TEJ SHANKAR, J. ( 1 ) THIS revision petition raises an important question of law with respect to the applicability of Section 69 (3) of the Indian Partnership Act to the proceedings which arise out of a filing of an Award by the Arbitrator. Admittedly there was a contract with the petitioner by Gas Authority of Indialimited, Vijaypur, Tahsil Raghogarh, District Guna (hereinafter referred to as GAILS) for horticulture work. After this agreement with the GAIL the petitioner entered into an agreement with the respondent for carrying out the said work of horticulture in GAIL. A dispute had arisen between the petitioner, on one hand, and the respondent, on the other, and the matter was referred to sole arbitrator Shri Padam Kumar Jain, Advocate, Guna, with the consent of both the parties. The Arbitrator after recording necessary evidence and hearing parties passed an Award on 6-12-93 and submitted it on 2-2-94 before the District Judge, Guna, for making the Award rule of the Court. Notices u/s. 14 (2) of Arbitration Act were issued by the District Judge whereupon an objection was filed by the petitioner with respect to the maintainability of the Award on 28-4-94. He also challenged the legality of the Award raising a legal objection that it was not maintainable in view of the provisions of S. 69 of the Partnership Act. The learned District Judge framed a preliminary issue in this regard and after hearing the parties held that provisions of S. 69 (3) of the Act were not applicable on the proceedings which arise from the filing of the Award. ( 2 ) THE contention raised before me by the learned Counsel for the revisionist is that proceedings relating to enforcement of an Award are covered within the meaning of S. 69 (3) of the Partnership Act. A lengthy and laboured argument has been made by the learned Counsel for the revisionist. He also made reference to the history of Partnership Act and placed reliance upon several authorities and an article written by former Chief Justice of Delhi High Court, Justice V. S. Deshpande published in (1991) 2 Arbi LR 13 which shall be dealt with henceforth.
A lengthy and laboured argument has been made by the learned Counsel for the revisionist. He also made reference to the history of Partnership Act and placed reliance upon several authorities and an article written by former Chief Justice of Delhi High Court, Justice V. S. Deshpande published in (1991) 2 Arbi LR 13 which shall be dealt with henceforth. ( 3 ) ON the other hand, it has been contended that S. 69 has no application to a case where an Award has been filed suo motu by the Arbitrator because irrespective of the fact whether an application for making the Award rule of the Court is made or not if the Court comes to the conclusion that there is no cause to remit the Award or set aside, the Award, the Court shall, after the time for making an application to set aside the Award has expired and in case the said application is made, after refusing it, proceed to pronounce judgment in accordance with the award u/s. 17 of the Arbitration Act. It cannot be said to be a proceeding for enforcement of a right arising out of a contract as provided u/ S, 69 -. ( 4 ) BEFORE entering into the discussion it is relevant to mention the provisions of S. 69 of the Partnership Act, so far as it is relevant for our purposes. It runs as follows : 69. Effect of non-registration.- (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 partners in the firm. (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 in the firm.
(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 in the firm. (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 for accounts of a dissolved 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 Towns Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, to realise the property of an insolvent partner. Thus, a bare reading of the aforesaid section clearly goes to show that the effect of the non-registration is that no suit, a claim of set off or other proceeding to enforce a right arising from a contract is maintainable. The provisions of Section 69 are mandatory, registration of firm is a condition precedent to the right to institute suit and the Court has no jurisdiction to proceed with the trial. The learned Counsel for the revisionist laid much emphasis upon the history of the enactment relating to partnership. Prior to the enactment of Indian Partnership Act the law relating to partnership was governed by the provisions of Sections 239 to 266 in Chapter 11 of the Indian Contract Act. The learned Counsel for the revisionist pointed out that to enact independent Partnership Act a special committee was constituted to formulate ways and means and the special committee submitted its report which was published in the Gazette of India of 24-1-1931. He urged if the report of the special committee is perused, it transpires that a protection has been provided against the dealing with a firm against falsedenials of partnership and the evasion of the liability by members of the firm. Consequently the Legislature incorporated S: 69 (3) a bar with respect to unregistered partnership firms. There cannot be a denial of the fact that the Legislature by making provision in S. 69 intended to put a pressure on the partnership firms to get them registered.
Consequently the Legislature incorporated S: 69 (3) a bar with respect to unregistered partnership firms. There cannot be a denial of the fact that the Legislature by making provision in S. 69 intended to put a pressure on the partnership firms to get them registered. It cannot be regarded as a mere formality relating to procedure. It is designed to incorporate registration. It bars unregistered firms from filing suit and it does not confer a right on the defendant which he could waive upon his option. It must, however, be kept in mind that its effect is to bar a suit, claim of set off or other proceeding, to enforce a right arising out of a contract. The moot question involved is as to whether in the facts and circumstances of the present case it can be said as to whether the bar provided u/s. 69 (3) is available in this case or not. A glimpse of the admitted facts of the case at this stage shows that there was a contract between the parties and there was a dispute which was agreed to be referred to the Arbitrator. The present revisionist himself took the reigns in his hand when he gave a notice to the respondent for appointment of an Arbitrator and suggested five names. The respondent agreed to the name of the Arbitrator Shri Padam Kumar Jain, who conducted the arbitration proceedings and ultimately filed the Award. In this way it was the revisionist himself who initiated proceedings on the basis of the contract. The Arbitrator filed the A ward which was the result of the reference made to the Arbitrator on the motion of the present revisionist with the consent of the respondent. I may re-emphasise here, as mentioned earlier, that the important fact is that the bar is with respect to the filing of a suit, claim of set off or other proceeding. Thus, so far the facts go, the respondent which is admittedly an unregistered firm cannot be said to have instituted the suit or raised a claim of set off or initiated other proceeding on the basis of a right arising out of a contract. The Award was admittedly filed by the Arbitrator himself and the proceedings started thereafter when the notices were given by the Court.
The Award was admittedly filed by the Arbitrator himself and the proceedings started thereafter when the notices were given by the Court. Once the matter is referred to the Arbitrator without the intervention of the Court and so long as the Award is given, the Court never comes into picture. The involvement of the Court came for the first time when the Award was filed by the Arbitrator. So long as the proceedings remained with the Arbitrator Section 69 could not have been put forward. ( 5 ) HAVING mentioned the facts relating to the manner in which the proceedings were initiated, it has now to be seen as to whether the proceedings after filing of the Award by the Arbitrator in Court are hit by the provisions of Section 69 or not. Before expressing any opinion, I deem it proper to mention the various authorities cited before me by the learned Counsel for the parties. Much emphasis has been laid by the learned Counsel for the revisionist upon AIR 1964 SC 1882 (Jagdish Chandra Gupta v. Kajaria Traders (India)Limited ). It was a case u/ S. 8 (2) of the Indian Arbitration Act. Two questions were raised therein and the question with which we are concerned was as to whether S. 69 (3) of the Partnership Act affords a bar to the petition u/s. 8 (2) of the Arbitration Act because the partnership was not registered. The matter came up before a Division Bench of Bombay High Court and the learned Judges differed. One of the Hon'ble JudgesMr. Justice Mudholkar (as he then was) held that S. 69 (3) of the Partnership Act barred the application while the other Judge Mr. Justice Naik held otherwise. The case was referred to a third Judge. Mr. Justice Desai, who agreed, with Mr. Justice Naik that the application was competent. The matter went up to the Apex Court. The question that arose, was of the meaning of the expression "other proceeding " occurring in S. 69 (3 ). It was held that the proceeding u/s. 8 of the Arbitration Act has its genesis in the arbitration clause because without an agreement to refer the matter to arbitration that section cannot possibly be invoked.
The question that arose, was of the meaning of the expression "other proceeding " occurring in S. 69 (3 ). It was held that the proceeding u/s. 8 of the Arbitration Act has its genesis in the arbitration clause because without an agreement to refer the matter to arbitration that section cannot possibly be invoked. Since the arbitration clause is a part of the agreement constituting the partnership, it is obvious that the proceeding which is before the Court is to enforce a right which arises from a contract. It was further held that the words of S. 69 (3) "a right arising from a contract" were in either sense sufficient to cover the matter involved. Two cases i. e. AIR 1936 Lah 136 (Hafiz Qamar Din v. Nur Din) and AIR 1950 Cal 391 (Bubulal Dhandhania v. M/s. Gautam and Co.) were also cited before the Apex Court. The Apex Court observed that proceeding in those cases started on an award, in one to make it a rule of the Court and in the other, to get it set aside Both the cases therefore were held to be distinguishable because they dealt with awards. The Apex Court did not decide the question as to whether such cases were within the meaning of "proceeding" occurring in S. 69 (3) or not. It was specifically observed that it was not necessary to decide whether after an award the proceeding is one to enforce a right arising from a contract. In this view of the matter, this authority can, in no case, help the learned Counsel for the revisionist and the question involved in the case was not decided and was left open. No other authority of the Apex Court has been brought to my notice by either party. The next authority upon which the learned Counsel for the revisionist placed reliance is AIR 1938 Pat 231 (Satish Chandra Chakrobarty v. P. N. Das and Co. ). It was a case under Schedule 2, Paras. 20, 21 and 14 (c), C. P. C. , 1908. There, an application for filing award was moved with respect to award given outside the Court in favour of an unregistered firm.
). It was a case under Schedule 2, Paras. 20, 21 and 14 (c), C. P. C. , 1908. There, an application for filing award was moved with respect to award given outside the Court in favour of an unregistered firm. I have carefullv gone through this authoritv and I do not find anything in it to support the view of the learned counsel for the revisionist that the proceedings after filing of the award were hit by S. 69 (3 ). In this case two submissions were made, one relating to the jurisdiction of the High Court u/s. 115, C. P. C. which was not decided at all and was left open with the observation that in the opinion of the learned Judge the case could be decided on an entirely different ground. ( 6 ) THE question, whether the proceedings after filing of award were hit by the provisions of S. 69 (3) was not specifically decided. It is one of those cases, on which both the learned counsel have relied upon, but unfortunately, there is no specific decision on the point in issue, though at page 233, there is mention :"there was nothing illegal on the face of the award within para. 13 (c) of Sch. 2, Civil P. C. and it was only by reference to S. 69, Partnership Act and by reference to the facts of the case that it could possibly be held that the firm was not entitled to enforce the award. "i observe that the facts of that case were different. ( 7 ) THE other authority relied upon is a Division Bench decision 0f the Allahabad High Court reported in AIR 1977 All 352 (Iqbal Singh v. Ram Narain ). It was a case on an application under S. 20, which was moved by the party to an agreement containing arbitration clause. Partnership was not registered. It was held by the Division Bench that the proceedings arising out of application under S. 20 are proceedings to enforce right arising out of contract within S. 69 (3) of Partnership Act. The aforementioned authority (Jagdish Chandra Gupta v. Kajaria Traderslimited), AIR 1964 SC 1882 was followed.
Partnership was not registered. It was held by the Division Bench that the proceedings arising out of application under S. 20 are proceedings to enforce right arising out of contract within S. 69 (3) of Partnership Act. The aforementioned authority (Jagdish Chandra Gupta v. Kajaria Traderslimited), AIR 1964 SC 1882 was followed. I have already mentioned above that the apex Court itself observed that the cases in which the proceedings started under S. 20 are distinguishable and the matter as to whether after an award proceeding is one to enforce right arising out of contract was not decided by the apex Court and was left as such. In this view of the matter, this authority is also not helpful to the learned counsel for the revisionist( 8 ) NOW there remains decision of learned single Judge of the Allahabad High Court reported in 1965 0 Alllj 1198 (Badri Dass v. P. K. Ramakrishnam ). Learned counsel for the revisionist contended that this authority does not lay down the correct law. It was a case, which had arisen out of an application under S. 14 (2) of the Indian Arbitration Act, moved by one of the parties, i. e. P. K. Ramakrishnan after the filing of the award and the learned Munsif directed the arbitrator to file the award with depositions and documents. The arbitrator accordingly filed the award and notices were given to the parties of the filing of the award. Badri Prasad, the applicant filed an application with the prayer that the award be set aside. Learned Munsif dismissed the objection and refused to set aside the award and directed that it may be made rule of the Court. On appeal the Addl. Civil Judge held that the application under Section 14 (2) of the Indian Arbitration Act was maintainable and the award could be taken notice of. As the award was beyond the terms referred to the arbitrator, it was held to be without jurisdiction. In valid part of the award was set aside whereas valid part of the award was made rule of the Court. Badri Dass challenged the order of the subordinate Courts in revision. It was canvassed before the High Court that S. 69 (3) of the Act was a bar to the maintainability of the application under Section 14 (2) and as such the award could not be made a rule of the Court.
Badri Dass challenged the order of the subordinate Courts in revision. It was canvassed before the High Court that S. 69 (3) of the Act was a bar to the maintainability of the application under Section 14 (2) and as such the award could not be made a rule of the Court. The second contention was that the award could not be accepted in part and rejected in part. It should have been set aside as a whole. The matter was considered in great detail by the learned Judge and after considering all the authorities including the case of Jagdish Chandra (supra), it was observed that in case of an unregistered firm only, such suit or proceedings cannot be taken cognizance of by the Court of law, which meant to enforce a right arising from a contract and it did not cover the suit or proceedings to enforce any other right irrespective of the fact that the firm is registered or unregistered. After considering the authorities including that of Jagdish Chandra (AIR1964 SC 1882) (supra), the learned Judge concluded that in the case with regard to award, while entertaining objection to an award the Court does not enforce a right under the arbitration agreement, nor it can be said that the objection as to the validity of the award was for enforcement of a right under the arbitration agreement. The Court enforce a right under the award and not a right under the arbitration agreement. By no stretch of imagination can it be said that the award by the arbitrator is akin to contract between the parties. Summarising the entire matter, the learned Judge held that the proceedings based on an application under S. 14 (2) were not proceedings arising from contract, i. e. , the agreement. It is a proceeding to enforce right arising from an award by the arbitrator of his own not necessarily with the consent of the parties. As the award is not and cannot be placed in the category of contract. S. 69 of the Indian Partnership Act shall be no bar to the maintainability of a proceedings to enforce a right arising therefore. It is not therefore, hit by the provisions of S. 69. ( 9 ) AFTER giving my anxious consideration to the entire matter, I am in respectful agreement with the reasonings of the learned Judge.
S. 69 of the Indian Partnership Act shall be no bar to the maintainability of a proceedings to enforce a right arising therefore. It is not therefore, hit by the provisions of S. 69. ( 9 ) AFTER giving my anxious consideration to the entire matter, I am in respectful agreement with the reasonings of the learned Judge. The proceedings arising out of an award cannot be put at par with the proceedings arising out of an agreement. Once an award is made and is filed in the Court either by the arbitrator himself or on the motion of any of the parties, the Court has no option except to make it a rule of Court, if it comes to the conclusion that there is no cause to remit the award or any of the matter referred to arbitration for reconsideration or set aside the award after the time for making an application to set aside has expired or if such application is made after refusing it. Thus, it cannot be said to be a proceeding to enforce a right arising out of the contract. ( 10 ) IT will not be out of place to mention here as shown in the earlier part of this order that in the present case the initial proceedings were initiated by the revisionist himself inasmuch as it was he who invoked agreement to refer the matter to the arbitrator. A bar under S. 69 is with respect to a suit/ proceeding/ claim of set off to enforce a right. As the unregistered firm has not initiated the proceedings and has only to defend it, hence to my mind, on this ground also it can safely be said that there is no bar under S. 69 (3 ). Section 69 (3) is not attracted on the facts of the present case. I, therefore, find myself unable to agree with the contention of the learned counsel for the revisionist. ( 11 ) BEFORE parting with this order, I may also mention that the learned counsel for the revisionist also referred to an Article written by Justice V. S. Deshpande, Former Chief Justice Delhi High Court, published in (1991) 2 Arb LR 13. I have carefully gone through this Article.
( 11 ) BEFORE parting with this order, I may also mention that the learned counsel for the revisionist also referred to an Article written by Justice V. S. Deshpande, Former Chief Justice Delhi High Court, published in (1991) 2 Arb LR 13. I have carefully gone through this Article. In this Article, it was concluded by the learned Judge that any notice or application under the Arbitration Act initiating an arbitration proceedings by an unregistered firm would be barred by Section 69 of the Partnership Act. It clearly goes to show that according to the learned Author, the bar is to apply to initiate arbitration proceedings by the unregistered firm. The question as to whether an unregistered firm is entitled to defend proceedings after the award was filed by the arbitrator does not appear to have been considered. I may repeat, the unregistered firm is not entitled to initiating the proceedings. To my mind, the bar is not attracted when the question of defending the proceedings is involved. ( 12 ) IN this view of the matter, I find no substance in the revision. The revision petition is accordingly dismissed with costs. Revision dismissed. .