Sultan Singh ( 1 ) M/s. Paras Ram Darshan Lal filed two petitions (Suit Nos. 678-A of 1974 and 679- A of 1974) u/s 8 and 20 of the Arbitration Act for filing arbitration agreements in Court and appointment of arbitrators in the two cases, The cases are similar in nature and can be disposed of by this judgment. Petitioners firm is a dissolved partnership firm. All the partners of the dissolved firm executed a special power of attorney in favour of Shri Darshan Lal ex-partner authorising him to act on behalf of the firm and to sign all documents. The petitioners allege that various contracts were entered into by them with the Union of India for construction of bridges of the value of more than Rs. 50 lakhs, that a contract for construction of four girdar bridges and one RCC Slab bridges was executed on 1. 5. 65 vide agreement No. 29/gal, disputes arose and by letter dated 22. 9. 69 the respondent was requested to appoint an arbitrator but the respondent did not appoint any arbitrator and therefore they filed the present petition. In Suit No. 679-M of 1974 the contract was executed on 25. 5. 68 May, 1968, vide Agreement No. 30/cal. ( 2 ) THE question in both the cases is ; Whether the petition u/s 8 and 20 of the Arbitration Act is barred u/s 69 of the Indian Partnership Act, 1939 (hereinafter called the Act ). It is admitted that the petitioners firm ram Darshan Lal is not registered under the Act. It is contended on behalf of the respondents that the petitioners firm being not registered under the Act is not entitled to institute the present petition u/s 8 and 20 of the Arbitration Act and that the same is barred u/s 69 of the Act, It is further contended that the present petition is not for dissolution of the firm, or accounts of the dissolved firm, or enforcement of any right or power to realise the property of a dissolved firm, but it is only for filing of the arbitration agreement in court and for appointment of arbitrator.
( 3 ) THE learned counsel for the petitioners on the other hand contended that a petition u/s 8 and 20 of the Arbitration Act is not a suit and that Section 69 of the Act does not apply to such a petition as the firm already stands dissolved. In the alternative it was contended that the present petition is for the enforcement of right or power to realise the property of the dissolved firm. ( 4 ) THE present petitions have been filed by the petitioners to enfforce their rights arising from the said two contracts dated 1. 5. 65 and 25 5. 65 1965. Section 69 of Partnership Act 1932 is " (1) No Suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court "by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner (2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners. (3) The provisions of Sub-sections (1) and (2) shall apply also to a claim of set- off or other proceeding to enforce a right arising from a contract, but shall not affect.
(3) The provisions of Sub-sections (1) and (2) shall apply also to a claim of set- off or other proceeding to enforce a right arising from a contract, but shall not affect. (a) the enforcement of any right to sue for the dissolution of a firm, or any right or power to realise the property of a dissolved firm, or (b) the powers of an official assignee, receiver or Court under the Presidency- town Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, to realise the property of an insolvent partner, (4): This section shall not apply ; (a) to firms or to partners in firms which have no place or business in the territories to which this Act extends, or whose places of business in the said territories by notification under section 56 of this Chapter does not apply, or (b) to any suit or claim of set-off not exceeding one hundred rupees in value which, in the Presidency-towns, is not of a kind specified in section 19 of the Presiency Small Cause Courts Act. 1882, or out-side the Presidency-towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887. ( 5 ) THE Section bars certain suits and proceedings as a consequence of non-registration of partnership-firm. Sub-section (1) prohibits the institution of a suit between the partners irter se or between the partners and the firm for the purpose of enforcing a right arising from a contract or conferred by the Partnership Act unless the firm is registered and the person suing is or has been shown in the Register of Firm as a partner in the firm. Sub-section (2) also prohibits a suit by or on behalf of the firm against a third party for the purpose of enforcing any right arising from a contract unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. These provisions according to sub-section (3) also, apply to a claim of set-off or other proceed-; ing to enforce a right arising from a contract; but do not affect a suit or proceeding for, dissolution of the firm or for accounts of the dissolved firm or enforcement of any right; or power to realise the property of the dissolved firm.
These provisions according to sub-section (3) also, apply to a claim of set-off or other proceed-; ing to enforce a right arising from a contract; but do not affect a suit or proceeding for, dissolution of the firm or for accounts of the dissolved firm or enforcement of any right; or power to realise the property of the dissolved firm. Sub-section (4) mentions firms and certain types of suits and claim of set- off to which sub-sections (1) and (2) are not applicable. The following questions arise. "1. Whether section 69 of the in idian- artnership Act is applicable to a dissolved firm; 2. Whether a petition u/s 8 and 20 of the Arbitration Act is a proceeding within S. 69 (2) Of the Act is applicable to such a petition ; 3. Whether the present petition u/s 20 of the Arbitration Act is for enforcement of any right or power to realise the property of a dissolved firm. " ( 6 ) THE language of sub-sections (1) and (2) of S. 69 of the Act is wide enough to cover suits relating to a dissolved firm. Bare perusal of the section shows that it is not essential that the firm should be actually in existence at the date when the suit or proceedings was instituted. Sub-sections (3) and (4) specifically mention the suit and proceedings to which the provisions of subsections (1) and (2) are not applicable. The statute does not Ijprovide that sub-sections (1) and (2) will not apply to dissolved firm. A suit or proceeding to enforce a right arising from a contract thus will not be maintainable if the dissolved firm was unregistered on the date of institution. ( 7 ) SUB-SECTIONS (1) and (2) apply to Sub-section (3) as mentioned above applies to a claim of set-off or other proceeding to enforce a right arising from a contract. The petitioners claim to enforce their right to the arbitrator appointed under the said two contracts. Petitions under the Arbitration Act, generally speaking, are not suits Petition u/s 20 of the Arbitration Act is however registered as suit between one or more of he parties interested in the disputes and they are called plaintiffs or defendants. If this petition is described as suit, there is no difficulty in applying sub-sections (1) and (2) of S. 69 of the Act.
If this petition is described as suit, there is no difficulty in applying sub-sections (1) and (2) of S. 69 of the Act. But if this petition is not a suit but only a petition, the question is ; Whether the same is covered under sub-section (3) of S. 69 of the Act. Sub-section (3) speaks of a claim of set-off, meaning thereby that a defendant will not be entitled to claim set- off unless condition mentioned in subsection (1) or sub-section (2) of the Act is complied with. The words other proceeding used in sub-section (3) mean proceedings of any kind which can properly be for said to be for enforcement of any right arising from contract except those expressly mentioned as exceptions in sub-sections (3) and (4 ). The petition u/s 8 and 20 of the Arbitration Act is a proceeding to enforce filing of Arbitration Agreement and appointment of Arbitrator; a right arising out of the contract. The petition under the Arbitration Act is thus a proceeding to enforce right arising out of contract within the meaning of sub-section (3) of S 69 of the Act. (n Jagdish Chander Gupta v. Kajaria Traders [. Ltd. , (1964) 8 SCR 50 , the Supreme Court held that the proceedings u/s 8 of the Arbitration Act are covered by S. 69 (3) of the Partnership Act. I therefore hold that the present petition is a proceeding within the meaning of S. 69 (3) of the Act and S. 69 (2) of the Act is applicable. ( 8 ) THE petitioners in the petition claim filing of the arbitration agreement in court and appointment of an arbitrator. By any stretch of imagination it cannot be said that such a claim is to enforce any right or power to realise the property of a dissolved firm. Sub-sections (1) and (2) of S. 69 of the Act are not applicable to a suit or proceeding for dissolution of a firm, or accounts of a, dissolved firm or to enforce any right or power to realise the property of a dissolved firm. The present petition is not a proceeding to enforce any right or power to realise the property of a dissolved firm and is thus not exempted from the operation of S, 69 (2) of the Act.
The present petition is not a proceeding to enforce any right or power to realise the property of a dissolved firm and is thus not exempted from the operation of S, 69 (2) of the Act. ( 9 ) THE petitioners firm is not registered under the Partnership Act and therefore the petition u/s 1,8 and 20 of the Arbitration Act whether treated as a suit or a proceeding is barred and not maintainable under sub-sections (2) and (3) of S. 69 of the Indian Partnership Act, 1932. The petition is, therefore, dismissed with no order as to costs.