JUDGMENT : Bivas Pattanayak, J. 1. This Civil Revisional Application is filed by the petitioner-plaintiff under Article 227 of the Constitution of India challenging Order No. 10 dated 18th January, 2023 passed by the learned Civil Judge (Junior Division)-I at Port Blair in Other Suit No. 17 of 2022 allowing the application of the opposite party-defendant under Section 8 (1) of the Arbitration and Conciliation Act, 1996. 2. The brief fact of the case is that the plaintiff-petitioner filed a suit for declaration and permanent injunction claiming declaration in the form of a decree declaring the opposite party-defendant as not a partner in the firm under the name and style of “Havelock Dive Club” which is registered as Other Suit No. 17 of 2022. The opposite party-defendant entered appearance in the suit and filed an application under Section 8 (1) of the Arbitration and Conciliation Act, 1996 praying for referring the matter in dispute between the parties to arbitration on the basis of valid arbitration agreement existing between them contained in the deed of partnership. Upon hearing and considering the materials on record, the learned Trial Court allowed such prayer of the opposite party-defendant made in terms of Section 8 (1) of the Arbitration and Conciliation Act, 1996. 3. Being aggrieved by and dissatisfied with the impugned order passed by the learned Trial Court, the petitioner-plaintiff has preferred the present revisional application. 4. Mr. K.M.B. Jayapal, learned Advocate for the petitioner-plaintiff submitted that though the partnership deed has been registered before the Sub-Registrar, however, the partnership firm has not been registered before the Register of Firms and therefore, the arbitration clause contained in the partnership deed cannot be invoked or acted upon. Referring to Section 69 of the Partnership Act, 1932, he submitted that for the reason of non-registration of the partnership firm before the Register of Firms, no suit can be instituted in respect of such partnership by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm or by or on behalf of a firm against any third party before any Civil Court and thus, it goes without saying that the arbitration clause contained in the partnership deed has no existence at all until and unless the said partnership is registered before the Register of Firms.
He further submitted that the clause containing for reference to arbitration in the partnership deed is ambiguous and it is settled proposition that if the language of such clause is not couched expressively for reference to arbitration, in that event every dispute cannot be referred to arbitration. To buttress his contention he relied on the decision of Hon’ble Supreme Court passed in Master Tours and Travels Versus Chairman, Amarnath Shrine Board and others reported in (2016) 16 SCC 661 . In light of his aforesaid submission, he prayed for allowing the revisional application by setting the impugned order of the learned Trial Court under challenge. 5. In reply to the contentions raised on behalf of the petitioner-plaintiff, Mrs. Anjili Nag, learned Advocate for the opposite party-defendant, at the very outset, submitted that the objection raised by the petitioner-plaintiff relating to the effect of non-registration before the Register of Firms of the partnership firm was neither asserted before the learned Trial Court at the time of hearing of the application under Section 8 (1) of the Arbitration and Conciliation Act, 1996 nor such ground has been taken in the Revisional Application and therefore, such ground of effect of non-registration of partnership before the Register of Firms is untenable. Furthermore, she submitted that no specific pleading has been made in the plaint that the said partnership is an unregistered one and she also drew the attention of the Court to the fact that the petitioner-plaintiff has not filed any supportive document to show that the partnership firm was not registered before the Register of Firms and such contention has been pressed into service by the petitioner-plaintiff by way of oral submissions only which is not at all acceptable. Furthermore, she submitted that in the plaint itself the petitioner-plaintiff has admitted the fact of existence of the partnership deed and therefore, the plaintiff-petitioner is debarred from disputing or raising question regarding existence of the partnership and arbitration clause contained therein. She further submitted that once it is seen that the matter in dispute between the parties is arbitrable and there is existing arbitration agreement it should be left to the arbitrator to decide and in support of her contention she relied on the decision of Hon’ble Supreme Court passed in VGP Marine Kingdom Pvt Ltd and another Versus Kay Ellen Arnold reported in (2023) 1 SCC 597 .
Accordingly, she prayed that the impugned order under challenge of the learned Trial Court for referring the matter for arbitration should be affirmed since there is an arbitration clause in existence contained within the partnership deed. 6. Upon hearing the learned Advocate for the respective parties, following issues have fallen for consideration:- (i) Whether dispute pertaining to an unregistered partnership cannot be referred to arbitration despite there being arbitration agreement in the partnership deed? (ii) Whether the arbitration clause contained in the partnership deed is ambiguous for referring the matter for arbitration? 7. With regard to the first issue, admittedly as per plaint case on 3rd February, 2017 the deed of partnership was executed and duly registered before the Sub-Registrar, South Andaman, Port Blair under Sl. No. 14 of 2017 dated 17th February, 2017. It is also not in dispute that on the basis of such partnership deed, the firm under the name and style of “Havelock Dive Club” was carried on by the parties to the suit, who are the partners. The partnership deed executed by and between the parties at Clause 16 reads as follows : “16. That all the disputes between the partners or the partners and the representatives of a deceased partner in relation to any matter whatsoever touching the partnership affairs or the construction or interpretation of this agreement, and whether before or after the determination of the partnership shall be referred to Arbitration and the decision of the Arbitrators shall be final and binding upon all the partners.” 8. Thus, the existence of the partnership deed is an admitted position and it is also found that it contains an arbitration clause. The invocation of the arbitration clause contained within the partnership deed has been challenged by the petitioner-plaintiff on the ground that since the partnership firm is unregistered one not being registered before the Register of Firms hence the arbitration clause contained therein cannot be invoked or acted upon in view of ban imposed under Section 69(1) of the Partnership Act. At the first instance, no records have been placed to show precisely that such partnership was not registered before the Register of Firms. There is no averment in the plaint that the said partnership is an unregistered one.
At the first instance, no records have been placed to show precisely that such partnership was not registered before the Register of Firms. There is no averment in the plaint that the said partnership is an unregistered one. Neither during hearing of application under Section 8 (1) of Arbitration and Conciliation Act, 1996 before the learned Trial Court nor in the present revisional application such ground of effect of non-registration of partnership firm has been taken. Be that as it may, since a legal question has been raised it needs to be addressed. For the sake of argument if it is conceded that the partnership in question has not been registered before the Register of Firms whether in such event the arbitration clause can be invoked or acted upon vis-à-vis provisions contained under Section 69 of Partnership Act. In order to appreciate the aforesaid aspect it would be apposite to reproduce Section 69 of the Partnership Act : “69 Effect of non-registration. – (1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. (2) No suits to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. (3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect- (a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm; or (b) the powers of an official assign, receiver or Court under the Presidency-towns Insolvency Act, 1909 (3 of 1909), or the Provincial Insolvency Act, 1920 (5 of 1920), to realise the property of an insolvent partner.
(4) This section shall not apply- (a) to firms or to partners in firms which have no place of business in the territories to which this Act extends, or whose place of business in the said territories are situated in areas to which, by notification under Section 56, the Chapter does not apply, or (b) to any suit or claim or set-off no exceeding one hundred rupees in value which, in the Presidency-towns, is not of a kind specified in Section 19 of the Presidency Small Cause Courts Act, 1882 (15 of 1882), to outside the Presidency-towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887 (9 of 1887), or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.” 9. Upon bare reading sub-section (1) of Section 69 it is seen that primarily it imposes a ban on any person as a partner of a firm from filing any suit to enforce a right arising from a contract or a right conferred under the Partnership Act in any Court by or on behalf of an unregistered firm or a person suing as a partner of a firm against the said firm or against any person alleged to be or to have been a partner in that firm. In short the ban imposed under sub-section (1) of Section 69 is on any person in his capacity as the Partner of an unregistered firm against the said firm or any of its partners, in the matter of filing a suit to enforce a right arising from a contract or conferred by the provisions of the Partnership Act. In effect, the ban is in respect of filing a suit against that unregistered firm itself or any of its partners by way of a suit under a contract or under the Partnership Act. 10. Under sub-section (2) similar ban is imposed on an unregistered firm or on its behalf by any of its partners against any third party by way of a suit to enforce a right arising from a contract in any Court. 11.
10. Under sub-section (2) similar ban is imposed on an unregistered firm or on its behalf by any of its partners against any third party by way of a suit to enforce a right arising from a contract in any Court. 11. Sub-Sections (1) and (2) therefore shows that while under sub-section (1) the ban is as against filing a suit in a Court by any person as a partner of an unregistered firm against the firm itself or any of its partner, under sub-section (2) such a ban in the same form of a suit in the Court will also operate against any third party at the instance of such an unregistered firm. The common element in both the sub-sections are filing of a suit, in a Court for the enforcement of a right arising from a contract or conferred by the Partnership Act either on behalf of an unregistered firm or by the firm itself or by anyone representing as partners of such an unregistered firm. While under sub-section (1) the ban imposed would operate against the firm itself or any of its partners, under sub-section (2) the ban would operate against any third party. It is pertinent to note that said provisions under Section 69 of the Partnership Act does not invalidate arbitration agreement or impose ban on an existing arbitration clause for reason of partnership being an unregistered one or take away any right that arises under the Arbitration and Conciliation Act or any other enactment. 12. Sub-section 3 of Section 69 of the Partnership Act relates to ban concerning ‘other proceedings’. The foundation for the application of the said sub-section should be initiation of a suit in which a claim of set-off or other proceedings which intrinsically connected with the suit arise and not otherwise. Section 69 of the Partnership Act has no application to the proceedings of the arbitrator as arbitral proceedings will not come under the expression “other proceedings” of Section 69 (3) of the Partnership Act, the ban imposed under the said Section 69 of the Act can have no application to arbitral proceedings as well as the arbitration award. [See Umesh Goel Versus Himachal Pradesh Cooperative Group Housing Society Limited reported in (2016) 11 SCC 313 ]. 13.
[See Umesh Goel Versus Himachal Pradesh Cooperative Group Housing Society Limited reported in (2016) 11 SCC 313 ]. 13. The petitioner has not shown any other statutory provision either in Arbitration and Conciliation Act, 1996 or the any other statute from which it can be said that the disputes concerning unregistered partnership deed cannot be referred to arbitration. The Hon’ble Supreme Court in Ananthesh Bhakta and others Versus Mayana S. Bhakta and others reported in (2017) 5 SCC 185 which deals with similar issue held as follows : “34. The submission by the appellants is that partnership being an unregistered partnership, no reference can be made to the arbitration. In the present case there is no dispute between the parties that both retirement deed and partnership deed contain an arbitration clause. In retirement deed which had been signed by the retiring partners, continuing partners and concurring partners, following was stated in Clause 8: “… In case of any dispute or difference arising between the parties, regarding the interpretation of the contents of this deed or retirement or any other matter or transactions touching the said retirement, it shall b referred to an arbitration under the provisions of the Arbitration and Conciliation Act, 1996….” 35. Further, in the partnership deed which was dated 5-4-2006, Clause 26 contains an arbitrations clause which is to the following effect: “26. ALL DISPUTES arising between the partners or their legal representatives about the interpretation of this deed or their rights and liabilities thereunder or in relation to any other matters whatsoever touching the partnership affairs shall be decided by an arbitration as provided by the Arbitration and Conciliation Act, 1996.” 36. When the partners and those who claim through partners agreed to get the dispute settled by arbitration, it is not open for the appellants to contend that partnership being unregistered partnership, the dispute cannot be referred. 37. The appellants have not been able to show any statutory provision either in the 1996 Act or in any other statue from which it can be said that dispute concerning unregistered partnership deed cannot be referred to arbitration. We thus do not find any substance in the third submission of the appellant. 38.In the result, we do not find any merit in this appeal which is accordingly dismissed.” 14.
We thus do not find any substance in the third submission of the appellant. 38.In the result, we do not find any merit in this appeal which is accordingly dismissed.” 14. Bearing in mind the aforesaid observation of the Hon’ble Supreme Court, since the partners agreed to get the dispute settled by arbitration, it is not open to the petitioner-plaintiff who is one of the partners in the said partnership, to contend that partnership being unregistered (for the sake of discussion) the dispute cannot be referred to arbitration. Thus such argument advanced on behalf of the petitioner-plaintiff falls short of merit. 15. So far as second issue in concerned let me examine whether there is any ambiguity in the arbitration clause contained in the partnership deed. Relying on the decision of Hon’ble Supreme court in Master Tours and Travels (Supra), Mr. Jayapal, learned advocate for the petitioner-plaintiff submitted that it is settled proposition that if the language of arbitration clause is not couched expressively for reference to arbitration, in that event every dispute cannot be referred to arbitration. Per contra, Mrs. Anjili Nag, learned advocate for opposite party-defendant relying on VGP Marine Kingdom Pvt Ltd (supra) argued that when the matter in dispute is arbitrable it should be left to the arbitrator. Upon close scrutiny of Clause 16 of the partnership deed containing the reference to arbitration, which has already been reproduced hereinabove, it is clearly seen that such Clause expressly mentions that all the disputes between the partners or the partners and the representatives of a deceased partner in relation to any matter whatsoever touching the partnership affairs or the construction or interpretation of this agreement, and whether before or after the determination of the partnership shall be referred to Arbitration and the decision of the Arbitrators shall be final and binding upon all the partners. Admittedly the disputes between the parties relates to the said partnership. The arbitration Clause in clear and unequivocal terms provides for disputes between the parties touching the partnership for reference to arbitration. I find substance in submission of Mrs. Nag, learned advocate for opposite party-defendant in this regard.
Admittedly the disputes between the parties relates to the said partnership. The arbitration Clause in clear and unequivocal terms provides for disputes between the parties touching the partnership for reference to arbitration. I find substance in submission of Mrs. Nag, learned advocate for opposite party-defendant in this regard. In the decision of Master Tours and Travels (supra) relied on behalf of the petitioner-plaintiff it is found that the clause of the work order stated that in case of any dispute the matter shall be referred to the Chief Executive Officer, Amarnath Shrine Board, whose decision in the matter shall be final, which the Hon’ble Supreme Court held to be not an arbitration clause for settling the dispute between the parties. However, the language of the partnership deed in the case at hand is clear and unambiguous that the matter in disputes touching the partnership is to be referred to the arbitrator. There is no such ambiguity whatsoever in the arbitration clause of the partnership deed. Thus, the ratio of the cited decision is distinguishable and does not apply to the facts of the case. In light of the above, the ground of ambiguity in the arbitration clause raised at the instance of the petitioner-plaintiff does not stand to reason. 16. Section 8 (1) of Arbitration and Conciliation Act, 1996 provides : “8. Power to refer parties to arbitration where there is an arbitration agreement – (1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.” 17. Section 8 (1) of the Arbitration and Conciliation Act, 1996 thus clearly envisages that judicial authority on the basis of arbitration agreement between the parties is required to direct the parties to go for arbitration unless the Court finds prima facie no valid arbitration agreement exists. From the foregoing paragraph, it is found that the there is valid arbitration agreement in existence.
From the foregoing paragraph, it is found that the there is valid arbitration agreement in existence. Therefore, the impugned order passed by the learned Trial Court allowing the application of the opposite party-defendant under Section 8(1) of the Arbitration and Conciliation Act, 1996 does not call for any interference. 18. In view of the above Civil Revisional Application being CO 7 of 2023 stands dismissed. The impugned order of the learned Trial Court passed in Other Suit No. 17 of 2022, is hereby affirmed. 19. All connected application, if any, stands disposed of. 20. Interim order, if any, stands vacated. 21. Urgent Photostat certified copy of the order, if applied for, be supplied to the parties upon compliance of all legal formalities.