Smt. Ritu Jaiswal And Another vs Brijeshwar Jaiswal And Ors.
2018 Latest Caselaw 1808 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

                                                                  
 
                                                          A.F.R
 
Court No. - 3
 

 
Case :- FIRST APPEAL No. - 99 of 2015
 

 
Appellant :- Smt. Ritu Jaiswal And Another
 
Respondent :- Brijeshwar Jaiswal And Ors.
 
Counsel for Appellant :- Subhash Vidyarthi
 
Counsel for Respondent :- D.M.Shukla
 

 
Hon'ble Dr.D.K.Arora, J.

Hon'ble Rajnish Kumar,J.

(Delivered by Hon'ble Rajnish Kumar, J.)

Heard Sri Subhash Vidyarthi, learned counsel for the appellants and Sri Dhruv Mathur,Advocate holding brief of Sri D.M. Shukla, learned counsel for the respondent.

The instant appeal has emanated from the judgment and order dated 13.10.2015, passed by the Second Additional Civil Judge (Senior Division), Court No.15, Faizabad by means of which the Regular Suit No.406 of 2008 titled "Smt. Ritu Jaiswal & Another versus Sri Brijeshwar Jaiswal and others" has been dismissed.

The appellants had filed the suit for declaration for 1/4th share in the property in dispute. The appellants have pleaded that their predecessor in interest- Sri Rajeshwar Jaiswal and the defendant /respondent no.1-Sri Brijeshwar Jaiswal had contributed the land in question, which has been purchased by them jointly, as their share of capital investment and the other partners had put in finances to build a complex on the said land and all the partners have 1/4th share in the capital and profit & losses of the firm.

The written statement was filed by the defendant nos. 1 to 3 stating therein that the 1/4th share of Late Rajeshwar jaiswal is being adjusted against the loan taken by him from the firm and,therefore, the plaintiffs/appellants are not entitled to receive 1/4th share in profits of the firm. However, the defendant nos. 1 to 3 i.e. present respondent nos. 1 to 3 have categorically pleaded that that they have never disputed the 1/4th share of the plaintiffs/appellants in the property in dispute.

The defendant no.6, i.e., respondent no.6 in the present appeal had filed a separate written statement, pleading that Sri Rajeshwar Jaiswal has taken a loan of Rupees Fifteen Lakhs from the firm. The 1/4th share of Sri Rajeshwar Jaiswal and thereafter of the plaintiffs, who are his successors is being adjusted against the aforesaid loan. However, the 1/4th share in the property in dispute has not been denied.

On the basis of the pleadings, seven issues were framed. The appellants had filed documentary evidence and the oral evidence of PW1- Smt. Ritu Jaiswal was adduced. On behalf of the defendant nos. 1 to 3 the documentary evidence were filed and Sri Brijeshwar Jaiswal was got examined. After hearing the parties and considering the  material available on record, the learned Trial Court has dismissed the suit.

Submission of learned counsel for the appellant, Sri Subhash Vidyarthi is that the issue no.1 was framed as to whether the plaintiffs are entitled to be declared the owners of 1/4th share in the property in dispute? The plaintiff/appellant no.1 had given documentary evidence in the form of partnership deed and she had also got herself examined as witness and proved her claim of 1/4th share in the property in dispute, which remained unrebutted and uncontroverted. It has further been submitted that the 1/4th share in the property in dispute has not been denied by the defendants/respondents. Therefore in view of Order XII Rule 6 C.P.C. and the evidence adduced before it, the learned Trial Court ought to have decreed the suit for declaration of the plaintiffs title to 1/4th share in the property in dispute.

It has further been submitted that the learned Trial Court erred in holding that in view of the arbitration clause in the partnership deed, the suit is barred by Section 41(h) of the Specific Relief Act. No application under Section 8 of the Arbitration and Conciliation Act, 1966 was submitted by the parties raising existence of the arbitration clause and invoking the same, therefore, there arose no occasion for the trial court to invoke the provisions of Section 8 of the Arbitration and Conciliation Act. Moreover, the arbitration clause does not bar the jurisdiction of the civil court. The existence of the arbitration clause does not attract the provisions of Section 41(h) of the Specific Relief Act to a suit for declaration. It has further been submitted that after death of Sri Rajeshwar Jaiswal, the plaintiffs became the partners in the Firm, which has been arrayed as respondent no.6, as such they became entitled to receive 1/4th share in the profits of the firm, to which Late Sri Rajeshwar Jaiswal was entitled. It has also been submitted that learned trial court has also erred in holding that for claiming share in profits, it is necessary that the firm be dissolved and since the firm has not been dissolved, the plaintiffs are not entitled to claim share in the profits.

Lastly, it has been submitted that once the learned Trial Court arrived at the conclusion that it has no jurisdiction to entertain the suit, even if wrongly, it ought not to have proceeded to examine the merits of the suit and hold that the plaintiffs are not entitled to be declared as owners of 1/4th share in the property in dispute.

Per contra, Sri Dhruv Mathur, Advocate holding brief of Sri D.M.Shukla, learned counsel for the respondents vehemently opposed the submissions made by learned counsel for the appellant. He submitted that the father of the appellants, Late Rajeshwar Jaiswal had taken loan from the firm and his 1/4th share is being adjusted against the loan taken by him from the firm. Therefore, the plaintiffs/defendants are not entitled to receive 1/4th share in the property in dispute in accordance with the terms and conditions of the partnership Deed.

Learned counsel for the opposite parties further submitted that learned Trial Court has rightly dismissed the suit of the appellants in accordance with law after considering the pleadings of the parties and the evidence adduced before it. He further submitted that in case there was any grievance to the appellants, they could have referred the matter for arbitration in accordance with the arbitration clause.

On the basis of above, learned counsel for the respondents submitted that the present appeal has been filed on mis-conceived grounds and is liable to be dismissed with cost.

We have considered the submissions of learned counsel for the parties and perused the record.

The predecessor-in-interest of the appellant nos. 1 and 2, i.e. husband of appellant no.1 and father of appellant no.2, Late Sri Rajeshwar Jaiswal and the defendant/ respondent no.1,Sri Brijeshwar Jaiswal had purchased Plot No.196 and 197 having total area of 19734 sq. ft situated at Mauja Niyanwa, Pargana-Haweli Awadh, Tehsil-Sadar, District-Faizabad through registered sale deeds dated 13.09.1983,25.10.1983 and 13.10.1984. Besides above, late Rajeshwar Jaiswal had also purchased one another plot having an area of 1500 sq.ft situated at Mauja Niyanwa, Pargana-Haweli Awadh, Tehsil-Sadar, District-Faizabad through registered sale deed. Late Rajeshwar Jaiswal, respondent no.1, father of respondent no.3, late Indra Sen Singh and respondent nos. 4 and 5 formed a Partnership Firm. In the said firm, late Rajeshwar Jaiswal and respondent no.1 contributed the land in question, which was purchased by them as their share of capital investment and the other partners had put in finances to build a Commercial complex namely 'Alka Tower' on the said land, Nagar Palika number of which is 2/6/4-5. All the partners had agreed for their equal share in the capital and profit and losses of the firm. The agreement was executed in the year 1990 in respect of Plot Nos. 196 and 197 having area of about 19734 sq. ft.

The said partnership firm was reconstituted on 01.10.2000 as respondent nos. 4 and 5 had withdrawn themselves from the Firm. In their places respondent nos. 2 and 3 were inducted in the firm. Accordingly equal i.e. 1/4th share of each partner was decided. Thereafter they were getting their share regularly.

The predecessor in interest of the appellants Late Sri Rajeshwar Jaiswal died on 15.03.2006. Thereafter the appellants were getting their share being legal heirs of Late Rajeshwar Jaiswal. In the year 2008, the respondent nos. 1 to 3 started denying the share of the appellants.

Since the appellants were not getting their share, they filed a suit under Order 7 Rule 1 of Civil Procedure Code (hereinafter referred to as C.P.C.) before Additional Civil Judge(Senior Division), Faizabad for declaration that they have 1/4th share in the property in dispute. The respondents had filed their written statement. On the basis of pleadings, seven issues were framed.

After considering the pleadings,evidence and material available on record, the learned Trial Court on the one hand came to the conclusion that the suit was not maintainable, as the appellants have a remedy of arbitration under Clause 17 of the agreement and on the other hand decided the suit on merit also holding that the appellants are not entitled for their 1/4th share in the profit and losses of the property in dispute.

Therefore the questions which fall for considerations are:-

(1) Whether the suit was maintainable before the Civil Court or not?

(2) Whether the appellants are entitled for their 1/4th share in the profit and losses of the property in dispute or not?

In regard to the first question as to whether the suit was maintainable before the Civil Court or not,learned Trial Court after considering the pleadings of the parties on the basis of Clause 17 of the agreement came to the conclusion that the appellants have a remedy of arbitration so if there is any dispute they can go for arbitration.Therefore the suit is barred by Section 41(h) of the Specific Relief Act. Further the learned Trial Court held that the appellants can claim their share only if the partnership firm is dissolved under Section 42 of the Partnership Act, 1932.Therefore the suit is not maintainable.

Clause 17 of the 'Deed of Partnership' created orally on 17.07.1990 and executed on 27 March, 1992 is extracted as under:-

"(17)That none of the partners shall have the right to launch or commence any proceedings in any court of law, specially to take any step or get any injunction issued or receiver appointed without first exhausting the remedy of an arbitrator as herein agreed. In any case courts at Faizabad shall have the exclusive jurisdiction to settle such dispute."

Similar provision was made in Clause 13 of the reconstituted 'Partnership Deed' executed on 01.08.2000,on the basis of which the appellants are claiming their right over 1/4th share,which on reproduction reads as under:

"(13) That in any controversy or claim arising out of this partnership business, the same shall be referred to arbitration, as provided under the Indian Arbitration Act."

In view of above, in any controversy or claim arising out of the partnership business, the same should be referred to arbitration, as provided under the Arbitration Act. It is also not in dispute that the arbitration agreement shall not be discharged by the death of any party i.e. predecessor-in-interest of the appellant. But nothing has been brought before this Court or the learned Trial Court to indicate that any of the parties invoked the aforesaid clause or moved to the judicial authority under Section 8 of the Arbitration & Conciliation Act,1996 for reference to arbitration. Section 8 of the Arbitration and Conciliation Act 1996 is extracted as under:-

"8. Power to refer parties to arbitration whether there is an arbitration agreement-

(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.

(2) The application referred to in sub section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

(3) Notwithstanding that an application has been made under sub section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made".

Section 41-(h) of the Specific Relief Act 1963 provides that injunction cannot be granted when equally efficacious relief can certainly be obtained by any other usual mode of procedure except in case of breach of trust. Section 41-(h) of the Specific Relief Act applies to the suits for injunction only and it does not apply to a suit filed for declaration. Section 41(h) of the Specific Relief Act 1963 is extracted as under:

"41. Injunction when refused- An injunction cannot be granted-

................................

(h) when equally efficacious relief can certainly be obtained by any other usual mode of proceeding except in case of breach of trust,"

In view of above, the learned Trial Court committed an error in holding that the jurisdiction of the civil court for a suit will be barred by Section 41(h) of the Specific Relief Act, as there is an arbitration agreement between the parties. Therefore the suit was maintainable before the Civil Court. Our view is also fortified by the law laid down by the Hon'ble Apex Court.

The Apex Court in the case of The State of Uttar Pradesh & another versus M/s Janki Saran Kailash Chandra & another has also held that the mere existence of an arbitration clause in an agreement does not by itself operate as a bar to a suit in the Court. The relevant portion of Para 7 is reproduced as under:-

"7...............................................It is, however, to be clearly understood that the mere existence of an arbitration clause in an agreement does not by itself operate as a bar to a suit in the court. It does not by itself impose any obligation on the court to stay the suit or to give any opportunity to the defendant to consider the question of enforcing the arbitration agreement. The right to institute a suit in some court is conferred, on a person having a grievance of a civil nature under the general law. It is a fundamental principle of law that where there is a right there is a remedy. Section 9 of the Code of Civil Procedure confers this general right of suit on aggrieved person except where the cognizance of the suit is barred either expressly or impliedly. A party seeking to curtail this general right of suit has to discharge the onus of establishing his right to do so and the law curtailing such general right has to be strictly complied with. To enable a defendant to obtain an order staving the suit apart from other condition mentioned in s. 34 of the Arbitration Act, he is required to present his application praying for stay before filing his written statement or taking any other step in the. suit proceedings. In the present case the written statement was indisputably not filed before the application for stay was presented. The question is whether any other step was taken in the proceeding as contemplated by s. 34 and it is this point with which we are directly concerned in the present case. Taking other steps in the suit proceedings connotes the idea of doing something in aid of the progress of the suit or submitting to the jurisdiction of the court for the purpose of adjudication of the merits of the controversy in the suit."

The Apex Court in the case of Sukanya Holdings Private Limited versus Jayesh H. Pandya (2003) 5 SCC 531 held that the arbitration act does not oust the jurisdiction of the civil court to decide the dispute in a case where parties to the arbitration agreement do not take appropriate steps as contemplated under sub-sections (1) and (2) of Section 8 of the Act. The relevant paragraphs 11 and 12 of which are reproduced as under:

"11. For appreciating the contentions raised by the learned counsel for the parties, we would refer to the relevant provisions, namely, Section 5 and 8 of the Act, which are as under:

"5"Extent of judicial intervention-Notwithstanding anything contained in any other law for the time being in force, in matters governed by this part, no judicial authority shall intervene except where so provided in this Part.

8. Power to refer parties to arbitration where there is an arbitration agreement (1) A judicial authority before which a action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his statement on the substance of the dispute, refer the parties to arbitration.

(2) The application referred to in sub section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

(3) Notwithstanding that an application has been made under sub-section 1 and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made"

12. For interpretation of Section 8, Section 5 would have no bearing because it only contemplates that in the matters governed by Part 1 of the Act, the judicial authority shall not intervene except where so provided in the Act. Except Section 8, there is no other provision in the Act that in a pending suit, the dispute is required to be referred to the arbitrator. Further the matter is not required to be referred to the Arbitral Tribunal, if (1) the parties to the arbitration agreeement have not filed any such application for referring the dispute to the arbitrator:(2) in a pending suit,such application is not filed before submitting first statement on the substance of the dispute: or(3) such application is not accompanied by the original arbitration agreement or duly certified copy thereof. This would, therefore, mean that the Arbitration Act does not oust the jurisdiction of the civil court to decide the dispute in a case where parties to the arbitration agreement do not take appropriate steps as contemplated under sub-sections (1) and (2) of Section 8 of the Act."

Now adverting to the second question as to whether the appellants are entitled for their 1/4th share in the profit and losses of the property in dispute or not,we find that the respondents had filed their written statement categorically accepting the agreement and the 1/4th share of the plaintiffs/appellants in the property in dispute and there was no denial regarding the share of the plaintiffs- appellants.

The respondent nos. 1,2 and 3 have filed their written statement admitting the 1/4th share of the appellants in paragraph 22 of the written statement. However, it has been stated that the amount of 1/4th share in the profits earned by the Firm is being deposited against the loan taken by Late Rajeshwar Jaiswal. The relevant paragraph 22 of written statement,on reproduction, reads as under:

/kkjk&22 ;g fd [email protected] us dHkh Hkh fookfnr lEifRr esa oknhx.k ds gd o fgLls bUdkj ugh fd;k gSA QnZ

}kjk vftZr ykHk esa ls [email protected] Hkkx dh /kujkf'k Lo0 jkts'oj tk;loky }kjk QeZ ls fy;s x;s dtZ dh /kujkf'k esa tek dh tk jgh gS mlls [email protected] dk dksbZ okLrk o ljksdkj ugha gSA

The opposite party nos. 4 and 5 have filed their written statement stating therein that they had withdrawn from the partnership firm prior to 2000 with their sweet will and received back their money.

The respondent no.6 had filed its written statement admitting the 1/4th share of the appellants. However, it had stated that the amount of 1/4th share is being deposited against the loan taken by Sri Rajeshwar Jaiswal-predecessor-in-interest of the appellants. The relevant paragraph 22 of written statement, on reproduction, reads as under:

/kkjk&22 ;g fd [email protected] us dHkh Hkh fookfnr lEifRr esa oknhx.k ds gd o fgLls ls bUdkj ugha fd;k gS QeZ }kjk vaftr ykHk esa ls [email protected] Hkkx dh /kujkf'k Lo0 Jh jkts'oj tk;loky }kjk QeZ ls fy;s x;s dtZ dh /kujkf'k esa tek dh tk jgh gSA

In view of the above, respondents have categorically admitted the 1/4th share of the appellants in the profit and losses of the Partnership Firm. The suit was filed claiming the 1/4th share. The prayer of the suit is extracted as under:-

"17./kkjk&17 ;g fd oknhx.k fuEufyf[kr mi'ke dh ;kpuk djrs gSa%&

¼v½ fMdzh ?kks"k.kkRed vkKfIr cgd oknhx.k fc:) izfroknhx.k 1 rk 3 o 6 bl vk'k; dh iznku dh tkos fd oknhx.k fookfnr lEifRr ftldk fooj.k bl okn i= ds vUr esa fn;k x;k gS ds [email protected] va'k ds Lokeh gSA rFkk QeZ vydk Vkoj ¼izfroknh uEcj 6½ ds ykHkka'k esa [email protected] va'k ikus ds gdnkj gSA

¼c½ [kpkZ eqdnek oknhx.k dks izfroknhx.k ls fnyk;k tk;A

¼l½ vU; mi'ke tks U;k;ky; mfpr le>s oknhx.k ds i{k esa ikfjr djus dh d`ik djsA"

Order 12 Rule 6 of the Code of Civil Procedure 1908 provides as under:

6."Judgment on admissions:- (1) Where admissions of fact have been made either in the pleading or otherwise, whether orally or in writing, the Court may at any stage of the suit, either on the application of any party or of its own motion and without waiting for the determination of any other question between the parties, make such order or give such judgment as it may think fit, having regard to such admissions.

2.Whenever a judgment is pronounced under sub-rule (1), a decree shall be drawn up in accordance with the judgment and the decree shall bear the date on which the judgment was pronounced."

In view of aforesaid provision where admissions of fact have been made either in the pleading or otherwise, the Court may at any stage of the suit, either on the application of any party or of its own motion and without waiting for the determination of any other question between the parties make such order or give such judgment as it may think fit, having regard to such admissions.

In view of the above, once there was an admission by the opposite parties regarding 1/4th share of the appellants, the learned trial court ought to have passed the judgment having regard to the admission and allowed the suit.

The Hon'ble Apex Court, considering the object of Order 12 Rule 6 of C.P.C. held as under in paragraph 12 of Uttam Singh Duggal & Co. Ltd. versus United Bank of India & Others; (2000) 7 SCC 120:-

"12.As to the object of the Order XII Rule 6, we need not say anything more than what the legislature itself has said when the said provision came to be amended. In the objects and reasons set out while amending the said rule, it is stated that where a claim is admitted, the court has jurisdiction to enter a judgment for the plaintiff and to pass a decree on admitted claim. The object of the Rule is to enable the party to obtain a speedy judgment at least to the extent of the relief to which according to the admission of the defendant, the plaintiff is entitled. We should not unduly narrow down the meaning of this Rule as the object is to enable a party to obtain speedy judgment. Where other party has made a plain admission entitling the former to succeed, it should apply and also wherever there is a clear admission of facts in the face of which, it is impossible for the party making such admission to succeed."

The Hon'ble Apex Court has held as under in paragraphs 45 to 48 of Karam Kapahi & others versus Lal Chand Public Charitable Trust and another (2010) 4 SCC 753:-

"45. Order 12 Rule 6 of the Code has been very lucidly discussed and succinctly interpreted in a Division Bench judgment of the Madhya Pradesh High Court in Shikharchand v. Bari Bai. G.P. Singh, J.(as His Lordship then was) in a concurring judgment explained the aforesaid rule, if we may say so, very authoritatively at p. 79 of the Report. His Lordship held;(AIR para 19)

......I will only add a few words of my own. Rule 6 of Order 12 of the Code of civil Procedure corresponds to Rule 5 of Order 32 of the Supreme Court Rules (English), now rule 3 of Order 27, and is almost identically worded (see Annual Practice 1965 edition Part I. p. 569). The Supreme Court Rule came up for consideration in Ellis v. Allen (1914) Ch 904. In that case a suit was filed for ejectment, mesne profits and damages on the ground of breach of covenant against sub-letting. Lessee's solicitors wrote to the plaintiff's solicitors in which fact of breach of covenant was admitted and a case was sought to be made out for relief against forfeiture. This letter was used as an admission under rule 5 and as there was no substance in the plea of relief against forfeiture, the suit was decreed for ejectment under that rule. Sargant, J. rejected the argument that the rule is confined to admissions made in pleadings or under rules 1 to 4 in the same order (same as ours) and said:

"The Rule applies wherever there is a clear admission of facts in the face of which it is impossible for the party making it to succeed."

Rule 6 of Order 12, in my opinion, must bear the same construction as was put upon the corresponding English rule by Sargent, J. The words "either on the pleadings or otherwise" in rule 6 enable us not only to see the admissions made in pleadings or under Rules 1 to 4 of the same order but also admissions made elsewhere during the trial."

(Emphasis added)

46. This Court expresses its approval of the aforesaid interpretation of Order 12 Rule 6 by Justice G.P. Singh (as His Lordship then was). Mulla in his commentary on the Code has also relied on ratio in Shikharchand (supra) for explaining these provisions.

47. Therefore, in the instant case even though statement made by the Club in its petition under Section 114 of the Transfer of Property Act does not come within the definition of the word `pleading' under Order 6 Rule 1 of the Code, but in Order 12 Rule 6 of the Code, the word `pleading' has been suffixed by the expression `or otherwise'. Therefore, a wider interpretation of the word `pleading' is warranted in understanding the implication of this rule. Thus the stand of the Club in its petition under Section 114 of the Transfer of Property Act can be considered by the Court in pronouncing judgment on admission under Order 12 Rule 6 in view of clear words `pleading or otherwise' used therein especially when that petition was in the suit filed by the Trust.

48. However, the provision under Order 12 Rule 6 of the Code is enabling, discretionary and permissive and is neither mandatory nor it is peremptory since the word "may" has been used. But in the given situation, as in the instant case, the said provision can be applied in rendering the judgment."

Section 42 of the Partnership Act 1932 provides the contingencies in which the dissolution of the partnership firm can take place. It does not bar the share of the partners in absence of dissolution of the firm in accordance with the terms and conditions.

So far as the question relating to any dispute regarding any loan taken by Late Rajeshwar Jaiswal from the Firm and its repayment etc. are concerned, since there is no relief in this regard, the Court need not to dwell upon it. The parties may take recourse to appropriate remedy, as may be available in accordance with law and as per terms and conditions of Partnership Deed.

In view of above, we are of the considered opinion that the learned Trial Court has erred in dismissing the suit, both on jurisdiction as well as on merit. Therefore the judgment is liable to be set aside.

The appeal is allowed. The judgment and order dated 13.10.2015, passed by the Second Additional Civil Judge (Senior Division), Court No.15, Faizabad in Regular Suit No.406 of 2008 titled "Smt. Ritu Jaiswal & Another versus Sri Brijeshwar Jaiswal and others" is set aside. The suit of the appellants is allowed.The appellants are declared to be entitled for 1/4th share in terms of the Partnership Deed.

No order as to costs.

[Rajnish Kumar,J.][ Devendra Kumar Arora,J.]

Order Date :- 2.8.2018

Akanksha S.