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Satya NaraIn and ors. Vs. Jugul Kishore and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAllahabad High Court
Decided On
Case NumberF.A.F.O. No. 180 of 1954
Judge
Reported inAIR1958All512
ActsArbitration Act, 1940 - Sections 2, 14 and 17; Partnership Act, 1932 - Sections 30 and 48(5)
AppellantSatya NaraIn and ors.
RespondentJugul Kishore and ors.
Appellant AdvocateR.C. Ghatak, Adv.
Respondent AdvocateK.C. Saksena and ;Jagdish Swarup, Advs.
DispositionAppeal dismissed
Excerpt:
arbitration - arbitration agreement - section 2, 14 and 17 of arbitration act, 1940 - minor cannot be a member of a firm and cannot be made personally liable for any liability of the firm - where the firm is dissolved by all the partners the amount of the share of the minor determined along with the share of the partners - arbitration agreement signed by a minor is absolutely void - if signed on behalf of the minor by guardian, legal or natural - any award made on the basis of such agreement without keeping in mind the interest of the minor by proper guardian - the award would be vitiated. - - the joint family business was turned into a partnership business in which a share was allowed to the minor as well. it is, however, urged before us that in view of section 30 of the..........made by satya narain, swami dayal, brahma narain, bishun narain & mahesh narain against jugul kishore, bishwa nath, nawai kishore and kishun narain minor under the guardianship of his mother smt. kamla devi under sections 14 and 17 of the arbitration act (no. x of 1940) requiring an award to be filed and to pronounce judgment and decree in terms of the award, the court below rejected the application and refused to grant the prayers aforesaid by an order dated the 5th of july, 1954. aggrieved by that order the applicants have preferred this appeal under section 39 of the arbitration act. 2. the parties are descended from one mukand ram who had three sons khunno lal, munnoo lal and munai lall all of whom are dead. jugul kishore, bishwa nath and nawal kishore are the sons of.....
Judgment:

D.N. Roy, J.

1. On an application made by Satya Narain, Swami Dayal, Brahma Narain, Bishun Narain & Mahesh Narain against Jugul Kishore, Bishwa Nath, Nawai Kishore and Kishun Narain minor under the guardianship of his mother Smt. Kamla Devi under Sections 14 and 17 of the Arbitration Act (No. X of 1940) requiring an award to be filed and to pronounce judgment and decree in terms of the award, the Court below rejected the application and refused to grant the prayers aforesaid by an order dated the 5th of July, 1954. Aggrieved by that order the applicants have preferred this appeal under Section 39 of the Arbitration Act.

2. The parties are descended from one Mukand Ram who had three sons Khunno Lal, Munnoo Lal and Munai Lall all of whom are dead. Jugul Kishore, Bishwa Nath and Nawal Kishore are the sons of Khunnoo Lal. They had another brother by name Kailash Narain who died leaving him surviving his widow Smt. Kamla Devi and his minor son Kishun Narain. Satya Narain applicant is the son of Munai Lal. Swami Dayal, Brahma Narain. Bishun Narain and Mahesh Narain applicants are the sons of Munnu Lal. The family continued joint up to the year 1944. On the 15th of April, 1944, there was a severance in the status by means of a deed of partition where by the properties were divided. The joint family business was turned into a partnership business in which a share was allowed to the minor as well.

The partnership business, according to the allegation made in the grounds of appeal, incurred heavy liabilities on account of the improvident acts of Jugul Kishore as managing partner who dissipated the assets of the firm. By a deed of agreement dated the 25th of September, 1952, executed by Jugul Kishore on his own behalf and on behalf of his minor nephew Kishun Narain and also by the other parties to this litigation, the partnership was dissolved and the disputes relating to the business were referred to the arbitration of certain person. That deed of agreement was supplemented by them by two other deeds dated the 1st of June, 1953 and the 26th Of June, 1953, respectively.

Before the board of arbitrators a draft of a compromise alleged to have been reached by the parties was filed and the arbitrators were requested to make an award in terms thereof which they did on the 14th of October, 1953. It was this award which was required to be filed under Section 14 of the Arbitration Act and the Court was asked by the applicants under the provisions of the same Act that a judgment should be pronounced in terms of the award and a decree should follow it up.

3. When the application under Sections 14 and 17 of the Act was made in the Court below, it was resisted by Kishun Narain minor through his mother and natural guardian on the ground that there was no reference to arbitration on his behalf and that Jugul Kishore his uncle could not properly represent him in the deed of agreement, and further there was no proper compromise which could be adopted by the arbitrators in the making up of the award so as to bind him, inasmuch as he was again not properly represented at the stage of the compromise. Both these grounds found favour with the Court below and that Court accordingly rejected the application.

4. Before Us it is not disputed that Kishun Narain minor as a separated member of the family could only have been properly represented in the deed of agreement and in the compromise by his natural guardian, the mother. It is, however, urged before us that in view of Section 30 of the Partnership Act, the minor was not at all a partner in the business in the true sense of the term, and that at best it could be said that he had been 'admitted as a minor to the benefits of partnership in the firm' and consequently he was not at all a necessary party, either to the agreement of reference to arbitration or to the award itself. Alternatively, it has been urged that if it be held that he was a necessary party to the same, he must be deemed to have been properly represented by his uncle Jugul Kishore, on whom the entire matter had been left by Smt. Kamla Devi the mother of the minor.

5. The first part of this argument cannot possibly hold any water, for ex facie the deed of agreement and the award indicate that the minor was intended to be made a party to the same. In fact it was on that footing that the appellants had impleaded the minor to their application under Sections 14 and 17 of the Arbitration Act, so as to make the act of filing the award and the consequent judgment and decree to be pronounced and passed in terms thereof binding on him.

6. It is true that in view of Section 30 of the Partnership Act, a minor, though participating in the profits of the firm, is not a partner. A person who is a minor cannot be a member of a firm. He may be admitted to the benefits of the firm, but cannot be made personally liable for any liability of the firm. His share in the property of the firm is liable for the obligations of the 'firm and that share is not more than his right to participate in the property of the firm after its obligation has been satisfied. Such a minor may not sue the partners for an account of the firm, or for payment of his share of the property, or profits of the firm, except when he severs his connection with the firm, in which case the amounts of his share shall be determined by a valuation made as far as possible in accordance with the rules contained in Section 48(5) of the Partnership Act. Where the firm is dissolved, as here, by all the partners acting together, the amount of the share of the minor shall be determined along with the share of the partners. Accordingly, the minor was as much a necessary party to the arbitration as the partners themselves.

7. The alternative argument that if it be held that the minor was a necessary party he must be deemed to have been properly represented by his uncle Jugul Kishore on whom the entire matter had been left by Smt. Kamla Devi the mother and the natural guardian of the minor, does not also commend itself to us. Jugul Kishore was never the de facto or the de jure guardian of the minor. The minor lived with his mother under her care and guardianship in a different district. Jugul Kishore, as alleged by the appellants in their grounds of appeal, involved the business in huge liabilities by his improvident acts. His interests qua this litigation were therefore adverse to the other partners and also adverse to those of the minor.

Jugul Kishore, could not therefore represent the minor, either in executing the deed of agreement of reference to arbitration or in the so-called compromise on foot of which the award id said to have been made. An agreement of arbitration signed by a minor would be absolutely void according to the Privy Council decision in Mohori Bibee v. Dharmodas Ghose, (30 Ind. App. 114) (PC) (A). But an agreement signed on behalf of the minor by his guardian, natural or legal, stands on a different footing. Sec Ramji Ram v. Salig Ram, (14 Cal. L. J., 188) (B), and also In the matter of Romonkissensett v. Hurrololl Sett, (I. L. R. 19 Cal. 334) (C). In Mst. Har Narain Kunwar v. Sajjan Pal Singh their Lordships of the Privy Council held that the widow of a deceased Hindu who had executed an arbitration agreement agreeing to refer to arbitration a claim to certain ancestral property

'in her right and as the mother and natural guardian of minor daughters'

had no power to bind her daughters by the agreement and the award made against the interest of the daughters was of no effect.

8. Having regard to the facts and circum-stances of the case and the state of law as stated above, we are of opinion that the award in the present case could not have been made a rule or the court under Section 17 of the Arbitration Act, and it would not be open to the appellants to contend that the court below failed to appreciate that it was Jugal Kishore, who was attempting to go behind the award and the compromise by setting up the minor through his mother challenging the same. Even, if that motive be attributable to Jugual Kishore, it would not be open to the appellants to contend that the minor upon the facts stated above should be made to submit to the arbitration agreement and to the award made on the basis of a compromise which ex facie has not been shown to the benefit of the minor.

In fact if the very foundation of the matter, namely, the arbitration agreement is knocked out of its bottom because the agreement was not made by the minors' natural guardian, namely, the mother, the agreement could not bind the minor and any award made on the basis of such agreement, much less an award where the arbitrators did not decide the matter upon their own judgment but decided it upon the terms of a compromise reached by the partners of the firm at which stage again the minors' interest had not been looked into by the proper guardian, the award was vitiated. In our opinion therefore the Court below was right in rejecting the application and in refusing to make the award a rule of the court. There is thus no force in the appeal and we dismiss it with costs to Kishun Narain Respondent.


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