Research › Search › Judgment

J&K High Court · body

2001 DIGILAW 19 (JK)

Reva Pargal v. Naresh Kumar

2001-02-01

A.M.MIR

body2001
1. An application preferred under Section 8 of the Jammu and Kashmir Arbitration and Conciliation Act which section is in paramateria to the Central Act namely Arbitration and Conciliation Act has been allowed. The proceedings which were initiated by the present petitioner by filing a suit have been stayed. It is against the above order passed by the trial court the present revision has been preferred. 2. The present petitioner (here in after referred to as the plaintiff) filed a suit in which a prayer was made for dissolution of the partnership firm and rendition of accounts. In this suit, one Naresh Kumarwas also arrayed as a defendant. He is not a partner. This was in addition to defendants No. 1 and 2 who were partners in the firm. To clarify it is restated that defendant No. 3 is not a partner. The application preferred under Section 8 of the Act has been allowed. A finding has been recorded that there did exist an agreement between the plaintiff and the defendants No. 1 and No. 2. As this agreement contained a clause for reference of disputes to arbitration the trial court found merit in the submissions made by defendants No. 1 and 2. The trial court has concluded that in terms of the above Act the proceedings in the suit are required to be stayed. It is against this order this revision petition has been preferred. It is contended that the matter cannot be examined by the arbitrator as defendant No. 3 is not a party to the said agreements. It is submitted that Naresh Kumar is a stranger, it would not be possible for the arbitrator to render any effective award. In addition to this it is submitted that the dissolution of partnership firm is to be ordered under the Supervision and direction of the court and this obligation cannot be entrusted to an arbitrator. 3. Another factor which has been pointed out is that in the application preferred by the defendants no. 1 and no. 2 to the suit it is no where stated that they are ready and willing to get the matter referred to the arbitrator. 4. After having heard learned counsel for the parties, I am of the opinion that there is merit in the submission made by the plaintiff/ petitioner. 1 and no. 2 to the suit it is no where stated that they are ready and willing to get the matter referred to the arbitrator. 4. After having heard learned counsel for the parties, I am of the opinion that there is merit in the submission made by the plaintiff/ petitioner. The dispute can be referred to the arbitrator if all the parties to the litigation are signatories to the agreement in question. The defendant no. 3 in the suit is admittedly not a signatory to the agreement. As such it would not be possible for the arbitrator to settle the dispute between the persons who are not signatories to the agreement and those who are not. To meet this argument the learned counsel for the defendants no. 1 and 2 has submitted that as only consequential relief has been sought against defendant no. 3 therefore, the argument put across by the learned counsel for the plaintiff should not be accepted. 5. I am of the opinion that even the consequential relief would depend upon the finding which would be recorded on merits and any finding which is recorded in the absence of defendant no. 3 to the suit, would not be binding upon him and the dispute would remain dispute. Therefore, referring the matter to the arbitrator would serve no useful purpose. 6. The learned counsel for the plaintiff at this stage places reliance on a decision of the Supreme Court reported as AIR 1999 SC 2354 Haryana Telecom Ltd. vs. Sterlite Industries (India) Ltd. In the above case, winding up proceedings were taken in hand. A pela was taken that the dispute should be referred to the arbitrator. This plea was rejected by the Supreme Court by observing that what can be referred to an arbitrator is only that dispute or matter which the arbitrator is competent or empowered to decide. It was observed that the claim made in the petition for winding up is to be settled under the supervision of court and therefore the prayer for staying the proceedings and for referring the matter to the arbitrator cannot be accepted. The position in this case is similar. The dissolution of partnership is in terms of Section 44 of the Partnership Act. This has to be under the supervision of the court. The position in this case is similar. The dissolution of partnership is in terms of Section 44 of the Partnership Act. This has to be under the supervision of the court. Therefore, what is said in the aforesaid case is fully attracted to the facts of this case also. In addition to this, it be seen that in the application seeking stay of the proceedings, respondent no. 1 and 2 were supposed to indicate their readiness and willingness to get the dispute settled before an arbitrator. This readiness and willingness is to be there at the time when the application was moved. They should indicate that even after the decision is given they would abide by that. Such an assertion is given they would abide by that. Such an assertion is not apparent from the application which has been preferred under Section 8 of the aforesaid Act. In this regard it would be apt to refer to a decision of Punjab and Haryana High Court reported as AIR 1999 P&H 294 Smt. Anjoo Sharma vs. D.L.F. Educational Charitable Trust. This decision does lay down that a party seeking stay of proceedings must indicate its readiness and willingness to abide the decision of the arbitrator. As indicated above in the application preferred under Section 8 of the Act such a plea is not apparent. It is accordingly held: i) That in the present case as defendant no. 3 is not a party to the agreement and he would not be bound by any decision of the arbitrator. In case the matter is referred to it no useful purpose would therefore, be served by referring the dispute to the arbitrator. ii) That respondents no. 1 and 2 have not shown their readiness and willingness to abide by or to get the matter settled from arbitrator. iii) That in the matter of dissolution of firms, the proceedings are to be controlled and supervised by the court. Therefore, as indicated above what was said by the Supreme Court in the case of Haryana Telecom Ltds case (supra) would be attracted to the facts of this case also. 7. In view of the above and in view of the peculiar facts and circumstances of the case, it is held that this is not a fit case for referring the matter to an arbitrator. This petition as such is allowed. 7. In view of the above and in view of the peculiar facts and circumstances of the case, it is held that this is not a fit case for referring the matter to an arbitrator. This petition as such is allowed. The matter would go back to the trial court. The proceedings which have been taken during the currency of interim order shall be deemed to have been taken validly. The records be sent forthwith. Disposed of as such.