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2000 DIGILAW 446 (KER)

Gopalakrishnan v. Sivadas

2000-08-24

A.LEKSHMIKUTTY, S.SANKARASUBBAN

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Judgment :- S. Sankarasubban, J. The above C.M. Appeal is filed against the order in I.A. No. 3553 of 1997 in O.S. No. 317 of 1997 on the file of the Principal Sub Court, North Parur. Plaintiff is the appellant. The suit was filed by the appellant for a decree of dissolution of partnership, that accounts be taken from the defendants and a decree be passed in favour of the plaintiff for the amounts that may be found due from the defendants, to appoint a receiver and for other reliefs. 2. According to the plaintiff, the plaintiff and defendants 1 to 3 have been carrying on business of manufacturing and trading in boat propellers and other allied products under the name and style 'Matha Metal Works' as per an agreement of partnership in writing executed between the parties on 15.10.1993. The partnership has been registered with the Registrar of Firms and the register number is 4738. Under the terms of the agreement, the plaintiff is the Managing Partner and the plaintiff is to contribute an amount of Rs. 1,50,000/- to the capital of the partnership and the plaintiff is entitled to get 621/2 % of the profits per annum. The plaintiff also entitled to get a monthly remuneration of Rs. 1,000/-. It is further averred that disputes have arisen between the plaintiff and the defendants as partners whereby it has become impossible to carry on the business in partnership with advantage to each partner. It is further stated that the defendants have violated the conditions laid down in the agreement by misappropriating the profits realised from the partnership business and is not showing the accounts and not rendering accounts. Even though the plaintiff many times approached the defendants for rendition of accounts, the defendants refused to do so. Hence, the suit was filed for dissolution of the partnership. 3. Along with the suit, a petition was filed for attachment of movables. Then the defendants filed LA. No. 3553 of 1997. The above LA. was filed under S.34 of the Arbitration Act. Hence, the suit was filed for dissolution of the partnership. 3. Along with the suit, a petition was filed for attachment of movables. Then the defendants filed LA. No. 3553 of 1997. The above LA. was filed under S.34 of the Arbitration Act. In the affidavit filed along with the application, it is stated that as per Clause 14 of the partnership deed, any dispute or difference, which may arise between the partners with regard to the construction, meaning and effect of the deed or any part thereof, or respecting the accounts, profits or losses of the business, or the rights and liabilities of the partners under the deed or the dissolution or winding up of the business or any other matter relating to the Firm shall be referred to arbitration and such difference shall be decided by the mediators as far as possible. On the basis of this, the defendant stated that the dispute between the parties has to be referred to arbitration and till then the dispute between the parties has to be decided in the suit. 4. A counter affidavit was filed by the plaintiff. It is stated that the petition filed by the defendants do not state that they are ready and willing to have the matter decided by arbitration. Further, it is stated that the suit is for dissolution involving exercise of judicial discretion. Therefore, the matter to be decided by a Court than an arbitrator and that the petition has to be dismissed. The court below allowed the application and stayed the proceedings. 5. Learned counsel for the appellant submitted that the application under S.34 of the Arbitration Act was not maintainable. The application was filed on 28.11.1997 and the suit itself was filed on 21.11.1997. Learned counsel contended that the Arbitration and Conciliation Act, 1996 came into force on 25.1.1996 and with the commencement of 1996 Act, the 1940 Act ceased to have any existence. He further contended that as per 1996 Act, a petition for stay cannot be filed. The Only petition that can be filed is a petition under S.8 of the Arbitration Act, 1996. As per this Act, the application has to be filed referring the dispute to arbitration. He further submitted that there is no provision akin to S.34 of the 1940 Act and hence, the petition was not maintainable. The Only petition that can be filed is a petition under S.8 of the Arbitration Act, 1996. As per this Act, the application has to be filed referring the dispute to arbitration. He further submitted that there is no provision akin to S.34 of the 1940 Act and hence, the petition was not maintainable. Further, he submitted that the suit was filed for dissolution of the partnership under S.44 of the Partnership Act. Learned counsel further contended that the defendant had not satisfied with the conditions under S.4 of the 1940 Act and in any event, the order has to be set aside. Learned counsel for the respondents submitted that the objection regarding the commencement of the new Act was not taken before the lower court. He then submitted that the application under S.34 may be treated as an application under S.8 of the 1996 Act. 6. We heard learned counsel for the appellant and learned counsel for the respondents. 7. We perused the records of the case. C1.14 of the Partnership deed speaks of arbitration, in case there is difference of opinion among the partners. But as already stated, the application filed by the respondents was one under S.34 of the 1940 Act. The Arbitration Act 1996 came into force on 25.1.1996 and after that date, no application can be filed under S.34. In the decision reported in Shetty 's Constructions Co. Pvt. Ltd. v. Konkan Railway Construction and another - (1998) 5 Supreme Court Cases 599, the question is whether the proceedings under the new Act or old Act has to be followed. In that case, the suit was filed prior to the coming into force of the new Act and demand for referring the dispute for arbitration was made by the petitioner before 26.1.1996. Hence, the Supreme Court held that the provision was governed by the 1940 Act. It further held that if the request was made prior to 26.1.1996, then the proceedings will be governed by the old Act and if the request was after 26.1.1996, the proceedings would be governed by the present Act. In the present case, admittedly, the suit was filed after 26.1.1996 and the request for arbitration was made subsequently. Hence, the provisions of the new Act are applicable. Hence, we are of the view that the order passed by the court below is not correct. In the present case, admittedly, the suit was filed after 26.1.1996 and the request for arbitration was made subsequently. Hence, the provisions of the new Act are applicable. Hence, we are of the view that the order passed by the court below is not correct. Regarding the contention of the respondent to treat the application filed under S.34 as one under S.8, we are of the view that it is difficult to treat that application as one under S.B. Under S.34 of the old Act, it can be requested for stay of the suit, in case there is arbitration clause. Under S.8, the court has to refer the matter for arbitration, if it is satisfied that there is arbitration clause. 8. In the above view of the matter, we are of the view that the I. A. filed under S.34 of the old Act is not maintainable. But this will not prevent the respondents from filing the application under S.8 of the new Act in the court below in accordance with law. Now, Rules have been framed as Kerala Arbitration and Conciliation (Court) Rules, 1997. 9. In the above view of the matter, we allow the appeal and dismiss the LA. But this will not prevent the respondents from filing application under S.8, if they desire to do so at the earliest opportunity. The suit will be posted in the lower court on 28.9.2000.