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2005 DIGILAW 691 (PAT)

Sunil Kumar Singh v. Prabha

2005-08-04

R.N.PRASAD

body2005
Judgment R.N.Prasad, J. 1. Heard counsel for the parties. The petitioner has challenged the order dated 17.3.2005 passed by Subordinate Judge X, Patna in Title Suit No. 296 of 1998 whereby the petitioners prayer to refer the dispute forarbitration has been rejected. 2. Title Suit No. 296 of 1998 was filed by the plaintiffs- opposite parties-1st set for declaration that the reconstituted partnership deed dated 17.2.1992 effective from 1.4.1992 is illegal, void, without jurisdiction and without the desire and intention to retire from the partnership of Babu Rajendra Prasad Singh and it be declared that the plaintiffs being heirs of Babu Rajendra Prasad Singh be deemed to be continuing as partners to the extent of the share of Babu Rajendra Prasad Singh. 3. Summons were issued to the defendants in the said suit, Defendant No. 2 appeared in the suit and filed written statement. Defendant No. 3 who is petitioner in this civil revision also appeared in the suit and before filing written statement filed a petition to contest the suit. He also filed petitions on 25.11.2004 and subsequently 16.12.2004 and 28.2.2005 making prayer therein that the matter be referred to the arbitrator in view of the specific provisions of sending the dispute to the Arbitrator. 4. Some facts relevant to the case are necessary to be mentioned. Veena Theatre is a partnership Firm and there was a partnership deed executed on 13.1.1989, Annexure 2. Clause 17 of the said partnership deed reads as follows: That in case of any dispute between the parties hereof as regards their respective rights and liabilities, the same will be referred to a sole arbitrator chosen by the parties hereof whose award will be final with regard to the matters referred to him. 5. Subsequently a fresh partnership deed was executed on 17.2.1992, Annexure 3. Clause 20 of the said partnership deed roads as follows: That in case of any dispute between the parties hereof with regard to their respective rights and liabilities, the came will be referred to a sole arbitrator chosen by the parties hereof whose award shall be final with regard to the matter referred to him. 6. Both partnership deeds Annexures 2 and 3 contain clauses for reference of the dispute to the Arbitrator. 6. Both partnership deeds Annexures 2 and 3 contain clauses for reference of the dispute to the Arbitrator. The suit was filed by the plaintiffs-opposite parties-1st set for declaration of the partnership deeds to be illegal, void and inoperative on the ground that they were not informed about the execution of the said partnership deeds. They have right by virtue of the partnership deed executed in 1989 Annexure 2. In Annexure 3 the plaintiffs opposite parties-1st set are not the party but the petitioner and opposite party Nos. 8 and 9 are parties. It is evident from the materials on record that on the strength of the arbitration clause in the partnership deeds executed in 1989 and 1992 the petitioner filed petitions for referring the dispute to the Arbitrator. The said petitions were rejected on the ground that since relief sought for in the plaint is for declaration of the partnership deed executed on 17.2.1992 to be illegal, void and without jurisdiction, the petitions for referring the dispute to the arbitrator are not entertainable and the said issue has to be decided by the Court itself. 7. Submission of the learned counsel for the petitioner is that u/s. 8 of the Arbitration and Conciliation Act, 1996, hereinafter to be referred to as 1 the Act 1996, specific provision, has been made for referring the dispute to the Arbitrator if the deed contains clause of arbitration. The petitioner was a party to Annexure 3 and also appeared in the suit and filed petitions before filing of the written statement for reference of the dispute to the. Arbitrator and as such the Court below has committed error of law in passing the order impugned. The contention of the petitioner was also supported by the counsel for opposite party Nos. 8 and 9. 8. On the other hand, counsel for plaintiffs-1st set-opposite party Nos. 2 to 7 submitted that since petitioner appeared and filed petition to contest the suit and had taken time, the petitions filed by him for sending the dispute to the Arbitrator are not maintainable. Furthermore, opposite party Nos: 1 and 10 are dead. 9. 8 and 9. 8. On the other hand, counsel for plaintiffs-1st set-opposite party Nos. 2 to 7 submitted that since petitioner appeared and filed petition to contest the suit and had taken time, the petitions filed by him for sending the dispute to the Arbitrator are not maintainable. Furthermore, opposite party Nos: 1 and 10 are dead. 9. On consideration of the submissions made by counsel for the parties and the materials available on record this much is obvious that the suit was filed by the Opposite Parties-1st set for declaration of the deed of partnership executed in 1992, Annexure 3, to be void, illegal, inoperative and without jurisdiction. They were not made party in the partnership deed Annexure 3. They are claiming right and interest in the suit property by virtue of deed of partnership executed in the year 1989, Annexure 2. In both the partnership deed, there is clause for reference of the dispute to the Arbitrator. The petitioner is a party in both the partnership deeds and he has acquired right by virtue of clause for reference of dispute to Arbitrator mentioned in the deed of partnership for reference of the dispute to the Arbitrator. The petitioner thus filed petitions for reference of the dispute to the Arbitrator before filing of the written statement in the suit. 10. Contention of the counsel for the opposite party Nos. 2 to 7 is that they were not party in the partnership deed executed in 1992 (Annexure 3) and as such the dispute cannot be referred to the Arbitrator but counsel has ignored that they are claiming right over the suit property by virtue of partnership deed executed in 1989 (Annexure 2) in which also a clause of reference of the dispute to the Arbitrator is available. Furthermore, the petitioner is party in both the partnership deeds executed in 1989 and 1992 and his right cannot be taken away. Therefore, in my opinion, ambission of the learned counsel for the plaintiffs- opposite party Nos. 2 to 7, 1st set has no substance. 11. Learned counsel for the opposite party Nos. 2 to 7 also contended that opposite party Nos. 1 and 10 are dead. Opposite parties appeared in this Civil Revision on 24.6.2005. However, no such petition has been filed to the effect that opposite party Nos. 1 and 10 is dead. 2 to 7, 1st set has no substance. 11. Learned counsel for the opposite party Nos. 2 to 7 also contended that opposite party Nos. 1 and 10 are dead. Opposite parties appeared in this Civil Revision on 24.6.2005. However, no such petition has been filed to the effect that opposite party Nos. 1 and 10 is dead. It is well established rule of law that unless a petition is filed, the Court cannot take any action. However, the heirs of opposite party No. 1 are already on the record as opposite party Nos. 2 and 3. Opposite party No. 10 is defendant in the suit and as such the plaintiffs opposite parties cannot take such objection. Thus, on consideration, the contentions of the counsel for the opposite parties, in my opinion, has no leg to stand. Counsel for the plaintiffs opposite parties relied upon a decision of the Apex Court in the case of Khardah Company Ltd. V/s. Raymon and Co. (India) Private Ltd., reported in AIR 1962 SC 1810 . In the decision as referred above the award was prepared which was set aside by the High Court. The question was raised with regard to the validity of the agreement. The Apex Court held that a party to the contract is entitled to maintain an application u/s. 33 of the Arbitration Act 1940 for declaration that contract is illegal and that in consequence the proceeding taken thereunder before the arbitrator and the award resulted is void. In the instant case no such stage has come. Moreover, the said decision is under the old Act. Now drastic change has been made in old Act and the Act, 1996 has been promulgated. sec. 8 of the Act, 1996 is enabling clause to refer the dispute to the Arbitrator. sec. 16 of the Act deals with competence of arbitral tribunal to rule on its jurisdiction and it says that the arbitral tribunal may rule on its own jurisdiction, including ruling on any objection with respect to the existence or validity of the arbitration agreement. 8 of the Act, 1996 is enabling clause to refer the dispute to the Arbitrator. sec. 16 of the Act deals with competence of arbitral tribunal to rule on its jurisdiction and it says that the arbitral tribunal may rule on its own jurisdiction, including ruling on any objection with respect to the existence or validity of the arbitration agreement. In the case of Hindustan Petroleum Corporation Ltd. V/s. Pinkcity Midway Petroleums, reported in - the Apex Court while considering the objection with regard to the applicability of the arbitration clause to the facts of the case goes to the very root of the jurisdiction of the reference to arbitration, the question will have to be decided by the Civil Court before referring the matter to arbitration even in cases where there is admittedly an arbitration clause. The Apex Court in the said background has held that sec. 16 of the Act itself empowers the arbitral tribunal to rule on its jurisdiction including those on any objections with respect to existence or validity of the arbitration agreement. Therefore, it is evident from the decisions of the Apex Court also that any objection can be decided by the Arbitrator in view of the Provisions of sec. 16 of the Arbitration Act, 1996. 12. Thus, on consideration and discussions made above, I find that the Court below has committed error in passing the impugned order. Accordingly, the impugned order is set aside and this Civil Revision is allowed.