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Babu Kirparam Vs. Jawaharsingh Harnamdas - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai
Decided On
Case NumberO.C.J. Award No. 66 of 1930
Judge
Reported inAIR1932Bom375; (1932)34BOMLR737; 140Ind.Cas.761
AppellantBabu Kirparam
RespondentJawaharsingh Harnamdas
Excerpt:
arbitration- award against firm-partners in the firm can be determined in execution or by separate suit.;it is open to arbitrators to make an award against a firm. they have not to decide who the partners are unless the question is referred to them. it is only necessary for thorn to inquire who the partners are, with a view to serve upon them notices of meetings and of the making and of the filing of the award.;louis dreyfus & co. v. purushottum das narain das (1919) i.l.r. 47 cal. 29, followed.;where a party elects to go against a firm, the question whether a particular person is or is not a partner of such firm and is bound by the decree or award as the case may be is a question which can be dealt with either in execution proceedings or in a separate suit. - [couto; m.l. pendse,..........that the arbitrators exceeded their jurisdiction in determining who were the partners in the firm ofnanakchand prakaschand, and (d) that the award as against him at any rate was improperly procured on a false representation that he was a partner in thatfirm. the petition came up for argument before me in chambers on july 18, 1931, when an order was made adjourning the hearing of the petition in court.3. it is the case of messrs. jawaharsing harnamdas (whom i shall hereafter refer to as ' the respondent firm ') that they carry on business in bombay as shroffs, bankers, adatias, commission agents and merchants in that name since the year 1927, that before that they carried on the same business in the name and style of messrs. dhanpatmal harnamdas, and that their firm is well-known in.....
Judgment:

Wadia, J.

1. This is a petition to set aside an award dated March 24, 1930, and made and published by the arbitrators under the rules and by-laws of the East India Cotton Association, Limited, on May 1, 1930. The award directs the firm of Messrs. Nanakchand Prakaschand and Babu Ramrakhmal, BabuKirparam, the petitioner, Nanakchand and Prakaschand as being partners in the said firm to pay a sum of Rs. 4,822-7-0 with interest thereon at six per cent. per annum from September 26, 1929, till payment and the costs of the arbitration proceedings to the firm of Messrs. Jawaharsing Harnamdas who carry on business in Bombay. I may mention here that in filing an award the arbitrators have to comply with High Court Rule No. 372 which requires that they should file together with the award the evidence on the reference and the minutes of the proceedings and also a copy of the notices given to the parties. This is not done in respect of all the awards made under the by-laws of the East India Cotton Association, and I am not aware of any provision of law under which arbitrations under the by-laws of the East India Cotton Association are to be treated in any way differently from other awards filed in this Court. However, I have made inquiries in the Prothonotary's office, and I have been informed that the arbitrators appointed by the East India Cotton Association do not always take notes of evidence, and in some cases they take short rough notes only which they send to the Prothonotary along with the award.

2. The petitioner in this case contends that the award is not binding upon him on the grounds (a) that there was no valid submission to arbitration in writing signed by the petitioner or any one authorised on his behalf, (b) that he had no notice of the arbitration proceedings,(c) that the arbitrators exceeded their jurisdiction in determining who were the partners in the firm ofNanakchand Prakaschand, and (d) that the award as against him at any rate was improperly procured on a false representation that he was a partner in thatfirm. The petition came up for argument before me in chambers on July 18, 1931, when an order was made adjourning the hearing of the petition in Court.

3. It is the case of Messrs. Jawaharsing Harnamdas (whom I shall hereafter refer to as ' the respondent firm ') that they carry on business in Bombay as shroffs, bankers, adatias, commission agents and merchants in that name since the year 1927, that before that they carried on the same business in the name and style of Messrs. Dhanpatmal Harnamdas, and that their firm is well-known in various important places in the Punjab. Towards the end of June 1928, their partner Ramdas Bhagwandas went to Bhatinda which is situate in the Native State of Patiala to recover the firm's dues from one Kedarnath who was a broker employed by the branch of Messrs. Ralli Brothers at Bhatinda. Kedarnath introduced the petitioner and Ramrakhamal and the other respondents to Ramdas, and they agreed to do business with the respondent firm in cotton on the printed terms, a copy of which was given to the petitioner and Ramrakhamal. The business according to Ramdas was to be done either in the name and style of Nanakchand Prakaschand or in the name ofFakirchand, as the petitioner is a railway servant in the employ of the North Western Railway, and Ramrakhamal is a broker or rather an agent or sub-agent of Messrs. Ralli Brothers in Bhatinda. According to him business dealings commenced on or about July 9, 1928, and in July 1929 a sum of over Rs. 5,000 was due to his firm. The firm made oral demands in July and in November 1929 and also demands in writing in January and in March 1980. No payment was made to them, and, therefore, the disputes were referred to the arbitration of the East India Cotton Association under one of the printed terms of business. All the notices according to the respondent firm were refused by the petitioner, Thereupon the arbitrators proceeded ex parte, and made their award on March 24, 1930, which was eventually filed on May 1, 1930. The respondent firm got the award transmitted for execution to the District Court at Firozpur in the Punjab, and in execution a moiety of the petitioner's salary was attached from January 1931. The petitioner says that he came to know of this attachment some time in February 1931, and he came down to Bombay and filed this petition on March 3, 1931.

4. The petitioner is a graduate of the Punjab University and has been in the service of the North Western Railway Company since 1917. He is at present an Inspector of Coaching and Goods (shortly called I.C.G), and he draws a salary of Rs. 225 per month. His head-quarters are at Bhatinda, but he says he keeps constantly touring about for inspection on the line. He has three brothers alive, Lala Balmukund, Lala Amichand and Lala Nanakchand. Another brother by the name of Lala Meherchand died in 1929. He said he was separate from them all, and with regard to his brother Nanakchand he stated that he had been on bad terms with him for the last eight or nine years. He further stated that he had never done business in his life, and he produced Rule 15 of the Government Servants Conduct Rules by which he is bound and which forbids him from engaging in any other business, trade or employment during the time he is in the service of the railway company. According to him he does not know the firm of NanakchandPrakaschand, and he further alleged that Nanakchand who was alleged to be one of the partners of that firm was not his brother. He denies having met Ramdas at Bhatinda in June 1928 or at any other date, either alone or withRamrakhamal, or that he received a copy of their printed terms of business and agreed to do business, or that he agreed to make a deposit of Rs. 1,500 per every hundred bales with the respondent firm. He also denies having met Ramdas in July and November 1929, and it is his case that at most of the dates mentioned in the affidavit of Ramdas he was not in Bhatinda, and that the packets addressed to him from time to time mentioned in that affidavit were not presented for delivery to him. [His Lordship after dealing with the evidence in the case in detail proceeded:]

5. From all this evidence it is clear that the case of the petitioner rests not only on his own statements in the box, but also on his diary, against which there is the evidence of Ramdas and his witness Gokulchand, There is nothing in writing which supports the bare word of Ramdas and his witness. There are discrepancies in their evidence which I have referred to above. The respondent firm has called no independent evidence, and though both sides were equally emphatic in statements and denials, I prefer the evidence of the petitioner to the evidence of RamdasBhagwandas and his witness Gokulchand.

6. As I have stated bafore, the award is made against the firm of Nanakchand Prakaschand and against the partners jointly and severally. The petitioner denies that he was a partner, and contends that the award has been improperly procured by a false representation that he was such partner. The only disputes that were referred to arbitration were disputes about the cotton transactions between the respondent firm on the one hand and the firm of NanakchandPrakaschand on the other. That appears from the letter of the respondent firm dated March 6, 1930, written to the East India Cotton Association enclosing a copy of their letter of February 6, 1930, addressed to the firm of Nanakchand Prakaschand. In the letter of March 6 they say that to the beet of their knowledge the firm of Nanakahand Prakaschand had the partners mentioned therein, one of them being the petitioner, and that these partners should be served separately. The notices were accordingly sent out by the Association separately, and the award is made against the firm of Nanakcband Prakaschand and against the partners mentioned in the notices jointly and severally. The question as to who were the partners in the firm of Nanakchand Prakaschand was not referred to arbitration. The reference does not embrace the question, and the law does not allow arbitrators to assume jurisdiction over questions which are not referred to them. I was referred to the judgment of Mr. Justice Mirza in Vallabhdas v. Keshavlal (1926) 29 Bom. L.R. 660, in which he held that an award cannot be executed against a party alleged to be a partner in a firm, when notices of the arbitration or of the filing of the award had not been served on that partner In the course of the judgment the learned Judge expressed a doubt whether a firm can be made a party to a reference to arbitration, because a firm is not a legal entity apart from the partners composing the firm, and the procedure for suing a firm in the firm's name under the Code was introduced long after the Indian Arbitration Act of 1899. It was, therefore, argued before me that an award could only be made against the partners of a firm, and that it became necessary, therefore, for the arbitrators to inquire and also to decide who the partners of that firm were. In my opinion it is not necessary for the arbitrators to decide who the partners are. It is only necessary for them to inquire who the partners are because they have to serve notices of meetings and of the making and of the filing of the award upon the partners. They have not to decide who the partners are, unless the question is referred to them. In Louis Dreyfus & Co. v. Purusottum Das Narain Das I.L.R. (1919) Cal. 29 Rankin J. held that an award against a firm is not bad. In the case of an action against a firm, where apartner of the firm is served as such, the action can proceed right up to the decree in the name of the firm, and he held that it was left to proceedings after the date of the decree to ascertain whether there were any other partners in that firm. Under Section 15 of tie Indian Arbitration Act an award is not a decree but is enforceable as a decree, and the provisions which apply to execution of decrees apply also to the execution of awards. Order XXI, Rule 50, of the Civil Procedure Code provides the machinery by which one can for the purposes of execution ascertain who the partners are in a firm against whom a decree is passed. When a party elects to go against a firm, the question whether a particular person is or is not a partner of such firm and is bound by the decree or the award as the case may be is a question which can be dealt with either in execution proceedings or in a separate suit. Mr. Justice Rankin also held that he did not wish to deprive the commercial community of the benefit of the system of arbitration and award by reason only of a technical objection which according to him was unfounded in principle and had got no commercial substance. He also stated that he had known both in India and in England a large number of awards in commercial cases being made either in favour of or against commercial firms. In my opinion there can be an award just as there can be a decree against a firm, but the determination of the claim of the respondent firm against the firm of Nanakchand Prakaschand did not impliedly involve the determination of the question who the partners in the firm of NanakchandPrakaschand were or who were liable to meet the claim.

7. There was really no inquiry before the arbitrators as to who the partners were. The onus of proving that the petitioner was a partner in the firm of Nanakchand Prakaschand was on the respondent firm. The petitioner said that he was not a partner, and Ramdas admitted that there was nothing in the handwriting of the petitioner to show that he was a partner in the firm of Nanakchand Prakaschand or that he was in any way connected with that firm. Gokulchand stated in his evidence that he wrote several letters, eight or ten, to the respondent firm in Bombay on the instructions not only of Ramrakhamal but also of the petitioner, and that he mentioned in those letters on whose instructions he had written them. Not one of these letters has been produced. It is true that Rule 15 of the Government Servants' Conduct Rules is not conclusive as far as the Court is concerned, because the petitioner may have chosen at his own risk to do business in another name, But in this particular case I hold that he did not do business in the name of Nanakchand Prakaschand or in any other name with the respondent firm. There is no evidence before me as to who the partners were in that firm. But neither the firm nor the other alleged partners have come forward to dispute the award, and in the absence of any evidence to the contrary the award is binding upon the firm and upon those who are proved to be partners in that firm.

8. My attention was drawn to a certain by-law of the East India Cotton Association under which any person who has been duly served with a registered letter is deemed to have duly received that notice, but in this particular case letters addressed by the Association were not even addressed to the petitioner according mentioned by the respondent firm in their letter of March 6, 1930. The petitioner had no notice of the arbitration proceedings, and so far as he is concerned there is no valid submission to arbitration at all. If the terms of business of the respondent firm were accepted by any of the partners of the firm of Nanakchand Prakaschand and business followed, there; would be a valid submission to arbitration, as was decided in Rambaksh v. Bombay Cotton Company : (1930)32BOMLR1451 . But I believe the petitioner when he says that the terms of business were not handed to him, and that they were never accepted by him, and that he was not a partner as alleged. In my opinion the award has been improperly procured by alleging that he was a partner in the firm of Nanakchand Prakaschand whereas he was not. So far as the award affects the petitioner, the award cannot be sustained and must be setaside. I, therefore, order that the award so far as it affects the petitioner be set aside, and any moneys that may have been received from him in execution of the award should be refunded to him. I order the respondent firm to pay the petitioner's costs of and incidental to the hearing of the petition. All execution proceedings under the award as against the petitioner must be withdrawn.


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