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2010 DIGILAW 1413 (RAJ)

Shyam Kamal Sharma v. Arun Kamal Sharma

2010-08-09

C.M.TOTLA, DINESH MAHESHWARI

body2010
JUDGMENT 1. - The petitioners of CWP No.5432/2010 have preferred this intra-court appeal for being aggrieved of the order dated 03.08.2010 whereby the learned Single Judge has dismissed the writ petition. 2. The writ petition aforesaid was filed by the petitioners appellants seeking to question the order dated 03.01.2010 as passed by the sole arbitrator who has entered into reference pursuant to the agreement of the parties that culminated into the order dated 16.04.2009 passed by this Court (Single Judge) in S.B.Civil Misc.Appeal No.868/2008. 3. The respondent No.1 submitted the statement of claim before the sole arbitrator seeking adjudication of various issues including the one that the dissolution dated 31.03.2003 be declared null and void. Per contra, the appellants submitted that the fact of the dissolution of the partnership with effect from 31.03.2003 was accepted by the respondent No.1 in CMA No.868/2008 and such an issue regarding dissolution of firm with effect from 31.03.2003 was not open for adjudication. 4. The learned arbitrator over-ruled the primary objection by his order dated 03.01.2010 while saying,- "In a suit for dissolution of partnership at will, court fixes a date from which partnership is to be dissolved. In present case the date of dissolution of partnership firm is not admitted. Only the fact of dissolution has been admitted before Hon'ble High Court. Therefore the arbitral tribunal has to decide the date of dissolution of partnership firm and which can only be decided after going through the pleadings and the documents submitted by the respective parties. The question of dissolution of firm in some cases it may be a question of fact or it may be a question of law and also may be question of law and facts. It is right of the partners to have business would up after dissolution and to have the property of the firm applied in payments of debts and liabilities of the firm and to have the surplus distributed among them or their representative. Therefore it is necessary to arrive at a definite date of dissolution and then the question of settlement of accounts arise on date of dissolution. And after discharging the liability the remaining will be distributed among the partner as per their share. Therefore no specific claim can be decided in the absence of date of dissolution." 5. Therefore it is necessary to arrive at a definite date of dissolution and then the question of settlement of accounts arise on date of dissolution. And after discharging the liability the remaining will be distributed among the partner as per their share. Therefore no specific claim can be decided in the absence of date of dissolution." 5. The petitioners-appellants preferred the writ petition against the order aforesaid and contended that the factum of dissolution and its date i.e., 31.03.2003 stood concluded by the order passed by this Court on 16.04.2009. 6. The learned Single Judge, however, did not agree with such submissions and observed that acceptance of the fact regarding dissolution of firm did not necessarily mean that the firm stood dissolved on the particular date i.e., 31.03.2003. The learned Single Judge agreed with the order passed by the sole arbitrator that the definite date of dissolution was required to be determined and only then, the question of settlement of account could be taken up. The learned Single Judge, thus, found no case for interference in exercising the powers under Article 226 and 227 of the Constitution of India. 7. The learned counsel for the appellants attempted to argue that the order passed by the learned arbitrator is not in conformity with the order passed by this Court on 16.04.2009 and the agreement of the parties as noticed therein but then, at the outset we posed a question to the learned counsel about the very competence of the writ petition against the order passed by the arbitrator particularly when the order in question is in essence referable to Sub-sections (3) and (5) of Section 16 of the Arbitration and Conciliation Act, 1996 ('the Act'); and by virtue of Clause (iv) of Sub-section (2) of Section 34 of the Act, if any party is aggrieved of an arbitral award and if the award deals with a dispute not contemplated by or not falling within the terms of the submissions to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, the award can be challenged before the Court; and the Court can set aside the award with necessary finding on such grievance. 8. 8. The learned counsel submitted that for the nature of the order passed by the arbitrator, the appellants have no remedy under the Act and then, the arbitrator would be proceeding rather contrary to and beyond the terms of reference as stated in order dated 16.04.2009. We are unable to agree on the submissions of the learned counsel for the appellants that the appellants are remediless qua the order dated 03.01.2010 as passed by the arbitrator. Section 16 of the Act reads as under:- "16. Competence of arbitral tribunal to rule on its jurisdiction.-(1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,- (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator. (3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. (4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified. (5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award. (6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34." The relevant parts of Section 34 of the Act read as under:- "34.Application for setting aside arbitral award.- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if- (a) the party making the application furnishes proof that- ......... ........ ......... (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or ........... ..........." 9. It is explicit and clear that the arbitrator is entitled to decide the question of its jurisdiction and scope of its authority. If after ruling on the question of jurisdiction and scope of its authority, the arbitrator proceeds with the matter and the arbitral award deals with the dispute not contemplated by or not falling within the terms of the submission or the award contains any decision on the matters beyond the scope of submission, a party aggrieved of such award can always make an application for setting aside the award in accordance with Section 34 ibid. Any such eventuality at the present stage cannot be said to have arisen because by the impugned order, the arbitrator has only stated that he would be determining the date of dissolution too. 10. Though we are not commenting on the correctness or otherwise of the order passed by the arbitrator but in our view, the writ jurisdiction was not available in this matter against the order dated 03.01.2010 and the writ petition ought to have been dismissed on this ground alone. 11. For what has been discussed above, we do not find any reason to interfere in this intra-court appeal.The appeal fails and is, therefore, dismissed.Special appeal dismissed. *******