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Paras Ram Darshan Lal Vs. Union of India and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration;Contract
CourtDelhi High Court
Decided On
Case NumberSuit No. 678-A of 1974
Judge
Reported inAIR1979Delhi135; 1979RLR248
ActsPartnership Act, 1932 - Sections 69
AppellantParas Ram Darshan Lal
RespondentUnion of India and anr.
Appellant Advocate D.P. Sharma, Adv
Respondent Advocate Y.K. Sabharwal, Adv.
Cases ReferredAct. In Jagdish Chander Gupta v. Kajaria Traders
Excerpt:
.....under sections 8 and 20 of the arbitration act, 1932 - it was held that the proceeding was to enforce the right out the contract within section 69 (3) of the partnership act - section 13: [altamas kabir & cyriac joseph,jj] custody of child - welfare of child vis--vis comity of courts - the minor girl child of 3 1/2 years was brought to india by her mother. the minor girl was a citizen of u.k. being born in u.k. her parents had set up their matrimonial home in u.k. and had acquired status of permanent residents of u.k. the child with her mother was supposed to return to u.k. but the mother cancelled her tickets and remained behind in india. the husband thereupon started procededings before the high court of justice, family division. u.k. praying for an order that the minor child..........1965 and 25th may, 1965. section 69 of the indian partnership act 1.932 is as under:69. (1) no suit to enforce a right arising from a contract or conferred by this act shall be instituted in any court 'by or on behalf of any person suing as partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the register of firms as a partner in the ftr1n. (2) no suit to enforce a right arising from a contract shall be instituted in any court by or on behalf of firm against any third party unless the firm is registered and the persons suing are or have been shown in the register of firms as partners in the firm. (3) the provisions of sub-sections (1) and (2) shall apply also to.....
Judgment:
ORDER

1. M/s. Paras Ram Darshan Lal filed two petitions (Suits Nos. 678-A of 1974 and 679-A of 1974) under Ss. 8 and 20 of the Arbitration Act for filing arbitration agreements in Court and appointment of arbitrators in the two cases, The cases Eire similar in nature and can be disposed of by this judgment. Petitioners' firm is a dissolved partnership firm. All the partners of the dissolved firm executed a special power of attorney in favor of Shri Darshan Lal expartner authorising him to act on behalf of the firm and to sign all documents. The petitioners allege that various contracts were entered into by them with the Union of India for construction of bridges of the value of more than Rs. 50 lakhs, that a contract for construction of four girder bridges and one Rcc Slab bridges was executed on lst May, 1965 vide agreement No. 29/GAL, disputes arose and by letter dated 22nd Sept. 1969 the respondent was requested to appoint 4n arbitrator but the respondent did not appoint any arbitrator and thereforee they filed the present ' petition. In Suit No. 679-A of 1974 the contract was executed on 25th May, 1968, vide Agreement No. 30/GAL.

2. The question -for decision in both the cases is: Whether 'the petition under Ss. 8 and 20 of the Arbitration Act is barred under S. 69 of the Indian Partnership Act, 1932 (hereinafter called the Act). It is admitted that the petitioner's firm Paras Ram Darshan Lal' is not registered under the Act. It is contended on behalf of the respondents that the petitioners' firm being not registered under the Act is not entitled to institute the present petition under Ss. 8 and 20 of the Arbitration Act and that the same is barred under S. 69 of the Act. It is further contended that the' present petition is not for dissolution of the firm, or accounts of the dissolved firm, or enforcement of any right or power to realise the property of a dissolved firm, but it is only for filing of the arbitration agreement in court and for appointment of arbitrator.

3. The learned counsel for the petitioners on the other hand contended that a petition under Ss. 8 and 20 of the Arbitration Act is not a suit and that S. 69 of the Act does not apply to such a petition as the firm already stands dissolved. In the alternative it was contended that the present petition is for the enforcement of right or power to realise the property of the dissolved firm.

4. The present petitions have been filed by the petitioners to enforce their rights arising from the said two contracts dated 1st May, 1965 and 25th May, 1965. Section 69 of the Indian Partnership Act 1.932 is as under:

69. (1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court

'by or on behalf of any person suing as partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the ftr1n.

(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of

firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.

(3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect-

(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or

(b) the powers of ah official assignee, receiver or Court under the Presidency Towns Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, to realise the property of an insolvent partner.

(4) This Section shall not apply

(a) to firms or to partners in firms which have no place of business in the territories to which this Act extends, or whose places of business in the said territories are situated in areas to which by notification under Section 56 this Chapter does not apply, or

(b) to any suit or claim or set-off not exceeding one hundred rupees in value which, in the Presidency towns, is not of a kind specified in Section 19 of the Presidency Small Cause Courts Act, 1882, or, outside the Presidency towns, is not of a- kind specified in the, Second Schedule to the Provincial 'Small Cause Courts Act, 1887, or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.'

5. The section bars certain suits and proceedings as a consequence of non-registration of partnership-firm. Subsection (1) prohibits the institution of a suit between the partners inter se or between the partners and the firm for the purpose of enforcing a right arising from a contract or conferred by the Partnership Act unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner, in the firm. Sub-section (2) also prohibits a suit by or on behalf of the firm against a third party for the' purpose of enforcing any right arising from a contract unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the, firm. These provisions according to sub-section (3) also apply to a claim of set-off other proceeding to enforce a right arising from a contract but do not affect a suit - or proceeding for dissolution of the firm or for accounts of the dissolved firm or enforcement of any right or power to realise the property of the dissolved firm. Subsection (4) mentions firms and certain types of suits and claim of set-off to which sub-sections (1) and (2) are not applicable, The following questions arise in this case:-

'l. Whether Section 69 of the Indian Partnership Act is applicable to a dissolved firm;

2. Whether a petition under Sections 8 and 20 of the Arbitration Act is a proceeding within Section 69(3) of the Act and Section 69(2) of the Act is applicable to such a petition;

3. Whether the present petition under Section 20 of the Arbitration Act is for enforcement of any right or power to realise the property of a dissolved firm.'

6. The .1anguage of sub-s6ctions (1) and (2) of Section 69 of the Act is wide enough to cover suits. relating to a dissolved firm. Bare persual of the section shows that it is not essential that the firm - should be actually in existence al the date when the suit of proceedings were instituted. Sub-sections (3) and (4) specifically mention the suit and proceedings to which the provisions of sub-sections (1) and (2) are not applicable. The statute does not provide that sub-sections (1) and (2) will not apply to dissolved firm. A suit or proceeding to enforce a right arising from a contract thus will not be maintainable if the dissolved firm was unregistered on the date of institution.

7. Sub-section (1) and (2) apply to suits. Sub-section (3) as mentioned above applies to a claim of set-off or other proceeding to enforce a right arising from a contract. The petitioners claim to enforce their right to get he arbitrator appointed under the said two contracts. Petitions under the Arbitration Act, generally speaking are not suits. Petition under Section 20 of the Arbitration Act is however registered as suit between one or more of he parties interested in the disputes and they are called 'plaintiffs or defendants. If this petition is described as it, there is no difficulty in applying sub sections (1) and (2) of Section 69 of the Act. But if this petition is not a suit but only a petition, the question is whether the same is covered under sub-section .(3) of Section 69 of the Act. Sub-section (3) speaks of a claim of set-off meaning thereby that a defendant will not be entitled to claim set-off unless condition mentioned in sub-section (1) or sub-section (2) of Act is complied with. The words other proceeding' used in sub-section (3) mean proceedings of any kind which can properly be said to be for enforcement of any right arising from contract ex those expressly mentioned as except in sub-sections 3) and (4). The pet under Sections 8 and 20 of the arbitration Act is a proceeding to enforce of Arbitration Agreement and appointment of Arbitrator; a right arising out of the contract. The petition under the arbitration Act is thus a proceeding to enforce right rising out of contract within the meaning of sub-section .(3) of Section 9 of the Act. In Jagdish Chander Gupta v. Kajaria Traders (India) Ltd., : [1964]8SCR50 , the Supreme Court held that the proceedings under Section 8 of the Arbitration Act are covered by Section 69(3) of the Partnership Act. I, thereforee, hold that the present petition under Secs. 8 and 20 of the Arbitration Act is a proceeding within the meaning of Section 69(3) of the Act and Section 69(2) the Act is applicable.

8. The petitioners in the petition claim filing of the arbitration agreement in court and appointment of an arbitrator. By any stretch of imagination it cannot be said that such a claim is to enforce any right or power to realise the property of a dissolved firm. Sub-sections (l) and (2) of Section 69 of the Act are not applicable to a suit or proceeding for dissolution of a firm, or accounts of a dissolved firm or to enforce any right or power to realise the property of a dissolved firm. The present petition is not a proceeding to enforce any right or power to realise the property of a dissolved, firm and is thus not exempted from the operation of Section 69(2) of the Act

9. The petitioners' firm is not registered under the Partnership Act and thereforee the petition under Ss. 8 and 20 of the Arbitration Act whether treated as a suit or a proceeding is barred and not maintainable under sub-sections (2) and (3) of Section 69, of the Indian Partnership Act, 1932. The petition is thereforee, dismissed with no order as to costs.

10. Petition dismissed.


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