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2013 DIGILAW 1194 (KAR)

Shriyala Devi v. Prathibha

2013-10-21

S.N.SATYANARAYANA

body2013
Judgment : 1. The respondent in AC.1/2007 (old No.3/1995) on the file of Civil Judge (Sr.Dn), Karkala, has come up in this revision impugning the judgment dated 29.8.2009 in allowing the petition filed by the respondent herein under Section 8 of the Arbitration Act, 1940 seeking to refer the dispute between the petitioner and respondent in running the partnership business of M/s. Padiwal Vegetarian Restaurant said to have commenced from 1.6.1986 under partnership deed dated 26.6.1986 for arbitration. This litigation having once got concluded by order of this Court dated 12.7.2011 was taken up in Special Leave to Apex Court in SLP (C) No.6758/2012 which was later admitted and converted in to Civil Appeal No.8230/2012 and subsequently, allowed and remanded for fresh consideration. Thereafter, this matter is taken up for arguments afresh. 2. In this proceedings the parties are referred to by their rank in the trial Court in AC.No.1/2007. Admittedly, the dispute between the parties to AC.1/2007 revolve around referring the dispute between them in running the business of partnership firm by name M/s. Padiwal Vegetarian Restaurant to arbitrator. The relationship between the parties is that petitioner and respondent herein are co-sisters i.e., the husband of petitioner Smt.Shiryala Devi, namely C.K.Padival is elder brother of respondent Smt.Prathibha's husband Dr.M.Shreyamsa Kumar. The case of the petitioner in the court below, who is respondent herein is that on 26.6.1986 the petitioner and respondent entered in to a partnership agreeing to carry on business of running a Hotel by name M/s.Padiwal Vegetarian Restaurant. It was agreed between them that said partnership shall be at Will. The deed of partnership also provided for arbitration in the event of dispute between the parties in running the aforesaid business under partnership. 3. The petitioner in the court below, namely Smt.Prathiba state that though business was commenced in the year 1986, till 1995 the respondent Smt.Shriyala Devi, who was running the business through her husband did not render accounts, no profits were given to petitioner, she was totally kept ignorant of the business carried in the name of M/s. Padival Vegetarian Restaurant. It is also the case of the petitioner before the trial Court that the business of the said Hotel was looked after by Smt.Shriyala Devi's husband Sri.C.K.Padival. It is also the case of the petitioner before the trial Court that the business of the said Hotel was looked after by Smt.Shriyala Devi's husband Sri.C.K.Padival. It is seen that in the month of January, 1995 a legal notice dated 14.1.1995 was sent to the respondent seeking dissolution of the said partnership firm and calling upon her to wind up the affairs of the firm by resorting to arbitration under clause 16 of the partnership deed. In the said notice it was also suggested that one Sri.S.S.Kamath, Chartered Accountant of Mangalore could be appointed as Arbitrator for winding up of said business transaction. In the said notice the respondent was also called upon to intimate the concurrence or otherwise regarding arbitration to the petitioner. Though the notice is duly served on the respondent, no reply was sent pursuant to legal notice. This has resulted in application being filed under Section 8 of the Arbitration Act, 1940, seeking appointment of Sri.S.S.Kamath, Chartered Accountant of Mangalore or any other person as Arbitrator to decide the dispute between petitioner and respondent relating to dissolution, winding-up and accounting of aforesaid partnership firm and for other related reliefs. 4. In the said proceedings, respondent entered appearance, filed counter contending in first place that there was no agreement of partnership between petitioner and respondent as contended in the petition in AC.No.3/1995, which is later renumbered as AC.1/2007. It is alternatively contended that even if there is existence of firm, the deed dated 26.6.1986 being unregistered deed of partnership firm, the petitioner is not entitled to seek appointment of Arbitrator by invoking Section 8 of the Arbitration Act, 1940, for the reason that Section 69 of the Partnership Act, is a clear bar for seeking any such relief under unregistered partnership deed. Therefore, petition filed under Section 8 of the Arbitration Act is required to be dismissed. 5. With these rival pleadings, the trial court proceeded to frame the following points: 1. Whether the petitioner proves that on 26.6.1986 the petitioner and respondent constituted a partnership, for carrying on business of running the hotel in the name and style of M/s. Padivala's Vegetarian Restaurant? 2. Whether the respondent proves that the alleged Partnership Deed dated 26.6.1986 is concocted, fabricated and not valid document? 3. What order? 6. Thereafter, the parties were called upon to adduce evidence. 2. Whether the respondent proves that the alleged Partnership Deed dated 26.6.1986 is concocted, fabricated and not valid document? 3. What order? 6. Thereafter, the parties were called upon to adduce evidence. On behalf of petitioner, the husband of petitioner- Prathibha, namely Dr.M.Shreyamsa Kumar Padival adduced evidence as PW.1. In addition to that he also got one another witness examined in support of his case, who is a Chartered Accountant, by name Raghupathi S.Bhat, as PW.2. In support of his case petitioner in all produced six documents. First of that is General Power of Attorney executed by petitioner in favour of her husband. Ex.P2 is original partnership deed dated 26.6.1986. Ex.P3 is publication in Udayavani daily newspaper dated 2.6.1986 regarding commencement of M/s. Padivala Vegetarian Restaurant under the partnership of petitioner and respondent. Ex.P4 is the copy of bank account extract. Ex.P5 is the copy of legal notice dated 14.1.1995 and Ex.P6 is the postal acknowledgement for having served copy of the legal notice on respondent Smt.Shriyala Devi. 7. Per contra, on behalf of respondent, the husband of respondent Shriyala Devi Sri.C.K.Padival examined himself as RW.1. He also produced in all eight documents. Out of that Ex.R1 is the copy of General Power of Attorney. Ex.R2 is the copy of licence obtained from TMC Moodabidri, Exs.R3 to R7 are certified copies of licence obtained from TMC Moodabidri with reference to said Restaurant and Ex.R8 is the certificate obtained from Labour Department. 8. The trial Court on appreciation of the pleadings, oral and documentary evidence available on record proceeded to answer the first point for consideration ie., whether the petitioner proves that on 26.6.1986, petitioner and respondent constituted partnership firm for carrying on the business of running a Hotel in the name and style of M/s. Padival Vegetarian Restaurant, in the affirmative. So far as second point for consideration, which was based on the defence raised by the respondent Shriyala Devi to the effect that said partnership deed dated 26.6.1986 is concocted, fabricated and not valid document, was answered in the negative. So far as second point for consideration, which was based on the defence raised by the respondent Shriyala Devi to the effect that said partnership deed dated 26.6.1986 is concocted, fabricated and not valid document, was answered in the negative. In the result, the case of the petitioner-Prathibha under Section 8 of the Arbitration Act was allowed and the court below proceeded to appoint Sri.S.S.Kamath, Chartered Accountant, Karangalpady, Mangalore, as Arbitrator to decide the dispute between the petitioner and respondent relating to dissolution of M/s. Padiwal Vegetarian Restaurant, to carryout the winding-up of said firm and also its accounts and thereafter to pass an award as per the provisions of Arbitration Act. Being aggrieved by the same, the present revision petition is filed. 9. Initially this revision petition was decided by order dated 12.7.2011, wherein the learned Single Judge of this Court allowed the revision petition filed by respondent Smt.Shriyala Devi in Ac.No.1/2007 and consequently, set aside the judgment dated 29.8.2009 passed in AC.No.1/2007. The same was taken-up to Apex Court in Special Leave, which was allowed. In the said Civil Appeal the order dated 12.7.2011 passed in this revision i.e, CRP.No.264/2009 a/w Misc.Cvl.No.20916/2009 is set aside and the matter is remanded back for fresh consideration. 10. This revision is heard along with Misc.Cvl.No.20916/2009 filed under Order 41 Rule 27 of CPC for production of additional documents, which was confronted to the witness in the original proceedings, but not marked. The main ground of challenge to the judgment dated 29.8.2009 is that, in first place there was no partnership between the petitioner-Prathibha and respondent-Shriyala Devi for running the business of M/s.Padival Vegetarian Restaurant. The partnership deed relied on as Ex.P2 is a concocted document. Secondly, the partnership deed being unregistered, the Court of Civil Judge (Sr.Dn), Karkala, did not have jurisdiction to consider the application under Section 8 of the Arbitration Act, since there is a bar to entertain the same under Section 69 (1) to (3) of the Parnership Act. Thirdly, that the judgment rendered by this Court in earlier proceedings in CRP.614/1986, which was filed by the present revision petitioner Smt.Shriyala Devi in challenging the rejection of her application under Order 7 Rule 11 of CPC would not act as res judicata in re-agitating the finding of court below regarding maintainability in this revision petition. 11. Thirdly, that the judgment rendered by this Court in earlier proceedings in CRP.614/1986, which was filed by the present revision petitioner Smt.Shriyala Devi in challenging the rejection of her application under Order 7 Rule 11 of CPC would not act as res judicata in re-agitating the finding of court below regarding maintainability in this revision petition. 11. Coming to the first ground, it is contended by the Counsel for revision petitioner that application under Section 8 of the Arbitration Act, 1940, is not maintainable, for the reason that, petitioner in the court below has failed to establish the execution of partnership deed between the petitioner and respondent on 26.6.1986 and the partnership deed at Ex.P2 is a concocted and fabricated document. Before considering this, pleading and evidence available on record will have to be looked in to. On going through the pleadings, it is clearly seen that on 14.1.1995 much prior to filing of Arbitration Case No.1/2007 (old No.3/1995) a legal notice was issued by petitioner, Smt.Prathibha calling upon respondent, Smt.Shriyala Devi to wind-up the business M/s. Padival Vegetarial Restaurant and in that behalf to concur with the proposal of Sri.S.S.Kamath, Chartered Accountant from Mangalore to be appointed as sole Arbitrator. Though said notice is served on respondent, Smt.Shriyala Devi, there is no reply from her to said notice. Assuming for a moment, there was no partnership between the parties as contended by respondent, Smt.Shriyala Devi, nothing prevented her from replying to said notice denying execution of partnership deed on 26.6.1986 or on any other date. The respondent did not respond to legal notice dated 14.1.1995, ignored the same and kept quiet. It is seen that subsequently petition under Section 8 of the Arbitration Act 1940, is filed on 10.2.1995, which was originally numbered as AC.3/1995 and notice is duly served on respondent, Smt.Shriyala Devi in said proceedings. Though respondent, Smt.Shriyala Devi filed objections to said petition contending that there was no partnership agreement between the parties, it is seen that nothing is done in furtherance to denial taken as and by way of defence in the arbitration proceedings. In normal circumstance, no prudent man would accept such kind of averment, assuming for a moment, there is no partnership deed in existence between the parties in respect of running aforesaid Restaurant, which is said to be in possession and enjoyment of person to whom such a notice is issued. In normal circumstance, no prudent man would accept such kind of averment, assuming for a moment, there is no partnership deed in existence between the parties in respect of running aforesaid Restaurant, which is said to be in possession and enjoyment of person to whom such a notice is issued. Here is a case, where the respondent does not protest the demand when legal notice was issued. Even after filing of the petition, except making a bland denial by way of filing objection statement, nothing is done thereafter to take any punitive steps for making false assertions by petitioner, Smt.Prathibha. 12. It is also seen that in the court below in addition to producing Ex.P2-partnership deed, another document is produced and marked as Ex.P3, which is the copy of a news item, which was published in Vijaya Vani newspaper dated 2.6.1986. The said document would clearly disclose the commencement of business under the name and style of M/s. Padivala Vegetarian Restaurant in Moodabidri town under the partnership of Smt.Prathibha, petitioner and Smt.Shriyala Devi, respondent. The husband of respondent, RW.1 in his evidence does not give any acceptable reason for the said advertisement, which is published in Vijaya Vani, daily newspaper, which is admittedly a newspaper having largest circulation in that place. More particularly, in a place like Moodabidri, which is a small town, if such advertisement is published in the year 1986, it is not possible to accept that it would go unnoticed by respondent and her husband, RW.1 or in the alternative even after seeing the news item respondent has not denied the aforesaid business being run under the partnership of petitioner and respondent. The very admission of this advertisement by RW.1 in his cross-examination, would go all the way beyond reasonable doubt that the allegation of Ex.P2 being concocted document is nothing but a make believe statement by respondent, Smt.Shriyala Devi to suit her requirement in the said proceedings. The trial court on proper appreciation of pleadings and evidence available on record has rightly rejected to accept said contention. 13. Counsel for the revision petitioner, Smt.Shriyala Devi would rely on the decision rendered in the matter of Rangammal -vs-Kuppuswami and Another, reported in (2011) 12 SCC 220 to contend that under Section 101 of the Evidence Act the burden of proving the genuineness of Ex.P2 lies on the party, who relies on said document. 13. Counsel for the revision petitioner, Smt.Shriyala Devi would rely on the decision rendered in the matter of Rangammal -vs-Kuppuswami and Another, reported in (2011) 12 SCC 220 to contend that under Section 101 of the Evidence Act the burden of proving the genuineness of Ex.P2 lies on the party, who relies on said document. However, in the facts and circumstances of the present case, the aforesaid judgment would not support the case of revision petition, on the contrary, it would strengthen the case of petitioner before the trial court ie., Smt.Prathibha, who is respondent herein, who has successfully established beyond all reasonable doubt that the document at Ex.P2 is executed by petitioner and respondent in the trial Court with the evidence of its scribe, PW.2, who has identified the signatures of all the parties, to the said deed. Therefore, said contention is rightly rejected by the court below and has rightly held that in fact, the document at Ex.P2 has come in to force on 26.6.1986 at the instance of petitioner and respondent before the trial court. 14. Coming to the second ground i.e., the partnership deed at Ex.P2 being unregistered, the same cannot be relied on for filing of the application under Section 8 of the Arbitration Act since Section 69(1) to (3) of the Partnership Act, is bar to filing of such application. In support of said contention, counsel for revision petitioner relied on the decision rendered by the Apex Court in the matter of Jagdish Chandra Gupta -vs-Kajaria Traders (India) Ltd., reported in AIR 1964 SC 1882 , wherein it is held that the partners of an unregistered partnership firm are not entitled to seek reference of their dispute to arbitration under Section 8 of the Arbitration Act, 1940. However, this judgment is considered and relied on by the Full Bench of Apex Court in the matter of Prabhu Shankar Jaiswal -vs- Sheo Narain Jaiswal & Ors., reported in (1996) 11 SCC 225 and while deciding the rights of parties under unregistered deed, the Apex Court has held as under: "7. Our attention was drawn to the case of Jagdish Chandra Gupta v. Kajaria Traders (India) LTD (AIR SC 1882) where this Court has held that the word "proceedings' in the first part of sub-section (3) must be widely construed to include proceedings in arbitration. Our attention was drawn to the case of Jagdish Chandra Gupta v. Kajaria Traders (India) LTD (AIR SC 1882) where this Court has held that the word "proceedings' in the first part of sub-section (3) must be widely construed to include proceedings in arbitration. The exception carved out under sub-section (3)(a) would equally apply to such proceedings. The dispute, however, in that case between the partners did not relate to dissolution or accounts of the partnership firm. Hence a resort to the exception under sub-section (3)(a) was not required. In fact, this aspect was neither argued nor considered by this Court in that case. This question directly arose in Prem Lata's case (supra). This Court has held that a suit under Section 20 of the Arbitration Act was maintainable under the exception carved out in sub-section (3)(a) of Section 69 of the Indian Partnership Act. Hence where arbitration is sought under the arbitration clause in a partnership deed of an unregistered firm for the of dissolution and accounts of the partnership Firm, the partners can maintain all applications/petitions under the Arbitration Act for the purpose of enforcing their right to secure dissolution and accounts of the partnership firm through arbitration. In fact, in the present case the suit for dissolution and accounts of the partnership firm has been stayed under Section 34 of the Arbitration Act at the instance of respondent No.1. The petition of the appellant, therefore, under Section 8 of the Arbitration Act is maintainable in the present case." 15. Counsel for revision petitioner tried to distinguish the aforesaid judgments rendered in Jagdish Chandra Gupta and Prabhu Shankar Jaiswal by relying on other judgments rendered by the Apex Court in the matter of Delhi Development Authority vs. Kochhar Constructions Work and Another, reported in (1998) 8 SCC 559 , in the matter of Prem Lata (Smt) & Anr., vs. M/s. Ishar Dass Chaman Lal & Ors., reported in (1995) 2 SCC 145 and in the matter of H.B.Vittala Kamath vs. M/s.Krishna Motor Service & Ors., reported in AIR 1994 KAR 181 to the effect that all these judgments are under Section 20 of the Arbitration Act, 1940, wherein the rights of all the parties seeking for reference to arbitration of dispute regarding dissolution of firm and rendition of the accounts is decided and it is not under Section 8 of the Arbitration Act. Therefore, the same could not have been relied on by the court below in accepting the right of petitioner, Smt.Prathibha in maintaining the application under Section 8 of the Arbitration Act. While trying to distinguish the aforesaid judgments, it is also contended that in the matter of Prabhu Shankar Jaiswal the earlier judgment of Apex Court in Jagdish Chandra Gupta, is not specifically overruled. Therefore, the finding of Apex court in the matter of Jagdish Chandra Gupta will have to be looked in to in stead of the finding rendered in Prabhu Shankar Jaiswal. 16. This Court after going through all the judgments is of the considered opinion that the ruling rendered by the Apex Court in the later judgment i.e, in Prabhu Shankar Jaiswal, so far as the right of partners of an unregistered firm in seeking reference of dispute under Section 8 of the Arbitration Act for adjudication, is rightly upheld and that judgment is rendered after referring to the other judgments, which are relied on by the Counsel for revision petitioner. In that view of matter, the finding of court below in accepting that petitioner, Smt.Prathibha in AC.No.1/2007 had right to file application under Section 8 of the Arbitration Act, 1940, is upheld and the finding of court below in nominating the person referred to in the notice and as well as in the claim petition as sole arbitrator to decide the dispute between the petitioner, Smt.Prathibha and respondent, Smt.Shriyala Devi, appears to be just and proper. 17. Now coming to third ground ie., judgment rendered by this Court in CRP.No.614/1988, which was filed by revision petitioner and the observation made by this Court will not act as res judicata is accepted and in the light of said acceptance revision petitioner is heard at length on all the grounds and after considering the same, this Court is of the considered opinion that the judgment rendered by the Court of Civil Judge (Sr.Dn), Karkala, in allowing the application filed by petitioner, Smt.Prathibha under Section 8 of the Arbitration Act seeking reference of dispute between herself and respondent, Smt.Shriyala Devi with reference to the business of M/s. Padivala Vegetarian Restaurant, which is commenced on 1.6.1986 under partnership deed reduced in to writing on 26.6.1986 for arbitration, is just and proper. The finding of court below in referring the same to Sri.S.S.Kamath, Chartered Accountant from Mangalore to decide the same as sole arbitrator is also just and proper, which does not call for interference by this Court in this revision petition, inasmuch as, there being no illegality or irregularity calling for interference of said judgment. 18. Accordingly, the revision petition is dismissed, consequently the judgment dated 29.8.2009 passed in C.No.1/2007 (old No.3/1995) on the file of Civil Judge (Sr.Dn), Karkala, is hereby confirmed.