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1990 DIGILAW 476 (CAL)

KANLKA GHOSH v. SILIGURI TEA BROKERS (P) LTD.

1990-12-19

MONORANJAN MALLICK

body1990
M. R. MALLICK, J. ( 1 ) SILIGURI Tea Brokers Pvt. Ltd. filed the Special Suit being No. 46 of 1990 under section 20 of the Arbitration Act against M/s. Rahut Syndicate, a partnership firm praying for the Arbitration Agreement dated 22nd December, 1989 to be filed in court and for reference of the disputes as specified in the said petition of section 20 of the Arbitration Act to be referred to Arbitration in terms of the Arbitration Agreement. ( 2 ) AN application under section 41 of the Arbitration Act being Matter No. 1360 of 1990 has also been filed by Siliguri Tea Brokers Pvt. Ltd. in which interim orders dated 10th May 1990 and 16th May 1990 have been obtained. ( 3 ) THE said Special suit as well as the petition under section 41 of the Arbitration Act has been contested by Ashok Rahut, Sm. Kanika Ghosh, Smt. Aparna Rahut, Smt. Sabitri Rahut, Sri Tapas Kumar Rahut, Sri Pradip Kr. Rahut and Smt. Lina Ghatak, Smt. Runa Naha and Sri Ajoy Kr. Rahut for and on behalf of Rahut Syndicate claiming to be the some of the alleged partners of M/s. Rahut Syndicate. An application under section 33 of the Arbitration Act being matter No. 1404 of 1990 has also been filed by those persons claiming to be the partners of Rahut Syndicate challenging the existance and validity of the purported Tea Selling Agreement dated 22nd December 1989 containing the purported Arbitration Agreement and for declaring the same to be void and of no effect and/or determined and/or cancelled and/or not binding upon the parties and also for consequential reliefs for staying the orders dated 10th May 1990 and 16th May 1990 by Satyabrata Mitra, J. under section 41 of the Arbitration Act in Matter No. 1360 of 1990. ( 4 ) SILIGURI Tea Brokers Private Ltd. has filed an application being Matter No. 1405 of 1990 praying for stay of the alleged partners' petition under section 33 of the Arbitration Act being Matter No. 1404 of 1990. ( 5 ) MATTER No. 1407 of 1990 has also been filed by the self-same partners praying for vacating the orders dated May 10, 1990 in Matter No. 1360 of 1990. ( 5 ) MATTER No. 1407 of 1990 has also been filed by the self-same partners praying for vacating the orders dated May 10, 1990 in Matter No. 1360 of 1990. ( 6 ) THE United Bank of India has also filed an application for being added as a party in Matter No. 1360 of 1990 on the allegations that as the Tea garden which is the subject matter of the dispute is hypothecated with the United Bank of India and the United Bank of India has filed O /c (Mortgage) Suit No. 2 of 1988 in the court of the Assistant District Judge, Jalpaiguri against the partners and guarantors and Joint Receivers have been appointed in that suit the said Bank is a necessary party in the proceeding because any order passed in the application under section 41 behind the back of the bank in view of the specific orders passed by the Assistant District Judge, Jalpaiguri in the said pending suit would affect the interest of the bank and the bank will be highly prejudiced if the bank is not permitted to intervene in the proceeding. Cytozyem Eastern India (P) Ltd. has also filed this petition for being added as party to the special suit No. 460 of 1990 and in this connected proceedings. ( 7 ) ALL these matters being inter-connected have been taken up together for reasons of convenience. I have decided to take up the Matter No. 1404 of 1990 along with the Special Suit No. 46 of 1990 and Matter No. 1407 of 1990 which is a petition of the Siliguri Tea Brokers Pvt. Ltd. for stay of the petition under section 33 of the Arbitration Act first for hearing and orders. ( 8 ) WHAT is revealed from all these court proceedings, is that main dispute between the concerned parties is whether the agreement dated 22nd December 1989 is a valid document or not. The petitioners claiming to be some of the partners of Rahut Syndicate in Matter No. 1404 of 1990 have challenged the validity of the said agreement. ( 8 ) WHAT is revealed from all these court proceedings, is that main dispute between the concerned parties is whether the agreement dated 22nd December 1989 is a valid document or not. The petitioners claiming to be some of the partners of Rahut Syndicate in Matter No. 1404 of 1990 have challenged the validity of the said agreement. If the contention of these petitioners are accepted then automatically the Special Suit in question as well as the application under section 41 of the Arbitration Act filed by Siliguri Tea Brokers Pvt. Ltd. would all become infructuous and there would also be no necessity for considering the other petitions filed by different parties over the self-same matter. ( 9 ) AT the outset, I would take up the question of the locus standi of the petitioners in Matter No. 1404 of 1990 in challenging the agreement dated 22nd December 1989. On behalf of the Respondent, Siliguri Tea Brokers Pvt. Ltd. of that petition, it is submitted that these applicants have already been removed from the partnership business and the partnership has thereafter been reconstituted in 1989 and therefore, they have no locus standi to file this application for and on behalf of the Rahut Syndicate. ( 10 ) IN support some Newspaper publication as well as some Gazette publication in which the removal of these partners have been notified for general information have been annexed. On behalf of the petitioners, it is urged that there was no proceeding for removal of those partners that those newspaper insertions are all fictitious, that the present petitioners are party defendants in the Mortgage Suit filed by the United Bank of India before the Assistant District Judge, Jalpaiguri as partners of Rahut Syndicate along with other partners and, therefore, they being very much interested in the partnership business being the partners have sufficient locus standi to challenge the agreement dated 22nd December, 1989. ( 11 ) ON hearing the submissions of the learned Advocates of both the parties, I am of the view that the present petitioners are arraigned as defendants in the Mortgage Suit being O/c No. 2 of 1988 and there is no material before this Court except those newspaper insertions and the Gazette insertion that they have actually been validly removed from the partnership business. In that view I am unable to dismiss the application of these partners on the ground that they do not have the locus standi to challenge the agreement dated 22nd December 1989 alleged by Siliguri Tea Brokers Pvt. Ltd. to have been entered into with it by Rahut Syndicate. ( 12 ) I would, therefore, propose to enter into the merits of the allegations made in the petition challenging the agreement dated 22nd December 1989. ( 13 ) ON behalf of the petitioners, it is submitted that some of the partners who were running the business of Anandapur Tea Estate as Managing Partners were misappropriating the fund and were not paying the dues of United Bank of India with whom the Anandapur Tea garden had been hypothecated and the petitioners have been obliged to file a writ petition being C. O. No. 11097 (W) of 1987 before the High Court, Calcutta, commanding the United Bank of India to start appropriate proceeding for recovery of their dues as they were apprehending that the Managing partners would further squander the fund without paying the legitimate dues of the bank. ( 14 ) IT is also their case that thereafter the bank filed the Mortgage suit in question before the Assistant District Judge, Jalpaiguri and in the said suit Joint Receivers have been appointed and the present petitioners' application for temporary injunction restraining the Managing Partners and/or some of the partners from transferring the shares/interest of the said firm has been disposed of directing the parties to maintain status quo in respect of their shares of the partnership firm by the order dated 24th March 1988. It is submitted that against the interim order passed in the said suit, appeal was filed before the Division Bench of the High Court, Calcutta by the present petitioners and the Managing Partners Monoj Kumar Mukherjee and Haridas Das, JJ. dismissed those appeals. Being aggrieved the Managing partners filed Special Leave Petition before the Supreme Court and the Supreme Court by the order dated 22nd March 1990 did not interfere with the order of the Division Bench. Calcutta High Court and only granted leave to the Managing partners to submit a scheme before the High Court for running the Tea garden. Being aggrieved the Managing partners filed Special Leave Petition before the Supreme Court and the Supreme Court by the order dated 22nd March 1990 did not interfere with the order of the Division Bench. Calcutta High Court and only granted leave to the Managing partners to submit a scheme before the High Court for running the Tea garden. It is further submitted that the said Mortgage suit is still pending and the Tea garden is in charge of the joint Receivers and interim order is still in force. The petitioners further submit that in view of the above interim injunction order passed by a competent civil court, the Managing Partners had no authority to execute the Power of Attorney dated 27th September, 1989 appointing S. H. S. Sukla and Sri Ram Avatar Agarwal to act as Constituted Attorney on behalf of the partnership firm of M/s. Rahut Syndicate, that the said Power of Attorney is illegal and invalid as not having been executed by all the partners of the firm and on the basis of the said Power of Attorney the constituted attorneys did not have any power to enter into any agreement with Siliguri Tea Brokers Pvt. Ltd. dated 22nd December 1989 and consequently the said agreement is a collusive and invalid agreement and on the basis thereof the present Respondent Siliguri Tea Brokers Pvt. Ltd. cannot file any special Suit or any proceeding under section 41 of the Arbitration Act. It is also submitted that the said agreement contained an Arbitration Clause by which the alleged Constituted Attorney agreed to refer the dispute to Arbitration but those Constituted Attorneys not representing the whole body of partners could not refer any dispute to arbitration which is clearly a bar under section 19 (2) (a) of the Partnership Act. A copy of the said Power of Attorney has been produced before this Court by the respondent. From the same I find that only the partners who claimed to be the Managing Partners executed it and it was not executed by all the partners of the firm. The partnership deed dated 31. 1. 1984 in clause 12 clearly prohibited partners to sign any deed without consent and approval of all the partners. From the same I find that only the partners who claimed to be the Managing Partners executed it and it was not executed by all the partners of the firm. The partnership deed dated 31. 1. 1984 in clause 12 clearly prohibited partners to sign any deed without consent and approval of all the partners. On behalf of the petitioners it is urged that even though originally the learned Assistant District Judge, Jalpaiguri permitted the Managing Partners to carry on the business of the tea garden under the supervision of the Joint Receivers but subsequently the present petitioners were appointed the Managing Partners and that after the said order had been passed these partners alone cannot under the law execute any Power of Attorney entrusting the management of the tea garden upon the Power of Attorney holders. So according to the petitioners the agreement dated 22. 12. 1989 is clearly an invalid document. ( 15 ) ON the contrary it is submitted on behalf of the Respondent, Siliguri Tea Brokers Pvt. Ltd. that the partners who were at the material point of time the only partners had executed the Power of Attorney. But in view of what has been stated by me in the above, that the petitioners are also still treated as partners in the civil suit filed by the bank and when there is no sufficient material to show that they have ceased to be the partners, the above contention of the respondent does not have any basis whatsoever. Therefore, the Power of Attorney was executed when the executants were not functioning as Managing Partners and the power of attorney was also not executed by all the partners. It was also executed in violation of the interim order passed in O/c No. 2 of 1988 dated 24. 3. 1988 by which all the partners were directed to maintain the status quo as regards their share/interest till the disposal of the said petition. Therefore, in utter violation of the interim order passed by the competent civil court which has been affirmed by the Division Bench of this Court, the Power of Attorney was executed which is, therefore, nothing but an invalid document. Therefore, in utter violation of the interim order passed by the competent civil court which has been affirmed by the Division Bench of this Court, the Power of Attorney was executed which is, therefore, nothing but an invalid document. Therefore, on the basis of the said Power of Attorney, any of the Power of Attorney holder cannot enter into an agreement on behalf of M/s. Rahut Syndicate with the present respondent making them the sole selling agent of Anandapur Tea Estate for the year 1990-91, 1991-92 and 1992-93 as purported to have been done by the alleged power of attorney holder. It is also clear that under section 19 (2) (a) of the Partnership Act the implied authority of a partner does not empower him to submit a dispute relating to the business of the firm to Arbitration. Therefore all the partners of the partnership firm have to refer the dispute relating to the business of the firm to arbitration. In this particular case, some of the partners executed the Power of Attorney and on the basis of the said Power of Attorney, one of the Power of Attorney holders entered into an agreement with the respondent Siliguri Tea Brokers (P) Ltd. and that agreement incorporated a clause to submit all the disputes relating to the said agreement to arbitration. Therefore neither the Managing partners being not the whole body of the partners nor their alleged Power of Attorney Holder had any such authority to refer the dispute in relation to the business of the firm, namely, the sale of the tea produced by the Tea garden, of which the partnership firm is the owner, to arbitration. Therefore, in any view of the case, the agreement dated 22nd December, 1989 together with the Arbitration Clause being Annexure 'k' to this petition is declared as illegal and void. In that view the application filed by the petitioners under section 33 of the Arbitration Act being matter No. 1404 of 1990 is allowed and the agreement dated 22nd December 1989 be declared as void and of no effect and is determined and cancelled and is also declared as not binding upon the partners of the firm, M/s. Rahut Syndicate. ( 16 ) IN that view of the matter the Special Suit No. 46 of 1990 is dismissed. The matter no. ( 16 ) IN that view of the matter the Special Suit No. 46 of 1990 is dismissed. The matter no. 1360 of 1990 being the application under section 41 of the Arbitration Act by Siliguri Tea Brokers (P) Ltd. is also dismissed and all interim orders are vacated. The application of Siliguri Tea Brokers Pvt. Ltd. for stay of the Matter No. 1404 of 1989 is rejected as the said matter has been allowed and matter No. 1360 of 1990 is dismissed. The Matter No. 1407 of 1989 being the petition for vacating the interim order passed by Satyabrata Mitra, J. dated 10th May 1990 is also disposed of without passing any order as the all interim orders including that dated 10th May 1990 in matter No. 1360 of 1990 has already been vacated. ( 17 ) AS the application under section 41 of the Arbitration Act being Matter No. 1360 of 1989 has been dismissed, the application of the United Bank of India for being added as a party to the proceeding has become infructuous. The Special Suit No. 46 of 1990 and the Matter No. 1361 of 1990 have been dismissed, the petitions of Cytozyem Eastern India (P) Ltd. has also become infructuous and is also dismissed. ( 18 ) IN the circumstances both the parties shall bear their respective costs themselves. ( 19 ) ALL parties shall act upon the signed copy of the operative portion of the judgment countersigned by the Assistant Registrar (Court) upon usual undertaking. The prayer for stay operation of this order made ( behalf of the Respondent Siliguri Tea Brokers (P) Ltd. is refused. But the Respondent will be at liberty to pray for appropriate order before the Division Bench in connection with the scheme to be framed for running the Tea garden in question in terms of the order of the Supreme Court. Application dismissed