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Omprakash and ors. Vs. Gaurishanker and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil Revision No. 105 of 1982
Judge
Reported in1983WLN(UC)242
AppellantOmprakash and ors.
RespondentGaurishanker and ors.
DispositionPetition dismissed
Cases ReferredPannlal v. Padmabati
Excerpt:
.....required to dissolve and wind up firm and to discharge liabilities and distribute remaining assets--arbitrators not discharging liabilities but directing to retain assets and discharge liabilities according to balance sheet--held, arbitrators exceeded their jurisdiction and order of district judge remitting award is right.;thus according to this term the arbitrators were to not only dissolve and wind up the firm in any manner they thought proper but they were to discharge the liabilities of the firm and thereafter only they were to distribute the remaining assets between the parties. now in this case the arbitrators did not discharge the liabilities and merely ascertained them according to the balancesheet of the firm. they also assessed the assets according to the balancesheet..........lordships went on to observe similarly on a reference of dispute in a suit for dissolution of the firm the arbitrator has full power to make an allotment of the assests and the properties of the dissolved firm to one of the partners at a valuation fixed by the arbitrator. the award in this case is therefore not in excess of the authority conferred on the arbitrator. this observation has to be read in conjunction with the above observation already referred to and, therefore, it appears that the assets and liabilities of a firm could not have been forced upon a partner without his consent or against his will by the arbitrator. however, the position in this case is a little different in as much as in this case the arbitrators, according to the reference were to act in a particular manner.....
Judgment:

K.S. Lodha, J.

1. Omprakash and others have filed this application for revision against the order of District Judge, Ganganagar dated December 7, 1981 by which an award made by the arbitrator was remitted to him for reconsideration The short facts giving rise to this revision are that there was a partnership firm of the parties. Some disputes arose in connection with the working of that firm and the partners appointed Shri Babulal Kothari and Shri Sushil Beyani as arbitrators. The arbitrators after hearing the parties filed their award in the court of the learned District Judge on August 19, 1980 after notice to the parties. The present non-pititioners raised certain objections to the award and urged that the award may not be made the rule of the court but should be set aside or remitted for reconsideration. At the time of hearing of these objections only one objection was pressed by them and that was to the effect that according to the submission (reference to arbiration) dated January 12, 1980 the arbitrators were required to completely dissolve and wind up the firm, discharge the liability and then to distribute the assets between the partners but instead of doing this the arbitrators directed that all the assets of the firm except a Nohara shall be retained by the nonpetitioners and the liabilities of the firm shall also be paid by them and that the other party would be paid a fixed amount named by the arbitrators and thus they have exceeded their jurisdiction and, therefore the award cannot be made a rule of the court. After hearing the parties the learned District Judge accepted this objection and remitted the award as stated above, by his order dated December 17, 1981. Omprakash and others have come up in revision against that order.

2. I have heard the learned Counsel for the parties and have gone through the record,

3. A preliminary objection has been raised on behalf of the non-petitioners that this revision is not maintainable because the order of remit does not amount to a case decided as has been held in Zaralbibi v. Shamsuddin A.I.R. 1946 Sindh 141. He further urged that the order of remit can be challenged in an appeal which may ultimately have to be filed against the decision of the learned District Judge when the award is again filed before him and in these circumstances the petitioner would not suffer any irreparable injury and the present order would not occasion any failure of justice and, therefore also the revision is not maintainable. In this connection he placed reliance on Major S.S. Khan v. Brig. F.J. Dhillan AIR 1984 SC 497, Balodeodas Shivlai and Ors. v. Filmstan Distributors : [1970]1SCR435 . Reference was also made by him to the authorities reported in Mohinder Kaur v. Bhagram Parithita v. Sita Devi AIR. 1971 Orissa 204 and Madhu Limaye v. State of Maharashtra : 1978CriLJ165 In reply to this objection the learned Counsel for the non-petitioner urged that as the learned court below has remitted the award on the ground that the arbitrators should have disposed of the assets of the firm, discharged the liabilities and then the remaining assets should have been disturbed by him bet ween the partners. This order amounts to a case decided and if it is allowed to stand it will occasion failure of justice in as much as before the appeal which may finally be brought before this court the assets of the firm will have already be disposed of. He placed reliance upon Narain Sonaji v. Shesharo Vithoba AIR 1948 Nagpur 258, Jupiter Chit Fund v. Dwarika Dish Dayal AIR 1980 All 771. During the course of the arguments in respect of this preliminary objection the learned counsel for the non-petitioners was fair enough to bring to my notice a decision of this Court in Ghewarchand v. Gajsingh ana others (reported in 1980 Weekly Law Notes 373) and has urged that although this court in a single Bench Authority has interpreted the term 'any order' in a wide manner, the view does not seem to be in consonance with the decision of the Hon'ble Supreme Court.

4. In my opinion, in the facts and circumstances of this case this preliminary objection need not detain us because on a consideration of the merits of the order sought to be challenged in this revision I am of the opinion that this order does tend to decide or at least affect the controversy between the parties about the disposal of the assets and liabilities of the firm and, therefore, if amounts to a case decided even according to the authorities relied upon by the learned Counsel for the non-petitioners himself. The further question of course is whether this court should interfere with or reverse or modify this order in the exercise of its revisional jurisdiction in view of the conditions laid down by Clauses (a) and (b) of the proviso added to Section 115 of the Civil Procedure Code and for that purpose a consideration of the merits of the order would be necessary.

5. I, therefore, now come to the merits of the matter. The main contention of the learned Counsel for the petitioners in this case was that the direction of the arbitrator giving all the assests of the firm to the non-petitioners and directing them to discharge the liabilities is not against law and therefore, the learned District Judge should not have remitted the award. He placed strong reliance upon (Pannalal Paul and Ors. v. Smt. Padmabati Paul and Ors. : AIR1960Cal693 ). I have given my careful consideration to this contention but in the circumstances of the case I am unable to accept it In the first place even according to the authority relied upon by the learned Counsel for the petitioner such a course can be resorted to only with the consent of the parties. Their Lordships of the Calcutta High Court in the aforesaid authority have observed 'In a suit for a dissolution of a firm sale of the assets of the dissolved firm is the general rule but the Court has the power to mould the relief in accordance with the circumstances of the case. If the equity of the case so required the Court has the power to direct that the properties be allotted to the partner who is willing to take them at a valuation fixed by the Court and that the proceeds be applied for the purposes mentioned in Section 46 of the Indian Partnership Act. It may be pointed out that even according to this observation the properties can be allotted to a partner who is willing to take them and not otherwise and after the above observations their Lordships went on to observe similarly on a reference of dispute in a suit for dissolution of the firm the arbitrator has full power to make an allotment of the assests and the properties of the dissolved firm to one of the partners at a valuation fixed by the arbitrator. The award in this case is therefore not in excess of the authority conferred on the arbitrator. This observation has to be read in conjunction with the above observation already referred to and, therefore, it appears that the assets and liabilities of a firm could not have been forced upon a partner without his consent or against his will by the arbitrator. However, the position in this case is a little different in as much as in this case the arbitrators, according to the reference were to act in a particular manner and it would appear that they did not act in that manner but went beyond it and thus they exceeded the jurisdiction. It will be per tinent to refer, to a salient provision in the agreement of reference. It reads- iap QeZ dks fMtksyo vkSj ck,UM+ cu djds ;k djokdj ikVujks dks fuiVk nsxs eqdfey fgLlk Qgeh djokdj ikjLifjd nkf;Ro dk fu.kZ; djus vkSj QeZ dh ykbZfcfyfVt fMlpktZ gksus ds ckn 'ks'k ,lsV~l dks tfj;s ,okMZ foHkktu djus dk vf/kdkj iapks dks gksxk A Thus according to this term the arbitrators were not only dissolve and wind up the firm in any manner they thought proper but they were to discharge the liabilities of the firm and thereafter only they were to distribute the remaining assets between the parties. Now in this case the arbitrators did not discharge the liabilities and merely ascertained them according to the balance sheet of the firm. They also assessed the assets according to the balance sheet and directed that the assets shall be retained by the nonpetitioners and they will also discharge the liabilities and pay a particular amount named in the award to the petitioners. They have thus not complied with the direction given to them by the agreement of reference It has been held by their Lordships of the Supreme Court in Jeevraj Bhai Ugamse Seth and Ors. v. Chintayanrao Balaji and Ors. : [1964]5SCR480 that if the parties set limits to action by the arbitrator then the arbitrator has to follow the limits set for him and the Court can find that he has exceeded his jurisdiction on proof of such action. The assumption of jurisdiction not possessed by the arbitrator renders the award to the extent to which it is beyond the arbitrator's jurisdiction invalid. 'In that case in the deed of reference it was mentioned that the assets of the firm shall be valued in the manner provided by the partnership agreement. However, the arbitrators, instead of valuing the assets in the manner provided by the partnership agreement valued the assets on their market value after taking in to consideration the depreciation and appreciation etc. and it was held by their Lordships that the arbitrators had exceed their jurisdiction because they could not have gone against or beyond the directions contained in the deed of reference itself. Another case of the Hon'ble Supreme court reported in Gordhandas v. Lachmiram and Ors. AIR 1954 SC 639-though not directly on point does throw light on the limits of the jurisdiction of the arbitrators. In that case deed of reference stated 'Jo kuch tay sfia fesla karenge fariken ko kabool va manjoor hoga.' The arbitrators in that case while making the award reduced to the liabilities of some of the partners on the ground that 'hey were poor and increased the liabilities of the other partners on the ground that they were rich. Their Lordships observed that it seemed to them that the arbitrators negatived the appellants claim against the respondents on the extraneous ground that they had contributed labour and were men in poor circumstances as against the appellant who was alleged to be a richman. The award thus arrived at was any thing but a settlement of the dispute which had arisen between the parties and which had necessitated the reference to arbitration. They further observed the words in the agreement ''Jokuch tay tasfia fesla karenge hamko kabool va manjoor hoga' on a proper interpretations were obviously intended to mean that the arbitrators were to put an end to the dispute by deciding the question of liabilities once for all and the parties were to abide by their decision, but that can not lead to the inference that the arbitrators were to travel outside the powers conferred upon them by the reference and were to decide the dispute on considerations wholly extraneous to it. So long as the Arbitrators act withing the scope of their authority there can be no doubt that their decision must be accepted as valid and binding In the present case, however, we are of the opinion that the arbitrators acted in excess of their authority and the award made to Indian Minerals Co. v. N. l.L.M. Asian A.I.R. 1958 All. 69: where in a Division Bench of the Allahabad High Court observed' the submission to arbitration furnishes the source and prescribes the limits of the authority of the arbitration and the award both in substance and form must confirm with the submission. Manifestly, there fore, where the arbitrator misdirected himself and exceeded the scope of his authority the award cannot be sustained. Any thing done by the arbitrator beyond the terms of reference would be without jurisdiction whether it be called misconduct or not.' Now. applying these principles to the present case it clearly appears that the arbitrators did not act within the jurisdiction conferred upon them by deed of reference and they proceeded in a manner inconsistent with the directions in that deed. They also took into consideration extraneous matters and, therefore, the learned District Judge was perfectly justified in holding that they exceeded their jurisdiction and was further right in remitting the award. The contention for the petitioner based on Pannlal v. Padmabati MR 960 Cal. 693 referred to above therefore cannot be accepter .

6. For the reasons stated above I do not find any force in this revision and hereby dismiss it with costs.


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