Calcutta High Court
Md. Wasim And Another vs M/S. Bengal Refrigeration And ... on 30 September, 2022
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
(Original Side)
A.P. No. 27 of 2022
Reserved on: 16.09.2022
Pronounced on: 30.09.2022
Md. Wasim and Another
...Applicants
-Vs-
M/S. Bengal Refrigeration and Company and Others
...Respondents
Present:-
Mr. Rahul Karmakar,
Mr. Sounak Mukherjee, Advocates
... for the applicants
Mr. Wasim Ahmed,
Mr. Anindya Halder, Advocates
... for the respondents
Coram: THE HON'BLE JUSTICE PRAKASH SHRIVASTAVA,
CHIEF JUSTICE
Prakash Shrivastava, CJ:
1. This application under Section 11 of the Arbitration and
Conciliation Act, 1996 (for short, 'the Act') has been filed for
appointment of Arbitrator to resolve the dispute between the parties.
2. The case of the applicants is that the partnership deed dated 4th
of May, 1992 was executed between the parties which contained the
following Arbitration Clause:
"13. That all disputes and questions whatever, which
arise during the partnership or afterwards between the partners
shall be referred to a person unanimously appointed to act as
Arbitrator and in such case his verdict shall be binding on all
the partners."
3. It is alleged in the AP that the respondent no. 2 had started
running parallel business and that the respondent nos. 2 and 3, in order
to suppress the illegal activities, had intentionally taken control of the
books of accounts and other relevant documents. It is also the case of
the applicant that the sale proceeds of the daily sales were also
usurped by the respondents in complete deprivation of the applicant.
Hence, applicant had sent the notice dated 8th of September, 2021 to
the respondents invoking the Arbitration Clause and proposing the
name of Mrs. Rajesh Ghosh, Advocate as sole Arbitrator to resolve
the dispute. Respondents had sent the reply dated 17th of September,
2021 denying the appointment of the proposed Arbitrator and taking
the stand that the applicants had made false allegations in the notice.
4. The applicants in order to safeguard the interest had filed the
application under Section 9 of the Act which was registered as
Miscellaneous Case No. 39 of 2022. Learned Judge, 12th Bench, City
Civil Court, Calcutta on 7th of January, 2022 had passed the ad-interim
order of injunction restraining the respondent nos. 2 and 3 from
interfering and/or creating any obstruction to the applicants from
participating in the day to day affairs of the firm.
5. It is also disclosed in the AP that respondent no. 3 had filed a
suit for partition before the learned Civil Judge (Senior Division) at
Sealdah which was registered as T.S. No. 101 of 2009 wherein the
counter claim was filed by the applicants. The inclusion has been
challenged by the respondent no. 3 by filing an application under
Sections 5 and 8 of the Act indicating that the affairs of the respondent
no. 1 cannot be challenged by way of suit owing to the existence of an
Arbitration Clause in the partnership business.
6. In the present AP filed before this Court under Section 11 of the
Act, the prayer is to appoint the sole Arbitrator to resolve the dispute.
7. Respondent no. 2 has filed their affidavit-in-opposition denying
the factual averment made in the AP and also raising an objection that
the dispute of an unregistered partnership firm cannot be referred to an
Arbitrator in view of the bar contained under Section 69 of the
Partnership Act, 1932 (for short, 'the Act of 1932).
8. I have heard the learned counsel for the parties and perused the
record.
9. The partnership deed containing the Arbitration Clause has not
been disputed by the respondents. It is also not in dispute that it is an
unregistered partnership deed.
10. The objection of the respondents is in respect of the bar
contained under Section 69 of the Act of 1932. Sub-sections (1) and
(2) of Section 69 of the Act of 1932 restrict filing of suit by any
person as a partner of unregistered firm. Sub-section (3) of Section 69
of the Act of 1932 makes the provisions of Sub-sections (1) and (2)
applicable also to a claim of suit of or "other proceedings" to enforce a
right arising from a contract. Hon'ble Supreme Court in the matter of
Umesh Goel vs. Himachal Pradesh Cooperative Group Housing
Society Limited reported in (2016) 11 SCC 313 has settled that the
arbitral proceedings will not come under the expression "other
proceedings" of Section 69(3) of the Act of 1932 and that the ban
imposed under Section 69 can have no application to arbitration
proceedings as well as the arbitral award. Madras High Court in the
matter of M/s. Jayamurugan Granite Exports vs. M/s. SQNY
Granites reported in 2015-4-L.W. 385 has considered the similar
issue and held that:
"38. If these observations are looked in the context of
Section 69 of the Partnership Act, the bar created for institution
of the suit or other proceedings is in respect of the same being
instituted in any "courts". But the aforesaid observation shows
that the power has to be exercised under Section 11 of the 1996
Act by the Chief Justice or his delegate and not by the Court. In
fact, it is observed in paragraph-20 that there are a variety of
reasons as to why the Supreme Court cannot possibly be
considered to be "court" within the meaning of Section 2(1)(e)
even if it retains seisin over the arbitral proceedings. The
Judgment is to the effect that the Chief Justice does not
represent the High Court or the Supreme Court, as the case may
be, when exercising power under Section 11, albeit a judicial
power. This is also the reason for the decision of the Chief
Justice or his designate not being the decision of the Supreme
Court or High Court, as the case may be, as there is no
precedential value being the decision of the judicial authority,
which is not a court of record.
39. In addition, as has been discussed aforesaid, the
scheme of the 1996 Act is different and the process of
mechanism for alternate dispute resolution system has to be
construed not identical to the 1940 Act, considering the
difference in their schemes.
40. I am thus of the view that non-registration of the
petitioner firm would not be a bar under Section 69 of the
Partnership Act for institution of proceedings under Section 11
of the 1996 Act."
11. In view of the above legal position, the objection of the
respondent based upon Section 69 of the Act of 1932 cannot be
sustained and is hereby rejected.
12. Another objection raised by learned counsel for the respondents
is that no prima facie case exists for referring the dispute to the
Arbitrator. The material on record indicates that the dispute exists
between the parties. Learned counsel for the applicants has also
pointed out the order of the learned Judge, 12th Bench, City Civil
Court, Calcutta dated 7th of January, 2022 to show that the prima facie
case and dispute exists between the parties and considering the same,
the concerned learned Judge of the City Civil Court has passed the
injunction order under Section 9 of the Act.
13. Since the arbitration agreement exists between the parties and
the dispute has also arisen and the Arbitration Clause has duly been
invoked, therefore, I am of the opinion that a case is made out for
allowing the prayer for appointment of the Arbitrator. Hence, AP is
allowed.
14. Mr. Debnath Ghosh (Mobile No. 9831343614), Advocate of
this Court is appointed as sole arbitrator, subject to submission of
declaration by the arbitrator in terms of Section 12(1) in the form
prescribed in the Sixth Schedule of the Act before the Registrar,
Original Side of this Court within four weeks from today.
15. Let this order be conveyed to the arbitrator by the Registrar,
Original Side forthwith.
16. A.P. is accordingly disposed of.
(PRAKASH SHRIVASTAVA)
CHIEF JUSTICE
Kolkata
30.09.2022
___________
PA(RB)
