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Lal Chand vs Chunni Lal And Ors. on 16 August, 1995

Rajasthan High Court
Lal Chand vs Chunni Lal And Ors. on 16 August, 1995
Equivalent citations: 1996 (1) WLC 130, 1995 (2) WLN 351
Author: R Kejriwal
Bench: R Kejriwal

JUDGMENT

R.S. Kejriwal, J.

1. This C.M.A. Under Section 39 of the Arbitration Act (for short the ‘Act’) has been directed against the order dated 1.10.1994, passed by learned Additional District Judge No. 6, Jaipur City, Jaipur, rejecting the application under Section 34 of the Act in suit No. 130/91.

2. Brief relevant facts of this appeal are that the plaintiff respondent Chunni Lal filed a suit for dissolution of partnership firm and rendition of accounts, with the allegations that the appellant and respondent No. 1 Chunni Lal started a business in partnership in the name of M/S Lal Chand Moti Lal Oil Mills on 1.10.1980; that the partnership was at Will; that the disputes arose between the parties; and that the appellant included his son Rakesh Kumar, respondent No. 2 in the partnership business in illegal way and got electricity connection in his name even though there was an electricity connection in the name of partnership firm itself. In Para No. 7 of the plaint, it has been mentioned that on 10.10.1990, Serva Shri Gouri Shankar Thawaria, Ram Nath, Shiv Prasad Kanungo, Damodar Das Agrawal and Sita Ram Agrawal were appointed arbitrators and it was expected from them that they would resolve the dispute by the end of December, 1990, but no steps were taken by them. Not only this, the arbitrators expressed their inability to resolve the dispute. It was prayed that a decree be passed declaring that the partnership firm started on 1.10.1980 stood dissolved either from the date of the suit or from the date of decree as the Court may think proper. It was further prayed that a Commissioner be appointed who after taking accounts of the firm make partition between the appellant and the respondent No. 1, Prayer for appointment of receiver of the properties of firm was also made. On receipt of summon of the suit, the appellant filed an application under Section 34 of the Act, with the allegations that in Para No. 16 of the partnership-deed dated 1.10.1980, it was specifically mentioned that all the disputes of partnership firm between the partners would be referred for arbitration under the Act and that the appellant was and is, still prepared for arbitration. In Para No. 4, it has been mentioned that the partnership firm continued upto 1.10.1983. On 30.9.1984, a new-partnership firm was constituted between the parties in which condition No. 11 was similar. It has been further mentioned that on 10.10.1990, the parties appointed arbitrators as mentioned in Para No. 7 of the plaint. The matter is still pending for arbitration with the arbitrators. If the arbitrators did not act, other arbitrators can be appointed under the Act. It was prayed that proceedings of the suit be stayed.

3. In reply to the said application, the plaintiff respondent mentioned that on 3.6.1991, Shri Shiv Prasad Kanungo (Arbitrator) on behalf of all the arbitrators gave in writing that they were unable to arbitrate the matter. He also handed-over the original letter which was given to the arbitrators by the plaintiff-respondent. It has been further mentioned in the reply that defendant No. 2 was not a party to the partnership deed and as such if any award is given by the arbitrators, that can not be binding on the defendant No. 2. The learned Judge vide his order dated 18.7.1991; dismissed the application holding that there was sufficient reason as to why the matter should not be referred to arbitrators in accordance with the Act. Being aggrieved with the said order the defendant-appellant has filed this appeal.

4. I heard Counsel for the parties and gone through the judgment passed by learned Additional District Judge No. 6, Jaipur City, Jaipur, and also the record.

5. Shri Vidhya Bhushan Sharma, Counsel for the appellant submits that respondent No. 2 Rakesh Kumar is son of appellant. Partnership-deed was executed by the appellant and the plaintiff-respondent. Respondent No. 2 was not a partner in the firm. The plaintiff respondent inpleaded him as a defendant with malafide intention. Respondent No. 2 is neither necessary nor proper party in the suit. The learned Judge has rejected the application of the appellant only on the ground that the Award would not be binding on the respondent No. 2. His contention is that the approach of the learned Judge in deciding the application is erroneous. His next submission is that when parties agree to refer their disputes to arbitrators, the Court generally should stay proceedings of the suit and should direct the parties to get their disputes decided through arbitrators of their choice. In support of his arguments, he placed reliance on the Printers (Mysore) Private Ltd. v. Pothan Joseph AIR 1960 SCI 156.

6. On the other hand, counsel for the plaintiff-respondent submits that the learned Judge has given cogent reasons while dismissing the application filed by the appellant. The order passed by the lower court is discretionary, which should not be interferred in appeal. He also placed reliance on the Printers (Mysore) Private Ltd. (supra). His further contention is that the allegation of the plaintiff respondent that the appellant has taken his son respondent No. 2 in partnership business has not been denied by the appellant in his application. Relief against the respondent No. 2 has also been sought by the plaintiff respondent in the suit. There was no agreement with the respondent No. 2 to refer the dispute regarding partnership business for arbitration and as such if the arbitrators decide the dispute, the same would not be binding on the respondent No. 2. On 10.10.1990, the appellant and the respondent No. 1 appointed arbitrators. No steps were taken by the arbitrators to resolve the dispute. Not only this, Shri Shiv Prasad Kanungo, who was one of the arbitrators expressed inability to resolve the dispute on behalf of all the arbitrators and handed-over the original letter which was addressed to all the arbitrators by the plaintiff while appointing them arbitrators. His further submission is that the appellant did not show his readiness and willingness for arbitration even at the time when the suit was filed or prior to that. He has been taking the benefit of the partnership firm to the exclusion of the plaintiff respondent. In such circumstances, the learned Judge was within his jurisdiction to reject the application submitted by the appellant.

7. According to the appellant the partnership which was started on 1.10.1980, continued upto 1.10.83, and thereafter a new partnership agreement was executed on 30.7.1984, on new terms. The appellant neither filed any partnership-deed dated 30.7.1984, nor mentioned as to what were the terms of partnership. In such circumstances, the appellant is not entitled by virtue of term No. 16 of partnership deed dated 1.10.1980; to get the proceedings of suit filed by the plaintiff respondent stayed. It is also pertinent to note that dispute arose between the parties in the year 1989. The parties themselves referred the matter to five arbitrators on 10.10.90. The letter written by the plaintiff-respondent to the arbitrators by which they Were appointed was also returned to the plaintiff respondent which goes to show that the arbitrators refused to resolve the disputes between the appellant and the respondent No. 1. It is also pertinent to note that the appellant though mentioned in his application that he was ready and willing and is still ready for arbitration but failed to demonstrate as to how he was ready and willing for arbitration at the time when suit was filed for dissolution of partnership firm. The appellant has been taking benefit of the partnership firm to the exclusion of the respondent No. 1,whose application for appointment of receiver has also been dismissed by the learned Judge on the ground that the suit has already been dismissed. It is true that ordinarily the court should direct the parties to get their disputes decided by the arbitrators of their choice and the court may stay the proceedings of the suit but in the facts and circumstances of particular case the Court may refuse to grant stay if it is satisfied that there are sufficient reasons why the matter should not be referred for arbitration even though there is an arbitration agreement and the requisite conditions specified in Section 34 of the Act also exist. The power of the Court is discretionary. Ordinarily the appellate court should not substitute its own exercise of discretion for that of the trial Judge,unless it appears to the appellate court that in exercising its discretion the trial court has acted unreasonably or carpricioulsy or has ignored relevant facts and has adopted an unjudicial approach.

8. In the facts and circumstances of the case. I do not think that the learned Judge has misused his powers considering all these aspects of the case, I find no merit in this appeal and the same is dismissed.

9. Before palling with the judgment, it is pertinent to mention here that previously the trial court while allowing the application submitted under Section 34 of the Act, vide its order dated 18.7.81, dismissed the suit and also dismissed the application for appointment of receiver. Since the order dated 18.7.81, dismissing the suit was set-aside by this Court vide its order dated 26.8.94,passed in CMA No. 660/93, the learned Judge should have recalled its order dismissing the application for appointment of receiver and should have decided the same on merits but it has not been done. In such circumstances, I direct the learned Judge to decide the application for appointment of receiver within one month from receipt of a copy of this order. He is further directed to decide the suit expeditiously as far as possible within a period of one year. Parties are directed to appear before the lower court on 28.8.1995.

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