ORDER
Amitava Lala, J.
1. This is an application, basically, for the purpose of passing an order for dissolution of the registered partnership firm, M/s Bansal Distributors and further order for the purpose of winding up of the affairs of the partnership firm along with various incidental prayers including Injunction etc.
2. This application is made under a suit being C. Section No. 527 of 2000.
3. In the said suit, an application was made for the purpose of various interlocutory reliefs.
4. Ultimately, by an order dated 28th February, 2000, a Single Bench of this High Court was pleased to refer the disputes and controversies between the parties involved in a suit to an appropriate forum in view of the Arbitration Clause for appointment of arbitrator with a rider that the arbitration clause does not provide the machinery for referring the disputes for adjudication by the Arbitrator as no specific name has been
mentioned nor the same has been appointed.
5. From such order, an appeal was preferred by the petitioner herein when an Appeal Bench of this Court by an order dated 28th March, 2000, gave directions to the petitioner to make an appropriate application for Interlocutory relief before a Single Bench of this Court.
6. The respondent took the point that when an order was passed in an application under Section 8 of the Arbitration and Conciliation Act, 1996, no appeal can be preferred from such order.
7. In this context, from annexure to the copy of the application under Section 8 of the Act as handed over to court, I find the arbitration clause which is as follows :
“15. All disputes and questions whatsoever which shall arise during the partnership or afterwards, between the partners or their respective representative or between one partner and the representative of the other partner relating to the business of affairs of the firm or the rights, duties and liabilities of any person under this instrument, shall be referred to one Arbitrator if the parties agree upon one, otherwise In accordance with and subject to the provisions of the Arbitration Act, 1940.”
8. Therefore, now, it is crystal clear that the power to refer parties to arbitration when there is an arbitration agreement available before the judicial authority before which such action is brought has been applied hereunder by the Single Bench of this Court from which such appeal was preferred.
9. Therefore, any interlocutory application as directed by the appeal court Is in the nature of interlocutory relief arising out of such arbitration proceedings as to be Initiated or has been initiated. By virtue of such appeal court’s order, the petitioner herein, cannot take a chance of making an interlocutory application in the suit itself.
10. The petitioner has taken a plea that there are two parts of the decision to be made in the suit. One is in respect of dissolution of partnership firm and other is dispute as to the accounts etc.
11. Therefore, such dissolution of the firm by virtue of Section 44 of the Indian Partnership Act, 1932, cannot be regarded as a dispute before the Arbitrator. But for such reason application has to be made under the Arbitration and Conciliation Act,
1996, either before the Court or before the Arbitrator, but once the dispute in respect of the parties pursuant to the direction of the Court under Section 8 of the Act has been referred for arbitration, suit court has no business to interfere with the same as if the suit Court has still seisin In respect of the suit.
12. Moreever, the respondent has pointed out that once it is decided by the Single Bench In the Interlocutory application in connection with the suit that the disputes should be referred to arbitration, the same cannot be re-opened in another interlocutory application before the suit Court. Such action is hit by principles of res Judicata or analogous thereto.
13. The petitioner has contended that the aforesaid arbitration clause speaks for the disputes between the partners”…..,…………
relating to the business or affairs of the firm or the rights, duties and liabilities of any person under this instrument, shall be referred to one Arbitraror ……….,…”.
14. Therefore, the same can be construed that the Arbitrator cannot be able to decide even the issue of the dissolution of the firm. Therefore, such part can be separated from the dispute to be referred before the Arbitrator.
15. The petitioner has relied upon the judgment reported In (Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd.) heavily by saying that analogy of Indian Companies Act can also be applicable in respect of dissolution of the partnership firm. If by virtue of the Supreme Court judgement as above, the dispute of winding up of a company cannot be resolved by the Arbitrator similarly the dissolution of a Partnership firm cannot also be decided by an arabitrator.
16. According to the petitioner that the dispute before the Arbitrator pestulates what can be referred to the arbitrator is only the dispute or matter which the arbitrator is competent or empowered to decide.
17. He further cited a judgment ( Sundram Finance Ltd. v. NEPC India Ltd.) by saying that the provisions of Arbitration and Conciliation Act. 1996 is very different from the Arbitration Act, 1940 and to be construed as uninfluenced by the principles underlying
in 1940 Act. Section 8 of the New Act is not in pari materia with Section 20 of the Old Act.
18. However, how this observation of the Supreme Court is helping the petitioner in the instant case is unknown to the petitioner. On the contrary, it is helping the respondent itself.
19. The scope and ambit of this Act, is followed from United Nations Commission on International Trade Law (UNCITRAL). United Nations Commission thought it fit that economic reforms in the Country may not become fully effective if the law dealt with settlement of both demostic and international commercial disputes remains out of tune with such reforms.
20. Therefore, this is a model law keeping an eye towards the International Trade Law. Thus, the existing law of the country is much more exhaustive than the previous law of arbitration.
21. In such a situation, can it be said that the dispute in respect of the partnership accounts can only be resolved by the Arbitrator but the dissolution of firm can be done by the court of law cannot alone ?
22. Dissolution of partnership cannot be equated with the winding up of the company. In a case of winding up of a company it can be held either by the Court or voluntary or subject to the supervision of the Court. In the event winding up of a Company is not a money claim simplicitor between two parties. In further a Company has a distinct personality from the members composing it. The property of the Company does not belong to the members and such members cannot be sued individually. On the other hand members of a partnership firm can be said individuals and also in the name of partnership firm since the partners are responsible for the firm.
23. Winding up of a Company even voluntary it has to be notified in the official gazatte and if necessary. Government through the Official Liquidator Is needed to be interfered. On the other hand dissolution of a partnership firm is private action between the partners.
24. Apart from the above, if I come back from the arbitration clause, I shall find that the arbitration clause provides that all disputes and questions whatsoever arises during the partnership or afterwards can be
decided by the Arbitrators.
25. Under such circumstances, it cannot be construed that the dissolution of a partnership firm cannot be decided by the Arbitrator at all.
26. In this context, it is to be remembered that this suit is virtually made for the dissolution and Incidentally for the purpose of accounts. Therefore, if disputes in respect of accounts are sent to the Arbitrator then what would be the ultimate outcome. Therefore, the multiplicity of the proceedings or lacuna in the proceedings is obvious outcome. Moreover, the present law is not very much rigid and restricted in the definition of the dispute nor the intention of the superior judiciary is to take any rigid view.
27. Therefore, in this context, one other important judgement which has been pointed out by this court when cited by the respondent as (Olympus Free Structure Pvt. Ltd. v. Meena Vijay Khetan) is to be taken into account.
28. By this judgment definition of the court under Section 20 of the Specific Relief Act Included Arbitrator by following the principle that only because of such Section 21 of the Specific Relief Act confers discretion on courts to grant specific performance does not mean that parties cannot agree that the discretion may be exercised by forum of their choice.
29. Specific Relief Act is a codified enactment of various nature of Specific performance but that does not necessarily mean that the specific performance only codified under such Act. Specific performance can be made by the Court, Arbitrator, Tribunal and appropriate forum under various Field of disputes. The arena of the Arbitration Act by virtue of the UNCITRAL is extended. Therefore, a declaration in respect of dissolution of the firm by an arbitrator cannot be said to be non est by saying that in view of Section 44 of the Partnership Act. only the Court may dissolve a firm but not the Arbitrator.
30. This type of dispute is not a new one. It has been cropped up long back in a case of Walmsley v. White, (1892) 67 LT 433 : 40 WR 675. It was held that when there is an arbitration clause in an agreement for partnership, If a partnership firm filed a suit for dissolution it may stayed under Section 34 of the Arbitration Act, and the matters in
dispute may be referred to arbitration. I am not saying, by virture of such decision principle become sacrosanct in respect of non-invocation of the suit court in the place and Instead of arbitration. But by virtue of the exposure of the new Arbitration and Conciliation Act, 1996 and trend of the superior courts, it is presumably correct to say that the declaration of dissolution of the firm can also be decided by the Arbitrator and in such case the word “Court” under Section 44 of the Indian Partnership, Act, 1932 includes Arbitrator.
31. Therefore, the dispute of dissolution of partnership firm can also be raised before the Arbitrator.
32. Thus the application fails.
33. However, no order is passed as to costs.
34. Xeroxed certified copies of this judgment will be supplied to the parties by the department within 7 days from the date of putting requisition for drawing up and completion of the judgment as well as the certified copies.
35. All parties are to act on a signed copy minutes of the operative part of the Judgment on the usual undertaking and subject to satisfaction of the Officer of the court as to putting of requisition as above.