SITA HOLIDAY RESORTS LIMITED Vs. MOHAN LAL HARBANS LAL BHAYANA AND COMPANY

JUDGEMENT

(1.) In this case, the question is whether there is a valid arbitration agreement in between the parties for, Mr. P.N. Bhatia who had signed on behalf of the defendant firm as partner, was allegedly not a partner, and as such, the defendant could not prima facie enforce the arbitration agreement.

(2.) Before proceeding further, it is desirable to appreciate the factual matrix. According to the plaintiffs case, late Shri P.N. Bhatia represented himself as a partner of defendant M/s Mohan Lal Harbans Lal Bhayana and Co. and signed the alleged Articles of Contract dated 12th February 1993 for and on behalf of defendant No.1, was not the partner on that date. A fraud was played on the plaintiff by producing photostat copies of some alleged partnership deed dated 24th May 1986 and a photostat copy of office order No. 208(B&R) New Delhi dated September 1986 from the Government of India, Directorate General, Central Public Works Department indicating that late Shri P.N. Bhatia was one of the partners of defendant No.1. Believing that Mr. P.N. Bhatia was competent to sign contract dated 12th February 1993, plaintiff entered into contract. Some disputes arose in between the parties relating to the said contract and the disputes were referred to arbitration in terms of Articles of Contract dated 12th February 1993 and from discovery and production of documents, it transpired that late Shri P.N. Bhatia, the signatory of the Contract, was not the partner and he represented as partner of the defendant No.1. It also transpired that the defendant firm was not registered under Section 69 of the Partnership Act. Mr. Ashish Bhatia who signed and verified the claim petition represented himself to be one of the partners of defendant No.l, was also not a partner. Now, the defendants are claiming that Mr. P.N. Bhatia and Mr. Ashish Bhatia were Attornies of defendant No.l and have allegedly filed forged and fabricated documents. Consequently, the plaintiff raised objection on 24th October 1997 that there was no valid executable and subsisting Article of Contract (including the arbitration agreement) and therefore no arbitration could take place. The matter could be tried only u/s 9 of the Civil Procedure Code and not under the Arbitration.

(3.) The arbitrator has already framed an issue and since the new Arbitration act applies, under section 9 it is only for the arbitrator to decide the issue first for this court has no jurisdiction to enter into those questions. Under section 22 of the Partnership Act, even an outsider could appoint the firm and firm could reconfirm the agreement; even oral authorisation was permissible.