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Rajesh Kumar Gupta & Others v/s Kewal Kumar Gupta


    Civil Revision No. 1944 of 1998

    Decided On, 31 July 2000

    At, High Court of Punjab and Haryana

    By, THE HONOURABLE MR. JUSTICE R.L. ANAND

    For the Appellants: A.K. Mittal, Advocate. For the Respondent: A.K. Chopra, Advocate.



Judgment Text

This is a civil revision and has been directed against the order dated 12.12.1997 passed by the Additional District Judge, Gurdaspur, who allowed the appeal of the Defendants and stayed the suit u/s 34 of the Arbitration Act by setting aside the order dated 19.8.1994 passed by the Sub Judge 1st Class, Batala, who dismissed the application u/s 34 of the Arbitration Act.2. Some facts can be noticed in the following manner and these facts I am writing from the copy of the plaint which was handed over to this Court by the learned Counsel for the parties:3. HUF Rajesh Kumar Gupta and Sons and others filed a suit for rendition of accounts and for payment of amount which was found due to the Plaintiffs from the Defendants Kewal Kumar Gupta and HUF Ravinder Kumar Gupta and Sons. The Plaintiffs also prayed for perpetual injunction restraining the Defendants from carrying on the trade and business of firm M/s. Rajesh Kumar and Brothers, G.T. Road, Batala or transferring or alienating any part or portion of the assets of the said firm. The case set up by the Plaintiffs before the trial Court was that Plaintiff i.e. HUF Rajesh Kumar Gupta and Sons through Rajesh Kumar Gupta as its Karta entered into a partnership for the purpose of carrying on the joint business in partnership with the Defendants under the name and style of M/s Rajesh Kumar and Brothers, G.T. Road, Batala. A regular deed of partner ship was executed by the parties on 1.4.1987 and the partnership came into existence with effect from 1.4.1987 itself. It was also a clause of the partnership deed that account books of the firm were to be maintained and kept at the business premises of the firm. The share of the parties in the profit and loss was as under:(i) Sh. Kewal Kumar Gupta 20%(ii) Sh. Ravinder Kumar Gupta Karta of his HUF 40%(iii) Sh. Rajesh Kumar Gupta Kartar of his HUF 40%4. In paras No. 4,5 and 6 the Plaintiffs have alleged as follows:4. That the Defendants are head-strong persons and have threatened the Plaintiff that they will carry on the business of the firm exclusively by themselves without joining the Plaintiffs in any transaction and that they will not allow the Plaintiffs to carry on the business of the firm. The Defendants further threatened that they will transfer or alienate any part or portion of the firm assets, properties or premises without joining the Plaintiffs in the said transaction. The said threatened action of the Defendants is illegal, ultra vires, high handed and amounts to an actionable nuisance and they are liable to be restrained by the issuance of perpetual injunctions as prayed for in the heading of the plaint which is the only efficacious remedy available to the Plaintiffs in the circumstances of the case. The Defendants should not carry on any business or transaction of the firm without joining the Plaintiffs or transfer or alienate any part or portion of the firm assets, properties or premises.5. That, the Defendants are in possession of all the account books of the firm and are accounting party. The accounts of the partnership have neither been rendered by the Defendants nor settled between the parties.6. That, the Plaintiffs have requested the Defendants to render the account of the partnership business to the Plaintiffs and on such rendition and settlement of accounts to pay the amount of profits etc. which is found due to the Plaintiffs and return them the assets contributed by them but they have refused to do so since yesterday. The Defendants have also refused to join the Plaintiffs in the carrying on the business of the firm although the same is not yet dissolved, and on the other hand threaten to hand over the assets of the firm to any other persons.5. Before filing the written statement and taking any steps the Defendants filed an application u/s 34 of the Arbitration Act and prayed for the stay of suit.6. The parties placed the original partnership deed before the trial Court and the trial Court vide order dated 19.8.1994 dismissed the said application by holding that since the claim of the Plaintiffs is for rendition of accounts, such a matter can only be adjudicated by the Civil Court and not by the arbitrator. The reasons of the trial Court are contained in paras No. 6, 7 and 8 of the order dated 19.8.1994, which are re-produced as under:6. The learned Counsel for the Respondent/Plaintiff stated that the said arbitration clause is vague as it does not mention the name as to whom the dispute could be referred. Not only this even it is not clear as to what kind of dispute could be referred to the arbitrator. Since the arbitration clause in this case is vague, therefore, no reference could be referred to the arbitrator. Particularly in the present case, there is no real dispute between the parties which could be arbitrated by an arbitrator. Therefore, application u/s 34 of the Arbitration Act is not maintainable. In this regard reference may be made to (1987 ) 92 P.L.R. 532.7. It is settled law that where the question of rendition of account is in dispute, arbitrator cannot go through the same and dispute be decided only by the Civil Court. In (1986) 89 P.L.R. 189 it was laid down that question of rendition of account cannot be gone in to arbitration after the dissolution of partnership and is to be decided by the Civil Court. Consequently suit seeking dissolution of partnership and rendition of account thereof could not be stayed u/s 34 of the Arbitration Act.8. From the perusal of my above discussion, it has become apparently clear that where the suit is for the rendition of account the matter for rendition of account could not be referred to the arbitrator. In Narinder Singh v. Hardayal Singh, AIR 1985 P&H 11, it was clearly laid down that question of rendition of account must be decided by the Court and not by the arbitrator. This application u/s 34 of the Arbitration Act is not maintainable and stand dismissed.7. Aggrieved by the order of the trial Court Defendants filed the appeal before the first Appellate Court, which allowed the appeal for the reasons given in paras No. 7 to 11 of the impugned order dated 12.12.1997 and stayed the suit by allowing the application u/s 34 of the Arbitration Act and in this manner, the present revision.8. I have heard the learned Counsel for the parties and with their assistance have gone through the records of the case.9. Before I deal with the submissions raised by the learned Counsel for the parties, it will be appropriate for me to re-produce paras 7 to 11 of the judgment of first Appellate Court, which read as under:7. Learned Counsel for the Appellants/Defendants has argued that as per Clause 19 of the partnership deed all the dispute and questions in connection with the partition of this deed arising between one of them and legal representative of other respective legal representative and whether during or after the partnership shall be referred to the arbitration as provided in the Indian Arbitration Act. He has further argued that the Plaintiffs being the legal representatives are bound by the said partnership deed and with the terms and conditions of the said agreements clause, therefore, matter is referable to the arbitrator in accordance with law. I would like to reproduce the arbitration Clause 19 which reads as under:That all dispute and questions in connection with the partnership or the deed arising between them and the legal representative of the others or between their respective legal representative and whether during or after the partnership shall be referable to arbitration as provided under the Arbitration Act.8. This clause clearly shows that any particular dispute if arising between the partners of their legal representative, that can be referred to the arbitrator under the Indian Arbitration Act. Learned Counsel for the Appellants/Defendants has relied upon Erach F.D. Mehta Vs. Minoo F.D. Mehta, wherein it was held as under:(B) Partnership Act (1932). Section 10-Construction of partnership agreement-Clause in partnership agreement to refer to arbitration all disputes and questions whatsoever which may arise during the partnership or afterwards between the partners touching the partnership agreement including division of assets, debts or liabilities-disputes whether parties agreed that partnership be dissolved is covered by the clause and can be referred to arbitrators.9. Learned Counsel for the Appellants has further argued that when a suit for rendition of accounts and distribution of assets and when there is arbitration clause in partnership deed, suit is to be stayed. He has relied upon 1996 (1) LJR 268, Manoj Ranjan Patnaik and Ors. v. Sangram Kesharipatnaik and others, wherein it was held as under:Arbitration Act, 1940, Section 34-Suit for rendition of accounts and distribution of assets - When there is arbitration clause in partnership deed, suit is to be stayed as per provision of Section 34 of the Act.10. On the other hand learned Counsel for the Respondent/Plaintiff has argued that the said arbitration clause is vague as it does not mention the name as to whom the dispute could be referred. He has also argued that in the present case, there is no real dispute between the parties which could be arbitrated by an arbitrator. Therefore, application u/s 34 of the Arbitration Act is not maintainable.11. A perusal of Section 2(a) of the Arbitration Act, 1940 reads as under:(a) arbitration agreement" means a written agreement to submit present or further differences to arbitration, whether an arbitrator is named therein or not.Clause '19' of partnership deed clearly shows that any particular dispute if arising between the partners or their legal representative, that can be referred to the arbitrator under the Indian Arbitration Act. I get support in this view from AIR 1971 SC 1953 (supra). Suit for rendition of accounts and distribution of assets. Where there is arbitration clause in partnership deed, suit is to be stayed as per provision of Section 34 of the Act. I get support in this view from 1996 (1) LJR 268 (supra).The submission raised by the learned Counsel for the Petitioners before this Court was that since no dispute had arisen between within purview of the arbitration clause, therefore, the first Appellate Court committed a patent illegality by allowing the application u/s 34 of the Arbitration Act and by staying the suit. In support of his contention, the learned Counsel for the Petitioners relied upon Harinder Singh Randhawa v. Hardial Singh Dhillon. (1984) 86 P.L.R. 744 and Murti Ram v. Ram Parkash, (1986) 89 P.L.R. 189. The learned Counsel submitted that so far as the rendition of accounts is concerned, there is no dispute between the parties and to that extent the suit of the Plaintiffs could not be stayed.10. On the contrary, the learned Counsel for the Respondents invites my attention to the arbitration clause and states that from the very pleadings of the Plaintiffs, the dispute has arisen with regard to the rendition of accounts and other assets and liabilities of the firm and as per the arbitration clause the matter has to be referred to the arbitration and the Defendants had not taken any steps in the suit nor filed the written statement, but filed the application u/s 34 of the Act at the first instance.11. In this case in order to adjudicate the contentions raised by the learned Counsel for the parties, it is very necessary for us to refer to the arbitration clause as contained in the partnership deed. The arbitration clause says as follows:That all disputes and question in connection with the partnership or this deed arising between them and the legal representative

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of the others or between their respective legal representative and whether during or after the partnership shall be referable to arbitration as provided under the Arbitration Act.A reading of the above would show that all sorts of disputes which arise in connection with the partnership and all disputes which arise during or after the partnership are liable to be referred to the arbitration. Now it has to be seen what was the case set up by the Plaintiffs themselves. I have already re-produced above the material portion of the pleadings of the Plaintiffs and keeping in view the same 1 agree with the reasons adopted by the first Appellate Court when it has rightly stayed the proceedings u/s 34 of the Arbitration Act. It is never admitted by the Defendants in their application nor it is the case set up by the Plaintiffs in the plaint that Defendants admitted to the extent that they are ready to render the accounts. In fact, the dispute is between the partners with respect to the partnership activities. Therefore, these disputes are within the scope of the arbitration clause. If the parties have chosen a forum, the law Courts are supposed to respect that forum. The matter has to go to the arbitration and, therefore, I do not see any illegality or impropriety in the impugned order.
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