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Debendra Nath Singha and ors. Vs. Dwijendra Nath Singha and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Arbitration
CourtKolkata High Court
Decided On
Case NumberMatter No. 151 of 1967
Judge
Reported inAIR1970Cal255
ActsArbitration Act, 1940 - Section 41
AppellantDebendra Nath Singha and ors.
RespondentDwijendra Nath Singha and ors.
Appellant AdvocateA.N. Bose, Adv.
Respondent AdvocateStanding Council, ;A.C. Mitra and ;Subrata Roy Choudhary, Advs.
DispositionApplication dismissed
Cases ReferredPrafulla Chandra Karmakar v. Panchanan Karmakar
Excerpt:
- ordera.n. sen, j.1. this is an application for the appointment of a receiver and for injunction. this application has been made under the arbitration act in the matter of an arbitration agreement between the parties.2. the parties to the dispute are brothers, some are own brothers and some are step brothers. the disputes between the brothers are with regard to joint family or joint properties or businesses or properties and businesses in which all the brothers claim to be equally interested.3. one dhirendra nath singha who was the father of the petitioner and also of all the respondents was a hindu governed by the dayabhaga school of hindu law and he had various properties and businesses. the said dhirendra nath singha had three wives. his first wife sushila bala died without any issue......
Judgment:
ORDER

A.N. Sen, J.

1. This is an application for the appointment of a Receiver and for injunction. This application has been made under the Arbitration Act in the matter of an arbitration agreement between the parties.

2. The parties to the dispute are brothers, some are own brothers and some are step brothers. The disputes between the brothers are with regard to joint family or joint properties or businesses or properties and businesses in which all the brothers claim to be equally interested.

3. One Dhirendra Nath Singha who was the father of the petitioner and also of all the respondents was a Hindu governed by the Dayabhaga School of Hindu Law and he had various properties and businesses. The said Dhirendra Nath Singha had three wives. His first wife Sushila Bala died without any issue. Dwijendra, Dwipendra, Dikendra and Digendra the respondents Nos. 1 to 4 herein are the sons of the said Dhirendra Naht Singha by his second wife Smt. Rose Bala who is dead. Debendra the petitioner, Dishendra and Dinendra the respondents Nos. 5 and 6 are the sons of the said Dhirenda Nath Singha by his third wife Smt. Nirmala Bala who is alive. Dhirendra Nath Singh died in 1941 leaving a Will. Dwijen the eldest son was appointed the executor under the said Will provided that so long as Dinen the youngest son of Dhirendra Nath Singha did not complete the age of 25 years, the estate would remain under the control and management of Dwijen as executor. By the said Will Dhirendra Nath Singha had given all his properties to his seven sons in equal share? At the time of thedeath of Dhirendra Nath Singha, the eldest son Dwijen who was appointed the executor was about 23 years old, the second son Dwipendra was about 15 years old, the third son Dikendra was about 13 years old, the fourth son Digendra was about 12 years old, the fifth son Debendra was about 7 years old, the sixth son Dishendra was about 6 years old and the youngest son Dinendra was of only 3 years of age. The youngest son Dinendra has attained the age of 25 years. There is no dispute to the fact and it is common case that the properties have now vested in the seven brothers in equal shares.

4. It appears that two several documents were executed on the 2nd of March 1966 by all the brothers and one of the said deeds is a deed of partnership between the brothers in respect of the business and the other is one of indemnity and release.

5. Disputes and differences have arisen between the brothers with regard to the properties including the businesses in which the brothers are all jointly interested. Dinendra the youngest brother instituted a suit in this Court on or about the 29th of May 1967 in respect of the various properties claimed to be joint family properties or joint properties or properties in which the brothers are all jointly and equally interested. In the said suit filed by Dinendra, Dinendra also challenged the validity of the two documents dated the 2nd of March 1966 on the ground of fraud, collusion and conspiracy. The nature of the disputes between the parties and the reliefs that have been claimed by Dinendra will appear more particularly from the plaint filed in the suit. In the said suit the plaintiff Dinendra made an application on or about the 30th of June 1967 for the appointment of a Receiver, for injunction and for various other reliefs. An application was thereafter made by Dwijendra, Dwipendra and Dikendra in the said suit for stay of the said suit and the proceedings thereunder under Section 34 of the Arbitration Act. All the brothers agreed to refer the disputes in the said suit to the arbitration of Mr. B. Das, Barrister-at-Law and on or about the 30th of August 1967 an order was made by consent of all the parties to the following effect:--

1. The suit No. 1161 of 1967 (Dinendra Nath Singha v. Dwijendra Nath Singha and others) is stayed.

2. All matters in dispute in the said Suit No. 1161 of 1967, including the question of the validity of the Partnership Deed and the Agreement of Indemnity and Release both dated 2nd March 1966 are hereby referred to the sole arbitration of Mr. B. Das, Barrister-at-Law.

3. The Arbitrator shall determine the value of the joint businesses, properties and assets particulars whereof are set out In the plaint either by appointing an Engineer, Valuer, Accountant and other experts or any such other manner as he may think best at such remuneration at his sole discretion.

4. The parties shall be entitled to withdraw and/or be paid a sum of Rs. 5,000/-per month on or before the 7th day of each month commencing from September, 1967 out of the funds of the joint business and properties until the final Award is made.

5. The Arbitrator is empowered to give necessary interim direction for the protection and/or conduct of the joint business, management of the joint properties and/or enhance the monthly payment as mentioned in preceding clause if the funds permit and his decision shall be final.

6. Subject to Clause 5 above the partnership business will be continued as it is being done now.

7. The petitioners and the respondent No. 2 shall out of the joint businesses and funds forthwith pay within seven days from the day hereof through the Arbitrator Rs. 5,000/- to each of the respondents Nos. 1 and 3 (Dinen and Deben), through their respective Solicitors M/s. J. N, Mitra & Co. and Mr. J. Mitra.

8. All monies payable under the clauses aforesaid shall be adjusted against the shares of the respective parties.

9. The Arbitrator shall have power to direct and allot a motor car to each of the parties for his use until the final Award.

10. The Arbitrator shall be paid a consolidated sum of Rs. 15,000 by way of his remuneration to be paid by the parties out of the joint estate.

11. The Arbitrator is to file his final Award within six months.

12. All costs, charges and expenses of the parties of and incidental to the said suit and of this application and the arbitration proceedings including all conferences, consultations with counsel and/or clients and all correspondences as between attorney and client and the remuneration of Engineer, Valuer, and Accountant or other experts as mentioned in clause 3 hereof would come out of the joint estate in proportion to the shares of the respective parties and costs to be assessed by the Arbitrator.

6. Pursuant to the said order and on the basis of the said agreement between the parties Mr. B. Das, Barrister-at-Law duly entered on the said reference and the said Arbitrator has already held three meetings and had been proceeding with the arbitration. The period of six months fixed by the said order on the basis of the said agreementfor making and filing the Award by the Arbitrator has expired. Before the time had expired an application was made on behalf of Dwijendra, Dwipendra, Dishendra and Digendra for an order extending the time to the Arbitrator to make and file his Award. During the pendency of the said application, Dinendra the youngest brother and the plaintiff in the suit, made an application for leave to revoke the authority of the Arbitrator Mr. B. Das, for his removal or discharge, for revocation or cancellation or supersession of the reference to arbitration and the arbitration proceeding and for proceeding with the suit in Court.

7. During the pendency of the said proceedings this application has been made by Debendra.

8. The application for extension of time to the Arbitrator to make and file his award and the application for leave to revoke his authority and for supersession of the arbitration proceeding and for proceeding with the suit in Court were heard together. On the said applications I have made an order extending the time of the Arbitrator to make his Award and I have rejected Dinen's application for leave to revoke the authority of the Arbitrator and for supersession of the arbitration proceeding for reasons recorded in my judgment.

9. It may be noted that in this unfortunate dispute between the brothers Dinen and Deben are on one side and the other brothers including Dishendra who is one of the own brothers of Deben and Dinen are on the other side.

10. Mr. A.N. Bose, learned counsel appearing in support of this application on behalf of Deben has submitted that in the instant case there is no dispute as to the fact that Deben and Dinen have each 1/7th share in the properties and the businesses, whether the said properties and businesses are joint family properties or partnership properties, Mr. Bose contends that as Deben and Dinen both have an admitted share in the properties, they are entitled to be in possession and to remain in possession, enjoyment and management of the properties. Mr. Bose argues that Deben and Dinen have been ousted from the said properties and are being denied the benefits of the said properties which are all under the control and management of Dwijen and his group. Mr. Bose points out that serious allegations have been made by Deben and Dinen against Dwijen and the other brothers of Dwijen. He states that grave allegations of fraud, collusion, conspiracy, misappropriation and dishonest dealings on the part of Dwijen and his brothers with regard to the said properties have been made and Deben and Dinen have lost complete confidence in Dwijen and his brothers. He has argued that thereare enough materials on record to substantiate the allegations made against Dwijen and his brothers and to justify the lack of confidence on the part of Deben and Dinen in Dwijen and his other brothers. He has contended that with the joint funds and assets Dwijen and his brothers have been carrying on various other businesses and have been making secret profits for themselves to the exclusion of Deben and Dinen. Mr. Bose has argued that Deben has given particulars of these benami businesses which are being carried on by Dwijen and his group and some of the documents which have been annexed to the petition justify this contention of Deben and Dinen. He argues that the account with the Bank of India Limited with its Bowbazar branch is only in the name of Dwijen, although admittedly all the monies lying in the said account belong to all the brothers jointly and he contends that taking advantage of that position Dwijen has misappropriated a sum of Rs. 2 lakhs from the said account. He comments on the different cases made by Dwijen at different stages and points out that Dwijen now admits withdrawal of the said amount from the said account and makes a case that the said sum was invested in the joint businesses from time to time. He has argued that various joint funds have been secreted from time to time and such amounts have been kept in fixed deposits in various names and the total amount of such deposits comes to over 12 lakhs. He argues that duplicate sets of books are being maintained and he comments on the different versions of Dwijen at different stages in course of the various proceedings. He points out that though on an earlier stage there was a denial by Dwijen of maintaining double sets of books of accounts, Dwijen is now forced to admit the existence of these books when they were produced in Court and Dwijen is now seeking to explain away the said books as supplementary books of accounts maintained for the benefit of all. He further argues that Dwijen and his group had also refused to produce various other books in violation of the direction of the Arbitrator and had denied the existence of such books but the interim Receiver who was appointed for the purpose of making an inventory of the books, vouchers, papers, documents, machinery and stock-in-trade and assets relating to the said business of D. N. Sinpha and Company and Bharat Iron & Steel Corporation did take possession of such books the existence of which had earlier been denied by Dwijen and his group and did make an inventory thereof. Mr. Bose has also argued that there is enough evidence to show that the goods and materials and funds are being diverted and secreted for the benefit of Dwijen and hisgroup and Deben and Dinen who are completely excluded and ousted from the businesses and their 'management are suffering greatly. Mr. Bose refers to the photographs annexed to the petition and argues that these photographs will show how finished goods are being kept and diverted. Mr. Bose contends that in view of the aforesaid conduct of Dwijen and his group they should not be allowed to continue to remain in charge and control of the properties and the businesses and if the properties and the businesses continue to be under the control and custody of Dwijen and his group, the interest of Deben and Dinen will be irreparably prejudiced. Mr. Bose submits that Deben and Dinen have justifiably lost their confidence in Dwijen and his group and are not prepared to leave the said properties and the businesses, in which Deben and Dinen have admittedly l/7th share each, under the control and management of Dwijen and his group. It is the contention of Mr. Bose that in view of the fact that the title of Deben and Dinen to the properties is admitted and it is also admitted that they have 1/7th share each in the said properties, the said properties should not be allowed to remain under the control and management of Dwijen and his group in view of the serious allegations made against them. Mr. Bose argues that in the facts of the instant case, as Deben and Dinen have an admitted share in the properties and they have justifiably lost confidence in Dwijen and his group, the Court should not allow Dwijen and his group to remain in charge and control of the said properties to the detriment of the interest of Deben and Dinen and the Court should take charge of all the said properties by appointing a Receiver for the preservation of the said properties. It is the argument of Mr. Bose that any of these allegations made, namely, ouster of Deben and Dinen, misappropriation, falsification of accounts and benami business by Dwijen and his group with joint funds, if established, will justify the appointment of a Receiver in the instant case which concerns joint properties in which Deben and Dinen have an admitted share. Mr. Bose argues that all the aforesaid allegations are sufficiently established for the purpose of making out a proper prima facie case at this stage to justify the appointment of a Receiver over the said properties for the preservation of the said properties for the benefit of all.

11. Mr. Bose has next argued that the agreement between the parties to refer the disputes to arbitration and the reference of the disputes to arbitration does not preclude the Court from appointing a Receiver in an appropriate case. He contends that the Court alone enjoys the power of appointing a Receiver and tomake an appropriate order of Injunction and this power is retained by the Court even though the disputes have been referred to arbitration. He refers to Section 41 of the Arbitration Act and argues that the Court's power to appoint a receiver in all appropriate cases, which has been recognised even before the said section had come into existence, is now clearly provided by the said section. He contends that the proviso contained in Section 41 of the Arbitration Act cannot be said to constitute any bar to the appointment of a receiver and to the making of any appropriate order of injunction in the facts of the instant case, as the power to appoint a receiver and to make any order of Injunction is not and cannot be any of the powers which may be vested in an Arbitrator or Umpire. He argues that the said proviso contained in Section 41 speaks of and contemplates powers which may be vested in an Arbitrator or an Umpire; and 'the power to appoint a receiver or to make any order of injunction is a power which cannot be so vested In any Arbitrator or Umpire and an Arbitrator or Umpire can never have the power to appoint a receiver and make an order of injunction. It is his argument that a receiver is an officer of the Court and derives his authority and power as such from Court and any interference with the receiver in the matter of possession or discharge of his duties becomes an act of contempt of court and punishable by the Court as such. Similarly, he argues that the violation of an order of injunction which operates in personam amounts to contempt of Court. It is his argument that the Arbitrator cannot and does not have the power or authority to punish for contempt and is, therefore, not in a position to enforce any order appointing a receiver or making any order of injunction. In support of his contention that the Arbitrator does not have any power to appoint a receiver or to make an order of injunction, Mr. Bose has referred to Article 54 at page 23 in Halsbury's Laws of England, (3rd Edition), Vol. 2. The said Article may be set out:--

'54. Ancillary relief and variation of order to stay. When making any order to stay, or at any time thereafter the Court may grant any relief which would not be obtainable from the arbitrator, such as the appointment of a receiver, or an injunction.'

12. Mr. Bose has also referred to the following passage at page 204 under the heading 'Interlocutory and Auxiliary Relief' from Russell on 'the Law of Arbitration' (17th Edition):--

'In addition to its powers to make orders relating to merely procedural matters the Court has wide powers to make orders for the purpose of preserving of the status quo pending arbitration.

These powers include those of making orders for the preservation, interim custody or sale of any goods, the subject-matter of the reference, or for the detention or preservation of any property or thing concerned in the reference of appointing a receiver; and of granting an interim injunction. Quite apart from these express powers, the Court has always been willing to assist in this way in appropriate cases.'

13. Mr. Bose also relies on the following passage at page 72 in Kerr on 'The Law and Practice as to Receivers' (13th Edition):--

'Disputes referable to arbitration.-- A receiver may be appointed in an action for dissolution notwithstanding a reference of disputes to arbitration; but it may now be more convenient to apply in the arbitration for the appointment of a receiver under the Arbitration Act, 1950. The Court will, by one and the same order, appoint a receiver and stay all proceedings in the action except for the purpose of carrying out the order for a receiver.'

14. He also relies on the following observations at page 84 of the same book:--

'Pending reference to arbitration.--The Court has jurisdiction to appoint a receiver pending a reference to arbitration, if an appropriate case is made out for doing so. Where there is an agreement to refer all matters in dispute under a contract to arbitration, and an action is subsequently brought on the contract, in which it is found to be desirable, for the protection of the property which is the subject-matter of the contract, that a receiver should be appointed, it is competent for the Court to appoint a receiver, and by the same order to stay all further proceedings in the action, except for the purpose of carrying out the order for a receiver. After a reference to arbitration a receiver can be appointed.'

15. Mr. Bose has argued that Section 12 of the English Act contains provisions similar to those contained in Section 41 of the Indian Act and, therefore, the aforesaid principles are clearly applicable. Mr. Bose has also argued that if by agreement any power is sought to be vested in the Arbitrator authorising him to appoint a receiver or to make any order of injunction such agreement must be held to be bad and unenforceable and the Court will not give any effect to such agreement In this connection Mr. Bose has referred to the decision in the case of Hurdwary Mull v. Ahmed Musaji Selaji, reported in (1909) 13 Cal WN 63; and he has drawn my attention to clause (o) of the agreement in question in that case. The said clause (o) which appears at page 66 of the report reads as follows:--

'No Award shall be set aside or varied or attempted to be set aside or varied byreason or on account of any informality or omission or delay or error of the proceedings in or about the same or in relation thereto or any other ground or for any misconduct, sort of collusion or fraud on the part of the arbitrators.'

16. He has argued that the said clause was held not to be any bar to Court's jurisdiction and the Court while dealing with this particular clause observed at pages 70 and 71:--

'But, then, it is said by the applicant that whatever misconduct there may have been on the part of the arbitrators, that is cured by Rule 6(o). As I have already pointed out this Rule does not apply, as the present application is not one to set aside or vary the Award. But even if the application were one to set aside the award, I am of the opinion that Rule 6(o) would be no bar to the jurisdiction of the Court to do so, if misconduct on the part of the arbitrators were shown or if it were shown that the Award were improperly procured.

Section 14 of the Indian Arbitration Act vests in the Court a discretion to do so in any case where the arbitration is proceeding under that Act and it is not competent for the parties by agreement to oust this jurisdiction, if they desire that the Award should be enforced under the provisions of that Act.'

17. Mr. Bose has next argued that as the arbitrator had become functus officio at the time when this application was made, as the time to make the Award had expired, he would not be in a position to exercise any of the powers vested in him; and in view of the fact that the arbitrator had become functus officio no power can be said to remain vested in the arbitrator any longer. He contends that in view of the aforesaid fact that the arbitrator has become functus officio and as such does not have any power and cannot exercise any power, the Court has in any event the power in the facts of the instant case to appoint a receiver and to make other appropriate orders.

18. Mr. B.K. Ghosh, learned counsel appearing on behalf of Dinen who supports the applicant Deben wholly, has adopted the arguments of Mr. Bose. He has submitted that in the facts and circumstances of this case Deben and Dinen have justifiably lost confidence in Dwijen and his group and it is a fit and proper case where a receiver should be appointed to take possession of all the properties and assets for proper preservation thereof for the benefit of all the parties. Mr. Ghosh has cited the following passage from Kerr on 'the Law and Practice as to Receivers' (13th Edition) at page 68:--

'Receiver not ordered as of course.--The Court will not, as a matter of course, appoint a receiver of the partnership assets, even where a case for dissolution is made. The very basis of a partnership contract being the mutual confidence reposed in each other by the parties, the Court will not appoint a receiver, unless some special ground for its interference is established. It must appear that the member of the firm against whom the appointment of a receiver is sought has done acts which are inconsistent with the duty of a partner, and are of a nature to destroy the mutual confidence which ought to subsist between the parties.'

19. Mr. Ghosh has also relied on the following observations at pages 562-63 in Lindley on 'The Law of Partnership' (12th Edn.) under the head 'Effect of Excluding a Partner':--

'Moreover, even although there be no misconduct jeopardising the partnership assets, the Court will appoint a receiver if the defendant wrongfully excludes his co-partner from the management of the partnership affairs.'

20. Mr. Ghosh has also referred to the decision in the case of Bank of Commerce Ltd. (In Liquidation) v. Arun Kumar Chowdhury, : AIR1965Cal333 and has relied on the following observations at page 339:--

'It is true that where a receiver is appointed, the effect of the appointment is that the parties are restrained from dealing with the properties over which a receiver is appointed. But in a partnership action if the appointment of a receiver operates as an order of injunction, it operates as such for both parties to the suit. Besides the receiver is appointed by the Court to receive and preserve a property in litigation pendente lite, when it does not seem reasonable to the Court that either party should hold it. The receiver is a representative of the Court and he is not a representative of either party to the litigation. A receiver is appointed not for the benefit of any party to the litigation but to protect the property and preserve it for equal benefit of those who are interested in its distribution and to keep the property within the control of the Court.'

21. Reference has been made to a decision of the Madhya Pradesh High Court in the case of Daulat Ram Phoolchand v. Shriram, : AIR1964MP219 and this decision was cited by Mr. S.P. Banerjee the learned junior of Mr. B.K. Ghosh and reliance has been placed on the following observations at page 221:--

'The arbitrators have not been vested by the Act with any powers to grant interim orders for the protection and safety of the subject-matter of the dispute. Such powers had, therefore, to be vested in the Court under Section 41(b) of the Act read with the Second Schedule. I do not find anything in that section or inthe Second Schedule to justify the view that the power to grant interim orders for the protection and safety of the properties in dispute cannot be exercised until proceedings under some other section of the Act are started. To import such a limitation into the provisions of Section 41(b) of the Act and the Second Schedule would have the effect of introducing therein words which do not find place in the said provisions. Such a limitation cannot, in my opinion, be placed upon the powers vested in the Court under Section 41(b) of the Act read with the Second Schedule.'

22. The learned Standing Counsel appearing on behalf of one of the respondents Dwipendra who opposed this application, has raised the contention that because of the provisions contained in clauses (5) and (6) of the 'Terms of Settlement' under which and on the basis of which the disputes in the instant case have been referred to arbitration, the Court has no power to appoint a receiver in the present case in view of the provisions contained in the proviso to Section 41(b) of the Arbitration Act. He has next contended that in any event in the facts of the instant case the Court should not exercise its power to appoint any receiver in view of the said provisions contained in the 'Terms of Settlement' and the proviso to Section 41(b) of the Arbitration Act. The learned Standing Counsel has argued that the power which the Court enjoyed in the matter of appointment of receivers and in making other interim orders before the introduction of Section 41 in the Act, is now recognized, regulated and governed by the said section. It is his argument that the said Section 41(b) read with the Second Schedule referred to therein, clearly and undoubtedly empowers the Court to appoint a receiver, to make any order of injunction and to make any other appropriate orders in respect of the matters set out in the Second Schedule but his further argument is that the exercise of any such powers is controlled by the proviso to the said section 41(b). He argues that this power conferred on the Court to appoint any receiver or to make any order of injunction or other interim orders in relation to matters set out in the Second Schedule is restricted and curtailed by the proviso to the said Section 41(b) and cannot be exercised by the Court, if the exercise of any such powers prejudices any power which has been vested in the Arbitrator. He submits that by clause (5) of the Terms, the Arbitrator hi the instant case has been empowered to give necessary interim direction for the protection and/or conduct of the joint family business, and management of the joint properties and for enhancement of the monthly payment to the parties; and it ishis submission that the appointment of a receiver will undoubtedly prejudice these powers vested in the Arbitrator, He submits that if the Court appoints any receiver, the Arbitrator cannot exercise any of these powers as exercise of any of these powers in effect will amount to interference with the possession or the duties of the receiver and will amount to an act of contempt on the part of the Arbitrator. The learned Standing Counsel, therefore, contends that the Court has no power to appoint a receiver in the instant case.

23. The learned Standing Counsel has next argued that even assuming that the Court has the power to appoint a receiver, the exercise of the power by the Court is entirely discretionary and the Court should not exercise the discretion in favour of appointing any receiver, in view of the said clauses (5) and (6) in the Terms of Settlement'. He contends that it is not now open to Deben and Dinen to invoke the power and jurisdiction of the Court after having entered into the said Terms. It is his contention that Deben and Dinen with full knowledge of all the facts and all their charges and grievances against Dwijen and his group have agreed to those 'Terms of Settlement on the basis of which the Court has made an order referring the disputes to arbitration and Deben and Dinen should not now be permitted to go back from the arrangement agreed upon in those Terms. The learned Standing Counsel has submitted that if Deben or Dinen wanted any direction with regard to protection or management of the properties, they should have gone to the Arbitrator and should have asked for an interim Award, The learned Standing Counsel has argued that Deben and Dinen had tried to back out from the arbitration agreement by initiating proceedings for leave to revoke the authority of the Arbitrator, for supersession of the arbitration proceeding, for recalling and/or setting aside the order made on the 30th August 1967 by consent of all the parties and also by opposing the application for extension of time to the Arbitrator to make his Award. He argues that in the said attempts they failed and the Court has made an order extending the time to the Arbitrator to make his Award. It is his argument that as the Court has refused to recall or set aside the order made on the 30th of August 1967 by the consent of the parties, the said order remains valid and in full force and the Court should not now appoint anv receiver or make any other order which will have the effect of nullifying the said order made on the 30th of August, 1967.

24. Mr. A. C. Mitra. learned counselappearing on behalf of Dipendra, hasadopted the arguments of the learnedStanding Counsel. He has further argued that the businesses over which a receiver is asked, does not form the subject-matter of the suit and therefore, no receiver can be appointed over the said businesses. It is his submission that the businesses in question are the partnership businesses of the brothers and the said businesses cannot be said to form a part of the subject-matter of the suit. He has also argued that Dinen and Deben had made all kinds of allegations against Dwijen and the other brothers in the suit, in the earlier application for the appointment of receiver and the proceedings for stay of this suit; and notwithstanding the fact that they had made all such allegations against them, they had agreed to clause (6) of the Terms which provides that subject to clause (5), the partnership business will be continued as it is being done now. It is the contention of Mr. Mitra that clause (5) which empowers the Arbitrator to give appropriate directions contemplates only cases of misconduct during arbitration proceedings. Mr. Mitra, therefore, submits that no order should be made on this application.

25. Mr. Subrata Roy Choudhury, learned counsel appearing on behalf of Dwrjendra, Digendra and Dishendra has submitted that no proper grounds have been made out for the appointment of any receiver. He has argued that all the allegations that have been made are primarily against Dwijen and the same are absolutely baseless and all the allegations against Dwijen and his group are unjustified and without any foundation. It is his argument that when the father died, Deben was about seven years old and Dinen's age was only about three; and Dwijen as the eldest brother shouldered the entire responsibility of the family and brought up all his brothers. He argues that Dwijen has developed the businesses and has brought the same to their present position and the brothers are all enjoying the benefits of Dwijen's hard, honest and able labour. Mr. Roy Chowdhury comments that if Dwijen had wanted to deprive any of his brothers, he could have done so, when the brothers were all very young; but Dwijen, on the other hand like a true elder brother, has looked after every brother's interest and has willingly shared the fruits of his labour with all his brothers. He further comments that the very fact that all the other brothers Including Dishendra who is one of the own brothers of Deben and Dinen are supporting Dwijen, clearly indicates and establishes that Dwijen has been honest and faithful to all his brothers and has not deprived any of his brothers of their legitimate shares. Mr. Roy Choudhury contends that the conduct of Dwijen also clearly shows that Dwijen is absolutely fair and honest, as Dwijen never disputesthat the banking account with Bank of India, Bowbazar Branch which stands only in his name, really belongs to all the brothers and all the brothers have an equal interest in not only the said banking account in the name of Dwijen with Bank of India but also various fixed deposit accounts which stand in the names of various persons. Mr. Roy Choudhury argues that there is no truth in the allegation of any benami business and also in the allegation of misappropriation of Rs. 2 lakhs by Dwijen from the said banking account with Bank of India. The sum of Rs. 2 lakhs which have been withdrawn from the said account, according to Mr. Roy Choudhury, has been invested in the business. Mr. Roy Choudhury denies that there has been any exclusion or ouster of Deben and Dinen from any of the businesses and Mr. Roy Choudhury contends that Deben and Dinen are both aware of the existence of the supplementary books and of the way in which the businesses have been managed. Mr. Roy Choudhury has referred to certain vouchers and documents to show that Deben and Dinen have been participating in the business; and referring to the fact that Deben and Dinen could produce the supplementary books and various other papers and documents he contends that this fact clearly establishes that they had full knowledge of the existence of these books and they have access to all books, documents and papers. Mr. Roy Choudhury finally submits that appointing any receiver over the businesses which are running concerns and which enjoy huge credit facilities from the bank, will mean complete ruination for the businesses and any appointment of receiver will have the effect of destroying these businesses instead of preserving or protecting them. Mr. Roy Choudhury, therefore, contends that on the merits no case has been made out for the appointment of any receiver.

26. Mr. Roy Choudhury has next contended that in any event because of the provisions contained in the Terms of Settlement' no receiver can be or should be appointed in the instant case in view of the provisions contained in Sections 23 and 41 of the Arbitration Act. He argues that under Section 23(2) of the Act, where a matter is referred to arbitration, the Court does not have any power to deal with such matter in suit, save in the manner and to the extent provided in the Act. It is his argument that the manner and the extent are provided in Section 41 and in view of the proviso contained in Section 41(b), the Court cannot and in any event should not appoint a receiver in the instant case. He adopts the arguments of the learned Standing Counsel. In support of the submission that in view of the provision contained in Clause (5) of the Terms of Settlement', the Court should not appoint any receiver in the instant case and the petitioner is disentitled to ask the Court for any such relief, Mr. Roy Choudhury has referred to the decision in the case of Surendra Kumar Roy Chowdhury v. Susil Kumar Roy Chowdhury : AIR1928Cal256 where a Division Bench of this Court had observed that if the Court would find that the question of interim management Was also referred, it might defer the consideration of the question of appointment of a receiver in the view that the parties by agreement between themselves had disentitled themselves to the auxiliary relief which otherwise they could have from the Court. Mr. Roy Chowdhury has placed particular reliance on the following observations at p. 258 (of ILR) = (at p. 259 of AIR) of the report:--

'It being the duty of the Court to act upon the agreement entered by the parties themselves it will have to be ascertained in each individual case as to what was actually referred. If the Court finds that the question of management interim was also referred it may defer the consideration of the question of appointment of a receiver in the view that the parties by agreement between themselves had disentitled themselves to the auxiliary relief which otherwise they could have from the Court.'

27. Mr. Roy Chowdhury has also submitted in answer to the argument of Mr. Bose that the Arbitrator has no power to appoint a receiver or to make any order of injunction, that it is undoubtedly true that the Arbitrator by himself cannot make any effective order appointing a receiver or granting any injunction, but there is nothing in law to prevent an Arbitrator from making any Award by which a receiver or any injunction may be directed and they will become effective as soon as the Court pronounces judgment on any such Award, In support of this contention. Mr. Roy Choudhury has referred to the decision in the case of Willesford V. Watson, (1873) 8 Ch 473 and to the decision in the case of Budhulal v. Jagan Nath, AIR 1949 All 70. For the purpose of explaining the scope of Section 41 of the Arbitration Act, Mr. Roy Choudhury has referred to the decision in the case of Prafulla Chandra Karmakar v. Panchanan Karmakar, AIR 1946 Cal 427.

28. The main question for determination on this application is whether in the facts and circumstances of this case a receiver should be appointed or not. This question has to be considered from two aspects. The first aspect is the factual side, that is to say, whether the materials on record call for the appointment of a receiver; and the other aspect and the more important one, is whether in view of the provisions contained in Clauses (5) and (6) of the 'Terms of Settlement' and in view ofthe provisions contained in Section 41 particularly in the proviso to Section 41(b) of the Arbitration Act, the Court can, or in any event should, appoint a receiver, even if the facts of the case might otherwise justify the appointment of a receiver.

29. I shall first deal with the factual aspect. It is true that when the father died, Deben and Dinen were both very young. It may also be true that Dwijen had shouldered the entire responsibility, when the father died and he might have brought up the younger brothers. There may also be some force in the contention that the businesses had prospered and developed and have reached the present position due to the ability and efforts of Dwijen. It is, however, equally clear that Deben and Dinen have now fallen out with the other brothers for reasons best known to them. It cannot also be disputed and it is not disputed that Deben and Dinen have each 1/7th share in all the properties including the businesses whether the said businesses are partnership businesses or joint family businesses. These admitted co-sharers have made various serious allegations against Dwijen. and the other brothers. Prima facie, some of these allegations appear to be not without any foundation. It is admitted that the banking account with Bank of India Ltd., Bowbazar branch stands in the name of Dwijen alone, although it is not disputed that the said account is one in which, all the brothers are equally interested. It is also established that Dwijen had withdrawn from the said account a sum of Rs. 2 lakhs, though Dwijen seeks to make the case that the said amount has from time to time been invested in the joint business. It also appears that there are various fixed deposit accounts in the names of various persons, although it is not disputed that the said accounts really belong to all the brothers. Though it is admitted that the amounts in the several fixed deposit accounts in the names of various persons belong to the brothers jointly and equally, it is to be noted that the said several accounts are not in equal proportion amongst the respective branches of the brothers. The existence of two sets of books is also not now seriously disputed, although the said fact is sought to be explained away by calling one set as the supplementary set of books maintained for the benefit of all. The allegation of ouster and exclusion also appears to be not without any justification and it appears clear that in any event Deben and Dinen do not and cannot have any effective control and participation in the management of the businesses. There are also the serious allegations of benami and secret profits. On this state of affairs, the case of Deben and Dinen that they have lost confidence in Dwijen and the other brothers, however, uncharitable andunfortunate, cannot be said, in my opinion, to be without any basis or justification. On the factual aspect, therefore, I am of the opinion, particularly in view of the fact that Deben and Dinen have both an admitted share, that a case fit for the appointment of a receiver has been made out; and the Court would have been justified in appointing a receiver in the suit, if the suit had been pending in the Court The contention of Mr. A. C. Mitra that no receiver can be appointed over the businesses, as the businesses do not form any part of the subject-matter of the suit, do not appear to be sound and convincing; and I am also not impressed by the argument of Mr. Subrata Roy Chqudhury that any appointment of receiver will necessarily ruin the businesses.

30. I shall now take up for consideration that other aspect of the matter which relates to the interpretation of Section 41 of the Arbitration Act As I have already indicated, it has, been the contention of the learned Standing Counsel that even if it be otherwise a fit case for the appointment of a receiver, the Court cannot and in any event should not appoint any receiver in the instant case in view of the provisions contained in Clauses (5) and (6) of the 'Terms of Settlement' and in Section 41 of the Arbitration Act particularly the proviso to Section 41(b). I have already set out the clauses contained in the 'Terms of Settlement1 including the said Clauses (5) and (6). It will be convenient to set out the said Section 41 which reads as follows:--

'Section 41. Procedure and powers of Court -- Subject to the provisions of this Act and of rules made thereunder-

(a) the provisions of the Code of Civil Procedure, 1908, shall apply to all proceedings before the Court, and to all appeals, under this Act, and

(b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to, any proceedings before the Court.

Provided that nothing in Clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or umpire for making orders with respect to any of such matters.'

31. The Second Schedule referred to therein may also be set out:--

'The Second Schedule. Powers of Court-

1. The preservation, interim custody or sale of any goods which are the subject-matter of the reference.

2. Securing the amount in difference In the reference.

3. The detention, preservation or Inspection of any property or thing which is the subject of the reference or as to whichany question may arise therein and authorising for any of the aforesaid purposes any person to enter upon or into any land or building in the possession of any party to the reference, or authorising any samples to be taken, or any observation to be made, or experiment to be tried which may be necessary or expedient for the purpose of obtaining full information or evidence.

4. Interim Injunctions or the appointment of a receiver.

5. The appointment of a guardian for a minor or person of unsound mind for the purposes of arbitration proceedings.' A plain reading of the Section 41 makes it quite clear that the provisions of this section are subject to the provisions of this Act and of Rules made thereunder. The section itself is prefaced 'subject to the provisions of this Act and of Rules made thereunder.' This section came up for consideration before a Division Bench of this Court in the case of AIR 1946 Cal 427, which has been relied on by Mr. Subrata Roy Choudhury. Chakravarti, J. fas he then was) observed at p. 432 of the report:-- 'In the first place, the operative part of Section 41 is prefaced by the words 'subject to the provisions of the Act' and therefore, the Civil Procedure Code can apply only subject to the provisions of Sections 23(2) and 32. Since those provisions forbid interference with the reference and the award except as provided for in the Act, to that extent the Civil Procedure Code is excluded. Indeed, it seems to me that the scope of Section 41, is limited to attracting the procedural rules of the Code to proceedings before the Court under the Arbitration Act.'

32. It may be noted that In this case the Court was concerned with an application for recording a compromise under Order 23, Rule 3 of the Code of Civil Procedure in a suit which has been referred to arbitration through Court and the Court was not concerned with the proviso contained in Section 41(b). Section 23(2) and Section 25 of the Arbitration Act are not of any particular importance in the present case. Section 41(b) of the Act itself makes provision for Court's powers in the matter of appointment of receiver and making orders of injunction and in respect of the other matters which are all set out in the Second Schedule. This decision in the case of AIR 1946 Cal 427 is, therefore, not of any great assistance in the instant case.

33. The instant case concerns and involves the interpretation of Section 41(b), particularly the proviso contained therein. Section 41(b), to my mind, clearly empowers the Court to make appropriate orders In respect of any of thematters set out in the Second Schedule and matters set out in the Second Schedule Include interim injunction and appointment of a receiver. By virtue of Section 41(b) the Court, therefore, enjoys, for the purpose of, and in relation to, arbitration proceedings, the same power of appointing any receiver or making any order of Interim injunction, as the Court has for the purpose of, and in relation to, any proceedings before the Court There cannot, therefore, be any question. In my opinion, as to the power and jurisdiction of the Court to appoint a receiver or to make any order of interim injunction, for the purpose of, and in relation to arbitration proceedings. This undoubted power and jurisdiction, which have been conferred on the Court by Section 41(b), do not, however, appear to be unrestricted or unqualified. The later part of Section 41(b), containing the proviso, qualifies the exercise of the power and jurisdiction; and this proviso contained in Section 41(b) curtails this power and restricts the exercise of this power to the extent stated in the said proviso. The proviso lays down that the power and jurisdiction conferred on the Court by Section 41(b) shall not prejudice any power which may be vested in an Arbitrator or umpire for making orders with respect to any of such matters. This proviso to the section, to my mind, therefore, curtails or limits the power and jurisdiction of the Court conferred by the said section in the matter of appointing any receiver or making any order of interim injunction and the same, in any event, controls the exercise of the said power and jurisdiction; and the said power and jurisdiction are not to be exercised, if the exercise of the said power and jurisdiction prejudices any powers which may have been vested in an Arbitrator or Umpire for making any orders with regard to such matters. On a proper construction of Section 41 of the Arbitration Act and of Section 41(b) in particular, I am of the opinion, that the Court has the power and jurisdiction to appoint a receiver or to make any order of interim injunction or to make orders in respect of other matters set out in the Second Schedule in appropriate cases for the purpose of, and in relation to arbitration proceedings; but this power and jurisdiction of the Court cannot be exercised. If the exercise of any such power would prejudice any power which might be vested in an Arbitrator or Umpire for making orders with respect to any of such matters. I am further of the opinion that in view of the provisions contained in Section 41 of the Arbitration Act, the power and jurisdiction of the Court to appoint a receiver or to make any order of interim injunction or any order in respect of the other matters set out in the Second Schedule are now governed, controlled andregulated by the said section, and apart from the power and jurisdiction conferred by the said section, the Court has no power and jurisdiction independently of the provisions contained in the said Section 41 to appoint a receiver, to make any order of interim injunction or any order in respect of the other matters set out in the Second Schedule.

34. In the instant case under Clause (5) of the 'Terms of Settlement' the Arbitrator has been empowered, to give necessary interim, direction for the protection and/or conduct of the joint business, management of the joint properties and/or to enhance the monthly payment to the parties. It cannot be contended that the powers which have been conferred on the Arbitrator under Clause (5) cannot be vested in an Arbitrator. If any receiver is now appointed, by the Court, the powers vested in the Arbitrator under Clause (5) of the 'Terms of Settlement' are bound to be prejudiced; and in that event, the Arbitrator will not be in a position to exercise the said powers vested in him, as the exercise of these powers will amount to Interference with the possession and duties of the receiver appointed by Court. In this view of the matter, I am, therefore, of the opinion that in the instant case, the Court is not competent to appoint any receiver because of the provisions contained in Section 41(b) of the Arbitration Act and more particularly in the proviso therein.

35. I am unable to accept the contention of Mr. Bose that the proviso contained in Section 41(b) cannot apply or act as a bar to the Court's power to appoint a receiver or make any order of interim injunction, as neither of these powers can be vested in an Arbitrator or Umpire. The said proviso applies, in my opinion, whenever the exercise of any of the powers conferred by Section 41(b), prejudices any power which is vested in an Arbitrator. Whether the power to appoint a receiver or to make any order of injunction can be vested in an Arbitrator or not, may raise an interesting question; but this question does not arise in the instant case and I do not, therefore, consider it necessary to deal with the question on this application, in the instant case no such power to appoint a receiver or to make any order of interim injunction has been vested in the Arbitrator. The powers that have been vested in the Arbitrator under Clause (5) of the 'Terms of Settlement' may, in my opinion, be properly vested in an Arbitrator, in this view of the matter, I do not consider it necessary to deal with the various authorities cited from the Bar on this aspect of the matter.

36. Even if I had held that the proviso contained in Section 41(b) did not act as a bar and the Court could have appointed a receiver, I would have in the Instantcase refused to exercise my discretion in favour of appointing a receiver in view of the said Clauses (5) and (6) of the 'Terms of Settlement', in spite of my coming to the conclusion that it was otherwise a fit case for the appointment of a receiver. If the matter had not been referred to arbitration and if the suit had been pending in Court and this application had been made in the suit, I would have exercised my discretion on the facts of the instant case in favour of appointment of a receiver. Even when the disputes had been referred to arbitration, I would have been Inclined to appoint a receiver in the arbitration proceedings, if Clauses (5) and (6) were not there in the 'Terms of Settlement'. With knowledge of all the grievances, charges and allegations that have been made against Dwijen and his group, the petitioner and Dinen have entered into the said 'Terms of Settlement' containing the aforesaid Clauses (5) and (6). The petitioner and Dinen by entering into the said agreement have, in my opinion, disentitled themselves to any relief on this application. If the petitioner and Dinen want to have any interim direction for the protection and/or conduct of the joint business and management of the joint properties, they have to apply before the Arbitrator for an interim Award in terms of Clause (5) of the 'Terms of Settlement'. The observations of the Division Bench of this Court at p. 258 in the case of ILR 55 Cal 249 referred to and relied on by Mr. Subrata Roy Chowdhury and quoted by me earlier in this judgment, support, to my mind, the view that Deben and Dinen have disentitled themselves to any relief on this application.

37. The other contention raised by Mr. Bose that the Court should exercise its discretion, as the Arbitrator was functus officio at the time when the application was made, is, in my opinion, not tenable. The Arbitrator might have become functus officio for the time being, but the agreement remains subsisting; and it is the duty of the Court to act upon and give effect to the agreement between the parties. In any event, in view of the subsequent order made by me extending the time to the Arbitrator to make and file his Award, this argument loses its force and is of no avail.

38. I, therefore, agree with the contention of the learned Standing Counsel that the Court in the instant case cannot and in any event should not appoint any receiver in view of Clause (5) of the 'Terms of Settlement' even though the appointment of a receiver might otherwise have been justified. In view of the provisions contained in the 'Terms of Settlement' and more particularly in the said Clause (5), I am also of the opinion that it will not be proper for me to make any interim order of injunction, as any such order of Injunction may also prejudice the powers vested in the Arbitrator and may fetter the hands of the Arbitrator and will lead to unnecessary complication in the arbitration proceeding. I may only note that the prayers for injunction were not very seriously pressed at the hearing of the application and Deben and Dinen had really wanted a receiver only. I am, therefore, of the opinion that the petitioner is not entitled to any relief on this application. There will, therefore, be no order on this application. The parties will pay and bear: their own costs.

39. Mr. Mathuranath Banerjee, the Interim Receiver, is directed to complete the inventory within a fortnight from date in terms of the order previously made in this regard. After he has made the inventory he will give a copy of the said inventory to each of the parties and will thereupon be discharged. Filing of accounts by the Interim Receiver is dispensed with. The interim Receiver will be entitled to a further remuneration of 20 G. Ms. to be paid by Mr. P.N. Mitter's client. The sum of 20 G. Ms. paid initially by the applicant and this further sum of 20 G. Ms. aggregating to 40 G. Ms. will be paid to the interim Receiver in full satisfaction of his remuneration. This total sum of 40 G. Ms. will be ultimately debited to the shares of each of the parties.

40. The interim Receiver will start making the inventory and initialling the books of account after giving one day's notice to the parties.

41. Interim Receiver and all parties to act on a signed copy of the minutes.


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