Som Nath and Others vs Khushi Ram and Others

D.K. Mahajan, J.—This order will dispose of F.A. Os. Nos. 65 and 105 of 1963. F.A.O. No. 65 of 1963 is directed against the order of the trial Court making the award a rule of the Court. F.A.O. 105 of 1963 is directed against the order of the Court making the award a rule of the Court conditionally on payment of additional stamp duty on the award which has been held to be insufficiently stamped by the trial Court. The trial Court has treated the award as an instrument of partition within the meaning of section 2(15) of the Indian Stamp Act No. 2 of 1899. It will be proper at this stage to deal with the latter appeal first. Mr. Chetan Das who appears for the State Das raised a preliminary objection that no appeal is competent u/s 39 of the Indian Arbitration Act and, therefore, the appeal must be dismissed on this short ground. I am, however, unable to agree with this contention. In order to understand the preliminary objection, it will be proper to set out the nature of the instrument which undoubtedly is an award of the arbitrator. The parties to the instrument entered into a partnership to carry on the business of the earthwork fur the Rajasthan Canal. Formerly the business was to be carried on at Hanumangarh. Later, on, at the time when the instrument of partnership was written, by the consent of the parties, the seat of business was shifted to Karnal and the business was earned on at Kamal. Though actually the business was being conduct at the relevant time in Rajasthan. In the partnership agreement, there is a provision that if any dispute arose between the partners that will be settled by arbitration. As disputes arose between the partners they were referred to arbitration. The arbitration agreement was executed between all the partners. Some of the partners were personally signatories to the agreement while others signed it through their attorneys. In pursuance of this agreement the arbitrators entered into the reference and gave their award. The award was also similarily signed. The award was written on a stamp paper of Rs. 66/-. Presumably the stamp was paid keeping in view the provisions of Article 12 of the Indian Stamp Act. An application u/s 14 of the Indian Arbitration Act was made by the respondents to make the award a rule of the Court. When the matter was pending before the trial Court, objections were raised by the present appellants in F.A.O. No. 65 of 1983 that the award be not made a rule of the Court. A very large number of objections were raised but I am only setting out those which have been agitated before me in appeal and they are :

that there was no valid agreement to refer the dispute to arbitration as it was not signed by all the arbitrators;

that the civil Court at Karnal had no jurisdiction to make the award a rule of the Court inasmuch as the partnership business was being carried on in Rajasthan;

that the arbitrators were guilty of misconduct and had also misconducted the arbitration proceedings; and

that the arbitration award was not properly stamped and, therefore, it could not be made a rule of the Court and in any case till it was properly stamped, the impugned order could not be passed.

The trial Court negatived all these objections excepting the objections as to stamp and held that the award amounted to an instrument of partition and, therefore, required stamp duty under Article 45 of the Stamp Act. It accordingly impounded the document and passed the order that the award be made a rule of the Court and a decree to follow only after the stamp with penalty was made good. In the present case, the respondents paid the stamp duty with penalty and a decree in accordance with the award has been passed. Against this order, the objectors have filed appeal No. 65 of 1963 and the respondents in appeal No. 65 of 1963 have preferred appeal No. 105 of 1963 questioning the order of the trial Court holding the award to be an instrument of partition, and requiring the deficiency in stamp to be made good. It is no doubt true that section 39 of the Arbitration Act does not directly provide for appeal in this contingency and, therefore, it seems a little doubtful whether F. A. O. No. 105 of 1963 is competent. In these circumstances I have though it fit to examine the impugned order under the provisions of section 115 of the Civil Procedure Code. I am leaving the question, whether such an order can be impugned in appeal, open. If the award is read as a whole, it will clearly indicate that it is not an instrument of partition which partitions shares of the co owners in severalty. It is an instrument which enables certain partners to retire from the partnership taking away the profits as well as their capital from the partnership business. The remaining partners still retained the business as well as the assets of the partnership and also the liabilities. The retiring partners were absolved from the liabilities. They parted with the assets of the firm and also the business of the firm. Therefore, it appears to me that the trial Court was in error in holding the instrument to be an instrument of partition and by this wrong decision it assumed jurisdiction which it had not because if he document in question was not an instrument of partition, it could not be impounded and the conditional order requiring the stamp duty to be made good could not be passed. Therefore, treating appeal No. 105 of 1963 as a revision, 1 allow this petition and modify the order of the trial Court to the effect that the decree will not be drawn even in case the deficiency in stamp duty is made good. I also hold that the instrument in the instant case is not an instrument of partition.

Taking up the appeal of the objectors (F.A.O. No. 65 of l963, the first contention advanced by Mr. Puri, learned counsel for the appellants, was that the agreement to refer the dispute was not signed by all the partners. I have gone through the instrument and find that it is signed by all the partners either personally or through their duly constituted attorneys. Mr. Puri has been unable to show that the attorneys were not authorised to sign on behalf of the partners who did not personally sign it. Ail that Mr. Puri contended was that the matter had been decided between two sets of parties and they gave legal form to it. There is nothing wrong or illegal in doing so. None of the objectors has stated that he was either fenced to sign the agreement or any fraud or undue influence was practised upon him. As a matter of fact, the signatories to the agreement are also the signatories to the award. Therefore it cannot, in any circumstances, be held that there was no valid agreement to refer the dispute to arbitration.

So far as the second contention with regard to the jutisdiction of the Court to entertain the application for making the award a rule of the Court is concerned, the matter admits of no difficulty. According to the partnership deed the principal place of business of partnership is Karnal and in view of the rule stated in V. Venkatasamiappa v. Sripidhi Ltd. 1, it must be held that the trial Court was right in holding that the Civil Court at Karnal had jurisdiction to deal with the matter.

Regarding the third contention, Mr. Puri has been unable to show any misconduct on the part of the arbitrators either in making the, award or in conducting the arbitration proceedings. No particulars pertaining to either of these matters have been either alleged or proved. Hence there is no merit whatsoever in the third contention either.

In view of my decision on the question of stamp, the fourth contention advanced by Mr. Puri has no legs to stand upon at all.

That being so, the result is that F.A.O. No 65 of 1963 is dismissed and F.A.O. No. 105 of 1963 is treated as revision and is allowed. There would be no order as to costs in F.A.O. 105 of 1963 but the respondents will get their costs in F.A.O. No. 65 of 1963.