Skip to content


Kamal Brothers and ors. Vs. Hansraj Kapur - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberAward case No. 19 of 1959
Judge
Reported inAIR1959Cal583
ActsArbitration Act, 1940 - Section 34; ;West Bengal City Civil Court Act, 1953 - Section 5(4); ;Code of Civil Procedure (CPC) , 1908 - Order 39, Rule 1
AppellantKamal Brothers and ors.
RespondentHansraj Kapur
Appellant AdvocateSambidananda Das, Adv.
Respondent AdvocateI.P. Mukherjee and ;D.P. Mukherji, Advs.
Cases ReferredSatya Kali Pal v. Kanai Lal Mandal
Excerpt:
- .....sreechand agarwalla his servants or agents from proceeding with suit no. 398 of 1958 filed in the city civil court. the application is made by hansraj kapur and is instituted in the matter of the arbitration act and in the matter of arbitration agreement dated april 19, 1951 (sreechand agarwalla v. hansraj kapur). the arbitration clause is to be found in a partnership agreement dated april 19, 1951 a copy of which is annexed to the affidavit of jitesh chandra sanyal. the parties to the agreement are the parties to this proceeding,2. clause 2 o the partnership deed indicates that kamal bros, the new partnership will be carried on at no. 13, manohardas street in which the respondent agarwalla was already carrying on his own business.3. clause 12 provides that the goodwill of the firm will.....
Judgment:
ORDER

P.C. Mallick, J.

1. This is an application for an order restraining the respondent Sreechand Agarwalla his servants or agents from proceeding with Suit No. 398 of 1958 filed in the City Civil Court. The application is made by Hansraj Kapur and is instituted In the Matter of the Arbitration Act and In the Matter of Arbitration Agreement dated April 19, 1951 (Sreechand Agarwalla v. Hansraj Kapur). The arbitration clause is to be found in a partnership agreement dated April 19, 1951 a copy of which is annexed to the affidavit of Jitesh Chandra Sanyal. The parties to the agreement are the parties to this proceeding,

2. Clause 2 o the Partnership Deed indicates that Kamal Bros, the new partnership will be carried on at No. 13, Manohardas Street in which the respondent Agarwalla was already carrying on his own business.

3. Clause 12 provides that the goodwill of the firm will always belong to Kapur the petitioner.

4. Clause 14 is the arbitration clause and reads as follows :

'Any dispute regarding the partnership business will be decided by Arbitrator appointed by each of the partners, In case of difference of opinion between the Arbitrators the decision of the Umpire appointed by the partners will be final and binding on the partners.'

5. The respondent Agarwalla filed a suit in this Court which was stayed under Section 34 of the Arbitration Act. Subsequently, the disputes between the parties were referred to arbitration. It is not necessary for me to trace the history of the arbitration proceedings. It is enough for me to state that pursuant to an order passed by me ultimately the disputes between the parties are being adjudicated by Mr. Tarun Bose, Barrister-at-Law as Umpire.

6. During the pendency of the proceeding before the Umpire the respondent Agarwalla has instituted a suit in the City Civil Court Calcutta, claiming tenancy right in the premises No. 13, Manohardas Street. It appears that the petitioner Kapur entered appearance in the said suit and filed his written statement on November 21, 1958. Thereafter, on December 11, 1958 issues were settled and the suit was ready for hearing. In fact, February 7, 1959 was the date fixed for the determination of that suit. Subsequently however it was twice adjourned to April 14, and May 6, 1959 respectively. In the meantime this present notice was taken out by the petitioner on April 6, 1959 and pursuant to an interim injunction issued by this Court nothing further has been done in the City Civil Court proceeding.

7. Dr. Das, the learned counsel, appearing in support of the application, submitted that under Section 5 of the City Civil Court Act read with Item No. 11 of Schedule I thereto, the City Civil Court has no jurisdiction to make an order for stay under Section 34 of the Indian Arbitration Act, and he has therefore made this application in this Court.

8. In the case of Radhakissen Dhanuba v. Bombay Co. Ltd. : AIR1930Cal51 , Lort-Williams J. held that the Small Cause Court had no jurisdiction to grant a stay under Section 34 of the Arbitration Act. It may be noted that the case was under the Old Act and not under 1940 Act. The present Arbitration Act however has changed the language. This alteration in the language of the Statute had been noticed by K.C. Das Gupta J. as he then was in the case of Basanti Cotton Mills Ltd. v. Dingra Bros., (AIR 1949 Cal 684), where he held that the Small Cause Court has jurisdiction under the new Act to make an order for stay under Section 34. He pointed out that having regard to the language of the old section the decision of Lort-Williams J. was correct and having regard to the change in the language it must be held now that the Small Cause Court has got jurisdiction to make an order for stay under Section 34 of the Indian Arbitration Act. The instant case is however a case of a suit pending not in the Court of Small Causes but in the City Civil Court. There is no decided authority on this point, viz., whether the City Civil Court has the power to grant a stay under Section 34 of the Indian Arbitration Act or not. Dr. Das contends that Section 5(4) of the City Civil Court Act states in clear terms that the City Civil Court shall not have any jurisdiction to try suits and proceedings of the description specified in the First Schedule. Item 11 of the First Schedule reads as follows :

'Suits and proceedings under the Indian Arbitration Act 1940 other than suits and proceedings under Chapter IV of that Act.'

Dr. Das submits that an application for stay under Section 34 is a proceeding under the Arbitration Act. There may be something to be in favour of this argument of Dr. Das. However, having regard to the importance of the question, I do not think it proper to decide this point in this application when the application can be disposed of on other grounds. I will proceed on the footing that the City Civil Court has no power to grant a stay under Section 34 of the Indian Arbitration Act. In order, therefore, to stop a proceeding before the City Civil Court a party may have to come to this Court, and this Court would have to issue an injunction on the party to the arbitration agreement, if further proceedings in the suit are to be stopped.

9. Under Section 34 of the Indian Arbitration Act the Court will stay a suit for a proceeding only I when the party seeking stay does not take any step in the suit or proceeding sought to be stayed. Indeed it is one of the most important conditions to be satisfied before an order for stay can be made. When the stay is granted under Section 34 the suit cannot proceed so long as the agreement remains effective and submission not revoked. If the same relief is sought by way of injunction it would appear, the petitioner will have to satisfy the conditions laid down in section including the condition that he has taken no step in the proceedings. In the instant case however the petitioner did not come to Court immediately on being served with the writ of summons by the City Civil Court. He entered appearance, filed his written statement, took part in the settlement of the issues and it was only after the suit had been fixed for hearing that he came to this Court with an application for injunction. I think, this fact disentitles the petitioner to ask for stay on the principles embodied in Section 34 of the Act.

10. Mr. I.P. Mukherji the learned counsel for the respondent submitted that the subject matter of the City Civil Court suit is different. Mr. Mukherji has submitted that the partnership deed itself shows that the tenancy right originally belonged to the respondent Agarwalla before the partnership came into existence and that though for the present it would be carried on at the same premises there is a clear intention indicated that the business will be carried on at a different place in future. The argument is that if the tenancy is in the name of one who is a partner, that fact is not enough to establish that it is a partnership asset. In support of this argument Mr. Mukherji placed before me an unreported decision of G.K. Mitter, J. in the case of Satya Kali Pal v. Kanai Lal Mandal dated June 19, 1958 in which the learned Judge held that a tenancy in the name of one of the partners by itself is not sufficient to prove that it is a partnership asset. Something more is needed to prove that the tenancy was made a part of the partnership asset and on the facts of the case before him he held that the tenancy in the name of one of the partners was not a partnership asset.

11. It is true that by itself the tenancy in favour of Sreechand Agarwalla would not become a partnership asset, But further facts may be proved to show that this tenancy right became a partnership asset. What the partnership assets are, is to be decided in the arbitration proceedings by the Umpire. I am unable to hold that the learned Umpire has no jurisdiction to decide whether the tenancy right was a partnership asset or not only from the fact that the tenancy is in the name of Agarwalla. I am, therefore, unable to accept the argument of Mr. Mukherji that the subject matter of the Arbitration proceeding being different from the subject matter in the suit before the City Civil Court no order should be made on this application restraining further proceedings in the City Civil Court. In the instant case the petitioner has admittedly been guilty of considerable laches and delay and Dr. Das frankly admitted that his client had foolishly taken various steps in the proceedings on the belief that before the City Civil Court suit can be brought to hearing the award would be made by the learned Umpire. His client was advised that the City Civil Court was powerless to make an order for stay. If Dr. Das's client has acted so foolishly he has got to pay the price and he is not entitled to ask this court to stay the suit. In my judgment, Dr. Das's client is guilty not merely of delay but also of having taken part in the City Civil Court suit. That being so, I am not inclined to issue an injunction in absolute terms restraining Agarwalla from further proceeding with the suit.

12. There is however another aspect of the matter that requires consideration. There is an arbitration agreement. In breach of the arbitration agreement Agarwalla instituted a suit in this court claiming dissolution of partnership and raising disputes that are covered by the arbitration clause in the partnership agreement. This suit has been stayed by an order in this Court. Thereafter the petitioner had to come to Court again asking for the appointment of an Umpire and a member of the Bar has been appointed an Umpire. The matter is pending before the Umpire who has been directed to make his award within 4 months from the date of the order. In the meantime the respondent has instituted a second suit. The same question namely whether the tenancy right is a partnership asset is before the Umpire and the City Civil Court. The arbitration agreement has not been superseded nor the submission revoked. On the other hand by an order of this Court the Umpire is proceeding with the reference and is directed to make his award within 4 months from the date of the order. There will therefore be two parallel proceedings. To avoid multiplicity of proceedings, one of the proceedings should be stayed for a time. The arbitration proceedings is prior in point of time and there is no reason why it should be stayed. Nor there is any application on that behalf. On the other hand, the suit in the City Civil Court has clearly been instituted in order to take out the question of tenancy right being adjudicated by the Umpire. In my judgment a case for injunction for a limited period has been made out. The award is expected to be made by the Umpire within 4 months. I think that in the interest of justice the proper order in this case is to issue an injunction against Agarwalla from further proceeding with the suit in the City Civil Court for a period of 4 months from this date. This Court has power apart from Section 34 to stay a suit by issuing an injunction on the plaintiff to the suit. In the circumstances of this case, this power should be exercised.

13. There is a previous notice taken out by the petitioner against the respondent in the same matter. No order need be made on the said notice and I dismiss the same.

14. The petitioner must pay cost of one application to the respondent.

15. After the judgment was delivered Mr. I.P. Mukherji appearing for Agarwalla submitted that his client wants to take an appeal against this order as his client is anxious that the tenancy right may be decided in Court so that his client will have a right of appeal, should the decision in the first court be against his client. On the other hand, if the tenancy right is decided in the arbitration proceeding, his client will have no right of appeal against the award. He therefore prays for a stay of the operation of this order for a fortnight. Stay of the operation of the order will entitle Agarwalla to proceed with the suit in the City Civil Court. In my judgment that would not be a proper order. But to accommodate Mr. Mukherji's client, I will direct the Umpire not to proceed with the reference for a fortnight and I extend the time for making the award by a fortnight. This is rather an irregular order, nevertheless I will make it. I need hardly say that I am not called upon to decide now whether an appeal lies against this order or not.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //