Pritpal Singh Bhatia vs Yogeshwar Nath And Anr.
2003 Latest Caselaw 1033 Del

JUDGMENT

S.K. Mahajan, J.

1. This appeal has been preferred to challenge an order passed by the Trial Court allowing the application of the respondents under Section 33 of the Arbitration Act. Since under Section 39 of the Act, no appeal lies against an order passed on an application under Section 33 of the Act, learned counsel for the respondent has objected to the maintainability of the appeal. It is submitted by learned counsel for the appellant that as no appeal lies again an order deciding application under Section 33 of the Act, this appeal may be treated as a Civil Revision. In view of the submissions made, I treat it as a Civil Revision and the Office is directed to register the same as such.

2. The parties to this petition were partners in a firm being run under the name and style of `M/s Consistent Clothing'. The respondents besides being partners of the firm were also directors of General Commerce Ltd. which was also engaged in the similar business of import and export. A consignment of trims was stated to have been imported by the General Commerce Ltd. The said consignment was sold by the General Commerce Ltd. to the partnership firm. The company besides claiming the price of trims also claimed customs duty and sales tax from the partnership firm. After making the payment of the price, customs duty and sales tax, the firm alleged that the respondents in their capacity as partners of the firm had acted in a fraudulent manner and have misled the petitioners and the firm in making payment of the customs duty and sales tax which the firm was allegedly not liable to pay. The petitioner, therefore, raised a dispute about the refund of this amount from the respondents and sought the same to be referred to an Arbitrator. The petitioner also appointed their arbitrator and called upon the respondents to appoint their Arbitrator. C laiming that as the respondents had failed and neglected to appoint their arbitrator, the arbitrator appointed by the petitioner was appointed the sole Arbitrator. The reference of the disputes to the Arbitrator was challenged by the respondents by filing application under Section 33 of the Arbitration Act. By the impugned judgment, the learned Additional District Judge was pleased to allow that application. It was held that the disputes sought to be raised by the petitioner did not arise under the partnership deed and they could thus not be referred to the Arbitrator. Aggrieved by the judgment of the learned Additional District Judge, the petitioner has filed the present petition.

3. In the meantime, the respondents had given a notice to dissolve the partnership firm and the disputes arising between the partners were sought to be referred to the Arbitrator to be appointed in terms of the partnership deed. The respondents appointed their Arbitrator and called upon the petitioner to appoint his Arbitrator so as to enter upon the reference and decide the disputes which had arisen between the parties under the partnership deed. The petitioner in his reply to the notice of the respondent stated that he had already appointed an Arbitrator and he would continue to be the Arbitrator of the petitioner and there was thus no need for him to appoint another Arbitrator. This reply of the petitioner was not considered appropriately by the respondents and they, therefore, informed him that as he had failed to appoint an Arbitrator within 15 days of the receipt of the notice by the petitioner, the Arbitrator appointed by the respondent had become the sole Arbitrator. On receipt of this reply, the petitioner filed an application under Section 8 of the Arbitration Act in High Court. That application was disposed of by the Court by its judgment dated 21.9.2001. The Court while deciding that application held that as the petitioner had already appointed an Arbitrator and had also stated that he was again appointing the same person as Arbitrator, there was proper nomination of the Arbitrator by the petitioner and the petitioner had exercised his right properly by appointing him as Arbitrator. The Court also held that as in any case even if the Arbitrator appointed by the respondent had become the sole Arbitrator, the Court had the power to allow further time to the defaulting party and it was eminently fit case to allow further time to the petitioner and even if it is presumed that there was some delay, the petitioner having appointed his Arbitrator on 9.6.1995, the same duly complied with the provisions of Section 9 of the Arbitration Act. One of the other issues framed by the Court in that case was:

"if an Arbitrator is appointed by the Court what are the disputes and differences between the parties that can be referred to the Arbitrator?"

4. While dealing with this issue the Court observed that as the Court was not appointing an Arbitrator strictly the issue may not require an answer. It was, however, observed by the Court that during the course of the proceedings both the parties were directed to file the list of disputes which were outstanding between the parties the parties pursuant to these directions had filed the list as per which the disputes were suggested by them. One of the disputes suggested by the petitioner was as under:-

"Whether Mr.Yogeshwar Nath in is capacity as Karta of M/s Yogeshwar Nath, HUF and Smt. Anjala Nath, partners of the firm M/s Consistent Clothings, misled the said firm into making a payment of Rs.2,60,000/- towards customs duty liability and Rs.8,809.15paise on account of sales tax liability to Shri Yogeshwar Nath and Smt. Anjala Nath in their capacity as Managing Director and Director respectively of M/s General Commerce Ltd.?"

5. One of the disputes suggested by the respondents was regarding rendition of accounts by the petitioner in respect of the transaction relating to the imported trims and the same reads as under :-

"Rendition of accounts to the respondents by Shri Pritpal Singh (Exclusive of transaction of Imported trims from General Commerce Ltd. in respect of which FAO 180/1995 is pending against the order of Mr.R.C. Jain, ADJ, Delhi."

6. After noting the disputes/ issues suggested by the parties, the Court decided the petition with the observations that "it would be appropriate for the Arbitrator to decide the aforesaid disputes/issues."

7. The contention of learned counsel for the appellant is that while deciding OMP No.67/1995 by judgment dated 21.9.2001, this Court has already directed the Arbitrator to decide the disputes/ issues suggested by them which included the dispute which was sought to be referred to the Arbitrator by the petitioner and which by the impugned order has been held by the learned Additional District Judge not arising under the partnership deed. It is submitted that since this Court has already directed the Arbitrator to decide the aforesaid dispute the order of the learned Additional District Judge cannot be sustained and has to be set aside. It is also contended that as the said order has not been challenged by the respondents in any forum, the same has become final and binding between the parties and this petition should be allowed.

8. The contention of learned counsel for the respondent, however, is that the Court in OMP No.67/1995 was not concerned with the dispute as to whether the respondents had misled the firm into making payment of the amount to the General Commerce Ltd. and, therefore, any observation made by the Court about the said dispute is not relevant to the present case and judgment of this Court directing the said dispute/issue to be referred to the arbitrator will be of no assistance to the petitioner and no reliance can be placed on the same. It is also contended by learned counsel for the respondent that in any case no dispute was specifically referred to the Arbitrator by this judgment.

9. I have heard learned counsel for the parties and have also gone through the judgment passed in OMP No.67/1995 by this Court. A bare perusal of the judgment passed in OMP No.67/1995 shows that the Court was aware as to what were the disputes/issues between the parties and one of the issues/disputes between the parties was the one about which a finding has been given by the impugned judgment as not arising under the agreement. This Court while deciding OMP No.67/1995 was fully aware about the disputes between the parties and the Court has specifically observed that it would be appropriate for the Arbitrator to decide the aforesaid disputes/issues. In my opinion, dispute no.1 suggested by the petitioner in OMP No.67/1995 has clearly been referred to the Arbitrator and the Arbitrator is required to decide the same in terms of the judgment in OMP No.67/1995. Judgment in OMP 67/1995 is inter se the parties and there is no reason to ignore the same. Respondents, if they were aggrieved by that judgment, had a right to file an appeal or take any other proceedings as might have been permissible in law to challenge the said judgment but the same having not been challenged in any forum will, in my opinion, operate as res-judicata between the parties. A direction having already been given to the Arbitrator to decide the disputes raised by the petitioner which include the dispute about which a decision has been given by the learned Additional District Judge, in my opinion, the impugned judgment cannot be sustained and has to be set aside.

10. I, accordingly, allow this appeal, set aside the impugned judgment and direct that in view of the judgment passed in OMP No.67/1995 decided on 21.9.2001, matter having already been directed to be decided by the Arbitrator, nothing survives in the present case and the same stands disposed of.