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TMI Blog2013 (11) TMI 1823X X X X Extracts X X X X X X X X Extracts X X X X ..... Civil Revision Application is filed. 3. For the sake of convenience, the petitioner herein would be termed as defendant no.1, respondent no.1 would be termed as plaintiff while respondent nos.2 to 4 would be termed as defendant nos.2 to 4 as arrayed in the trial court. 4. Admittedly the composition of the three partnership firms involved in the present dispute is as under: PARTNERSHIP FIRM EXISTING PARTNERS STATUS IN SUIT SHARES M/s Kasliwal Bhagyoday 1] Jugalkishor Chaganlal Tapadia Plaintiff 40% 2] Sanjay Suganchand Kasliwal Defendant No.1 60% M/s T.K. Developers (Reconstituted) 1] Jugalkishor Chaganlal Tapadia Plaintiff 25% 2] Sanjay Suganchand Kasliwal Defendant No.1 42% 3] Venugopal Omprakash Jaju Defendant No.3 17% 4] Vijaykumar Ramprasad Jaju Defendant No.4 16% M/s Kasliwal Tarangan (Reconstituted) 1] Jugalkishor Chaganlal Tapadia Plaintiff 25% 2] Sanjay Suganchand Kasliwal Defendant No.1 65% 3] Neelam Pankaj Gangwal 5. The clause regarding the arbitration agreement in each of the agreements of partnership firms is as under : PARTNERSHIP FIRM ARBITRATION CLAUSE M/s Kasliwal Bhagyoday CLAUSE NO. 18: If any dispute or difference arise be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he suit properties as the activities are carried by defendant no.1 with malafide intention and fraudulently to make unlawful gains. The issues involved in the present matter require recording of detailed evidence which could be done by civil Court only. So far as rest of the defendants i.e. defendant nos.2 to 4 are concerned, it was submitted that the plaintiff has no claim against those defendants, however, as all the three firms are in existence, those defendants would be co owner of the property purchased by defendant no.1 in his own name as per their share and therefore they are added as parties to the present suit. In the circumstances, declaration regarding all the scheduled properties is sought that those are the properties of the three partnership firms and the plaintiff and defendants are co-owners and joint possessors of the same. 8. In the circumstances, defendant no.1 present petitioner appeared in the suit and filed application under section 8 of the Act. He submitted that since the claim of the plaintiff is that all the suit properties are the properties of 3 partnership firms being acquired and purchased by defendant no.1 in his individual name etc., the dispute r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms are concerned (out of which in the present suit the firm M/s. Kasliwal Tarangan is involved), the dispute has arisen between the parties. Since the dispute could not be settled amicably, the defendant no.1 was invoking the arbitration clause of respective partnership deeds of each of the partnership firms. Therefore, he decided to refer the matter to the sole Arbitrator. He proposed the names of three arbitrators and asked the plaintiff to accord consent to any one of them within thirty days from the receipt of the letter. 12. Plaintiff vide his reply dated 21/5/2012 has interalia replied that in fact the parties have earlier approached Chartered Accountant Mr. Pankaj Agrawal, Mr. Deepak Sawaji, M.L.A. Mr. Pradeep Jaiswal etc. Even the award in the form of M.O.U. was prepared by Mr. Gangwal on 6/8/2011 but the defendant no.1 failed to fulfill his part. In the circumstances, the plaintiff informed that he had no hesitation to refer the dispute to the sole Arbitrator suggested by defendant no.1 subject to the condition that defendant no.1 would agree to abide by the award of the Arbitrator in whatever form it may come. For the purpose, the plaintiff demanded fresh written agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f three personalities. Mere ingenious drafting of a suit would not make the dispute between the parties beyond the reach of the arbitration agreements. The dispute as per the plaint itself is essentially between the plaintiff and defendant no.1 who are the common partners in all the partnership firms. The declaration is sought that the suit properties belong to the partnership firms. In the circumstances, the dispute cannot be said to be beyond the arbitration agreement. Merely because defendant nos.2 to 4 are arrayed as parties to the suit, it cannot be said that the parties are strangers to the arbitration agreement. No bifurcation of cause of action or parties is needed. The issue as to whether the suit properties are properties of the three partnership firms can be decided by the Arbitral Tribunal. There was no need to file any original or certified copy of the arbitration agreement in the admitted facts of the case. In the circumstances, he submits that the Revision Application be allowed. 16. On the other hand, Mr. Samdani learned Senior Counsel i/b. Mr. R.F. Totla for the respondent no.1 submitted as under: That each of the agreement of partnership firm contains different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The gist of the pleadings, as already summarized herein above, would show that aggrieved by the alleged misuse of term in the agreement, the defendant No. 1 has unilaterally withdrawn the amount from the banks, as detailed in the pleading and misappropriated the same for the purposes of acquiring the schedule properties in his own name. Therefore, the declaration that the properties are assets of all the three firms with consequential relief is sought. Relevant provisions of Section 8 of the Arbitration and Conciliation Act, 1996 20. Section 8(1) of the Act runs as under : "8. Power to refer parties to arbitration where there is an arbitration agreement - (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration." 21. In view of the above provision, it would be necessary to examine as to whether the subject matter of the suit and the subject matter of the arbitration agreement/agreements is one and the same and as to whether all the parties to the suit are the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as declared in the agreement to constitute three partnership firms. 27. Besides this, the terms of the agreements and more particularly "dispute relating to firm or its business" is wide enough to include the dispute which is raised in the present suit by the plaintiff. 28. Mr. P.M. Shah, learned Senior Counsel for the petitioner, relies on the ratio in "Branch Manager, magma Leasing and Finance Limited and another Vs. Potluri Madhavilata and another" (2009) 10 S.C.C. 103 wherein observation in "Heyman V. Darwins Ltd." 1942 AC 356 are relied, which run as under : "..... If, however, the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them as to whether there has been a breach by one side or the other, or as to whether circumstances have arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen 'in respect of,' or 'with regard to,' or 'under' the contract, and an arbitration clause which uses these, or similar, expressions, should be construed accordingly. By the law of England (though not, as I understand, by the law of Scotland) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "19. If A had a claim against B and C, and there was an arbitration agreement between A and B but there was no arbitration agreement between A and C, it might not be possible to have a joint arbitration against B and C. A cannot make a claim against C in an arbitration against B, on the ground that the claim was being made jointly against B and C, as C was not a party to the arbitration agreement. But if A had a claim against B and C and if A had an arbitration agreement with B and A also had a separate arbitration agreement with C, there is no reason why A cannot have a joint arbitration agreement against B and C. Obviously, having an arbitration between A and B and another arbitration between A and C in regard to the same claim would lead to conflicting decisions. In such a case, to deny the benefit of a single arbitration against B and C on the ground that the arbitration agreements against B and C are different, would lead to multiplicity of proceedings, conflicting decisions and cause injustice. It would be proper and just to say that when A has a claim jointly against B and C, and when there are provisions for arbitration in respect of both B and C, there can be a single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 8 of the Arbitration and Conciliation Act, 1996 was filed. In those circumstances, it was observed that as the arbitration clause is not binding on all the parties to the suit, only some part of the subject matter is covered by the agreement to refer the matter to the arbitration. In the circumstances, it was held that as there is no provision in the Act for bifurcating the suit in two parts, there cannot be any reference to the Arbitral Tribunal. 39. In the present case, as already pointed out, all the parties to the suit are partners in three partnership firms and in between them, the arbitration agreements exist. The ratio, therefore, in the facts of the present case, is not applicable. In the result, all the parties to the suit can be referred to a single Arbitral Tribunal. PLEADINGS OF FRAUD : 40. Mr. Samdani, learned Senior Counsel for the plaintiff further submits that as the plaintiff has pleaded that the defendant No. 1 has played a fraud on the plaintiff and rest of the defendants, by withdrawing some of the funds of the three partnership firms, the matter requires to be scrutinized in an open Court and not in a private chamber by any arbitrator. He has relied on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention of the parties is to refer the dispute as stated in the agreement, to the arbitration and in that view of the matter, mere reference to the earlier Act in the agreement would not make any difference for referring the dispute between the parties as per the provisions of the present Arbitration and Conciliation Act, 1996. Protection of the properties : 44. The apprehension of the plaintiff that the arbitral tribunal would not be able to reach a stranger in case the defendant no. 1 creates any third party interest needs no consideration as the provisions of Section 9 of The Act provides right to seek interim measures from the court in this regard. 45. Much arguments were advanced on behalf of both the sides on the question as to whether the power to appoint arbitrator either under section 8 or section 11 of the Act, is administrative in nature or a judicial one, thereby affecting the provisions of section 16 of the Act where under the arbitrator can even rule on its own jurisdiction. The ratio of the case of S.B.P. & Co. V. Patel Engineering Ltd." 2005 (8) S.C.C. 618, was also pressed into service by the plaintiff. However, since we have come to the conclusion that the Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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