Delhi High Court
New Bansal Glass Works vs Gail Gas Ltd. & Ors. on 21 November, 2017
$~21
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP (COMM) 68/2017
Date of decision: 21st November, 2017
NEW BANSAL GLASS WORKS ..... Petitioner
Through: Mr. Nitin Bhardwaj, Adv.
versus
GAIL GAS LTD. & ORS. ..... Respondents
Through: Mr.N.L.Ganapathi, Mr.Shaleen
Srivastava, Advs. For R-1
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
1. This petition under Section 34 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as the Act) has
been filed by the petitioner challenging the award dated 13 th
February, 2015 passed by the Sole Arbitrator dismissing the
claims of the petitioner on the ground that the petitioner, being
a partnership firm, is not registered and consequently in terms
of Section 69 (3) of the Partnership Act, the claim petition is not
maintainable.
2. Counsel for the petitioner submits that the firm was in
fact registered with the Registration of Firm, Uttar Pradesh,
OMP (COMM) 68/2017 Page 1
however, due to inadvertence, the said document was not placed
on record before the Sole Arbitrator.
3. The counsel for the respondent submits that under
Section 34 of the Act, the Arbitral Award cannot be challenged
by relying upon a document which was not placed before the
arbitrator and, therefore, no reliance can now be placed on the
purported Registration Certificate that has been produced by the
petitioner.
4. In my view, the above controversy would have no
significance inasmuch as the Supreme Court in M/s Umesh
Goel vs. Himachal Pradesh Co-operative Group Housing
Society Ltd. AIR 2016 SC 311 6, has held that Arbitral
proceedings will not come under the expression 'other
proceedings' of Section 69(3) of the Partnership Act and,
therefore, the ban imposed under the said Section 69 can have
no application to Arbitral proceedings as well as the Arbitration
Award. I may only quote from the judgment as under:-
"15) Keeping the above outcome of the legal position
that can be derived from a reading of sub-section (1), (2)
and (3) of Section 69 in mind we can draw further
conclusions by making specific reference to sub-clauses
(a) and (b) of sub-section (3) as well as the exceptions set
out in sub-clauses (a) and (b) of sub-section (4) as well.
When under sub-section (3) which also relates to a ban
concerning 'other proceedings', the law makers wanted
to specifically exclude from such ban such of those
proceedings which also likely to arise in a suit, but yet
OMP (COMM) 68/2017 Page 2
the imposition of ban of an unregistered firm need not be
imposed. Keeping the said intent of the law makers in
mind, when we read sub-clauses (a) and (b) of sub-
section (3), it can be understood that even though such
other proceedings may be for the enforcement of any
right to sue but yet if it is for the dissolution of a firm or
for accounts of a dissolved firm or any right or power to
realize the property of a dissolved firm, the same can be
worked out by way of a suit in a Court or by way of other
proceedings in that suit and the same will not be affected
by the ban imposed under sub-section (3). Similarly, any
steps initiated at the instance of an official assignee, a
receiver or Court under the Presidency-Towns Insolvency
Act of 1909 (3 of 1909) or the Provincial Insolvency Act
of 1920 (5 of 1920) to realize the property of an insolvent
partner in a pending suit of a Court also stand excluded
from the ban imposed under sub-section (3). The specific
exclusions contained in clauses (a) and (b) of sub-section
(3) therefore makes the position clear to the effect that
even though such proceedings may fall under the
expression "other proceedings" and may be intrinsically
connected with a suit in a Court, yet the ban would not
operate against such proceedings.
16) When we read sub-section (4), the ban imposed
under sub-section (1), (2) and (3) will have no
application to any of those proceedings set out in sub-
clauses (a) and (b) of the said sub-section (4). A specific
reference to sub-clause (b) of sub-section (4) disclose
that in the last part of the said sub-clause it is specifically
provided that other proceedings incidental to or arising
from any suit or claim of set off not exceeding Rs.100 in
value under those specific statute referred to in the said
sub-clause can also be launched without any ban being
OMP (COMM) 68/2017 Page 3
operated as provided under sub-section (1), (2) and (3).
The said part of sub-clause (b) of sub-section (4) thus
gives a vivid picture as to the position that the 'other
proceeding' specified in the said sub-section can only
relate to a pending suit in a Court and not to any other
different proceeding which can be categorized as 'other
proceedings'.
17) We are thus able to arrive at a definite conclusion
as to the scope and ambit of Section 69 in particular
about Section 69(3). Having thus analyzed the provision
in such minute details and its implication, we can now
apply the said provision to the case on hand and find out
whether Section 69(3) is attracted to the Arbitral
Proceedings and the ultimate award passed therein by
construing the same as falling under the expression"
other proceedings.
18)-19) xxxxxxxxxxx
20) Based on the close analysis of Section 69 in its
different parts, we are able to discern and hold that in
order to attract the said Section, first and foremost the
pending proceeding must be a suit instituted in a Court
and in that suit a claim of set off or other proceedings
will also be barred by virtue of the provision set out in
sub-sections (1) and (2) of Section 69 as specifically
stipulated in sub-section (3) of the said Section. Having
regard to the manner in which the expressions are
couched in sub-section(3), a claim of set off or other
proceedings cannot have independent existence. In other
words, the foundation for the application of the said sub-
section should be the initiation of a suit in which a claim
of set off or other proceedings which intrinsically
connected with the suit arise and not otherwise.
21)-35)xxxxxxxxxx
OMP (COMM) 68/2017 Page 4
36) Though the learned senior counsel for the
appellant and the respondent referred to certain other
decisions in support of their respective submissions, as
we are fortified by our conclusion, based on the
interpretation of Section 69 of the Partnership Act vis-a-
vis the 1996 Act and the 1940 Act as well as supported by
the decision in Jagdish Chander (AIR 1964 SC 1882)
(supra) and Kamal Pushp Enterprises (AIR 2000 SC
2676) (supra), we do not find any necessity to refer to
those decisions in detail. Having regard to our
conclusion that Arbitral Proceedings will not come under
the expression "other proceedings" of Section 69(3) of
the Partnership Act, the ban imposed under the said
Section 69 can have no application to Arbitral
proceedings as well as the Arbitration Award."
5. In view of the above decision, the impugned arbitral
award cannot be sustained.
6. At the request of the parties, the arbitral proceedings
before the Sole Arbitrator are revived who shall deal with the
merits of the claim in accordance with law.
7. Parties would accordingly approach the Arbitrator to take
up the proceedings.
8. The petition is allowed in the above terms.
NAVIN CHAWLA, J
NOVEMBER 21, 2017
RN
OMP (COMM) 68/2017 Page 5
