Neelam Kumar vs Darshan Singh Kharbanda
1995 Latest Caselaw 887 Del

JUDGMENT

S.K. Mahajan, J.

1. The petitioner has filed this petition under Section 20 of the Arbitration Act for reference of certain disputes which are stated to have arisen between the parties under a partnership deed dated 1st February, 1990. The facts in short are that the defendant is stated to have approached the petitioner with a proposal to carry on business in partnership, in case, the petitioner was able to invest Rs. 70,000/- in the business. It is the case of the petitioner that she invested a sum of Rs. 70,000/- and accodingly, a partnership deed dated 1st February, 1990 was entered into between the parties. It is stated that during the continuance of the partnership the defendant did not render true accounts to the petitioner and the petitioner, accordingly, vide a telegraph notice dated 24th April, 1980 dissolved the partnership firm. In the partnership deed, there was an arbitration agreement whereby any dispute between the parties was required to be referred to arbitration in accordance with Indian Arbitration Act. The contention of the petitioner is that as the disputes have now arisen between the parties in respect of the dissolution of the firm and also the rendition of accounts, such disputes are liable to be referred for adjudication to an arbitration in terms of the Arbitrator agreement existing between the parties and as contained in the partnership deed.

2. The respondent has filed his reply to the petition contending that the petitioner and her husband are guilty of forgery as they had alleged to have interpolated the partnership deed by altering the basic terms of the deed. It is also the case of the respondent that the partnership deed was never acted upon and no partnership business could commence and the amount of Rs. 70,000/- had not been paid as agreed by the parties. It is stated that the petitioner was requried to pay a sum of Rs. 75,000/- as goodwill of the firm and she had also agreed to take over the liabilities and had further agreed to deposit a sum of Rs. 5,000/- towards her share capital of the firm. It is stated that the petitioner gave this sum of Rs. 75,000/- by means of three cheques for a sum of Rs. 20,000/- dated 23rd February, 1990; Rs. 50,000/- dated 25th February, 1990 and Rs. 5,000/- dated 28.2.1990/1.3.1990. The cheque for Rs. 50,000/- was dishonoured by the bankers and returned to the respondent. It is stated that with a view to create evidence in her favour, the petitioner subsequently deposited a sum of Rs. 45,000/- in the account of the respondent, vide two cheques on different dates. It is, therefore, the case of the respondent that as even the amount which had been agreed to be paid was not paid, no partnership had come into existence. This amount fradulently deposited in the account of the respondent by the petitioner, had been returned to the petitioner. It is, therefore, stated that as no partnership had come into existence, there was no question of reference of any disputes to the arbitrator.

3. On the pleadings of the parties, the following issues are framed :

(1) Whether there exists a legal and valid partnership deed containing an arbitration clause ? If so, its effect.

(2) Whether the disputes referred in the petition are liable to be referred to arbitration ? If so, its effect.

(3) Relief.

4. Though originally on 10th April, 1991 the parties had stated that they will lead evidence in court. However, on 15th July, 1994 the parties were directed to file evidence by way of affidavits. 16th August, 1995 it was stated by Mr. Malhotra, Advocate appearing for the petitioner that he will file affidavits in the registry within one week. However, neither any affidavit has been filed by the petitioner nor the respondent has filed any affidavit and parties have argued the case on the basis of documents on record.

5. While the respondent has not denied that the parties had entered into a partnership deed which contained an arbitration agreement, the only objection raised is that the petitioner has made certain interpolations in the agreement. I have seen the original partnership deed. In place of the typed clause 6, there is a hand written clause and the typed clause has been cancelled with ink. Even assuming that this change has been made without the consent of the respondent, in my opinion, it will have no affection the arbitration agreement which is contained in clause 21 of the partnership deed. The only other objection raised by the respondent is that the amount of Rs. 70,000/- has been refunded. This is also a question which has to be decided on merits. No arguments have been raised that the partnership deed was not legal. The only objection is that the partnership had not come into existence. In my opinion, as there is no-dispute about the existence of a legal and valid arbitration agreement contained In the partnership deed. I hold that the partnership deed was signed by the parties and the said deed contained an arbitration agreement under which all disputes which may arise between the parties, were liable to be referred to arbitration.

6. The question as to whether the partnership had come into existence or as to whether the amount of Rs. 70,000/- had been returned or not is a question which is to be decided on merits. These objections cannot be a bar for reference of disputes to the arbitration in accordance with the arbitration agreement existing between the parties. I, therefore hold that all disputes between the parties are liable to be referred to arbitration in terms of the arbitration agreement.

7. As I have already held that all disputes between the parties are liable to be referred to arbitration in terms of arbitration agreement. I hold that besides the disputes mentioned by the petitioner in the petition, the following which have been raised by the respondent will also be referred to arbitration :

(1) Whether the petitioner has interpolated the partnership deed. If so, to what effect.

(2) Whether the partnership deed was never acted upon and no partnership business could commence on account of the petitioner not performing her obligations under the deed ?

(3) Whether the amount paid by the petitioner had been accepted back by her and if so had walked out of the partnership business before it could commence ? If so, to what effect.

8. I, accordingly, appoint Mr. K. K. Buccher, Advocate, 416, Lawyers Chambers, Delhi High Court, as the arbitrator to decide the disputes mentioned above as well as disputes raised by the petitioner in the petition. In the first instance, he will be paid a sum of Rs. 7,500/- as fee by the petitioner for conducting the arbitration. Arbitrator will also decide as to who is to ultimately bear the costs.

9. A copy of this order be sent directly to the arbitrator.

10. In the circumstances of the case, I leave the parties to bear their own costs.

11. Order accordingly.