SUBHASH INDUSTRIES Vs. BHAGWANDAS RATANJI PANCHAL
LAWS(GJH)-1979-11-5
HIGH COURT OF GUJARAT
Decided on November 06,1979

SUBHASH INDUSTRIES Appellant
VERSUS
BHAGWANDAS RATANJI PANCHAL Respondents

JUDGEMENT

M.K.SHAH - (1.) AN interesting question which arises in this revision application is as to whether a party to a partnership deed who repudiates the contract with regard to partnership can be permitted to rely upon a term in the deed of partnership itself and demand a reference to arbitration based on the arbitration clause contained in the said deed of partnership.
(2.) PLAINTIFF Bhagwandas Ratanji Panchal and two of the three defendants viz. Manchharam Morarji Panchal (defendant No. 2) and defendant No. 3 Subhaschandra Manchharam Panchal (son of defendant No. 2 Manchharam) entered into partnership to do business in the name and style of M/s. Subhash Industries (deft. No. 1) doing business at Vapi district Bulsar. A deed of partnership was executed on 15th November 1968 and was signed by all the three partners viz. the plaintiff and the said two defendants. The business continued for sometime and thereafter the plaintiff addressed a notice through his advocate on 14th December 1976 inter alia asking for dissolution of the partnership and winding up of the partnership business and accounts from the defendants. The defendants by their reply dated 21st December 1976 inter alia contended that the plaintiff was never a partner in the said firm and was not entitled to any account or any other rights in the said partnership business. It was the defendants case that as the plaintiff was a near relative of the defendants viz. son of their sister they having compassion on him employed him as an employee in the said firm on a salary of Rs. 200.00 per month and the partnership deed was executed only in the names sake in order to maintain status of the plaintiff. But the plaintiff in fact had not acted as a partner now done any work therein and he was an employee therein and after sometime he left the service of the said firm and was doing his own business. He was therefore not entitled to any accounts or share in the profits of the firm. The plaintiff thereafter filed regular civil suit No. 60 of 1977 in the court of the Civil Judge (Junior Division) at Pardi for dissolution and accounts. The defendants while appearing in the said suit filed an application Ex. 11 inter alia contending that as there was a clause with regard to arbitration being clause 14 in the deed of partnership the plaintiff was not entitled to file the suit and to have recourse to the court of law without getting the matter first referred to arbitration. The defendants therefore prayed for stay of the suit under sec. 34 of the Arbitration Act without prejudice to their right to file a written statement in the suit later. The learned Civil Judge (Junior Division) at Pardi by his order dated 20th October 1977 on Ex. 11 dismissed the said application inter alia holding that the question regarding dissolution of partnership and accounts would not come within the purview of the Arbitration Act contained in clause 14 of the partnership deed. He therefore ordered the defendants to file the written statement within three weeks. The defendants carried the matter further up in appeal being civil appeal No. 44 of 1977 to the court of the learned District Judge Bulsar at Navsari and the learned District Judge by his order dated 13th January 1978 dismissed the appeal; and hence this revision by the petitioners that is original defendants. ... ... ... ... ... ... ... Mr. Amin secondly submitted that in the instant case the defend ants themselves having repudiated the contract of partnership between them and the plaintiff it would not be open to them to have recourse to the partnership deed and the arbitration clause contained therein for the purpose of seeking stay of the proceedings under sec. 34 of the Arbitration Act.
(3.) I find considerable force in the second submission of Mr. Amin the learned Advocate appearing for the opponent plaintiff and as the matter can be disposed of on the short question which arises as submitted by Mr. Amin it would not be necessary to go into and consider the other submissions made by Mr. Vyas the learned Advocate for the petitioner as also the first contention raised by. Mr. Amin.;


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