L.C.Sharma vs P.C.Sharma & Ors.
2009 Latest Caselaw 3486 Del

*          IN THE HIGH COURT OF DELHI AT NEW DELHI


                                               Date of Reserve: August 12, 2009
                                                Date of Order: September 01, 2009

+OMP 322/2007
%                                                                  01.09.2009

      L.C. Sharma                                  ...Petitioner
      Through: Mr. Sudhir Nandrajog, Sr. Adv. with Ms. Sahila Lamba,
      Advocates

      Versus

      P.C. Sharma & Ors.                          ...Respondents
      Through: Mr. Sandeep Sethi, Sr. Adv. with Mr. Sandeep Sharma,
      Advocates


      JUSTICE SHIV NARAYAN DHINGRA

1.    Whether reporters of local papers may be allowed to see the judgment? Yes.

2.    To be referred to the reporter or not?                                     Yes.

3.    Whether judgment should be reported in Digest?                             Yes.


      JUDGMENT

1. This petition/application under Section 9 of Arbitration & Conciliation

Act, 1996 ("the Act", for short) has been made by the petitioner on the

ground that there was a dispute between the parties which the petitioner

wanted to raise before the arbitrator and in the meantime, this Court should

restrain respondent from encashing or appropriating the amount of Rs.45 lac

deposited by the DDA in the registry of this Court. The other prayer made is

that the respondent no.8 i.e. PNB, be restrained from making any payment

from the account number 036002100012593 in Punjab National Bank,

Sarvodaya Enclave Branch, or payment of Rs.45 lac to respondent no.1 to 7.

2. Brief facts relevant for the purpose of deciding this petition are that the

OMP 322/2007 L.C. Sharma v. P.C. Sharma Page 1 Of 4 petitioner was a partner in a firm known as Prem Chand Sharma & Company.

The initial partnership deed was executed between petitioner and some of the

respondents on 9th October 1978. This partnership was renewed and a second

partnership deed was executed on 2nd April 1980. There were six persons as

partners namely Mr. P.C. Sharma, Mr. Ravi Sharma, Mr. Ramji Lal Sharma, Mr.

Lekh Raj Sharma Mr. Ved Prakash Sharma and Mr. Dharamvir Sharma. The

petitioner was having 20% shares in the partnership and the partnership was

doing the business of construction in the name and style of P.C. Sharma &

Company.

3. The award was passed in favour of partnership firm P.C. Sharma &

Company by the arbitrator on 16th April 1989 and this award was made a rule

of the Court vide order dated 8th November 2005. After the award was made

a rule of Court, the partnership firm filed an execution and during execution,

petitioner raised an objection that the amount of partnership firm cannot be

entirely given to the other partners since he was also one of the partners.

When the matter came up before the Division Bench of this Court, the

Division Bench observed that adjudication of disputes inter se partners

cannot be a subject matter of execution and the petitioner should avail an

independent remedy. Thereafter, the petitioner filed this application under

Section 9 of the Act on the strength of a partnership deed dated 2nd April

1980, which contained an arbitration clause. In response to the application,

the respondents have filed documents along with their reply. It is submitted

by respondents that the petitioner retired from the partnership of P.C.

Sharma & Company on 1st April, 1982 by virtue of a written retirement deed

duly executed between all the contracting partners. The retirement deed did

not contain any arbitration clause. Moreover, in terms of retirement deed, the

OMP 322/2007 L.C. Sharma v. P.C. Sharma Page 2 Of 4 petitioner had settled all his accounts under the partnership deed and he was

not concerned with the partnership after 1st April 1982.

4. The petitioner has not denied execution of retirement deed dated 1st

April 1982 but has submitted that this retirement deed was not acted upon

and the petitioner has been, even after signing the retirement deed, acting as

a partner of the firm. This contention of petitioner has been denied by

respondents who had placed on record the subsequent partnership deed

entered into between rests of the three partners constituting another

partnership firm in the name of P.C. Sharma and Company, executed on 2nd

April 1982. This partnership deed was executed among Mr. P.S. Sharma, Mr.

Dharamvir Sharma and Mr. Ved Prakash Sharma.

5. The argument of petitioner counsel is that petitioner has been acting as

partner even after retirement deed. He relied on certain documents wherein

he has shown himself as a partner. I consider that self serving documents

created by petitioner cannot be a ground to invoke arbitration clause in a

partnership deed which came to an end. Whenever a written contract is

executed between the parties, the presumption is that it was acted upon

between the parties and the intention of the parties had been clearly stated

in the written document. It is also settled law that where a contract is entered

into in writing by the parties, any amount of oral evidence contrary to the

written contract is not admissible. There is no reason for this Court to believe

that despite having executed a retirement deed, the petitioner continued to

be a partner in the partnership firm namely P.C. Sharma & Company. The

concept of a partner by holding out is applicable only in respect of third

parties. If a person holds himself out to be a partner of the partnership firm to

OMP 322/2007 L.C. Sharma v. P.C. Sharma Page 3 Of 4 the third parties and third parties bonefidely act on his representation in such

a case because of his holding out as a partner he is held responsible for the

acts done by him in the garb of a partner. The concept of a partner by holding

out is not applicable inter se partners and is not applicable for giving benefit

to the person who is holding out as a partner even after signing the

retirement deed. A person may continue to hold himself out as a partner

despite not being a partner under the contract but that would not entitle him

to claim benefit of the partnership firm. I, therefore, consider that the

petitioner had no case of invocation of the arbitration clause of a partnership

deed which was dissolved and a retirement deed was executed, when no

arbitration clause is there in the retirement deed. Even otherwise, the

petitioner cannot invoke arbitration clause for a dispute which was barred by

limitation. The retirement deed was executed on 1 st April 1982 and this

retirement deed would have to be held as void if the petitioner is to be given

the status of a partner. The declaration of retirement deed to be a void

document could have been filed within three years of its execution i.e. upto

1985. The petitioner cannot raise a dispute about the voidness of the

retirement deed now after 27 years of the execution of the retirement deed.

Even otherwise, I find that the petitioner has no prima facie case. The

petitioner's contention of acting as a partner even after signing the

retirement deed is not tenable.

6. In view of my foregoing discussion, I find no force in this petition. The

petition is hereby dismissed. No orders as to costs.

September 01, 2009                               SHIV NARAYAN DHINGRA J.
rd


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