{"id":127584,"date":"2009-08-31T00:00:00","date_gmt":"2009-08-30T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ashok-kumar-jain-vs-ms-haryana-iron-steel-rolling-on-31-august-2009"},"modified":"2016-03-14T21:23:33","modified_gmt":"2016-03-14T15:53:33","slug":"ashok-kumar-jain-vs-ms-haryana-iron-steel-rolling-on-31-august-2009","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ashok-kumar-jain-vs-ms-haryana-iron-steel-rolling-on-31-august-2009","title":{"rendered":"Ashok Kumar Jain vs M\/S Haryana Iron & Steel Rolling … on 31 August, 2009"},"content":{"rendered":"
Punjab-Haryana High Court<\/div>\n
Ashok Kumar Jain vs M\/S Haryana Iron & Steel Rolling … on 31 August, 2009<\/div>\n
C.R. No. 5167 of 2008                                                  [1]\n\n\n\n\n        IN THE HIGH COURT OF PUNJAB AND HARYANA AT\n\n                               CHANDIGARH.\n\n                                C.R. No. 5167 of 2008\n\n                                Date of Decision: August 31, 2009\n\n\n\nAshok Kumar Jain\n\n                                     .....Petitioner\n\n            Vs.\n\nM\/s Haryana Iron & Steel Rolling Mill, Hisar and others\n\n                                     .....Respondents\n\n\nCORAM:      HON'BLE MR. JUSTICE M.M.S. BEDI.\n\n                         -.-\n\nPresent:-   Mr. D.V. Sharma, Senior Advocate with\n            Mr. Nitin Jain, Advocate\n            for the petitioner.\n\n            Mr.Arun Palli, Senior Advocate with\n            Mr.H.O. Atri, Advocate.\n\n            Mr.Ashish Gupta, Advocate for respondent No.16.\n\n                   -.-\n\n\n\nM.M.S. BEDI, J.\n<\/pre>\n
            Petitioner has filed this revision petition under Article 227 of<\/p>\n
the Constitution of India against the order dated September 17, 2008 passed<\/p>\n
by Civil Judge, Junior Division, Hisar, allowing the application of<\/p>\n
defendant- respondents under Section 8 of the Arbitration and Conciliation
\n C.R. No. 5167 of 2008                                                     [2]<\/p>\n
Act, 1996, (hereinafter referred to as “the Act’) and dismissing the suit of<\/p>\n
the plaintiff relegating him to the remedy of approaching the Arbitrator as<\/p>\n
per the arbitration agreement, holding that the subject matter of the suit<\/p>\n
regarding separate possession by way of partition of the joint land<\/p>\n
belonging to the partnership firm M\/s Haryana Iron and Steel Rolling Mill<\/p>\n
and the validity of the sale deed dated May 16, 2007 executed by defendant-<\/p>\n
respondents No.1 to 6 in favour of defendant No.11 regarding 8 kanals 6<\/p>\n
marlas of land can be decided by the Arbitrator.\n<\/p>\n
             In order to appreciate the controversy and the applicability of<\/p>\n
Section 8 of the Act, it is appropriate to refer to the facts leading to the<\/p>\n
passing of the impugned order. Plaintiff- petitioner had filed a suit for<\/p>\n
separate possession by way of partition of joint land comprising in Khasra<\/p>\n
No. 4996 (8-6), 5241 (3-5), 5242 min (2-10) totaling 14 K 1 M situated at<\/p>\n
Hisar and in the alternative for possession by way of dissolution of firm M\/s<\/p>\n
Haryana Iron & Steel Rolling Mill, Delhi Road, Hisar, by declaring sale<\/p>\n
deed No. 1791 dated May 16, 2007 executed by defendants No.1 to 6 in<\/p>\n
favour of defendant No.11 in respect of land comprising in Khasra No. 4996<\/p>\n
measuring 8 K-6M is illegal, against facts, unauthorized, void ab initio and<\/p>\n
is not binding upon the right of plaintiff and as a consequential relief of<\/p>\n
permanent prohibitory injunction restraining defendants No.1 to 6 and 11<\/p>\n
from dispossessing the plaintiff from the above land or alienating it by way<\/p>\n
of sale deed, gift deed, decree or allotting it through defendant No.12 and<\/p>\n
also making any construction, addition and alteration till the actual partition<\/p>\n
of land on the basis of evidence oral and documentary of every kind. Copy
\n C.R. No. 5167 of 2008                                                       [3]<\/p>\n
of the civil suit has been attached with the petition as annexure P-1. The<\/p>\n
petitioner was one of the partners alongwith Ferozi Lal Jain, Kul Bhushan<\/p>\n
Jain, Parmod Jain and Deepak Jain, as per the partnership deed dated June<\/p>\n
19, 1978, after few of the earlier partners consisting partnership firm Ms\/<\/p>\n
Haryana Iron and Steel Rolling Mill w.e.f. October 1963 retired. Copy of<\/p>\n
the partnership deed dated June 19, 1978 has been placed on record as<\/p>\n
annexure P-2.    The land forming subject matter of the suit is owned by the<\/p>\n
partnership firm. The father of the plaintiff- petitioner and defendant-<\/p>\n
respondents No.2 to 4 Sh.Ferozi Lal Jain expired on January 29, 2004. The<\/p>\n
petitioner- plaintiff claims that dispute regarding the distribution of shares\/<\/p>\n
properties of the firm arose as such a partnership agreement was entered<\/p>\n
into between the sons of Ferozi Lal, including the petitioner.              The<\/p>\n
Arbitration Agreement dated September 23, 2006, entered into between the<\/p>\n
parties reads as follows:-\n<\/p>\n
                   “We Kulbhushan Jain, Ashok Kumar Jain, Parmod Jain<\/p>\n
                   and Deepak Jain, sons of Sh. Ferozi Lal Jain son of<\/p>\n
                   Sh.Sher Singh are residents of Hisar, Tehsil and District<\/p>\n
                   Hisar.      That we have a dispute regarding shares in<\/p>\n
                   following properties\/ firms:-\n<\/p><\/blockquote>\n
                   1.        Land and machinery of firm Haryana Rolling Mill<\/p>\n
                             and its liabilities and its dates.\n<\/p><\/blockquote>\n
                   2.        Firm Khushiram Sher Singh, Moti Bazaar, Hisar,<\/p>\n
                             partnership or HUF.\n<\/p><\/blockquote>\n
                   3.        House Moti Bazaar, Hisar, including 3 shops.\n<\/p><\/blockquote>\n
 C.R. No. 5167 of 2008                                                [4]\n\n\n\n\n                 4.     Nohra Birkhuwala Hisar which includes a tea\n\n                        shop.\n\n<\/pre>\n
                 5.     Agricultural land 55 A.P. Bangla Road of which<\/p>\n
                        jamabandi and map is attached.\n<\/p><\/blockquote>\n
                 6.     House Factor, House No.77, Urban Estate -2 ,<\/p>\n
                        Farm House Camry Road Hisar, only constructed<\/p>\n
                        area (land will not be included) House No.119,<\/p>\n
                        Sector 15-A, Hisar.\n<\/p><\/blockquote>\n
                 7.     That we all state that out of the total land of<\/p>\n
                        Haryana Rolling Mill leaving 1000 square yards<\/p>\n
                        for Kulbhushan’s house, for the remaining 7800<\/p>\n
                        square yards approximately, deal has been done by<\/p>\n
                        Kulbhushan, Pramod and Deepak, all the parties<\/p>\n
                        will be abide by it.\n<\/p><\/blockquote>\n
                 That our father Late Sh.Ferozi Lal Jain for his share in<\/p>\n
                 the abovementioned properties at Sr. No.1, 2 and 3 has<\/p>\n
                 executed one will dated 22.9.2003 which was written by<\/p>\n
                 Sh.M.P. Aggarwal, Advocate in presence of the<\/p>\n
                 witnesses at Holi Hospital, Hisar, which we all consider<\/p>\n
                 to be correct but Sh.Ferozi Lal’s share in percentage in<\/p>\n
                 abovementioned properties is in dispute.<\/p><\/blockquote>\n
                        That we all have agreed with our own wish to<\/p>\n
                 appoint Sh.M.P. Aggarwal and Sh.Subhash Gupta,
\n C.R. No. 5167 of 2008                                                   [5]<\/p>\n
                  Advocate and Sh.Ashok Goyal (C.A.) as our Panch\/<\/p>\n
                  Arbitrator.\n<\/p>\n
                           That abovementioned arbitrators after hearing all<\/p>\n
                  the parties and seeing all the documents will give<\/p>\n
                  decision as to whether each four of us has any share in<\/p>\n
                  each property and to what extent, either by consensus or<\/p>\n
                  by majority decision and this will be binding and we will<\/p>\n
                  not challenge this anywhere.\n<\/p>\n
                           Now this Arbitration Agreement has been written<\/p>\n
                  which will be binding on us and our legal heirs and<\/p>\n
                  representatives. All the three arbitrators will give their<\/p>\n
                  award prior to the registration of the Haryana Rolling<\/p>\n
                  Mill.”\n<\/p>\n
            A perusal of the above said arbitration agreement dated<\/p>\n
September 23, 2006 indicates that the plaintiff- petitioner, defendant-<\/p>\n
respondent No.2, defendant-respondent No.3 and defendant- respondent<\/p>\n
No.4 brothers had agreed that the property of the partnership firm<\/p>\n
mentioned in the abovesaid agreement of sale would be decided by the<\/p>\n
Arbitrator and Sh.M.P. Aggarwal, Sh.Subhash Gupta, Advocate and<\/p>\n
Sh.Ashok Goyal, C.A.        Though the Will of Sh.Ferozi Lal Jain dated<\/p>\n
September 22, 2003 was agreed to be corrected but his share in percentage<\/p>\n
in the properties mentioned in the arbitration agreement was in dispute and<\/p>\n
it would be decided by the Arbitrators.        An important feature of the<\/p>\n
arbitration agreement is that out of the total land of Haryana Rolling Mill,
\n C.R. No. 5167 of 2008                                                    [6]<\/p>\n
1000 sq. yards would be left for the house of Kulbhushan Jain, defendant-<\/p>\n
respondent No.2 and for remaining 7800 sq. yards, approximately deal had<\/p>\n
been done by defendants No.2, 3 and 4 and all parties to the arbitration<\/p>\n
agreement agreed to abide by, b y the said deal.\n<\/p>\n
            The plaintiff- petitioner in his suit has sought the partition and<\/p>\n
possession of the property of partnership firm besides seeking declaration<\/p>\n
that the sale deed dated May 16, 2007 executed by defendant No.1 i.e. in<\/p>\n
favour of defendant No.11 regarding Khasra No.4996 measuring 18 K 6 M<\/p>\n
was illegal and not binding upon his rights.       He also sought injunction<\/p>\n
against the said defendants from dispossessing him from the land besides<\/p>\n
seeking a prohibitory injunction restraining them from alienating property<\/p>\n
through defendant No.12. Grievance of the plaintiff- petitioner is that he is<\/p>\n
a partner in view of the partnership deed dated June 19, 1978 and that he did<\/p>\n
not retire from the firm. He has asserted in the suit that after the death of<\/p>\n
Ferozi Lal Jain, the partnership concern was dissolved and the assets stood<\/p>\n
devolved on the partners as per their share.       1\/5th share of Ferozi Lal<\/p>\n
devolved upon his legal representatives i.e. the plaintiff and defendants-<\/p>\n
respondents No.2 to 4 and defendants No.7 to 10 under Section 8 of the<\/p>\n
Hindu Succession Act and that no sale deed could have been executed by<\/p>\n
defendants No.2 to 6. Copy of the sale deed dated May 16, 2007 regarding<\/p>\n
8 K 6M of land has been attached as annexure P-4 which indicates that the<\/p>\n
said property had been sold by defendant No.2 Kulbhushan Jain, Parmod<\/p>\n
Jain and Deepak Jain, sons of Ferozi Lal Jain and Abhinav Jain and<\/p>\n
Abhishek Jain, sons of Kulbhushan Jain, who have been defendants No.5
\n C.R. No. 5167 of 2008                                                       [7]<\/p>\n
and 6. It is specified in the sale deed that the vendor’s partnership concern<\/p>\n
M\/s Haryana Iron and Steel Rolling Mill and except the sale persons none-<\/p>\n
else was partner in the said firm. Defendants No.7 to 10 are the other legal<\/p>\n
heirs of deceased Ferozi Lal Jain whereas defendant No.11, vendee is<\/p>\n
alleged to have carved out plots for selling it through one Society, defendant<\/p>\n
No.12 and had circulated a lay-out plan under a title “Jain Enclave” to<\/p>\n
various property dealers for selling plots under a scheme.       The contesting<\/p>\n
defendants moved an application under Section 8 of the Act before the Civil<\/p>\n
Court averring therein that in view of arbitration agreement dated<\/p>\n
September 23, 2006, the matter stands referred to the Arbitrator and award<\/p>\n
was to be passed by the Arbitrator but the plaintiff- petitioner has filed a suit<\/p>\n
which deserves to be referred to the Arbitrator. The plaintiff- petitioner<\/p>\n
contested the said application taking up the plea that the agreement had<\/p>\n
become infructuous as defendants No.2 to 6 had forged a partnership deed<\/p>\n
and had transferred the land measuring 8 K 6 M by a sale deed dated May<\/p>\n
16, 2007 and the matter of suit is not covered under the provisions of clause<\/p>\n
of any of the arbitration agreement.        The trial Court in view of the<\/p>\n
arbitration agreement dated September 23, 2006 allowed the application and<\/p>\n
dismissed the suit.\n<\/p>\n
             Sh.D.V. Sharma, Senior Advocate, on behalf of the plaintiff-<\/p>\n
petitioner contended that the relief claimed by the plaintiff- petitioner is not<\/p>\n
covered by the arbitration agreement and the matter lies out of the ambit of<\/p>\n
the arbitration agreement, besides this the defendant- respondents No.8 to<\/p>\n
10 are not party to the arbitration agreement.        The trial Court has not
\n C.R. No. 5167 of 2008                                                       [8]<\/p>\n
considered the pleas taken by the plaintiff- petitioner in the suit and illegally<\/p>\n
and arbitrarily allowed the application under Section 8 of the Act.<\/p>\n
             Mr.Arun Palli, Senior advocate for the defendant- respondents<\/p>\n
vehemently urged that once it is established that there is an arbitration<\/p>\n
clause to settle the controversy amongst the rival parties, in view of<\/p>\n
provisions of Section 8 of the Act, it is incumbent on the civil Court to refer<\/p>\n
the matter to the Arbitrator.      Counsel relies on Hindustan Petroleum<\/p>\n
Corporation Ltd. Vs. M\/s Pinkcity Midway Petroleums, 2003 (3) RCR<\/p>\n
(Civil) 686 to argue that it is mandatory for the Civil Court to refer the<\/p>\n
matter to the Arbitrator if there is an arbitral clause accepted by both the<\/p>\n
parties. He also refers to M\/s Agri Gold Exims Ltd. Vs. M\/s Sri Lakshmi<\/p>\n
Knits & Wovens and others, 2007 (1) RCR (Civil) 851 to contend that<\/p>\n
whenever there exist an arbitration agreement, Court is under an obligation<\/p>\n
to refer the parties to Arbitration in terms of the arbitration agreement.<\/p>\n
Shree Subhlaxmi Fabrics Pvt. Ltd. Vs. Chand Mal Baradia and others,<\/p>\n
2005 (2) RCR (Civil), 363 was relied on to contend that contentious issues<\/p>\n
should not be gone into or decided at the stage of appointment of the<\/p>\n
Arbitrator and that no time should be wasted in referring the description<\/p>\n
forming subject matter of arbitration clause to the Arbitrator.       He argued<\/p>\n
that the dispute inter-se the parties arise out of the assets of the partnership<\/p>\n
firm and as per clause 7 of the Arbitration Agreement, immovable property<\/p>\n
of 7800 sq. yards had been agreed to be sold by Kulbhushan Jain, Parmod<\/p>\n
Jain and Deepak Jain. The sale deed impugned in the suit falls under the
\n C.R. No. 5167 of 2008                                                        [9]<\/p>\n
ambit of clause 7 of the Arbitration Agreement as such the trial Court has<\/p>\n
rightly allowed the application under Section 8 of the Act.<\/p>\n
             Counsel for the petitioner relies upon M\/s Sharda Ginning<\/p>\n
Pressing & Oil Mills and others Vs. Smt. Bimla Devi, 2007 (2) PLR 807,<\/p>\n
wherein in a dispute amongst the partners pertaining to dissolution of<\/p>\n
partnership concern and rendition of accounts, it was held that where the<\/p>\n
partnership contained an arbitration clause, the dispute regarding<\/p>\n
dissolution of partnership and rendition of accounts has to be adjudicated by<\/p>\n
the Civil Court and not by the Arbitrator.\n<\/p>\n
             I have heard counsel for the petitioner as well as counsel for<\/p>\n
the respondents and carefully gone through each document referred to by<\/p>\n
the parties, in context to the provisions of Section 8 of the Act. Section 8 of<\/p>\n
the Act reads as follows:-\n<\/p>\n
                             “Section 8:- Power to refer parties to arbitration<\/p>\n
                             where there is an arbitration agreement- (1) A<\/p>\n
                             judicial authority before which an action is<\/p>\n
                             brought in a matter, which is the subject of an<\/p>\n
                             arbitration agreement, shall, if a party so applies<\/p>\n
                             not later than when submitting his first statement<\/p>\n
                             on the substance of the dispute, refer the parties to<\/p>\n
                             arbitration.<\/p><\/blockquote>\n
                   (2)       The application referred to in sub-section (1) shall<\/p>\n
                             not be entertained unless it is accompanied by the
\n C.R. No. 5167 of 2008
\n[10]<\/p>\n
                          original arbitration agreement or a duly certified<\/p>\n
                          copy thereof.<\/p>\n
\n\n                   (3)    Notwithstanding that an application has been\n\n                          made under sub-section (1) and that the issue is\n\n                          pending    before   the   judicial   authority,    an\n\n                          arbitration may be commenced or continued and\n\n                          an arbitral award made\"\n\n<\/pre>\n
             A perusal of the abovesaid provisions indicates that Section 8<\/p>\n
of the Act brings out the conditions which are required to be specified by a<\/p>\n
party under Sections 8(1) and 8(2) of the Act before a Court can be called<\/p>\n
upon to exercise its powers. The language of Section 8 of the Act suggests<\/p>\n
that following conditions are necessary before powers under Section 8 of<\/p>\n
the Act are exercised:-\n<\/p>\n
                   \"i)    there is an arbitration agreement;\n\n                   ii)    a party to the agreement brings an action in the\n\n                   court against the other party;\n\n<\/pre>\n
                   iii)   subject matter of the action is the same as the<\/p>\n
                          subject matter of the arbitration agreement; and<\/p>\n
                   iv)    the other party moves the court for referring the<\/p>\n
                          parties to arbitration when submitting his first<\/p>\n
                          statement on the substance of the dispute.”\n<\/p>\n
             Whether the abovesaid conditions stipulated in Section 8 of the<\/p>\n
Act are attracted in the present case, are required to be looked into in<\/p>\n
context to the pleadings and claim of the plaintiff- petitioner. In the present
\n C.R. No. 5167 of 2008
\n[11]<\/p>\n
case, the arbitration agreement annexure P-3 dated September 23, 2006 has<\/p>\n
been entered into between four persons i.e. the sons of Ferozi Lal Jain<\/p>\n
pertaining to the properties of the partnership firm.       In the arbitration<\/p>\n
agreement there is no reference regarding the rendition of account amongst<\/p>\n
the partners of M\/s Haryana Iron and Steel Rolling Mills, even the share of<\/p>\n
Ferozi Lal Jain, deceased in the properties mentioned in the arbitration<\/p>\n
agreement is to be as determined by the Arbitrators. The arbitrators are<\/p>\n
required to find out the share of the four persons mentioned in the<\/p>\n
Arbitration agreement. Prima facie, the abovesaid four persons had agreed<\/p>\n
to abide by the deal which stood already struck regarding the sale of 7800<\/p>\n
sq. yards by Kulbhushan Jain but the suit has been filed by the plaintiff<\/p>\n
regarding the subject matter which lies out of the cope of the arbitration<\/p>\n
agreement. For instance, sale deed executed by Abhinav Jain and Abhishek<\/p>\n
Jain, sons of Kulbhushan Jain and its effect cannot be looked into by the<\/p>\n
Arbitrators. The sine qua non for directing the provisions of Section 8 of<\/p>\n
the Act is that the subject matter of the suit should be the subject matter of<\/p>\n
the arbitration agreement and the subject matter of the civil suit should<\/p>\n
coincide with the subject matter which can be gone into by the Arbitrator<\/p>\n
pursuant to the arbitration agreement between the contesting parties. The<\/p>\n
arbitrator in the present case, will not be able to determine the rights of the<\/p>\n
parties who are not parties to the arbitration agreement. The sale deed<\/p>\n
changed by the plaintiff apparently does not coincide with the deal which is<\/p>\n
stated to have been entered into by Kulbhushan and Deepak Jain in the<\/p>\n
arbitration agreement. Besides this, it is pertinent to mention that in the
\n C.R. No. 5167 of 2008
\n[12]<\/p>\n
case of M\/s Makar Cotton Mill Vs. Harminder Singh, 2002 (1) RCR<\/p>\n
(Civil) 437 (Delhi) and Haryana Telecom Ltd. Vs. Sterlite Industries<\/p>\n
(India) Ltd., 1999 (3) RCR (Civil) 619, a suit for dissolution of partnership<\/p>\n
and rendition of accounts has to be adjudicated by the Civil Court and not<\/p>\n
by Arbitrator. The trial Court while allowing the application under Section<\/p>\n
8 of the Act did not take into consideration that the parties to the suit are not<\/p>\n
the same as the parties who are subject matter of the arbitration agreement.<\/p>\n
The arbitration agreement will bound only the four persons mentioned<\/p>\n
therein but rights of the other defendants vis-\u00e0-vis the plaintiff- petitioner<\/p>\n
cannot be adjudicated upon by the Arbitrator.          I have considered the<\/p>\n
contention of Mr.Arun Palli, and the judgments cited by him. In view of the<\/p>\n
judgments cited, there is no dispute regarding the scope of Section 8 of the<\/p>\n
Act but in view of the subject matter of the Arbitration Agreement and the<\/p>\n
suit being different, the ratio the abovesaid judgments is not applicable.<\/p>\n
             In view of the above circumstances, the impugned order dated<\/p>\n
September 17, 2008, allowing the application under Section 8 of the Act is<\/p>\n
set aside. The parties are directed to appear before the Civil Court on<\/p>\n
October 10, 2009 for proceedings in accordance with law.<\/p>\n
             Allowed in the aforesaid terms.\n<\/p>\n<\/p>\n
August 31, 2009                                      (M.M.S.BEDI)\n sanjay                                                JUDGE\n <\/pre>\n","protected":false},"excerpt":{"rendered":"
Punjab-Haryana High Court Ashok Kumar Jain vs M\/S Haryana Iron & Steel Rolling … on 31 August, 2009 C.R. No. 5167 of 2008 [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.R. No. 5167 of 2008 Date of Decision: August 31, 2009 Ashok Kumar Jain …..Petitioner Vs. M\/s Haryana Iron & Steel […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,28],"tags":[],"class_list":["post-127584","post","type-post","status-publish","format-standard","hentry","category-high-court","category-punjab-haryana-high-court"],"yoast_head":"\nAshok Kumar Jain vs M\/S Haryana Iron & Steel Rolling ... on 31 August, 2009 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ashok-kumar-jain-vs-ms-haryana-iron-steel-rolling-on-31-august-2009\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ashok Kumar Jain vs M\/S Haryana Iron & Steel Rolling ... on 31 August, 2009 - 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