V.H. Patel & Company And Ors. vs Hirubhai Himabhai Patel And Ors.
2001 Latest Caselaw 870 Bom

JUDGMENT

F.I. Rebello, J.

1. The present petition by the petitioners is clearly an attempt to overcome the order of this Court dated 25th October, 1999 in Arbitration Petition No. 175 of 1999. That order came to be challenged before the Apex Court in Special Leave Petition (Civil) Nos. 1701, 1702 and 1703 of 1999. By order dated April 18, 2000 the said S.L.Ps. were dismissed.

2. On 5th June, 2000 the present petitioners who were also petitioners in one of the Special Leave Petitions filed before the Apex Court lodged the present petition, seeking to invoke this Court's powers under section 31 read with section 33 of the Arbitration Act, 1940. The relief as prayed for in the petition reads as under:--

'That this Honourable Court be pleased to determine and decide the effect of said Award dated 25th January, 1999, including the effect of the relief granted by the learned Arbitrator to the Respondent No. 1 Hirubhai Himabhai Patel under Clause (c) of the Order contained in the Award, and to hold that the Respondent No. 1 Hirubhai Himabhai Patel having failed to comply with the condition of re-paying back to the petitioner No. 1 the amount specified in the said Clause (c) of the order contained in the Award, the Respondent No. 1 Hirubhai Himabhai Patel is not a continued partner of the 1st petitioner firm." The petitioner No. 1 is a registered partnership of which the petitioners 2 to 6 are partners. The respondent No. 1 pursuant to the award dated 25th January, 1999 passed by the learned Arbitrator has been held as not to have retired as a partner of Petitioner No. 1 under the Deed of Retirement dated 1st August, 1987. The Award, however, provided that a relief in favour of respondent No. 1 herein was to operate only on his paying back to the petitioner No. 1 firm the sum specified therein paid to him on 3rd/4th May, 1988 as standing to his credit to the capital account as of 31st July, 1987 in the books of the firm for being credited to his said account in the books of account of the firm of M/s V. H. Patel & Co., and other sums paid to him as set out therein. In the petition the main contention that is sought to be urged as can be adverted from the pleadings is that as the respondent No. 1 did not make payments at the earliest available opportunity he was not entitled, considering Clause (c) of the award of the Arbitrator, to be a partner of the petitioner No. 1. In ground (e) of the petition it is set out that the learned Arbitrator was pleased not to grant any time to the 1st respondent for making the payment. Whenever time had to be granted, It is contended, the learned Arbitrator had so granted as in the case of relief Clause (f) in the operative part of the Award. In ground (h) it has been set out that the respondent No. 1 without prejudice to the other contentions could have made payment within 30 days of the award as that was the time to challenge the Award.

3. Before I deal with the issues, let me briefly advert to a few facts in order to dispose of the controversy and/or issues that have arisen. Reference was made to the Arbitrator pursuant to a consent order dated 15th February, 1991 of the' Apex Court in Special Leave Petition No. 11533 of 1990. The Arbitrator made his Award on 25th January, 1999. The said award came to be filed in this Court on 26th February, 1999. Notice of the Award was given to the parties on or about 7th April, 1999. In terms of the Schedule to the Limitation Act time to challenge the Award would be therefore, within 30 days of the notice. Respondent No. 1 in fact challenged a part of the Award by filing a petition on 5th May, 1999 being Arbitration Petition No. 175 of 1999. Similarly, the petitioners herein had filed Arbitration Petition No. 1888 of 1999. Respondent No. 1 had also filed another Petition being Arbitration Petition No. 208 of 1999. Arbitration Petition No. 175 of 1999 was allowed inasmuch as the finding recorded by the learned Arbitrator which reads as under :--

"Whether the Arbitrator has jurisdiction to entertain the counter-claim in respect of averments in paragraph 41 and prayer (vii) and (viii) thereof was set aside and the issue was remitted back to the learned Arbitrator for de novo consideration and decision in accordance with law."

In view of the disposal of the petition, the other two petitions were disposed of in view of the directions issued by the Court while passing an order dated 25th October, 1999 in Arbitration Petition No. 175 of 1999.

Two additional dates may also be noted. The respondent No. 1 herein from the records as now available in Arbitration Petition No. 208 of 1999 at para 9 had mentioned that in fact draft dated 12th June, 1999 for a sum of Rs. 5,17,927.17 paise was tendered in favour of the Prothonotary and Senior Master of this Court by respondent Nos. I to 6 in S.L.P. referred to earlier. It was, however, the case of the petitioners that they were not so informed or that money was not offered to the petitioner No. 1. Thereafter the money came to be offered on 21st April, 2000 immediately after the Judgment of the Apex Court dated April 18, 2000.

4. At the hearing of the petition, it is contended on behalf of the petitioners by the learned Counsel as under :-- That the respondent No. 1 has failed to make the payment forthwith or within the time available to challenge the Award. The purported relief as granted in terms of prayer Clause (c) of the Award is not available and as such he ceases to be a partner of the petitioner No. 1; (b) at any rate it is contended that this issue was not directly in issue in any of the proceedings and as such the principles of res judicata or principles of constructive res judicata will not apply.

On the other hand on behalf of the respondents their learned Counsel contends as under :-- (a) That in fact' no time was prescribed to make payment and as such it had to be paid within a reasonable time. The amounts were paid within a reasonable time, and, therefore, that contention must be rejected; (b) The issue as to what is reasonable time for payment was in issue before this Court in Arbitration Petition No. 175 of 1999. As the petitioner herein was aware of the same as can be seen from the affidavit in rejoinder filed before the Apex Court. Even alternatively it is contended that it was open to the petitioners herein to have raised the issue considering the averments in the petition before this Court or before the Apex Court and as such would be barred by the principles of explanation IV to Section 11 of the Code of Civil Procedure. Learned Counsel has sought to place reliance on the judgments in support of the said contention.

5. We will, therefore, first consider whether the issue regarding payment was in issue and/or had come up for consideration and if so whether the respondents had offered payment within reasonable time. From the facts narrated above it can be seen that the reference to arbitration was pursuant to the consent terms filed before the Apex Court. The Arbitrator thereafter published his award on 26th February, 1999. The time to challenge the award does not commence on publication of the award but only after the award has been filed and the Prothonotary and Senior Master of this Court issuing notice to the parties of the filing of the Award. Petition must then be filed within 30 days of the notice being issued. Notice of filing of the award was given on 7th April, 1999. Award was challenged by filing petition on 8th May, 1999. The amount for the first time was sought to be deposited on 12th June, 1999. Apart from that in the various affidavits filed before this Court the Respondents had expressed their desire to pay the amount and set out that they were at all times ready and willing to pay the said sum. In Arbitration Petition No. 1888 of 1999 averment to that effect will be found in para 4(s) of the affidavit of Pravin D. Patel, Respondent No. 4 herein. In rejoinder to that the petitioner No. 4 by the affidavit, filed on 12th July, 1999 had set out that the respondent No. 1 herein had no real, genuine and bona fide desire or intention to join the petitioner firm. In Arbitration Petition No. 208 of 1999 in the petition itself it was averred that the petitioners are always ready and willing to pay a sum of Rs.,5,17,927.78 paise. Therein an averment was made that on filing of the petition the amount was being tendered by bank draft dated 12th June, 1999 and in view of that there ought to be no legal impediment in passing the judgment and decree in accordance with accepted part of the Award. To that the respondent No. 4 had averred that the Award of the Arbitrator was conditional on making payment and that the petitioner No. 1 had failed to do so. There is other material which I need not advert to. Before this Court it was contended on behalf of the respondent No. 1 herein that by the award the learned Arbitrator had directed the petitioners had not retired from the partnership. However, the relief was to operate only on making payment. No time was fixed. The petitioners herein disputed that contention and contended that the respondent No. 1 herein did not pay the amount immediately after the award. In the circumstances the petitioners herein assuming that the respondent No. 1 was not interested in being partner of the firm had assigned the trade marks on 18th February, 1999. It can, therefore, be argued and possibly so that the issue was not directly in issue, but was incidental in answering the issue of assignment of trade marks. The learned Judge, however, was'pleased to observe that the respondents i.e. the petitioners herein had accepted the entire award and thus have accepted the respondent No. 1 herein was entitled to continue as a partner of the firm. The learned Judge then proceeded to hold that the Arbitrator had not fixed any time limit for making payment thereof and that the petitioner had to make payment within a reasonable time. After so holding the learned Judge set aside the assignment done by the petitioners in favour of the Private Limited Company. The learned Judge further observed that as the proceedings had been remitted back to the learned Arbitrator for considering the issue whether the petitioner No. 1 is entitled to seek dissolution of the partnership certain directions were given and other observations which I need not advert to. At least from the judgment it is clear that the learned Judge did hold that no time was stipulated. Payment had to be paid within a reasonable time. However, no time was fixed. There is no difficulty and ought not to be that the principles contained in Section 46 of the Indian Contract Act namely reasonable time for payment ought to be followed. In Hungerford Investment Trust Ltd. (In Voluntary Liquidation) v. Haridas Mundhra and others, the Apex Court observed that if no time is fixed for performance of the contract, it must be implied that it is to be performed within a reasonable time. In The Bank of India Ltd. and others v. Jamsetji A. H. Chinoy and Messrs Chinoy & Co., AIR 1950 (37) P.C. 90 in the case of contract to purchase shares the Privy Council held that reasonable time for payment would be two months. In Chaturgun v. Shahzady, AIR 1930 Oudh 395 in the case of a contract of a lending some ornaments to B for a particular ceremony the Court held that the reasonable, time for return of the ornaments would be when the owner demanded them after the ceremony was completed and in those circumstances the time for limitation would start from the date when the bailee should have returned the ornaments after the ceremony was over. In Byomkesh Mukharji v. Madhabji Mepa Mazru and others, AIR 1940' Patna 609 in the case of Mining Lease, payment of royalty at a known rate in the absence of any provision as to when it was payable, it was held that it would be payable within a reasonable time of the coal being abstracted. Therefore, can it be said that on the facts of the present case that the payment was offered within reasonable time. I have already set out earlier considering the contention of the petitioners themselves that time to challenge the award on issuance of notice by this Court was 7th April, 1999 and even if 30 days are counted there from the time to make payment would be 30 days thereof. The record shows that the money was sought to be deposited in this Court by Demand Draft, but it could not be deposited as there was no decree or order directing deposit. At any rate all throughout the respondent No. 1 indicated both in the reply and in the affidavits which were filed that he is ready and willing to make payment. The respondent No. 1 was aggrieved by the award and had, therefore, challenged the award before this Court. A major issue involved was transfer of the trade mark of the Petitioner No. 1 firm. This Court found merit in the challenge raised by the petitioners and while remitting the matter this Court observed as under:--

"In my opinion it will be highly unequitable to force the petitioner No. 1 to go as a partner of the firm which, at present does not own the trade marks on the basis of which it was doing business."

The petitioners against the order of this Court went to the Apex Court. Since the S.L.Ps. were dismissed on April 18, 2000 the Respondent No. 1 offered to make payment on 21st April, 2000. To my mind, therefore, the consistent stand of the respondent No, 1 snowing his willingness to make payment and taking steps to either to deposit or pay, it can be said that payment was offered within reasonable time. That contention that payment was not offered within reasonable time, therefore, has to be rejected.

6. We then come to the issue as to whether the issue was directly in issue and7or was available to be raised by the petitioners herein. I have already adverted to in the earlier part of this judgment to the various affidavits and averments as also pleadings of the parties as the finding of the learned single Judge of this Court. From what was pleaded before this Court both by the petitioners and the respondents at least parties knew that the issue as to the time for payment and what is reasonable time was in issue. The contention of the petitioners herein was that the payment was not offered within reasonable time whereas the contention of the respondent No. 1 was that payment had been offered within reasonable time. Even assuming that the issue of reasonable time was answered while considering the issue as to whether the assignment in favour of the Pvt- Company was legal it was open to the petitioners herein to have raised the issue. They were aware of the said contention. In these circumstances to my mind the Explanation IV of Section 11 of the Civil Procedure Code would be attracted. In State of Uttar Pradesh v. Newab Hussain, the Apex Court held that the principle of estoppel per rem juducatum is a rule of evidence and would be applicable. That rule has sometimes been referred to as constructive res judicata. Principles of estoppel per rem judicatttm in the case before the Apex Court were in proceedings before a Civil Court. They are also applicable to arbitral proceedings. If authority is required reference may be made to the observations of Lord Denning in Fedelitas Shipping Co. Ltd. v. Exportehleb, (1966) 1 QB 630. Considering the above to my mind the matter ought to have been in issue and once it ought to have been in issue the principles of constructive res judicata would apply and on that count also it must be held that the issue was in issue and has been decided.

7. For the aforesaid reasons I find no merit in the present petition. As observed by me earlier this is a classic case where the petitioners are seeking to frustrate the order passed by this Court in remitting the matter to the Arbitrator. It is an abuse of the process of the Court. Ordinarily in such matters the petitioners ought to be saddled with heavy costs. However, considering the peculiar facts and circumstances, I do not propose to exercise that discretion in the present proceedings for the present.

Petition disposed of accordingly. No order as to costs.

Parties/Authorities to act on an ordinary copy of this order duly authenticated by the Personal Assistant of this Court.