judge bench of this Court after considering the seven- Judge bench decision of this Court in In Re : Interplay (supra), we are of the view that the respondent cannot profit from certain observations made by a two- Judge bench of this Court in Emaar (supra). In our view, therefore, the High Court fell in error in bisecting the claim of the appellant into two parts, one arbitrable and the other not arbitrable, when it found arbitration agreement to be there for settlement of disputes between the parties. The correct course for the High Court was to leave it open to the party to raise the issue of non-arbitrability of certain claims before the arbitral tribunal, which, if raised, could be considered and decided by it.

          13. The appeal is, therefore, allowed. The order of the High Court to the extent it excludes claims mentioned in para 48 (ii), (iii) and (iv), as referred to in paragraph 8 of the impugned order, is set aside. The parties are, however, at liberty to take the plea of non-arbitrability of certain claims before the arbitral tribunal, which shall decide the same without being prejudice by any observations made in the order of the High Court. There is no order as to costs.

17. In the considered view of this Court, considering the position of law as quoted above and the facts of the present case, the pleas raised by the respondent holds no water, particularly when the acceptance of a substantial amount of Rs.3,75,76,000/- was not denied and repayment of Rs.76,99,800/- was also not denied. The conduct of the respondent thus demonstrates that the agreement was initially executed, partial repayment were made and thereafter the terms of the agreement were not complied with.

18. The reliance placed by the learned counsel on the judgment of 10 AC-66-2025 N.N. Global Mercantile (Supra) is misplaced. In fact, the said judgment was overruled by the Hon'ble Apex Court in the case of Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899, In Re in (2024) 6 SCC 1 .

19. As regards the case of Vidya Drolia (Supra) a n d Magic Eye Developers (Supra), the mandate of the Court is that it must be ascertained that prima facie there exists an arbitration agreement, as analysed above, in the considered view of this Court, the arbitration agreement is very much in existence. Accordingly, the reliance on the aforementioned judgments is of no avail to the respondent.

20. In view of the above facts and the assertions in the respective pleadings, it is clear that not only does the dispute exist, but it is also very much live. The arbitration agreement as held above, is in existence and there is no impediment in the appointment of an arbitrator. The respondent has failed to adhere to the agreed procedure for such appointment.

21. Hence, this Court is of the considered view that the present case is fit for the appointment of an arbitrator by invoking the provisions of Section 11 of the Arbitration and Conciliation Act, 1996.

22. Accordingly, the name of Hon'ble Shri Justice Duppala Venkata Ramana (Retd. Judge of M.P. High Court) is proposed for appointment as the Arbitrator.

23. Let a declaration in terms of Section 11(8) read with Section 12(1) of the Arbitration & Conciliation Act, 1996 in the prescribed form as contained in sixth Schedule of the Act be obtained from the proposed 11 AC-66-2025 Arbitrator by the Principal Registrar of this Court before the next date of hearing.

List the matter on 06.05.2026.