JAYANTILAL DAHYABHAI Vs. ANILKUMAR DAHYABHAI AND ANOTHER
LAWS(GJH)-1970-2-13
HIGH COURT OF GUJARAT
Decided on February 10,1970

Jayantilal Dahyabhai Appellant
VERSUS
Anilkumar Dahyabhai and Another Respondents


Referred Judgements :-

JAGDISH CHANDRA GUPTA VS. KAJARIA TRADERS INDIA LIMITED [REFERRED TO]


JUDGEMENT

P.N.BHGWATI,J. - (1.)The plaintiffs carry on business as partners in the firm's nameand styleof "Anilkumar Punjabhai Palkhivala and Company". One Jayantilal Dahybahi who was original defendant No.1 and defendant Nos. 2 to 5 carried on business at all material times in the firm name and style of "Ajitbhai and Jayantilal". The defendant Nos. 6 to 9 being minors were admitted to the benefits of this partnership. The plaintiffs, original defendant No. 1 and defendant Nos. 2 to 5 entered into a partnership agreement for the purpose of carrying on business in cloth on the terms and conditions recorded in the partnership-deed dated 3rd December 1958. Clause 9 of the partnership deed provided that in case of dispute, the matter shall be decided according to the provisions of the Arbitration Act. The partnership between the plaintiffs, original defendant No. 1 and defendant Nos. 2 to 5 carried on business for a period of about three years until 4th December 1961 when it was dissolved by reason of a notice of dissolution given by the defendants to the plaintiffs. Some attempt was thereafter made by the parties to settle the dispute by arbitration of two leading merchants in Ahmedabad but by reason of a dispute raised on behalf of the plaintiffs as to the scope of the arbitration, progress could not be made by the arbitrators and they intimated to the parties their inability to proceed with the arbitration. The plaintiffs thereafter filed Civil Suit No. 1357 of 1964 in the City Civil Court, Ahmedabad, for accounts of the dissolved partnership between the plaintiffs and the defendants. The plaintiffs also prayed in the alternative that if the partnership was held not dissolved on 4th December 1961, it should be dissolved by the Court and accounts of the partnership should be taken. On the service of the writ of summons upon them, the defendants made an application to the City Civil Court for stay of the suit under Section 34 of the Arbitration Act on the ground that the dispute forming the subject-matter of the suit was liable to be referred to arbitration as provided in clause 9 of the partnership deed. The application was resisted by the plaintiffs on several grounds all of which are not now material for the purpose of the present appeal. The learned Judge of the City Civil Court, by an order dated 14th September 1965 held that there was sufficient reason for not referring the dispute to arbitration and he accordingly discharged the rule on the application and directed that the suit be proceeded according to law. Hence the present appeal by the defendants.
(2.)When the appeal reached hearing the learned Advocate appearing on behalf of the plaintiffs raised a contention that apart altogether from the other points raised on behalf of the plaintiffs in the affidavit-in-reply to the application, there was one point which was fatal to the application and it was that the application was not maintainable in view of sub-section (1) read with subsection (3) of Section 69 of the Partnership Act. The partnership between the plaintiffs and the defendants was not registered under the provisions of the Partnership Act and therefore, submitted the learned advocate for the appellant, the application which was a proceeding for enforcing a right arising out of the contract of arbitration contained in the partnership deed was, by reason of Section 69 sub-section (3), within the mischief of Section 69 sub-section (1) and was accordingly not maintainable in law. This contention is well-founded and there is no answer to it. It is now settled by the decision of the Supreme Court in Jagdihsh Chandra v. Kajaria Traders (India) Ltd. A.I.R. 1964 S.C. 1882, that the words "other proceeding" in the opening part of Section 69 sub-section (3) are words of wide import which must receive their full meaning untrammelled by the preceding words "a claim of set-off. The proceeding in relation to which the question arose in that case was an application for appointment of an arbitrator under Section 8, Section (2) of the Arbitration Act. The application was filed by a partner of an unregistered firm and the question was whether the partnership being unregistered such an application was barred under Section 69 sub-section (1). The Supreme Court held that the application was a proceeding to enforce a right arising from a contract between the partners and it was, therefore, barred under sub-section (1) read with sub-section (3) of Section 69. This decision clinches the determination of the issue in the present case in favour of the defendants. If an application for appointment of an arbitrator under Section 8 sub-section (2) is proceeding to enforce a contract between the partners, equally an application for stay of the suit under Section 34 must be held to be a proceeding to enforce a right arising from a contract between the partners. What the partner making the application seeks in such a case is enforcement of the right arising from the contract of arbitration contained in the partnership-deed. Such an application would be clearly barred under Section 69 sub-section (1) if the partnership is not registered. This would appear to be clear as a plain corrollary from the decision of the Supreme Court in Jagdish Chandra's case, but I find that there is also a decision of Divan J. given on 15th March, 1967 in Appeal From Order No. 67 of 1962 where the same view has been taken. The facts of that case are identical with the facts of the present case and that decision being a decision given by a single judge of this Court is binding upon me. But even apart from the binding character of this Judgment, I myself am inclined to take the same view and I find myself wholly in agreement with what has been stated by the learned Judge in that Judgment. It must, therefore, be held that the application made by the defendants for stay of the suit under Section 34 of the Arbitration Act was barred under Section 69 sub-section (1) of the Partnership Act since the partnership was unregistered.
(3.)The appeal, therefore, fails and is dismissed.
(RMC) Appeal dismissed.



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