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Wednesday, November 16, 2016

whether it can be referred to arbitration -(i) The application I.A.No.IV of 2014 praying for referring the matter to arbitration was not accompanied by the original retirement deed dated 25.07.2005 and partnership deed dated 05.04.2006, hence the application was liable to be dismissed under Section 8(2) and Learned District Judge committed error in allowing the application. According to Section 8(2) of the Act, it is mandatory to file the original arbitration agreement or a duly certified copy thereof along with the application seeking reference to the arbitration. (ii) All the parties to the suit were not parties to the arbitration agreement as claimed in retirement deed and partnership deed. Hence, dispute could not have been refereed to the arbitrator. (iii) The firm being an unregistered firm, no reference to the arbitration can be made with regard to the dispute relating to unregistered firm. -held - No = ANANTHESH BHAKTA REPTD. BY MOTER USHA A BHAKTA AND ORS Vs. NAYANA S. BHAKTA AND ORS R.K. AGRAWAL, ASHOK BHUSHAN

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL No.10837 OF 2016
                  (ARISING OUT OF SLP(C)NO. 31179 OF 2014)


ANANTHESH BHAKTA REPRESENTED
BY MOTHER USHA A.BHAKTA & ORS.    .... APPELLANTS


                                     VERSUS

NAYANA S. BHAKTA & ORS.            .... RESPONDENTS



                                  JUDGMENT

ASHOK BHUSHAN, J.


      Leave granted.
2.    This appeal has been filed against judgment dated 08.07.2014  of  High
Court of Karnataka in Civil Revision No. 219 of  2014.  The  Civil  Revision
was filed by the appellants against the judgment and order dated  27th  May,
2014 of vacation District Judge, Mangalore in Original Suit No.  5  of  2014
filed by the appellants/plaintiffs. In the Suit, I.A. No. IV  was  filed  by
the  defendants/respondents  under   Section   8(1)   of   Arbitration   and
Conciliation Act, 1996, relying on arbitration agreement in retirement  deed
dated 25.07.2005(hereinafter referred to as retirement deed) as well  as  in
the  partnership  deed   dated   05.04.2006(hereinafter   referred   to   as
partnership deed). Learned District Judge has allowed the application  filed
by the defendant under Section 8(1) of 1996 Act. Parties to  the  suit  were
referred to the  arbitration  to  settle  the  dispute  as  per  arbitration
agreement. The High Court wide impugned judgment has affirmed the  order  of
Trial Court with observation that parties can press for an early trial.  The
Revision  Petition  was  disposed  of  accordingly.  Aggrieved  against  the
judgment of High Court, the appellants/plaintiffs have filed this appeal.

3.    The brief facts necessary to be noted for deciding this appeal are:
      (i) Late Ramabhakta had started a  business  of       manufacture  and
sales of 'Beedi' under the   name 'M/s Neo Subhash Beedi Works'.  After  his
demise,  his  six  sons,  namely,  late  M.    Narasimha  Bhakta,  late   M.
Subhaschandra    Bhakta, late M. Prakashchandra Bhakta, late  M.      Ganesh
Bhakta, late M. Gangadhar Bhakta and    late M.  Ashok  Bhakta,  constituted
the   partnership firm.

(ii) M. Narsimha Bhakta retired from the firm as per the release deed  dated
30.06.1986 and the remaining partners continued with the firm.

(iii) M.Prakashchandra Bhakta died on 20.03.1995 and as per  his  Will,  his
minor son Master M. Vinayaka Bhakta was admitted to the partnership  as  per
partnership deed dated 21.03.1995. On 06.03.1997, Subhaschandra Bhakta  died
and his LRs, namely Defendant Nos. 1 to  4  became  partners.  Ashok  Bhakta
died on 18.09.2001. The first plaintiff is son of late Ashok Bhakta.

(iv)  On  25.07.2005,   retirement     deed       was  executed   in   which
Defendant Nos. 1 to 4 were stated to have retired  from    partnership.  The
partnership deed dated 05.04.2006 was  entered  between  late  M.  Gangadhar
Bhakta, M. Vinayaka Bhakta, Defendant No. 5 and M. Vipin Bhakta(S/o late  M.
Ganesh Bhakta) and Master M. Anantesh    Bhakta,1st  Plaintiff.  M.Gangadhar
Bhakta      expired and his estate  is  represented  by  the       Plaintiff
Nos. 2 & 3.

4.    The suit for partition was filed by           M. Prakaschandra  Bhakta
and others against M. Subhaschandra Bhakta and others, being O.S. NO.  4  of
1985. The preliminary decree was passed  on  31.07.1986.   M.  Subhaschandra
Bhakta and others filed FDP No. 24 of 1992 for preparation of  final  decree
in which the compromise petition dated 04.04.1994 was filed  and  compromise
decree was passed on 05.04.1994. As per the  compromise decree, Item  No.  1
of 'A' schedule  property was allotted to M. Subhaschandra Bhakta  and  Item
No. 2 was allotted to M. Prakashchandra Bhakta.

5.     An  agreement  to  sale  dated  19.04.1993   was   executed   by   M.
Prakashchandra Bhakta in favour of partnership firm.  Similar  agreement  to
sell dated 19.04.1993 was also executed by M.Subhaschandra Bhakta in  favour
of firm.

6.    A Suit No. 5 of  2014  was  filed  by  three  Plaintiffs  (appellants)
against six Defendants who are  Respondent  Nos.  1  to  6  in  this  appeal
praying for permanent prohibitory injunction restraining the  Defendants  or
anyone claiming through them for transferring  or  alienating  'A'  schedule
property. Further, the permanent prohibitory injunction was  sought  against
the Defendant regarding possession and enjoyment of property  by  Plaintiff.
The Defendant had filed I.A.No.IV under  Section  8(1)  of  Arbitration  and
Conciliation Act, 1996 (hereinafter  referred  to  as  Act)  on  09.05.2014,
praying to pass an order  referring  the  parties  to  the  arbitration  for
adjudication of the disputes raised  by  the  Plaintiff  in  the  Suit.  The
application was not accompanied by retirement deed and partnership deed.

7.    On 12.05.2014, the original retirement deed and the  partnership  deed
were produced by the Defendant along with the list.  The  counter  affidavit
to the  application I.A. No.  IV  was  also  filed  by  the  Plaintiff.  The
Learned District Judge heard the I.A.No.IV as well as the objections  raised
by the Plaintiff and by  an  order  dated  27.05.2014,  pass  the  following
order:
       “I.A.No.  IV  filed  under  Section  8(1)  of  the  Arbitration   and
Conciliation Act, 1996 by the defendants is allowed.
      The parties to the suit are referred  to  the  Arbitration  to  settle
their disputes and differences, in view of the Arbitration Agreement.
      The suit of the plaintiffs stands disposed off accordingly.”


8.    Learned Counsel appearing for appellants in  support  of  this  appeal
raised following submissions:
(i)   The application I.A.No.IV of 2014 praying for referring the matter  to
arbitration was not  accompanied  by  the  original  retirement  deed  dated
25.07.2005 and partnership deed dated 05.04.2006, hence the application  was
liable to be  dismissed  under  Section  8(2)  and  Learned  District  Judge
committed error in allowing the application. According to  Section  8(2)  of
the Act, it is mandatory to file the original  arbitration  agreement  or  a
duly certified copy thereof along with the application seeking reference  to
the arbitration.

(ii)  All the parties to the  suit  were  not  parties  to  the  arbitration
agreement as  claimed  in  retirement  deed  and  partnership  deed.  Hence,
dispute could not have been refereed to the arbitrator.

(iii) The firm being an unregistered firm, no reference to  the  arbitration
can be made with regard to the dispute relating to unregistered firm.

9.     Learned  counsel  appearing  for   respondents   have   refuted   the
submissions and contends that Learned District Judge after  considering  all
aspects of the matter have rightly made the reference to the arbitrator.  It
is submitted that there was clear arbitration agreement  in  the  retirement
deed as well as in the partnership deed as has been noted by District  Judge
and the suit could not  have  proceeded.  All  the  Plaintiffs  as  well  as
Defendant Nos. 1 to 4 and Defendant No. 5 were parties  to  the  arbitration
agreement either personally or claiming through the person who was party  to
the agreement. The Defendant No. 6  has  not  inherited  any  right  in  the
partnership firm and was unnecessarily  impleaded  by  the  Plaintiff.  Mere
presence of Defendant No.6 as one of the Defendants does  not  preclude  the
implementation of  arbitration  agreement.  With  regard  to  non-filing  of
retirement deed and partnership deed along with application  I.A.No.  IV  of
2014, two submissions have been raised. Firstly, it is  contended  that  the
Plaintiff themselves has filed both retirement  deed  and  partnership  deed
along with the list of documents and having admitted  both  retirement  deed
and partnership deed, non-filing along with the application I.A.No.  IV  was
inconsequential. Secondly, the Defendant themselves immediately after  three
days of filing their I.A.No. IV of 2014 had filed  the  original  retirement
deed and partnership deed on 12.05.2014 and  at  the  time  the  matter  was
considered by District Judge, original deeds were on the record. Hence,  the
application I.A.No. IV was not liable to be rejected on this  ground.  There
is no  such  provision  which  prohibits  the  adjudication  of  dispute  by
arbitration regarding an unregistered partnership firm.
10.   We have considered the submissions of learned counsel for the  parties
and perused the records.

11.   From the pleadings on records and submissions  made,  following  three
issues arises for consideration:
(1) Whether non-filing of either original or certified  copy  of  retirement
deed  and  partnership  deed  along  with  application  I.A.No.   IV   dated
09.05.2014 entailed dismissal of the application  as  per  section  8(2)  of
1996 Act.

(2)   Whether the fact that all the parties to the suit  being  not  parties
to the retirement deed/partnership deed, the Court was not entitled to  make
the reference relying on arbitration agreement.

(3) Whether dispute pertaining to unregistered partnership  deed  cannot  be
referred to an arbitration despite there being arbitration agreement in  the
deed of retirement/partnership deed.

ISSUE NO.(1)

12. Two facts which emerged from record in this respect need  to  be  noted.
Firstly, the plaintiffs in their plaint of O.S.No. 5 of 2014  have  referred
to and admitted the retirement deed dated 25.07.2005  and  partnership  deed
dated 05.04.2006 in para 5 of the plaint.  The  plaintiffs  themselves  have
filed the  photocopies  of  deed  of  retirement  dated  25.07.2005  as  the
document no. 6 in  the  list  and  photocopies  of  partnership  deed  dated
05.04..2006 as document no. 7 as have been noted in para 23 of the  District
Judge judgment.

       Further,  although  initially  the  application  filed  by  Defendant
I.A.No. IV dated 09.05.2014 was not accompanied by copy of  retirement  deed
and partnership  deed.  The  Defendant  on  12.05.2014  filed  the  original
retirement deed and partnership deed along with the list. It  is  useful  to
note the findings recorded  by  District  Judge  in  the  above  context  in
paragraph 39 which is to the following effect:
"39.  The materials on record clearly goes  to  show  that  I.A.No.  IV  was
filed by the defendants on 09.05.2014. It is true that the  application  was
not accompanied by the Retirement Deed and the Partnership Deed  either  the
originals or the certified copies. On  12.05.2014  the  original  Retirement
Deed and the Partnership Deed were produced by  the  defendants  along  with
the list."


13. Section 8 which falls for consideration in the present case provides  as
follows:
" 8. Power to refer parties to arbitration where  there  is  an  arbitration
agreement-
(1)   A judicial authority before which an action is  brought  in  a  matter
which is the subject of an  arbitration  agreement  shall,  if  a  party  so
applies not later than when submitting his first statement on the  substance
of the dispute, refer the parties to arbitration.
(2)    The  application  referred  to  in  sub-section  (1)  shall  not   be
entertained unless it is accompanied by the original  arbitration  agreement
or a duly certified copy thereof.
(3)   Notwithstanding that an application has been  made  under  sub-section
(1)  and that the  issue  is  pending  before  the  judicial  authority,  an
arbitration may be commenced or continued and an arbitral award made."


14.   The appellants submit that sub-section (2)  of  Section  (8)  provides
that  "the  application  referred  to  in  sub-section  (1)  shall  not   be
entertained unless it is accompanied by the original  arbitration  agreement
or a duly certified copy thereof." They  submit  that  admittedly  with  the
application I.A.No. IV  filed on 09.05.2014, original or certified  copy  of
the Retirement Deed and Partnership Deed was not filed.
15.   Learned Counsel to the appellants also placed reliance on  a  judgment
of this court reported in  2008 (2) SCC 602, Atul Singh &  Othes  Vs.  Sunil
Kumar Singh & Others. In the above case, defendant had moved a  petition  on
28.02.2005 praying for referring  the  dispute  to  arbitration.  The  Trial
Court had dismissed the petition on  the  ground  that  the  predecessor  in
interest of the plaintiff was not party to the Partnership Deed executed  on
17.02.1992. Hence the main relief being declaration of the deed to  be  void
which could have been granted only by the Civil  Court,  the  dispute  could
not be referred. Defendant filed Civil Revision which  was  allowed  by  the
High Court. One of the submissions made before this court was  that  as  per
sub-section (2) of Section (8), the application could not  have  entertained
unless  it  was  accompanied  by  original  arbitration  agreement  or  duly
certified copy thereof. This court held that there  is  no  whisper  in  the
petition that the original agreement or  a  duly  certified  copy  is  being
filed. There was non compliance of Section 8(2). Hence the  reference  could
not have been made. Following was stated by this court in paragraph 19:
" 19. There is  no  whisper  in  the  petition  dated  28.02.2005  that  the
original arbitration agreement or a duly certified  copy  thereof  is  being
filed along  with  the  application.  Therefore,  there  was  a  clear  non-
compliance with sub-section (2) of Section 8 of the  1996  Act  which  is  a
mandatory provision  and  the  dispute  could  not  have  been  referred  to
arbitration. Learned counsel for the respondent has submitted  that  a  copy
of partnership deed was on the record of the  case.  However,  in  order  to
satisfy the requirement  of  sub-section  (2)  of  Section  8  of  the  Act,
Defendant 3 should have filed the original arbitration agreement or  a  duly
certified copy thereof along with the petition filed by him  on  28.02.2005,
which he did not do. Therefore,  no  order  for  referring  the  dispute  to
arbitration could have been passed in the suit."


      It is relevant  to  note  that  in  Atul  Singh's  case  (Supra),  the
submission of respondent was noticed that the copy of the  Partnership  Deed
was on the record of the case, but the Court has not  proceeded  to  examine
as to when such copies are already on record what is the effect.

16. In this context, the reference is made to  judgment  of  this  Court  in
2007 (7) SCC 737, Bharat Sewa Sansthan Vs. U.P.Electronics Corporation  Ltd.


      In the above case, two  judge  bench  of  this  Court  has  held  that
photocopies of lease agreement could be taken on record under Section 8  for
ascertaining the existence of arbitration clause. Following  was  stated  in
paragraph 24:
"24.  The respondent  Corporation  placed  on  record  of  the  trial  court
photocopies of the agreements along with an application under  Section  8(1)
of the Arbitration Act. The High Court, in our view, has rightly  held  that
the photocopies of the lease agreements  could  be  taken  on  record  under
Section  8  of  the  Arbitration  Act  for  ascertaining  the  existence  of
arbitration clause. Thus, the  dispute  raised  by  the  appellant  Sansthan
against the respondent  Corporation  in  terms  of  the  arbitration  clause
contained in the lease agreement is arbitral."


      In the case of Atul Singh (Supra), which was also a  judgment  of  two
Judge Bench, earlier  judgment  in  Bharat  Sewa  Sansthan  was  not  cited.
However, for purposes of this case, we need not enter into the issue  as  to
whether there is  a  compliance  of  section  8(2)  if  photocopies  of  the
arbitration agreement is already on the  record  and  not  disputed  by  the
parties.

17.   There is one another aspect of  the  matter  which  is  sufficient  to
uphold the order of the District Judge. Section 8(2) uses the phrase  "shall
not be entertained". Thus, what is prohibited is the  entertainment  of  the
application unless it is accompanied by the original  arbitration  agreement
or a duly certified copy thereof.

18.   The word 'entertained' has specific meaning in  P.  Ramanatha  Aiyar's
Advanced Law Lexicon word 'entertained' has been defined as:
" 1. To bear in mind or consider, esp, to  give  judicial  consideration  to
(the Court then entertained motions for continuance).
2.    To amuse or please.
3.    To receive(a person) as a guest or provide hospitality to (a person).
      The expression 'entertain' means to 'admit a thing for  consideration'
and when a suit or proceeding is not thrown out  in  limine  but  the  Court
receives it for consideration and disposal  according  to  law  it  must  be
regarded as entertaining the suit or  proceeding,  no  matter  whatever  the
ultimate decision might be."


      The Blacks Law  Dictionary  also  defines  this  word  'entertain'  as
follows:
"To bear in mind or consider;esp., to give judicial  consideration  to  <the
court then entertained motions for continuance>"


19.   In 1971 (3) SCC 124, Hindusthan Commercial Bank Ltd.  Vs.  Punnu  Sahu
(Dead) through  Legal  Representatives,  the  word  'entertained'  came  for
consideration as occurring in Order 21, Rule 90, Proviso of Civil  procedure
Court. Para 2 of the Judgment notices the amended Proviso which was  to  the
following effect:
"2.   The amended proviso with which we are concerned in this  appeal  reads
thus:
'Provided that no application to set aside a sale shall be entertained-
(a) upon any ground which could have been  taken  by  the  applicant  on  or
before the date on which the sale proclamation was drawn up; and
(b) Unless the applicant deposits such amount not exceeding twelve and  half
percent of the sum realised by the sale or furnishes such  security  as  the
Court may, in its discretion, fix except when the Court for  reasons  to  be
recorded dispense with the requirements of this clause:
      Provided further that no sale shall be set  aside  on  the  ground  of
irregularity or fraud unless upon the facts proved the  Court  is  satisfied
that the applicant has  sustained  substantial  injury  by  reason  of  such
irregularity or fraud."


      The contention of the appellant was that word  'entertain'  refers  to
initiation of the proceedings and not to the stage when the Court  takes  up
the application for consideration. The High  Court  had  rejected  the  said
contention. The above view of the High Court was approved by this  court  in
paragraph 4 of the judgment. Following was stated:
"4.   Before the High Court it was contended on behalf of the appellant  and
that contention was repeated in this court, that Clause (b) of  the  proviso
did not govern the present proceedings as the application  in  question  had
been filed several months before that clause was added to  the  proviso.  It
is the contention of the appellant that the expression 'entertain' found  in
the proviso refers to the initiation of the proceedings and not to the  sage
when the Court takes up the application for consideration.  This  contention
was rejected by the High Court relying on the  decision  of  that  Court  in
Kundan Lal Vs. Jagan Nath Sharma, AIR 1962 All 547. The  sameview  had  been
taken by the said High Court in Dhoom Chand Jain  V.  Chamanlal  Gupta,  AIR
1962 All 543 and Haji Rahim Bux and Sons V. Firm  Samiullah  and  Sons,  AIR
1963 All 320 and again in Mahavir Singh V. Gauri Shankar, AIR 1964 All  289.
These decisions have  interpreted  the  expression  'entertain'  as  meaning
'adjudicate upon' or 'proceed to consider on merits'. This view of the  High
Court  has  been  accepted  as  correct  by  this  Court   in   Lakshmiratan
Engineering Works Ltd. V. Asst. Comm., Sales tax, Kanpur, AIR 1968  SC  488.
We are bound by that decision and as  such  we  are  unable  to  accept  the
contention of the appellant that Clause (b) of the proviso did not apply  to
the present proceedings."

20.   Another relevant judgment  is 1998 (1)  SCC  732,  Martin  and  Harris
Ltd. Vs. VIth Additional District  Judge  and  others.  In  the  above  case
Section 21(1) proviso of U.P. Urban Buildings (Regulation of  Letting,  Rent
and  Eviction)  Act,  1972  (13  of  1972)  word  'entertained'   came   for
consideration. The proviso to Section 21(1) was to the following effect:

" 8.  Provided that where the building was in the  occupation  of  a  tenant
since before its purchase by the landlord, such purchase  being  made  after
the commencement of the Act, no application  shall  be  entertained  on  the
grounds, mentioned in clause(a) unless a period of three years  has  elapsed
since the date of such purchase and the landlord has given a notice in  that
behalf to the tenant not less than six months before such  application,  and
such notice may be given even before the expiration of the aforesaid  period
of three years."


      In the above case, the application under Section 21(1)  was  filed  by
the landlord before expiry of  period  of  three  years  from  the  date  of
purchase. It was held by this Court that word 'entertained' as  employed  in
first proviso under Section 21(1)  could  not  mean  'institution'  of  such
proceedings. In Para 9 and 10, following was laid down:
"9.   Even that apart there is an internal indication in the  first  proviso
to Section 21(1) that the legislature has made a clear  distinction  between
'entertaining' of an application for possession under  Section  21(1)(a)  of
the Act and 'filing' of such application. So  far  as  the  filing  of  such
application is concerned it is clearly indicated  by  the  legislature  that
such application cannot be filed before expiry of six months from  the  date
on which notice is given by the landlord  to  the  tenant  seeking  eviction
under Section 21(1)(a) of the Act. The words,  "the  landlord  has  given  a
notice in that behalf to the tenant not less than  six  months  before  such
application", would naturally mean that before filing  of  such  application
or moving of such application before the prescribed  authority  notice  must
have preceded by at least six months. Similar terminology  is  not  employed
by the legislature in the very same proviso so far as  three  years'  period
for entertaining such application on the grounds mentioned in clause (a)  of
Section 21(1) a stage must be reached when the court  applied  its  judicial
mind and takes up the case for decision on  merits  concerning  the  grounds
for possession mentioned  in  clause  (a)  of  Section  21(1)  of  the  Act.
Consequently on the very scheme of this Act it cannot be said that the  word
'entertain' as employed by the legislature in the first proviso  to  Section
21(1) of  the  Act  would  at  least  mean  taking  cognizance  of  such  an
application by the prescribed authority by issuing  summons  for  appearance
to the tenant-defendant. It must be held  that  on  the  contrary  the  term
'entertain' would only show that by the time the application for  possession
on the grounds mentioned in clause (a) of Section 21(1) is taken up  by  the
prescribed authority for consideration  on  merits,  atleast  minimum  three
years' period should  have  elapsed  since  the  date  of  purchase  of  the
premises by the landlord.

10.   Leaned Senior Counsel, Shri Rao, for the appellant  then  invited  our
attention to two decisions  of  this  Court  in  the  case  of  Lakshmiratan
Engineering  Works  Ltd.  V.  Asstt.  Commr.(Judicial)  I,  Sales  Tax   and
Hindusthan Commercial bank Ltd V. Punnu Sahu.  In  Lakshmiratan  Engineering
this Court was concerned with the meaning of the word 'entertain'  mentioned
in  the  proviso  to  Section  9  of  the      U.P.  Sales  Tax  Act,  1948.
Hidayatullah,J., speaking for  the  Court  observed  in  the  light  of  the
statutory scheme of Section 9 of the said Act  that  the  direction  to  the
Court in the proviso to Section 9 was to the effect  that  the  Court  shall
not proceed to admit to consideration an appeal which is not accompanied  by
satisfactory proof of the payment of  the  admitted  tax.  In  the  case  of
Hindusthan Commercial Bank the term 'entertain' as found in the  proviso  to
Order XXI Rule 90 Code of Civil Procedure(CPC)  fell  for  consideration  of
the Court. Hegde,J., speaking for a Bench of  two  learned  Judges  of  this
Court in this connection observed that the  term  'entertain'  in  the  said
provision means 'to adjudicate upon' or 'to proceed to consider  on  merits'
and did not mean 'initiation of proceeding '. The  aforesaid  decisions,  in
our  view,  clearly  show  that  when  the  question  of   entertaining   an
application for giving relief to a party arises and  when  such  application
is based on any grounds on which such application has to be considered,  the
provision regarding 'entertaining such application' on any of these  grounds
would necessarily mean the consideration of the application  on  the  merits
of the grounds on which it is base. In the present case, therefore, it  must
be held that when the legislature has provided  that  no  application  under
Section  21(1)(a)  of  the  Act  shall  be  entertained  by  the  prescribed
authority on grounds mentioned in clause (a) of Section  21(1)  of  the  Act
before expiry of three years from  date  of  purchase  of  property  by  the
landlord it must necessarily mean consideration by the prescribed  authority
of the grounds mentioned in clause (a)  of  Section  21(1)  of  the  Act  on
merits."


21.   In the present case as noted above, the original Retirement  Deed  and
Partnership Deed were filed by the defendants on 12th May  and  it  is  only
after  filing  of  original  deeds  that  Court  proceeded  to  decide   the
application I.A.No. IV.

22.   Section 8(2) has to be interpreted to mean that the  court  shall  not
consider any application filed by the party under Section 8(1) unless it  is
accompanied  by  original  arbitration  agreement  or  duly  certified  copy
thereof. The filing of the application without such  original  or  certified
copy, but bringing original arbitration agreement  on  record  at  the  time
when the Court is considering the application shall not entail rejection  of
the application under Section 8(2).

23.   In the present case it is relevant to note  the  Retirement  Deed  and
Partnership Deed have  also  been  relied  by  the  plaintiffs.  Hence,  the
argument of plaintiffs that  defendants'  application  I.A.No.  IV  was  not
accompanied by original deeds, hence,  liable  to  be  rejected,  cannot  be
accepted. We are thus of the view that the appellants  submission  that  the
application of defendants under Section 8 was liable to be rejected,  cannot
be accepted.

ISSUE NO. 2

24.   The relevant facts and pleadings of the parties  have  been  marshaled
by the  trial  court.  Trial  Court  has  returned  the  findings  that  the
plaintiff no. 1 represented by his mother and next friend was party  to  the
Retirement Deed. The mother of plaintiff namely  Smt.  Usha  A.  Bhakta  has
signed the retirement deed for self and on behalf  of  her  minor  children,
the plaintiff No. 1. Plaintiff No. 2  and 3 claiming  their  rights  through
one of the partners Shri Gangadhar Bhakta, their father, who  was  party  to
the retirement deed. In paragraph  23  of  the  judgment,  Learned  District
Judge had returned the following findings:
"...therefore, the plaintiff no.  1  represented  by  his  mother  and  next
friend Smt. Usha A. Bhakta is a party to the Retirement Deed and  plaintiffs
2 and 3 are claiming their rights through  one  of  the  partner  late  Shri
Gangadhar Bhakta,  who  was  also  a  party  to  the  Retirement  Deed.  The
Defendants 1 to 5 are also the parties to this Retirement  Deed.  Therefore,
except defendant No. 6 all others  are  either  personally  or  through  the
persons from whom they are claiming the right are parties  to  the  Deed  of
Retirement Deed dated 25.07.2005..."


      Thus it was only defendant no. 6 who was not party to  the  retirement
deed or partnership deed. Both 5th and 6th defendants are issues of late  M.
Prakashchandra Bhakta.

25.   Learned Counsel for the respondents have submitted that  it  was  case
of  the  plaintiffs  themselves  that  by  virtue  of   Will   executed   by
M.Prakashchandra Bhakta it was only defendant no. 5 who became  entitled  to
benefits of partnership and defendant no. 6 was not given any share.

26.   The plaintiffs admittedly are parties to the arbitration agreement  as
noted above. It does not lie in their mouth to contend  that  since  one  of
the defendants whom they have impleaded was not  party  to  the  arbitration
agreement, no reference can be made to the arbitrator. In the facts  of  the
present case, it cannot be said that merely because one  of  the  defendants
i.e. defendant no. 6  was  not  party  to  the  arbitration  agreement,  the
dispute between the  parties  which  essentially  relates  to  the  benefits
arising out of Retirement Deed and Partnership deed cannot be referred.

27.    Learned  District  Judge  has  noted  that  defendant  no.6  has  not
inherited any share either in Partnership deed or in the  schedule  property
and hence there is no question of bifurcation of either cause of  action  or
parties. Relevant findings in this context have been  returned  by  District
Judge in paragraph 40 to the following effect:
“40...It is only defendant No. 6 was not the party to either the  Retirement
Deed or the Partnership Deed where there is an Arbitration Clause  to  refer
all the disputes and differences to the Arbitration. Even according  to  the
plaintiffs defendant No. 6 is not a Partner nor she is a  party  to  any  of
the documents and further as per the Will executed by her father  late  Shri
Prakash Chandra Baktha, she has not inherited any right or share  either  in
the Partnership Deed or in  the  Schedule  property.  Moreover,  the  Plaint
schedule property according  to  the  plaintiffs  is  the  property  of  the
Partnership Firm M/s. 'Neo Subhash Beedi  Works'.  Therefore,  there  is  no
question of bifurcation of either cause of action or parties if the same  is
to be referred to the Arbitration as per the Arbitration  Clause  formed  in
the Retirement  Deed  dated:  25.07.2005  and  the  Partnership  Deed  dated
05.04.2006...”


      We fully endorse the above view taken by Learned District Judge.

ISSUE NO. 3
28.   The  submission  by  the  petitioner  is  that  partnership  being  an
unregistered partnership, no reference can be made to  the  arbitration.  In
the present  case  there  is  no  dispute  between  the  parties  that  both
Retirement deed and Partnership  deed  contain  an  arbitration  clause.  In
Retirement deed which had  been  signed  by  retiring  partners,  continuing
partners and concurring partners, following was stated in clause 8:
“...In case of any  dispute  or  difference  arising  between  the  parties,
regarding the interpretation of the contents of this Deed of  Retirement  or
any other matter or transactions touching the said retirement, it  shall  be
referred to an  arbitration  under  the  provisions  of  the  Arbitration  &
Conciliation Act, 1996...”


      Further, in partnership deed which was 05.04.2006, clause 26  contains
an arbitration clause which is to the following effect:

“  26.  ALL  DISPUTES  arising  between  the   partners   or   their   legal
representatives about the interpretation of this Deed or  their  rights  and
liabilities there under or in  relation  to  any  other  matters  whatsoever
touching the partnership affairs shall  be  decided  by  an  Arbitration  as
provided by the Arbitration & Conciliation Act, 1996.”

            When the partners and those who claim  through  partners  agreed
to get  the  dispute  settled  by  arbitration,  it  is  not  open  for  the
appellants to contend that partnership being unregistered  partnership,  the
dispute cannot be referred.

29.   The petitioners have not been able to  show  any  statutory  provision
either in 1996 Act or in any other statute from which it can  be  said  that
dispute concerning unregistered  partnership  deed  cannot  be  referred  to
arbitration. We thus do not find any substance in the  third  submission  of
the appellant.

30.   In the result, we do not find  any  merit  in  this  appeal  which  is
accordingly dismissed.


                                               ...........................J.
                                                              (R.K. AGRAWAL)


                                               ...........................J.
                                                             (ASHOK BHUSHAN)


NEW DELHI,
NOVEMBER 15, 2016.











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