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Hans Raj L. Bishan Das Vs. Surjit Singh and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial;Arbitration
CourtPunjab and Haryana High Court
Decided On
Case NumberFirst Appeal from Order No. 150 of 1960
Judge
Reported inAIR1963P& H252
ActsArbitration Act, 1940 - Sections 2, 21 and 24
AppellantHans Raj L. Bishan Das
RespondentSurjit Singh and ors.
Appellant Advocate S.L. Puri and; M. Puri, Advs.
Respondent Advocate D.R. Manchanda, Adv.
DispositionAppeal dismissed
Cases Referred and Arbn. Jupiter General Insurance Co. Ltd. v. Corporation of Calcutta
Excerpt:
.....to be given to or to be received from them. there is, thus, no force in this objection as well. in the 'mukhtarnama given to chuni lal by ajudhya nath, it was clearly mentioned that he had no power to refer any matter in a pending suit to arbitration. 11. there is no merit in this contention as well. it means that they are satisfied with the award of the arbitrator and the decree passed thereon......by one chum lal, mukhtar-i-am of ajudhya nath who he had no power to refer any matter in a pending suit to arbitration. it may be mentioned that certain grounds of misconduct were also alleged against arbitrator, but the same were not pressed in this court. on replies having been filed by the plaintiffs and defendants 1 and 4 to the objections raised by hans raj, defendant no. 3, the following issues were framed:-1. whether defendant no. 3 is competent to challenge the reference made by this court to the arbitrator? 2. whether the award is liable to be set aside on any of the grounds alleged? 2. it was held by the trial judge that defendant no. 3 was not competent to challenge the reference made by the court to the arbitrator. it was further found that the award was not liable to be set.....
Judgment:

P.C. Pandit, J.

1. On 3-8-1949 Sohan Singh and Gopi Nath, owners of two firms and who were also the partners of the Commercial Syndicate, instituted a suit for dissolution of partnership and rendition of accounts against the remaining 9 other partners of that Syndicate. A preliminary decree fixing the shares of the various partners and appointing one Nathu Mal as a Local Commissioner for going into the accounts and for reporting the liability of each of the partners was passed on 29-4-1950. Later on a final decree in accordance with the report of the Local Commissioner was passed on 29-6-1950. This decree was ex parte against Parma Lal and others defendants 2 to 9. It was later on set aside in appeal filed by Hans Raj, defendant No. 3, by this Court on 24-12-1953 and the case was remanded to the trial Court to proceed from the stage at which the ex parte proceedings had been taken. On 31-5-1960 the legal representatives of the plaintiffs, plaintiffs having died in the meantime, and defendants 1 to 4 agreed to refer the whole dispute to the sole arbitration of Shri Atma Ram Aggarwal, Advocate of Amritsar. He filed his award on 29-8-1960, according to which, defendant No. 3 was to pay a sum of Rs. 2,500/- to Sohan Singh, plaintiff, Rs. 2,000/- to Gopi Nath, plaintiff, Rs. 2,500/- to defendant No. 4 and Rs. 2,000/- to defendant No. 2, and another sum of Rs. 2,000/- to defendant No. 1.

The parties were left to bear their own costs. The suit against defendants 5 to 9 was dismissed. Only defendant No. 3 filed objections to the award, mainly, on the grounds (1) that the agreement of reference was void ab initio, because defendants 5 to 9 had not signed that reference and had not agreed to refer their dispute to the arbitrator and (2) defendant No. 1, Ajudhya Nath, was also not a party to this reference, since the agreement of reference was signed by Shri Prem Nath Behal, Advocate, on his behalf. The said Advocate had no proper authority to refer the dispute to arbitration, because the power of attorney given in his favour was signed by one Chum Lal, mukhtar-i-am of Ajudhya Nath who he had no power to refer any matter in a pending suit to arbitration. It may be mentioned that certain grounds of misconduct were also alleged against arbitrator, but the same were not pressed in this Court. On replies having been filed by the plaintiffs and defendants 1 and 4 to the objections raised by Hans Raj, defendant No. 3, the following issues were framed:-

1. Whether defendant No. 3 is competent to challenge the reference made by this Court to the Arbitrator?

2. Whether the award is liable to be set aside on any of the grounds alleged?

2. It was held by the trial Judge that defendant No. 3 was not competent to challenge the reference made by the Court to the Arbitrator. It was further found that the award was not liable to be set aside on any of the grounds alleged by defendant No. 3. In view of these findings, the objections filed by defendant No. 3 were dismissed and a final decree in accordance with the terms of the award was passed. The present appeal has been filed by Hans Raj defendant No. 3 against the order of the Court below refusing to set aside the award.

3. Learned counsel for the appellant, in the first instance, submitted that the agreement of reference in the present case was void, because in a pending suit relating to the dissolution of partnership and rendition of accounts, unless the agreement of reference was signed by all the parties to the suit, the Court had no jurisdiction to entertain such an agreement and refer the dispute to arbitration. In a partnership suit, all the partners are necessary parties and, consequently, the learned counsel contended that all of them should have agreed to refer the dispute to arbitration.

4. The decision of this question will depend on the interpretation of the words 'all the parties interested' occurring in Section 21 of the Indian Arbitration Act, 1940. Can it be said that in the present case defendants 5 to 9 were 'parties interested?' In the agreement of reference, it is clearly stated by its signatories that they had neither any dispute with defendants 5 to 9 nor had anything to be given to or to be received from them. This shows that defendants 5 to 9 were not concerned with the dispute, which had been referred to arbitration. It is also significant to mention that defendants 5 to 9 have not raised any objections regarding this reference, even though they were parties to the suit. They have also been made parties in the present appeal, but there too nobody has come on their behalf to object to the agreement of reference in spite of the fact that they had been duly served.

The trial Court in its judgment has mentioned that even during the course of the arguments, it was not stated that defendants 5 to 9 had to pay any amount to defendant No. 3, who is the appellant in the present case. In the grounds of appeal filed in this Court, it has not been objected that any amount was either due from them or was to be paid to them. It is important to note that defendant No. 3 was himself a party to the agreement of reference, in which it was unequivocably stated that defendants 5 to 9 were not interested in the matter referred to arbitration. In these circumstances, there is no escape from the conclusion that defendants 5 to 9 cannot be called 'parties interested' within the meaning of Section 21 of the Indian Arbitration Act and the agreement to reference in the present case was, consequently, valid.

5. Learned counsel then contended that by virtue of the provisions of Section 24 of the Indian Arbitration Act, 1940, the matter in the present case could only be referred to arbitration if it could be separated from the rest of the subject-matter of the suit and he relied on a Full Bench decision of this Court in Firm Khetu Ram Basham-ber Dass v. Kashmiri Lal Rattan Lal, AIR 1959 Punj 617 (FB), in this connection.

6. It has already been mentioned above that defendants 5 to 9 had no interest in the matter referred to arbitration. Moreover, they were not interested even in the suit. It means that the dispute remained between the other parties, who themselves had signed the agreement of reference. Therefore, it is clear that the provisions of Section 24 of the Indian Arbitration Act have not been infringed in the present case.

7. As regards the objection that in the dissolution of partnership and rendition of account cases all the partners, whether interested in the dispute or not, must sign the agreement of reference in order to validate it, reference was made by the learned counsel to a ruling of the Madras High Court in Ranga Reddi v. China Sidda Reddi, AIR 1927 Mad. 1154, which had followed two earlier decisions of the Madras High Court in Potita Favana Panda v. Narasinga Panda., ILR 42 Mad 632: (AIR 1920 Mad 852), and T. S. Subba Rao v. Appadurai Aiyar, AIR 1925 Mad 621. Both these latter authorities were noticed in a Division Bench of the Bombay High Court in Mahadeo Narayan v. Narayan Dattatraya, AIR 1928 Bom 248, wherein it was held:

'The words 'all the parties interested' in para. 1, Schedule 2 do not mean necessarily all the parties to the suit, but all the parties interested in any matter in difference between them which they wish to refer. No general rule can be laid down whether a defendant, who has not put in an appearance and who does not contest the suit, is or is not a party interested within the meaning of this paragraph; and each case must be decided upon its own particular facts.'

In the present case, as I have already held above, defendants 5 to 9 were not the parties interested in the matter referred to arbitration. There is, thus, no force in this objection as well.

8. Learned counsel then contended that defendant No. 1, Ajudhia Nath, was not a party to the reference because Shri Prem Nath Behal, Advocate, who had signed the agreement on his behalf, had no legal authority to do so, the reason being that he was given the power of attorney by Chuni Lal, who was the mukhtar of Ajudhya Nath. In the 'mukhtarnama given to Chuni Lal by Ajudhya Nath, it was clearly mentioned that he had no power to refer any matter in a pending suit to arbitration.

9. In the first place, Ajudhya Nath himself is not raising any objection on this account even though he was a party to all the proceedings before the trial Court, the arbitrator and this Court. Secondly, the appellant had signed the agreement of reference and at that time he did not raise any objection in this connection. Thirdly, the proceedings before the arbitrator show that on some occasions Ajudhya Nath himself had been appearing before him and taking part in the arbitration proceedings. Fourthly, it is not necessary that the agreement of reference should be signed by all the parties. They can later on by their conduct or by word of mouth accept the same. In Firm Mangal Chand Banwari Lal v. Firm Pyare Lal, AIR 1949 EP 199, it was held thus:

'When Section 2(a), Arbitration Act of 1940 speaks of an agreement in writing all that it means is that the terms of the agreement should be expressed in writing and that the agreement should be such that it binds both the parties and that the actual signatures of both the parties on the agreement are not essential. The agreement may be in the form of a signed document by both the parties containing all the terms or a signed document by one party containing the terms and a plain acceptance, signed or orally accepted by other party, or it may be an unsigned document containing the terms of a submission to arbitration agreed to orally by both the parties. It is sufficient if one party signs the submission and the other accepts it. The acceptance may be by word of mouth or may be by conduct'.

It was also held in Jugal Kishore Rameshwardas v. Mrs. Goolbai Hormusji, (S) AIR 1955 SC 812, that it was settled law that to constitute an arbitration agreement in writing it was not necessary that it should be signed by the parties, and it was sufficient if the terms were reduced to writing and the agreement of the parties thereto was established. There is, thus, no force in this contention also.

10. Learned counsel, lastly, contended that the arbitrator had in his award dismissed the suit against defendants 5 to 9. Since nobody had referred their case to him, he had no jurisdiction to pass this order. This was an error patent on the record and the award should be set aside on this ground.

11. There is no merit in this contention as well. No objection was taken by the appellant before the trial Court on this ground. Even in the course of arguments, this point was not raised by him. There is no ground of appeal to this effect in this Court. Moreover, the plaintiffs had themselves stated in the order of reference that they were not claiming anything from defendants 5 to 9 and the said defendants had no claim against them. The suit had naturally, therefore, to be dismissed against defendants 5 to 9. Further, only the plaintiffs could raise an objection if their suit was wrongly dismissed. They have not done so. It means that they are satisfied with the award of the arbitrator and the decree passed thereon. Besides, it is not the appellant's case that defendants 5 to 9 owed anything to him.

12. This apart, the trial Court had decided issue No. 1 in favour of the respondents and had held that the appellant was not competent to challenge the reference made by the Court to the Arbitrator' It has been held in V. Gurumurty Raju v. V. Narasimha Raju, AIR 1954 Orissa 234:

'It was urged that all the partners of the two businesses did not join in the arbitration agreement and that consequently the award was illegal. This argument, however, is not available for Narasimha Raju who is a party to the agreement. It was pointed out in Dwarka Nath v. Kedar Nath, AIR 1951 Pat 445, that it was not necessary that all parties in a suit should concur in an application for an order of reference to an arbitrator. It is only necessary that all parties interested in the subject-matter of the reference should join in the submission. Again in Mamraj v. Mt. Kishni, AIR 1951 Simla 1S3, it was pointed out that parties to a reference cannot challenge the validity of an award on the mere ground that one of the parties to the suit was not a party to the arbitration. It was also pointed out that the award was valid so far as the parties, who joined in the reference were concerned.

From the history of the dispute it will be clear that the real contestants are Narasimha Raju on the one hand and Gurumurty Raju on the other. Appa Rao filed a petition in M.J.C. No. 105/46 stating that he was not interested in the dispute and no costs may be awarded against him. He further stated that the dispute was one between Narasimha Raju and Gurumurty Raju. The other partners of the firm had never bothered to appear at any stage of the dispute. The lover Court was, therefore, justified in saying that the arbitration agreement cannot be impugned on the ground that the other partners had not signed it.'

Also see in this connection, R. Prince and Co. v. Governor-General-in-Council, AIR 1955 Punj 240, Jagmohan v. Suraj Narain, AIR 1935 Oudh 499, Union of India v. Radhanath Nanda, AIR 1961 Orissa 143, and Arbn. Jupiter General Insurance Co. Ltd. v. Corporation of Calcutta, (S) AIR 1956 Cal 470.

13. In view of what I have said above, this appeal fails and is dismissed. In the circumstances of this case, however, I will leave the parties to bear their own costs in this Court.


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