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.
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.
