Rattan Chand vs Smt. Bimla Devi and Others

A.N. Jindal, J.—Bimla Devi, widow of Banwari Lal deceased partner of M/s Sharda Oil Mills, G.T. Road (Sirsa Road), Fatehabad (herein referred as ''the Firm'')} filed a suit for dissolution of the Firm and also claimed separate possession of l/4th share in the moveable and immovable property, as fully detailed and described in the heading of the plaint and rendition of accounts. She also challenged the mortgage deed No. 177 dated 17.4,2006 executed by the petitioner - defendant No. 2 Rattan Chand (herein referred as "the petitioner'') as general power of attorney of the plaintiff and defendant No. 3 and Sanjay Kumar, predecessor in interest of defendants No. 4 and 5 on behalf of defendant No.1 in collusion with defendants No. 3 to 6 in favour of defendant No. 7. She also challenged the agreement to sell dated 16.7.2006 executed by defendant No. 7 in favour of defendant No. 6 and the alleged compromise dated 13.12.2066, prepared by the petitioner, defendants No. 6 and 7 in Civil Suit No. 234-C of 2006 titled as "Ved Parkash v. Narender Kumar and another".

Upon notice, the petitioner moved an application u/s 8 of the Indian Arbitration and Conciliation Act, 1996 (for short ''the Act'') on 14.4.2007 stating that as per Arbitration Clause No. 14, the civil court has no jurisdiction to try the suit and that the dispute could be resolved by any Arbitrator appointed as mutually agreed upon between the parties. The reply to the said application was filed, denying all the allegations and pleading that defendants No. 6 and 7 are not the parties to the partnership agreement and on the death of Sanjay Kumar, the firm stood automatically dissolved and the arbitration agreement came to an end. The Trial Court vide order dated 19.2.2009 declined the application u/s 8 of the Act and allowed the suit to proceed.

Heard.

On going through the contentions as raised by both the parties as also the frame of the suit, it appears that this petition is without merit. It is amply clear from the frame of the suit that on the death of Sanjay Kumar, one of the partners, Smt. Sharda Devi and Ritu Garg being the mother and widow of Sanjay Kumar, respectively, were impleaded as defendants being legal representatives of Sanjay Kumar. There is nothing on the record to indicate that they were inducted as tenants and the firm still survived on inducting them as tenants after the death of Sanjay Kumar. Admittedly, Ved Parkash and Narender Kumar - defendants No. 6 and 7 respectively, are not the partners of the Firm and also not parties to the agreement of partnership deed dated 1.4.1997, therefore, clause 14 of the aforesaid agreement is not binding upon them. The mortgage deed which was executed in their favour has been specifically challenged by Bimla Devi therefore, Ved Parkash and Narender Kumar could also not be made subject to arbitration while applying against them the said agreement of partnership dated 1.4.1997. The dispute could be referred to Arbitrator if it was between the parties. As such, the present suit being clearly beyond the purview of Clause 14 of the arbitration agreement, is certainly maintainable. Section 8 of the Act is not applicable to the facts of the present case.

It is also held in Makkar Cotton Milk v. Harminder Singh (2001-1)127 PLR 609 that a suit for dissolution of a partnership and rendition of accounts has to be adjudicated by the court itself and not by the arbitrator. Similarly, the Apex Court in case Sukanya Holdings Pvt. Ltd. Vs. Jayesh H. Pandya and Another, held as under:

The relevant language used in Section 8 is - "in a matter which is the subject matter of an arbitration agreement." Court is required to refer the parties to arbitration. Therefore, the suit should be in respect of ''a matter'' which the parties have agreed to refer and which comes within the ambit of arbitration agreement. Where, however, a suit is commenced - "as to a matter" which lies outside the arbitration agreement and is also between some of the parties who are not parties to the arbitration agreement, there is no question of application of Section 8. The words ''a matter'' indicates entire subject matter of the suit should be subject to arbitration agreement.

It appears that the petitioner is coming with the same question of law time and'' ''again. This matter was also agitated by the Firm itself when M/s Sharda Ginning Pressing & Oil Mills & Others had filed the revision petition (the said Firm may be their sister concern) raising the same question that the matter was to be decided by the Arbitrator, wherein, this High Court vide judgment dated 11.12.2006 passed in Sharda Ginning Pressing and Oil Mills and others v. Smt. Bimla Devi (2007-2) 146 PLR 807 observed as under:

It is not in dispute that defendant? No. 6 and 7 are not parties to the agreement of partnership deed dated 1.4.1991 and therefore, the matter did not fall within the ambit of arbitration clause No. 15, referred to above. The learned Trial Court was right in coming to the conclusion that in view of judgment of Hon''ble Supreme Court in Sukanya Holdings Pvt. Ltd. Vs. Jayesh H. Pandya and Another, the matter cannot be referred to the arbitration. The suit should be in respect of a matter which the parties have agreed to refer and which comes within the ambit of arbitration agreement. When a suit is commenced as to a matter which lies outside the arbitration agreement and is also between the some of the parties who are not parties to the arbitration agreement, there is no question of moving application u/s 8 as the word "matter" referred to in Section 8 indicates the entire subject-matter of the suit should be subject-matter of arbitration agreement. Not only this, it has been held by this Court in the case of Makkar Cotton Mills'' case 2002 (1) RCR (Civil) 437 (Delhi) (supra) by relying upon the judgment of Hon''ble Supreme Court in Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. 1993 (3) RCR (Civil) 619 that the suit for dissolution of partnership and rendition of account has to be adjudicated by the civil court itself and not by the arbitrator. In view of this authoritative pronouncement, the learned Trial Court was right in rejecting the application.

The Similar view was taken by this Court in Sanjeev Goyal v. H.L. Goyal and others 2010 (2) RCR (Civil) 44. Thus, without further delving deep into the matter, it is held that since the suit for dissolution of Firm and rendition of accounts and challenging the mortgage deed as also the compromise was not between the parties, therefore, the matter could not be referred to the Arbitrator and the civil court has the jurisdiction to try the suit.

Hence, the petition, being devoid of any merit, is dismissed with costs of Rs. 20.000/-