Ashok Kumar vs Dharam Pal and others

J.V. Gupta, J.—This order will also dispose of Civil Revision Petition No. 1833 of 1989, as both the revision Petitions have been filed against the same order of the District Judge, Sirsa, dated May 3, 1989.

The Plaintiff Dharam Pal filed the suit for dissolution of the firm and for rendition of accounts. The suit was filed on February 28, 1989. Since the partnership entered into vide partnership deed dated June 2, 1980, was at will, the same was dissolved by the Plaintiff by serving notices dated February 28, 1989; hence he filed the suit for rendition of accounts and the dissolution of the firm. In the suit, before filing the written statement, Defendants Nos. 2 to 5 moved an application u/s 34 of the Arbitration Act, (hereinafter called the Act) for staying the proceedings and to refer the matter to the arbitrator as per Clause 20 of the partnership deed dated June 2, 1980. The said clause reads as under:

Any controversy or claim relating to this partnership agreement, any breach in respect thereof, shall be subject to arbitration under the Indian Arbitration Act then in force

It was alleged in the said application on behalf of the Defendants that the said firm had already been dissolved earlier on February 23, 1989 and thereafter a new firm had come into existence. It was further alleged that the accounts had already been settled while retiring from the partnership concern and the amounts as per the statement of accounts were to be paid to the Plaintiff and Defendants Nos. 7 and 8 by the re-constituted firm which amounts the partners of the reconstituted firm are ready to pay against valid receipts. That application was resisted on behalf of the Plaintiff. The allegations made therein were denied. However, the trial Court vide order dated March 14, 1989, came to the conclusion that the dispute can be settled by the arbitrator as it fell within the subject-matter of the arbitration clause. Consequently, the application was allowed and the case was adjourned for appointment of the arbitrator. Dissatisfied with the same, the Plaintiff filed an appeal before the District Judge. The learned District Judge reversed the said finding of the trial Court and came to the conclusion:

I am of the opinion that the trial Court had grossly erred in coming to a conclusion that the matter regarding rendition of accounts in this case could be referred to arbitration. The findings of the learned Subordinate Judge are, therefore, liable to be reversed and I order accordingly.

According to the findings of the learned District Judge the dispute regarding the rendition of accounts did not relate to the partnership business or the partnership deed or the partnership or the breach thereof and, therefore, could not be referred to the arbitration. Reliance in this behalf was placed on Harinder Singh Randhawa v. Shri Hardial Singh Dhillon (1984) 86 P.L.R. 744. Consequently, the appeal filed by the Plaintiff was allowed. However, it was urged on behalf of the Plaintiff before the lower appellate Court that a receiver should be appointed with respect to the property in dispute and the Defendants should be directed not to carry on the business. That request was declined by the learned District Judge with the observations,--

This is wholly unwarranted because the Defendants could not be put to an undue loss on account of stoppage of business nor a receiver could be appointed in a light hearted manner without there being substantial documentary or other evidence to show that the Defendants had indulged in want of waste or destruction of the property in which the Plaintiff claims a share.

Dissatisfied with the same order dated May 3, 1989, Civil Revision Petition No. 1750 of 1989 has been filed on behalf of the Defendants whereas Civil Revision Petition No. 1833 of 1989 has been filed on behalf of the Plaintiff.

According to the learned Counsel for the Defendant-Petitioner, the trial Court rightly decided that in view of Clause 20 of the partnership deed dated June 2, 1980, the dispute was to be referred to the arbitration, but the view taken by the lower appellate Court in this behalf was wholly wrong and illegal. According to the learned Counsel, even the rendition of accounts fell within the purview of Clause 20 of the partnership deed dated June 2, 1980. In support of the contention, reliance was placed on Erach F.D. Mehta Vs. Minoo F.D. Mehta, . The learned Counsel further argued that in the application filed u/s 34 of the Act, it was stated that the firm had already dissolved on February 23, 1989 and a new firm had come into existence and thus there was dispute between the parties as to the date of dissolution of the firm and, therefore, the same was referable to the arbitrator under Clause 20 of the partnership deed dated June 2, 1980.

After hearing the learned Counsel for the parties, I do not find any merit in the contention raised on behalf of the Defendant-Petitioner.

A plea which may be available to the Defendant in his written statement could not be taken into consideration at the time of deciding the application u/s 34 of the Act. For the said purpose, the case set up in the plaint as such is to be seen. Admittedly, the partnership has been dissolved. Whether it has been dissolved on February 23, 1989 or February 28, 1989, as claimed by the Plaintiff can only be decided by the Court and not by the arbitrator because this is not a dispute which falls under Clause 20 of the partnership deed, as reproduced above As a matter of fact by taking the plea that the partnership was dissolved earlier by the partners, the matter is taken out of the purview of the arbitrator. E.F.D. Mehta''s case (supra) is clearly distinguishable as therein in the arbitration clause it was provided that all disputes and questions whatsoever which may arise during the partnership or afterwards between the partners touching the partnership agreement including division of assets, debts or liabilities shall be referable to the arbitrator. There is no such clause in the present partnership deed Rendition of accounts is something after the partnership is dissolved and comes to an end.

In any case, there is nothing to interfere with in the revisional jurisdiction, with the discretion exercised by the lower appellate Court in this behalf as there is no error of jurisdiction, nor it has acted illegally or with material irregularity in the exercise of its jurisdiction

As regards Civil Revision Petition No. 1833 of 1989, I do not find any justification for interference in the revisional jurisdiction with the impugned order. However, it is left open to the Plaintiff to make an appropriate application in the trial Court in order to safeguard his interests in the partnership property. As and when any such application is filed on behalf of the Plaintiff, the trial Court will dispose of the same on merits in accordance with law. Hence both the Petitions stand dismissed.

Since further proceedings were stayed by this Court at the time of the motion hearing the parties are directed to appear in the trial Court on September 12, 1989.