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2008 DIGILAW 49 (JK)

Furqan Ahmed Rather v. Mir Nasar-ul-Laj

2008-02-27

MOHAMMAD YAQOOB MIR

body2008
1. Business concern run under the name and style of M/S Dale Agro Industries situated at Industrial Estate of J&K Industrial Development Corporation Limited (SIDCO) Rangreth, District Budgam, of which petitioner and respondent no. 1 are the owners-cum-partners has been established for manufacturing of food procession. Dispute in between the partners has given rise to litigation i.e. respondent (plaintiff) has filed suit for declaration and permanent injunction praying therein that the petitioner (defendant) be asked to render the accounts as per the terms and conditions of partnership deed and has also prayed that petitioner (defendant) is not entitled to transfer or sell the goodwill, name and style of business including the customers of the said firm, except in favour of the respondent (plaintiff) who has a preferential right. Further more respondent (plaintiff) is entitled to the said business establishment in the capacity of exclusive owner petitioner (defendant) alongwith other respondents (defendants) shall be restrained from causing any sort of inconvenience in the functioning and running of the said business. 2. Petitioner (defendant) seem to have filed an application in terms of Sub Section (1) of Section (8) of Jammu & Kashmir Arbitration and conciliation Act of 1997 contending therein that the suit may be dismissed and matter referred to Arbitrator in terms of the conditions of Partnership deed. 3. In short, it is projected that in terms of para 15 of the partnership deed, dispute or difference in connection with the said firm is required to be settled amicably, on failure required to be referred to the Arbitrator. 4. Learned trial court has repelled the contention of the petitioner (defendant) holding therein that Arbitration clause dues not make it obligatory for either of the parties to refer the dispute arising out of the partnership to the Arbitrator. For reference, fresh agreement between the parties is essential. While, dismissing the application petitioner (defendants) has been asked to file the written statement. 5. Heard. Considered. Appearing counsel for the petitioner projected that in terms of para 15 of the partnership deed, dispute has to be referred to the Arbitrator. Only option available to the parties in case of dispute/difference viz-a-viz partnership business/partnership property, is to be settled amicably and in case of failure to settle the matter amicably, matter is required to be referred to Arbitrator to be nominated by and accepted by all the parties. Only option available to the parties in case of dispute/difference viz-a-viz partnership business/partnership property, is to be settled amicably and in case of failure to settle the matter amicably, matter is required to be referred to Arbitrator to be nominated by and accepted by all the parties. Therefore, suit filed by respondent no.1 (plaintiff) is not maintainable. Trial Court has wrongly interpreted the Arbitration clause, resultantly, has rejected the application. 6. Controverting this submission, appearing counsel for respondents while relying on the wording of the partnership deed contended that reference of dispute to the Arbitration is not mandatory. It is the choice of the parties, not obligatory. In support of his contentions, learned counsel relied on judgment reported in AIR 2000 SC page 1379. 7. Though the object of J&K Arbitration and Conciliation Act as envisaged by Section 5 of the Act, is redressal of the dispute with minimum intervention of the court but at the same time wording of the Arbitration clause in a particular document is to be considered as to whether same suggests reference of dispute mandatorily to the Arbitrator. 8. Judgment as relied by the appearing counsel for respondent no.1 AIR 2000 SC page 1379 is applicable to the present case. In the reported judgment, it has been held that agreement clause must mandatorily require appointment of Arbitrator. Words "may" used in the agreement has been interpreted, para 22 is required to be reproduced for appreciating the matter in hand in its right direction: - "It is contended for the petitioner that the word `may in Cl.5 has to be construed as `shall. According to the petitioners counsel, that is the true intention of the parties. The question then is as to what is the intention of the parties? The parties, in my view, used the words `may not without reason. If one looks at the fact that Cl.4 preceded Cl.5 one can see that under Cl.4 parties desired that in case of disputes, the Civil Courts at Bombay are to be approached by way of suit. Then follows Cl.5 with the words it is also agreed that the dispute `may be referred to arbitration implying that parties need not necessarily go to the Civil Court by way of suit but can also go before an arbitrator. Thus, Cl.5 is merely an enabling provision as contended by the respondents. Then follows Cl.5 with the words it is also agreed that the dispute `may be referred to arbitration implying that parties need not necessarily go to the Civil Court by way of suit but can also go before an arbitrator. Thus, Cl.5 is merely an enabling provision as contended by the respondents. I may also state that in cases where there is a sole arbitration clause couched in mandatory language, it is not preceded by a clause like Cl.4 which discloses a general intention of the parties to go before a Civil Court by way of suit. Thus, reading Cl.4 and C 5 together, I am of the view that it is not the intention of the parties that arbitration is to be the sole remedy. It appears that the parties agreed that they can "also "go to arbitration also in case the aggrieved party does not wish to go to arbitration is necessary. Further, in the present case, the same Cl.5, so far as the venue of arbitration is concerned, used word `shall. The parties, in my view, must be deemed to have used the words `may and `shall at different places after due deliberation. " 9. While going through the contents of the partnership deed executed on 22.03.2006 available on the file, what transpires is that words "may" and "shall" have been used consciously with a purpose. The words "may" and "shall" have to be interpreted while taking into consideration all the recitals of the document. The word "shall" used in the Partnership deed, appears to have been used for being mandatorily followed, whereas, word " may" used leaves scope for either of the parties to have recourse to other remedies. Minute perusal of the document i.e. partnership deed suggests that words "may" be referred to Arbitrator has been used to show, the intention of the parties that the Arbitrator is not the sole remedy. In the reported judgment as referred to hereinabove, word "may" and " shall" used at different places are deemed to have been used after due deliberation. Likewise, in the Arbitration agreement, the words "shall" and "may" appear to have been used after due deliberation which in turn means that reference to Arbitrator is not sole remedy but open for other remedy; partnership agreement postulate that in case, parties want the matter to be referred to Arbitrator, both of them must consent to it. Likewise, in the Arbitration agreement, the words "shall" and "may" appear to have been used after due deliberation which in turn means that reference to Arbitrator is not sole remedy but open for other remedy; partnership agreement postulate that in case, parties want the matter to be referred to Arbitrator, both of them must consent to it. 10. Learned trial court has correctly appreciated the words as used in Arbitration agreement and has correctly concluded that Arbitration clause does not make it obligatory for either of the parties to refer the dispute arising out of partnership to the Arbitrator, therefore, has rightly dismissed the application. 11. Revision is found to be devoid of force, is dismissed as such. Learned counsel for the parties shall ensure presence of the parties in person or through their authorized agent before the trial court on 04.03.2008. Copy of the order be sent back to the concerned court below forthwith.