JUDGMENT
Pinaki Chandra Ghose, J.
1. This application has been filed by the defendant Nos. 18 and 19 in the suit under Section 8 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the said Act). The petitioners in this application have prayed before this Court to refer the disputes and differences between the parties to the arbitration in terms of the arbitration agreement dated 30th November, 1992 and the suit should be stayed.
2. Facts of case pleaded in the petition briefly are as follows:
Parties are the members of the same family. The defendant Nos. 2, 3 and 18 alongwith other members of the family formed a partnership firm under the name and style of Economic Transport Organisation with effect from 1st November, 1962. A deed of partnership was executed in respect thereof on 7th November, 1962. The firm carries on business as a transporter and common carrier having its branches and/or land and properties throughout India.
3. From time to time the said Deed of Partnership was reconstituted, last of such reconstitution was made on 30th November, 1992 between the parties.
4. The said Deed of Partnership dated 30th November, 1992 contains the following clause:
“That any dispute or differences, which may arise between the partners or their legal representatives with regard to the construction meaning and effects of these presents or any part thereof or respecting the accounts profit and loss of the business or the rights and liabilities of the partners under this deed or the dissolution or winding up of the business or any matter relating to the business of the firm shall be referred to arbitration in accordance with the provisions of the Indian Arbitration Act, 1940 or any other modifications thereof for the time being in force.”
5. Further, the original partner, being Chandra Mohan Arya, being the father of the plaintiff died on 3rd September, 1999. The plaintiff, his mother, his brother and sister are the heirs and legal representatives of the said deceased. Plaintiff representing the Estate of his deceased father and claiming right through or under the said original partner, Chandra Mohan Arya, since deceased. The plaintiff is bound by the said arbitration clause contained in the Deed of Partnership.
6. The plaintiff without invoking the said Arbitration clause filed Civil Suit No. 83 of 2002 in this Hon’ble Court inter alia praying for the following reliefs:
(a) Declaration that the Partnership Firm being the defendant No. 1 will stand dissolved with effect from 1st March, 2002;
(b) Alternatively, a decree for dissolution of the defendant No. 1 firm;
(c) Preliminary decree be passed in Form No. 21 of Appendix “D” to the 1st Schedule of the Code of Civil Procedure to be followed by final decree in Form No. 22;
(d) The accounts of the defendant No. 1 be taken and decree for such sum be passed and against such of the defendants as may be deemed necessary upon taking of such accounts;
(e) The defendant Nos. 2, 7 and 12 be directed to render accounts of all diversions made to Economic Transport Organisation Private Limited and Economic Services Private Limited and profits earned by us of assets, goodwill of the defendant No. 1 and diversion of the Firm’s customers and make over to the defendant No. 1 all such sum as may be found on accounting to the defendant No. 1;
(f) Perpetual injunction restraining the defendants diverting any business, assets or customers of the defendant No. 1 to the Economic Transport Organisation Pvt. Ltd. and Economic Services Pvt. Ltd. or any other concern or person;
(g) Perpetual injunction restraining the defendants from dealing with and/or disposing of the assets of the assets of the firm and/or carrying on the business of the firm in any manner other than for winding up;
(h) Interim interest and interest on judgment @ 24% per annum;
(i) Receiver;
(j) Injunction;
(k) Costs;
(l) Such other and/or further reliefs.
7. The present petitioners/defendants Nos. 18 and 19 on enquiry came to learn that from time to time various ad-interim orders were passed by the Court on the application filed by the plaintiff and further without serving any notice of the petition on the present petitioners.
8. The petitioners did appear in the suit, but have not yet filed any statement on the substance of disputes, on the contentions of the petitioner there is a valid and subsisting Arbitration Clause and the parties are bound by the said agreement and the disputes which have been raised by the parties are also covered under the said Arbitration Clause. Therefore, it is contended that this Court has no jurisdiction to entertain and determine the present suit except referring the parties to arbitration.
9. Learned senior counsel appearing on behalf of the petitioner submitted that the shares of the parties in the said partnership firm would appear from the following chart:
I. PARTIES TO THE
DISPUTES
Name
Share holding
Party in the present
proceedings
PLAINTIFF GROUP
Vivek Arya
8%
Plaintiff in CS 83/2002
Sulochona Arya
Respondent No. 2 in A.P.
239/02
Parikshit Arya
Respondent No. 3 in A.P.
239/02
Bharat Chidiyawala
Respondent No. 4 in A.P.
239/02
Supporting Defendants
1. Dayanand Arya
6%
Defendant No. 6
2. Ratan Prakash Arya
8%
Defendant No. 7
3. Sanjay (D) Arya
1%
Defendant No. 8
4. Sandeep Arya
1%
Defendant No. 10
5. Sujit Arya
1%
Defendant No. 9
25%
OPPOSING
DEFENDANTS GROUP
1.
Satyaprakash Arya (HUF)
6.25%
Defendant
No. 2
2.
Jaiprakash Arya
6.25%
Defendant
No. 3
3.
Sanjay(s) Arya
6.25%
Defendant
No. 4
4. Rohit
Arya
6.25%
Defendant
No. 5
5.
Satyanand Arya (HUF)
6.25%
Defendant
No. 12
6.
Murtidevi Arya
6.25%
Defendant
No. 15
7.
Mahendra Kumar Arya
3.125%
Defendant
No. 13
8.
Narendra Kumar Arya
3.125%
Defendant
No. 14
9.
Prakashanand Arya
6.25%
Defendant
No. 11
10.
Sudarshan Kumar Arya
6.25%
Defendant
No. 16
11.
Anand Kumar Arya
6.25%
Defendant
No. 17
12.
Bimala Devi Arya
6.25%
Defendant
No. 18
13. Anil
Kumar Arya
3.125%
Defendant
No. 19
14.
Sunil Kumar Arya
3.125%
Defendant
No. 20
75%
Grand
Total… 100%
10. He also submitted that parties who are supporting the plaintiff’s case and who are opposing the plaintiff, would also appear from the chart’. He further contended that in fact the plaintiff and the supporting defendants are having 25% shares in the said firm and the defendants who are opposing including the petitioners herein, are having 75% shares in respect of the said Firm.
11. He further submitted that the suit is for dissolution of the partnership and accounts subject matter is entirely come within the scope of the Arbitration Clause. The Arbitration Clause is admitted and the said clause is wide enough to cover the entire subject matter of the suit. He also relied upon a judgment (P. Ahmed Gqjaptt Raju v. PVG Raju) and contended that it has been laid down that the Court shall exercise its power under Section 8(1) and 8(2) of the said Act if the following conditions are fulfilled:
(i) There is an arbitration agreement.
(ii) A party to the agreement brings an action in the Court against the other party.
(iii) The subject-matter of the action is the same as the subject-matter of the arbitration agreement.
(iv) The other party moves the Court for referring the parties to arbitration before it submits his first statement on the substance of the dispute.
12. He also submitted that admittedly parties in the suit relied upon the Deed of Partnership dated 30th November, 1992. The said agreement admittedly contains an Arbitration Clause. Admittedly, the plaintiff had brought the suit against the other parties on the basis of the said agreement. In fact according to him, in plaint itself, the plaintiff had admitted that he wanted to go to arbitration in terms of the said arbitration agreement. The defendant Nos. 18 and 19 being the applicants herein, are also parties to the said arbitration agreement and have moved the Court for referring the parties to arbitration. Therefore, according to him, all the requirements as have been laid down in the said decision, have been fulfilled.
13. He further contended that the language of Section 8 of the said Act is peremptory and the Court is under in obligation to refer the parties to arbitration in terms of their arbitration agreement. He also relied upon a decision of “Kalpana Kothari” reported in 2000(1) SCC 203 and he relied upon the observation made by the Hon’ble Supreme Court which is reproduced hereunder:
“As long as the arbitration clause exists having recourse to the Civil Court for adjudication of disputes envisaged to be resolved through arbitral process or getting any order of the nature from the Civil Court for appointment of Receiver or prohibitory orders without evincing any intention to have recourse to arbitration in terms of the agreement, may not arise.”
14. He further submitted that Section 8 should be read alongwith Section 5 of the said Act which provides that no judicial authority shall intervene in matters provided in Part II of the Act except where so provided in that part. The object of the legislature, it is submitted that, is that intervention by the Court should be minimum and only would be expressly provided for. Accordingly, he submitted in this background that Section 8 acquires even more force and a reference becomes all the more emphatic and compulsory.
15. He further contended that application was filed for vacating the interim order , which would show that it was founded upon and related only to the question of non-service and that no pleadings on the merits of the several controversies pleaded in the plaint were elaborated in that application. Therefore, the same contains no pleadings on behalf of the petitioners dealing with the claims and contentions of the plaintiff in the suit and no averment was made in that petition regarding the subject-matter of the plaint.
16. He further contended that on the substance of the disputes between the plaintiff and each of the several defendants there were no pleadings in the application for vacating the interim orders.
17. He also submitted that the point which may be taken by the plaintiff that no copy of the Deed of Partnership containing the Arbitration Clause was annexed to the petition. But it would appear from the plaint that the plaintiff annexed a copy of the Deed of Partnership containing the Arbitration Clause and furthermore leave was granted by His Lordship K.J. Sengupta, J. to file a supplementary affidavit by the petitioners herein and a supplementary affidavit was filed. In the said supplementary affidavit it was expressly stated that the original of the Deed of Partnership was lying with the defendant No. 6 and was not in the possession of the present petitioner. A xerox copy of the said Deed of Partnership containing the Arbitration Clause was served upon the applicants on behalf of the plaintiff which was annexed to the supplementary affidavit. Therefore, there cannot be any dispute as to the correctness of the xerox copy of the annexed Deed of Partnership, nor regarding the text of the arbitration agreement between the parties contained therein.
18. He further contended that a certified copy can only be issued of a public document and not of a private document. He drew my attention to Section 74 of the Evidence Act, 1872. According to him, the Deed of Partnership containing the Arbitration Clause in the said case is a private document. Therefore, a certified copy thereof cannot be obtained and obviously could not be annexed in the petition and produced before this Court. Hence he submitted that upon a true construction of Section 8(2) of the said Act, the parliamentary intention which emerges and the object which it was designed to achieve would appear to eliminate any dispute regarding the language of an arbitration clause. In other words, the purpose and spirit of the sub-section is to obviate disputes as to the making of the arbitration agreement and its text or language. Here, undisputably there is no such dispute or issue at all. Therefore, he submitted that the hypertechnical objection raised on behalf of the defendant No. 6 has no substance at all.
19. He also relied upon a decision (ITC Classics Finance Ltd. v. Gropco Mining & Co. Ltd.) where the Court in almost identical circumstances observed the xerox copy of the arbitration agreement containing the arbitration clause constituted “sufficient compliance with Section 8(2) of the Act”.
20. He further contended that even if there is any dispute regarding the factum or existence of the arbitration agreement, then such a dispute is also referable to the arbitral tribunal under Section 16 of the Act.
21. According to learned counsel, there is no delay on the part of the applicants/petitioners herein to file this application and further they are ready and willing to go to the arbitration. He further contended that the main ground for opposing this application under Section 8 was based upon an alleged settlement said to have been entered into between the parties on 23rd March, 2002, that is, after the suit.
22. Regarding such settlement, he further submitted as follows:
(a) The alleged settlement is itself disputed. The petitioners herein never participated in the so-called settlement proceedings. Such settlement was never signed by the petitioners. According to him, under Order 23 Rule 3 a settlement must be in writing and signed by the parties. Admittedly, the signatures of all the parties/partners are not there on that alleged settlement.
(b) It is also alleged that Om Prakash Arya was an authorised representative of the defendant Nos. 18and 19 and these petitioners participated in the settlement proceedings, the said fact has been denied in the affidavit. There is no evidence to show that Om Prakash Arya had any authority to make any settlement on behalf of the defendant Nos. 18 and 19.
(c) The scope of the suit is exfacie wider than the scope of the so-called settlement. The suit is for dissolution of the partnership and accounts between the partners, which are not covered by the so-called settlement The purported settlement purports to deal with the claim of the plaintiff only, who purports to represent only 8% of the partners. The rights of the other 92% are not dealt with by the purported settlement. In other words, the disputes between the others are left totally unresolved. This shows, according to him that there was no settlement in the suit.
(d) In any event, he submitted that the arbitration still remains necessary and compulsory under Section 8.
(e) The purported settlement does not even refer to the suit or its subject-matter. It clearly shows that there was an ad-hoc attempt by some family members to come to some terms with Vivek Arya. The record further shows that this ad-hoc approach fell through. This is patently demonstrable from the petition filed by the plaintiff in T. No. 448 of 2002 (G.A….. 2002).
(e) The plaintiff obviously abandoned and/or gave a go-bye to the purported settlement, which is also apparent from his said other applications.
(f) He further drew my attention to the pleadings in the other application filed by the plaintiff and he drew my attention that the plaintiff has specifically stated in his pleadings and described the settlement as “a purported settlement”. Therefore, the plaintiff himself relies that the said purported settlement was an incomplete, inchoate and uncertain document.
23. Therefore, this would show, according to him, that there are issues and disputes between the parties, which should be resolved by arbitration since such disputes are clearly come within the purview of the said Arbitration Clause.
24. He further relied upon a decision (Star Construction & Transport Co. and Ors. v. India Cements Ltd.) and submitted that the Hon’ble Supreme Court has been pleased to hold that a decree under Order 23 Rule 3 cannot be passed unless it is clearly established that the parties have entered into an accord or compromise whereby their claims have been satisfied or adjusted. In the instant case, there was a settlement on 24th March, 2002 and not is itself a dispute and therefore, the said decision of the Hon’ble Supreme Court squarely applies in the instant case. The Hon’ble Supreme Court was pleased to approve the finding of the Hon’ble Division Bench of this High Court holding that the question as to whether a settlement has been reached between the parties was a matter to be decided as an issue and is a referable dispute to arbitration. In these circumstances, he submitted that the dispute between the parties including the disputes relating to the purported settlement should be referred under the provisions Section 8 of the said Act.
25. According to the plaintiff, this application has been filed by the petitioners herein only after the application for vacating the interim order was rejected by the Court. The defendants took out the present application under the provisions of Section 8 of the said Act. Therefore, the application is not maintainable on the ground that the original arbitration agreement and also the certified copy to the application of the defendants are not annexed. The petitioner does not disclose any readiness or willingness on the part of the said defendants to apply for referring the disputes to arbitration. It is further submitted that since the disputes have already been settled between the parties by way of an agreement recorded at the meeting of the parties held on March 24, 2002 and all the seven groups of partners through their respective members had attended the meeting and fulfilled the final settlement between the parties forming the subject-matter of the present suit and therefore since the disputes have already been compromised between the parties in the suit, there is no dispute pending to be referred between the parties in the suit to arbitration. It is also contended that whether the suit has been compromised between the parties or whether the suit should be disputed by thfs Hon’ble Court passing a compromise decree, or whether passing a compromise decree is not covered under the said arbitration agreement and the said dispute cannot be referred to arbitration.
26. It is further contended that there was not arbitration agreement between the plaintiff and the defendant and on the basis of the said letter the suit has been filed by the plaintiff as a partner of the defendant No. 1.
27. Learned senior counsel appearing on behalf of the plaintiff contended before me that on the ground of delay, and the settlement, the application is not maintainable. He further contended that it is the duty of the petitioners to file the original arbitration agreement in terms of the Section 8 of the said Act. The petitioner has failed to annex the same. Therefore, according to him, the application is not maintainable. He also relied upon a judgment (Chartered Bank v. Port Commissioner) and contended that the petitioner was not ready and willing to go to arbitration at the material time. Therefore, they are not entitled at this stage to ask for any order for stay of the suit.
28. Mr. Panja, learned senior counsel, appearing on behalf of the defendant Nos. 6, 7, 8 and 10 and supporting the cause of the said plaintiff submitted that the application is not maintainable on the ground that the original arbitration agreement has not been annexed to the petition. He relied upon a judgment (India Lease Development Limited and Anr. v. Thimmakka) and submitted that it appears from Section 8(2) that the application for referring the parties to the arbitration can be filed at any time but not later than when the first statement of substance of dispute is filed. Therefore, an application under Section 8(1) can be filed at any time prior to or at the time of filing the written statement. According to him, the petitioners have filed an application for vacating the interim order which is the first statement of substance of dispute between the parties, therefore, is hit under Section 8(1) and the decision cited by him supports his cause. He further submitted that Section 8(2) of the Act specifically provides that an application for referring the parties to arbitration “shall not be entertained unless it is accompanied by the original arbitration agreement or duly certified copy thereof. Therefore, in the absence of the same, according to him, no order can be passed and the application is not maintainable.
29. He further contended that since the disputes between the parties have already been settled and the compromise application for recording the compromise had been filed by the plaintiff under Order 23 Rule 3 this application is also not maintainable since there is no dispute between the parties.
30. He further relied upon a judgment (Union of India v. Popular Construction Company) where the Hon’ble Court held that the main objection of the said Act “to minimise supervisory role of course in the arbitrary process” and that objective is found expression in Section 5 of the said Act. According to him, the disputes between the parties should be referred to the arbitration even without the intervention of the judicial process.
31. It has already been decided in “Pannalal Sagoremull v. Fateh Chand Muralidhar” reported in 88 CLJ 34 that by mere denial of a contract, a party could not defeat the arbitration agreement nor could he take away the jurisdiction of the Arbitrator to decide on the merits.
32. In the said decision the Hon’ble Division Bench held that where the contract between the parties had been superseded, the contract containing the arbitration clause could not be treated as alive and can bind the parties so as to compel them to go to arbitration. Therefore, the said arbitration clause cannot compel them to go to arbitration and furthermore, under Section 34 of the old Act the essential ingredients for stay of a suit was whether the petitioner is ready and willing to proceed with the arbitration at the commencement of the said proceedings. In my opinion, after enactment of the new Act, there is no question of the readiness and willingness which can play a role in the facts and circumstances of this instant case and therefore, in my opinion, this decision has no application in the facts and circumstances of this case.
33. In “Gaga Electric Supply Co. Ltd. v. State of Bihar” , where it has been held that when the Court is exercising its jurisdiction under Section 34 of the Arbitration Act, it should find out whether the claim brought in the suit sought to be stayed comes within the submission to arbitration. The Court cannot come into the validity of the claim in the proceedings under the said section.
34. According to learned senior counsel, the disputes between the parties are not covered under the said arbitration agreement since the matter had already been settled. Therefore, he submitted that since the parties have already stayed their disputes, there is no reason to refer the matter before the learned Arbitrator or to stay the suit. In my opinion, it has been held in the said decision that the said decision cannot help the plaintiff.
35. In “The Oriental Fire and General Insurance Co. Ltd. v. Sm. Usharani Kar and Ors.” reported in AIR 1978 Al 206, the said decision deals with the prayer for stay of the suit which was refused on the ground that the defendant had repudiated the contract. Therefore, since the agreement itself has been repudiated, no effect can be given to the said agreement on the ground that the suit cannot be stayed. The decision also makes no help to the plaintiff.
36. After considering the facts and circumstances of this case and after analysing the facts placed before me and the submissions made on behalf of the parties, the questions arose in this application are:
(a) whether the disputes between the parties in the suit can be referred to the arbitration and the disputes are covered under the arbitration agreement which has already been set out hereinabove;
(b) whether this application is maintainable on the ground that the application does not contain the original arbitration agreement or a certified copy thereof;
(c) whether the disputes between the parties have already been settled by way of an agreement as referred to before me on behalf of the plaintiff.
37. After analysing the facts and the documents which were placed before me on behalf of the parties, it appears that there is no dispute that there is an arbitration clause which is wide enough to cover all the disputes between the parties. It further appears that the Hon’ble Court only at this stage should be satisfied to exercise its power after coming to the conclusion that the requirements to refer the matter to arbitration whether prevailing in the facts and circumstances of this case. Admittedly, in this Instant application the terms and conditions of the partnership firm, the subject-matter of the suit are contained in a Deed of Partnership dated 30th November, 1992 and it contains an arbitration clause and under the said clause, in my opinion, if there is any dispute or differences which may arise between the partners or through legal representatives (emphasis) in respect of the accounts, profit and loss of the business, rights and liabilities of the partners, or construction meaning and effects– all disputes and differences between the parties would come within the four corners of the said arbitration clause and in my opinion the said clause is wide enough to entertain the arbitration between the parties in respect of their disputes. It is not in dispute that the suit is for dissolution of partnership and accounts. The arbitration clause is also admitted and also covers the claim of the plaintiff.
38. If further appears that the essential conditions which have been laid down by the Hon’ble Supreme Court in “P. Ahmed Gajapati Raju v. PVG Rqju” , all the requirements are also fulfilled, in my opinion, in the facts and circumstances of this case and, in my opinion, I do not have any hesitation to accept the contention of the petitioner that under Section 8 of the said Act the Court is under an obligation to refer the parties to arbitration and there is nothing in my opinion, remains to be decided in the original action, i.e., the suit, which is pending before this Court. All the disputes between the parties in the suit would automatically be referred to the arbitration in terms of the said arbitration clause and may be decided. Therefore, I do not have any hesitation to hold that the suit should be stayed on this ground alone.
39. The question that whether the petitioners have dealt with the substance of the disputes in their statement filed before the Court as it has already been decided by the Karnataka High Court that such statement has to be treated as written statement only and not otherwise and furthermore, the submissions have been made before me as has been pointed out by the learned counsel appearing for the petitioner that no statement of substance of the disputes has been dealt with by the petitioner in respect of the plaint filed before this Court. In my opinion, the application which has been filed by the petitioner for the purpose of vacating the interim order cannot be treated as the written statement of the petitioners in the suit or tbe first statement on the substance of the disputes between the parties. Hence, the same cannot stand in the way to refer the matter to the arbitration. Furthermore, it appears that in the plaint itself the plaintiff has admitted that he wanted to go to arbitration in terms of the said arbitration agreement. Therefore, the plaintiff has already admitted the arbitration agreement itself and further annexed the same in the plaint and the petitioner in fact relied upon the same and annexed a certified copy thereof. The said document was not disputed or denied by the parties. The only question has been put forward before this Court that without the original arbitration agreement, no application can be filed or can be entertained by the Court. In my opinion, the original agreement is lying with the defendant No. 6 who has already been called upon to produce the same. By not producing the same the point cannot be taken by the said defendant No. 6 in the proceeding. Such objection is hypertechnical and only to oppose the prayer of the petitioner. Furthermore, it has already been held that the copy of the agreement containing the arbitration clause constitute “sufficient compliance with Section 8(2) of the Act” had already been held by this Court in (supra). It is further a rational approach to be taken by the Court and shall come to the conclusion when it appears that the original document is lying with one of the parties and further the plaintiff relied upon the said document and parties to the suit not denied the existence of the said agreement between the parties. Hence, on these facts, it is not necessary for me to hold that the application is not maintainable on the ground that the original and/or certified copy of the arbitration clause is not annexed to the petition. Therefore, in my opinion, the application is maintainable even in the basis of the arbitration agreement annexed petition.
40. In my opinion, whether even the parties have already settled their disputes is also a dispute which would come within the purview of the arbitration clause between the parties, and that too, in my opinion can be adjudicated upon in terms of the arbitration clause. Such dispute has also referable to the arbitration.
41. After considering all these aspects, I have to hold that since the disputes between the parties are covered under the Arbitration Clause and it fulfills the conditions laid down by the Hon’ble Apex Court in (supra). The Court shall exercise its power under Section 8 of the said Act and accordingly, the suit should be stayed and parties shall be at liberty to refer their disputes and differences to arbitration in terms of the arbitration agreement dated 30th November, 1992.