Research › Browse › Judgment

Madhya Pradesh High Court · body

1979 DIGILAW 240 (MP)

Kailash Kumar Agarwal v. Daya Shankar Jaiswal

1979-08-18

C.P.SEN

body1979
JUDGMENT : ( 1. ) This is an appeal under Order 43, rule 1 read with section 104 of the Code of Civil Procedure against the order of the trial Court on the applications for temporary injunction and appointment of a receiver. ( 2. ) The case of the appellants is that the respondent Daya Shanker Jaiswal had taken contract for minor constructions and read metalling with the Western Coalfields Ltd. in its Jhagrakhand colliery. Sometime in December, 1974 he entered into an oral agreement with the appellants regarding the contracts taken by him from the Western Coalfields Ltd. It was stipulated that the partners shall share profit and loss equally. On 6-9-1976, a written partnership deed was executed by the parties. The partnership since then has been registered with the Registrar of Firms under the provisions of the Indian Partnership Act. The partnership deed stipulated that all disputes arising between the parties in connection with the partnership business shall be decided by arbitration. The construction work came to an end and bills worth Rs. 1,01,750 were due for payment by the Western Coalfields Ltd. According to the appellants, the respondent started disowning the partnership and he withdrew a sum of Rs. 2,600 and another sum of Rs. 1,000 and appropriated these amounts to himself from the Western Coalfields Ltd. in connection with the said contract. The appellants, therefore, filed an application under section 20 of the Arbitration Act before the District Judge for filing of the arbitration agreement and for appointment of an arbitrator for settling the dispute between the parties. The application was opposed by the respondent and contended that the contracts in question was entered in the name of the respondent and it was his individual business and it has nothing to do with appellants. No such oral partnership was entered into. The contract was taken in his individual name and could not have been sublet and the partnership, if any, entered into between the parties is invalid and inoperative. There is no dispute between the parties as all outstanding disputes were settled on 31-3-1978 and the appellants have separated after taking their due share in the profits. The application is liable to be rejected. ( 3. There is no dispute between the parties as all outstanding disputes were settled on 31-3-1978 and the appellants have separated after taking their due share in the profits. The application is liable to be rejected. ( 3. ) The appellants also filed an application under clause 4 of II Schedule of the Arbitration Act read with Order 39, rule 1 of the Code of Civil Procedure contending that there are pending bills worth Rs. 1,01,750. with the Western Coalfields Ltd. in connection with the partnership business in which the appellants have 2/3rd share. However, the respondent is denying their claim and asserting that it is his individual business. The respondent is bent upon withdrawing all the amount of the bills and appropriating the same to himself. He has already withdrawn Rs. 2,600 and Rs. 1,000 and misappropriated the same. Therefore, it is just and expedient in the interest of justice that status quo should be maintained and the respondent be restrained from withdrawing the amount. The appellants also filed another application for appointment of receiver under Order 40, rule 1 of the Code read with clause 4 of II Schedule of the Arbitration Act contending that a receiver be appointed to realise the bills from the Western Coalfields Ltd. and keep the same in proper custody till the dispute is settled under arbitration. ( 4. ) The respondent in his replies submitted that there is no case made out for granting temporary injunction or appointment of receiver. The bills which are pending for payment with the Western Coalfields Ltd. are in connection with the contract taken by the respondent in his individual name and he alone is entitled to withdraw the bills. There was no partnership regarding the work executed and even if there was one, the same was invalid and inoperative as the respondent was not permitted to sublet his work. Besides the partnership, if any, came to an end on 31-3-1978 when the parties settled their accounts and the appellants separated after taking their due share in the assets and profits. The trial Court by the impugned order held that since the bills are not yet encashed and therefore there is no property in existence for which a receiver could be appointed. The application for appointment of receiver is misconceived and was rejected. The trial Court by the impugned order held that since the bills are not yet encashed and therefore there is no property in existence for which a receiver could be appointed. The application for appointment of receiver is misconceived and was rejected. Regarding grant of temporary injunction the trial Court held that the respondent had offered that his immoveable property worth about a lac of rupees may be attached. According to him he will be greatly prejudiced if he is restrained from encashing the bills of Western Coalfields Ltd. As the counsel for the appellants wanted time to verify about the immoveable property of the respondent, in the meanwhile, the respondent has been restrained from encashing the bills mentioned in Schedule A of the application except to the extent of Rs. 10,000. The temporary injunction will continue as ad interim measure till the question of attachment of immoveable property of the respondent is decided. The appellants were directed to file an application for attachment of the immoveable property of the respondent. Aggrieved by this order the present appeal has been filed. ( 5. ) A preliminary objection has been raised by the learned counsel for the respondent that no appeal lies against the impugned order passed by the trial Court. The impugned order has been passed under clause 4 of II Schedule read with section 41(b) of the Arbitration Act and such an order is not appealable under section 39 of the Arbitration Act. An appeal lies from the orders mentioned therein and from no other orders. Besides it being an ad interim order, no appeal or revision lies against such an order. The impugned order is a consent order because the counsel for the appellants wanted time to verify about the immoveable property of the respondent for issuing an order of attachment before judgment pending decision of the case. The learned counsel for the appellants on the other hand submitted that the provisions of the Code of Civil Procedure are applicable to all arbitration proceedings before the Court and to all appeals under section 41 (a) of the Arbitration Act. Since by the impugned order the application for temporary injunction and appointment of receiver under Order 39, rules 1 and 2 and Order 40, rule 1 have been decided the same is appealable under Order 43, rule 1 (r) and (s) of the Code of Civil Procedure. Since by the impugned order the application for temporary injunction and appointment of receiver under Order 39, rules 1 and 2 and Order 40, rule 1 have been decided the same is appealable under Order 43, rule 1 (r) and (s) of the Code of Civil Procedure. By the ad interim order the application for appointment of receiver has been rejected and the application for temporary injunction has also been decided. There is no consent order as such. The counsel for the appellants wanted time to verify the immoveable property of the respondent because the Court directed him to do so. ( 6. ) I am of the opinion that the objection raised by the respondent has to be up-held and the present appeal is not competent. No appeal lies against the impugned order passed by the trial Court under clause 4 of II Schedule read with section 41 (b) of the Arbitration Act because section 39 (1) of the Act clearly mentions that appeal will lie only against the orders mentioned therein and against no other order. Orders on application for temporary injunction and appointment of receiver have not been made appealable under this section. Though the appellants have filed their applications under clause 4 of II Schedule of the Arbitration Act read with Order 39, rules 1 and 2 and Order 40, rule 1, Civil Procedure Code, these applications in fact are applications under clause 4 of II Schedule read with section 41 (b) of the Act. The Supreme Court in Union of India v. Mohindra Supply Co., AIR 1962 SC 256 . has held that under section 39 (1) of the Arbitration Act an appeal lies from the orders specified in that sub-section and from no others. The Legislature has plainly expressed itself that the right of appeal against orders passed under the Arbitration Act may be exercised only in respect of certain orders. The right to appeal against other orders is expressly taken away. It is true that in that case the Supreme Court was considering whether second appeal lay under clause 10 of the Letters Patent of the Punjab High Court. This was because section 39 (2) bars all second appeals against an order passed in appeal under section 39 (1). The right to appeal against other orders is expressly taken away. It is true that in that case the Supreme Court was considering whether second appeal lay under clause 10 of the Letters Patent of the Punjab High Court. This was because section 39 (2) bars all second appeals against an order passed in appeal under section 39 (1). It may be that the Supreme Court was not directly dealing with the question raised herein but its observations are binding on this Court that the right to appeal against orders is expressly taken away. I am also fortified in my view by several decisions of other High Courts and there seems to be unanimity of opinion that no appeal lies against the orders passed under clause 4 of 11 Schedule read with section 41 (b) of the Arbitiation Act. The first case is a Division Bench decision of the Calcutta High Court in Rebati Ranjan Chakravarti v. Suranjan Chakravati and others, AIR 1963 Cal. 642 . where it has been held that an application for appointment of receiver in an arbitration proceeding can only be made under section 41 of the Arbitration Act read with Schedule II. It cannot be made under any other provision of law, because the Arbitration Act is a complete Code in itself. Where an application is made invoking the Courts jurisdiction under this provision, then an order allowing such an application for whatever reasons, must be deemed to be order under the said provision and not outside it. The second case is also a Division Bench decision of the Himachal Pradesh High Court in State of Himachal Pradesh and another v. M/s H. S. Sobti and Co., AIR 1973 HP 1 . R. S. Pathak C. J. (as he then was) held that the power to grant the interim injunction is specifically conferred by section 41 (b). An appeal under section 39 (1) of the Arbitration Act lies against only those orders which are specifically enumerated therein and against no other and a perusal of section 39 (1) will show that an order for temporary injunction under section 41 (b) is not an appealable order. The third case is also a Division Bench decision of the Jammu and Kashmir High Court in M/s Sharma Ice Factory v. M/s Jewel Ice Factory and others, AIR 1975 J and K 25. The third case is also a Division Bench decision of the Jammu and Kashmir High Court in M/s Sharma Ice Factory v. M/s Jewel Ice Factory and others, AIR 1975 J and K 25. S. Murtaza Fazl Ali C. J. and Jaswant Singh J. (as they were then) held that in a proceeding under the Arbitration Act pending before the Court, the only powers which can be exercised by the District Judge are those specifically conferred on him by section 41. An order of injunction passed by him therefore must be deemed to be one passed under the Arbitration Act by virtue of section 41 (a). As such an order does not fall within any of the categories enumerated by section 39, it is not appealable. The order of injunction passed by the District Judge under section 41 (b) of the Act, although the injunction was issued on the basis of Order 39, rule 1. This being the position, no appeal lies under section 39. There are two decisions in which appeals were entertained, but these cases are clearly distinguishable and they do not suggest that an appeal lies against any order passed under section 41 (b) of the Arbitration Act. The first case is Division Bench decision of the Allahabad High Court in Sri Kishan and another v. Radha Kishan and another, AIR 1952 All. 652 . wherein it was held that the phrase "and from no others" refers to orders passed under the Act, i.e., under the express provisions of the Act. It has no reference to appeals which the Civil Procedure Code provides from orders passed under the provisions of that Act. Similarly the words "under the Act" refer to the express provisions of the Act and not to the provisions contained in the Civil Procedure Code. Hence an appeal lies when an application for restoration of an application made under the Arbitration Act is dismissed for default. There the appeal was not against any order under the Arbitration Act but against the order passed under the Code of Civil Procedure, i.e. dismissing in default an application for setting aside the award under section 33 of the Arbitration Act. The second case is also a Division Bench case of the Madhya Bharat High Court in Tharpal v. Arjunsingh, AIR 1957 MB 22. The second case is also a Division Bench case of the Madhya Bharat High Court in Tharpal v. Arjunsingh, AIR 1957 MB 22. wherein it has been held that the words "and from no others" used in section 39 refer to orders passed under the express provisions of the Arbitration Act and not to orders passed under other provisions of law, like Code of Civil Procedure. Thus, where an order is not an order passed under the Arbitration Act, but is an order of rejection of plaint passed under the provisions of Order 7, rule 11, Civil Procedure Code, section 39, Arbitra- Act does not apply. Hence an appeal lies from the order and not a revision. ( 7. ) In the alternative it is urged by the appellants that even if no appeal lay this could be treated as a revision and relied on the Division Bench decision of this Court in Rajendra Dayal v. Govind, 1970 MP LJ 322. and M/s Sharma Ice Factory v. M/s Jewel Ice Factory (supra). It is true that a revision may lie when no appeal is provided under the Code of Civil Procedure, but the interference in revision is called for only the impugned order is patently illegal and without jurisdiction. It cannot be said that the impugned order is without jurisdiction. At the most it can be said that the trial Court has not correctly decided the application on a misapprehension regarding some of the requirements for granting temporary injunction and for appointment of receiver. The Supreme Court in Hindustan Aeronautics Ltd. v. Ajit Prasad, AIR 1973 SC 76 . has held that when the lower appellate Court acted within its jurisdiction the High Court should not interfere even if the order is right or wrong or not in accordance with law or not, unless it has exercised its jurisdiction illegally and with material irregularity. It may be mentioned that the trial Court overlooked the fact that while deciding application for appointment of receiver he has first to determine whether a partnership has been established or not and if so then if the partnership is already dissolved. It is almost a matter of course to appoint a receiver in the interests of the partnership. It may be mentioned that the trial Court overlooked the fact that while deciding application for appointment of receiver he has first to determine whether a partnership has been established or not and if so then if the partnership is already dissolved. It is almost a matter of course to appoint a receiver in the interests of the partnership. But if the partnership is still subsisting no receiver shall be appointed unless some good ground for appointment could be shown, such as fraud, gross misconduct of some kind endangering property, or wilful denial of partners right, or persistence under the cover of right in conduct endangering the assets. Even though there may be no misconduct endangering the partnership assets, the Court will appoint a receiver if the defendant wrongfully excludes his co-partner from the management of the partnership affairs, or contends that plaintiff is not a partner. See Dayabhai Poonambhai Patel v. Natwarlal Somabhai and others, 1961 MP LJ 1420. The trial Court was also not right in holding that no receiver can be appointed because the bills have not yet been encashed. Receiver can be appointed for doing all things necessary for the realisation and preservation of the assets of the firm N. Subramanniya v. Lakshmana, AIR 1923 PC 50. So, at the most it can be said that the trial Court has erroneously rejected the application for appointment of receiver but he has safeguarded the interest of the appellants by ordering attachment of the immovable properties worth a lac of rupees of the respondent till the decision of the suit. So, interference is not called for, as no prejudice is caused to any one. ( 8. ) Accordingly the appeal fails and is dismissed. There shall be no order as to costs. Appeal dismissed.