The submission by the petitioner is that
partnership being an unregistered partnership, no
reference can be made to the arbitration. In the
present case there is no dispute between the parties
that both Retirement deed and Partnership deed
contain an arbitration clause. In Retirement deed
which had been signed by retiring partners,
continuing partners and concurring partners,
following was stated in clause 8:
“...In case of any dispute or
difference arising between the
parties, regarding the
interpretation of the contents of
this Deed of Retirement or any other
matter or transactions touching the
said retirement, it shall be
referred to an arbitration under the
provisions of the Arbitration &
Conciliation Act, 1996...”
Further, in partnership deed which was
05.04.2006, clause 26 contains an arbitration clause
which is to the following effect:
“ 26. ALL DISPUTES arising
between the partners or their legal
representatives about the
interpretation of this Deed or their
rights and liabilities there under
or in relation to any other matters
whatsoever touching the partnership
affairs shall be decided by an
Arbitration as provided by the
Arbitration & Conciliation Act,
1996.”
When the partners and those who claim
through partners agreed to get the dispute settled by
arbitration, it is not open for the appellants to
contend that partnership being unregistered
partnership, the dispute cannot be referred.
29. The petitioners have not been able to show any
statutory provision either in 1996 Act or in any
other statute from which it can be said that dispute
concerning unregistered partnership deed cannot be
referred to arbitration. We thus do not find any
substance in the third submission of the appellant.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.10837 OF 2016
(ARISING OUT OF SLP(C)NO. 31179 OF 2014)
ANANTHESH BHAKTA REPRESENTED
BY MOTHER USHA A.BHAKTA & ORS.
VERSUS
NAYANA S. BHAKTA & ORS.
Dated:NOVEMBER 15, 2016.
2. This appeal has been filed against judgment
dated 08.07.2014 of High Court of Karnataka in Civil
Revision No. 219 of 2014. The Civil Revision was
filed by the appellants against the judgment and
order dated 27th May, 2014 of vacation District Judge,
Mangalore in Original Suit No. 5 of 2014 filed by the
appellants/plaintiffs. In the Suit, I.A. No. IV was
filed by the defendants/respondents under Section
8(1) of Arbitration and Conciliation Act, 1996,
relying on arbitration agreement in retirement deed
dated 25.07.2005(hereinafter referred to as
retirement deed) as well as in the partnership deed
dated 05.04.2006(hereinafter referred to as
partnership deed). Learned District Judge has allowed
the application filed by the defendant under Section
8(1) of 1996 Act. Parties to the suit were referred
to the arbitration to settle the dispute as per
arbitration agreement. The High Court wide impugned
judgment has affirmed the order of Trial Court with
observation that parties can press for an early
trial. The Revision Petition was disposed of
accordingly. Aggrieved against the judgment of High
Court, the appellants/plaintiffs have filed this
appeal.
3. The brief facts necessary to be noted for
deciding this appeal are:
(i) Late Ramabhakta had started a business of
manufacture and sales of 'Beedi' under the Page 3
3
name 'M/s Neo Subhash Beedi Works'. After his
demise, his six sons, namely, late M.
Narasimha Bhakta, late M. Subhaschandra Bhakta,
late M. Prakashchandra Bhakta, late M. Ganesh
Bhakta, late M. Gangadhar Bhakta and late M.
Ashok Bhakta, constituted the partnership firm.
(ii) M. Narsimha Bhakta retired from the firm
as per the release deed dated 30.06.1986 and
the remaining partners continued with the
firm.
(iii) M.Prakashchandra Bhakta died on
20.03.1995 and as per his Will, his minor son
Master M. Vinayaka Bhakta was admitted to the
partnership as per partnership deed dated
21.03.1995. On 06.03.1997, Subhaschandra
Bhakta died and his LRs, namely Defendant Nos.
1 to 4 became partners. Ashok Bhakta died on
18.09.2001. The first plaintiff is son of late
Ashok Bhakta.
(iv) On 25.07.2005, retirement deed Page 4
4
was executed in which Defendant Nos. 1 to 4
were stated to have retired from partnership.
The partnership deed dated 05.04.2006 was
entered between late M. Gangadhar Bhakta, M.
Vinayaka Bhakta, Defendant No. 5 and M. Vipin
Bhakta(S/o late M. Ganesh Bhakta) and Master
M. Anantesh Bhakta,1st Plaintiff.
M.Gangadhar Bhakta expired and his estate is
represented by the Plaintiff Nos. 2 & 3.
4. The suit for partition was filed by M.
Prakaschandra Bhakta and others against M.
Subhaschandra Bhakta and others, being O.S. NO. 4 of
1985. The preliminary decree was passed on
31.07.1986. M. Subhaschandra Bhakta and others filed
FDP No. 24 of 1992 for preparation of final decree in
which the compromise petition dated 04.04.1994 was
filed and compromise decree was passed on 05.04.1994.
As per the compromise decree, Item No. 1 of 'A'
schedule property was allotted to M. Subhaschandra
Bhakta and Item No. 2 was allotted to M.
Prakashchandra Bhakta.Page 5
5
5. An agreement to sale dated 19.04.1993 was
executed by M. Prakashchandra Bhakta in favour of
partnership firm. Similar agreement to sell dated
19.04.1993 was also executed by M.Subhaschandra
Bhakta in favour of firm.
6. A Suit No. 5 of 2014 was filed by three
Plaintiffs (appellants) against six Defendants who
are Respondent Nos. 1 to 6 in this appeal praying for
permanent prohibitory injunction restraining the
Defendants or anyone claiming through them for
transferring or alienating 'A' schedule property.
Further, the permanent prohibitory injunction was
sought against the Defendant regarding possession and
enjoyment of property by Plaintiff. The Defendant had
filed I.A.No.IV under Section 8(1) of Arbitration and
Conciliation Act, 1996 (hereinafter referred to as
Act) on 09.05.2014, praying to pass an order
referring the parties to the arbitration for
adjudication of the disputes raised by the Plaintiff
in the Suit. The application was not accompanied byPage 6
6
retirement deed and partnership deed.
7. On 12.05.2014, the original retirement deed and
the partnership deed were produced by the Defendant
along with the list. The counter affidavit to the
application I.A. No. IV was also filed by the
Plaintiff. The Learned District Judge heard the
I.A.No.IV as well as the objections raised by the
Plaintiff and by an order dated 27.05.2014, pass the
following order:
“I.A.No. IV filed under
Section 8(1) of the Arbitration and
Conciliation Act, 1996 by the
defendants is allowed.
The parties to the suit are
referred to the Arbitration to
settle their disputes and
differences, in view of the
Arbitration Agreement.
The suit of the plaintiffs
stands disposed off accordingly.”
8. Learned Counsel appearing for appellants in
support of this appeal raised following submissions:
(i) The application I.A.No.IV of 2014 praying for
referring the matter to arbitration was not
accompanied by the original retirement deed datedPage 7
7
25.07.2005 and partnership deed dated 05.04.2006,
hence the application was liable to be dismissed
under Section 8(2) and Learned District Judge
committed error in allowing the application.
According to Section 8(2) of the Act, it is mandatory
to file the original arbitration agreement or a duly
certified copy thereof along with the application
seeking reference to the arbitration.
(ii) All the parties to the suit were not parties to
the arbitration agreement as claimed in retirement
deed and partnership deed. Hence, dispute could not
have been refereed to the arbitrator.
(iii) The firm being an unregistered firm, no
reference to the arbitration can be made with regard
to the dispute relating to unregistered firm.
9. Learned counsel appearing for respondents have
refuted the submissions and contends that Learned
District Judge after considering all aspects of the
matter have rightly made the reference to the
arbitrator. It is submitted that there was clearPage 8
8
arbitration agreement in the retirement deed as well
as in the partnership deed as has been noted by
District Judge and the suit could not have proceeded.
All the Plaintiffs as well as Defendant Nos. 1 to 4
and Defendant No. 5 were parties to the arbitration
agreement either personally or claiming through the
person who was party to the agreement. The Defendant
No. 6 has not inherited any right in the partnership
firm and was unnecessarily impleaded by the
Plaintiff. Mere presence of Defendant No.6 as one of
the Defendants does not preclude the implementation
of arbitration agreement. With regard to nonfiling
of retirement deed and partnership deed along with
application I.A.No. IV of 2014, two submissions have
been raised. Firstly, it is contended that the
Plaintiff themselves has filed both retirement deed
and partnership deed along with the list of documents
and having admitted both retirement deed and
partnership deed, nonfiling along with the
application I.A.No. IV was inconsequential. Secondly,
the Defendant themselves immediately after three daysPage 9
9
of filing their I.A.No. IV of 2014 had filed the
original retirement deed and partnership deed on
12.05.2014 and at the time the matter was considered
by District Judge, original deeds were on the record.
Hence, the application I.A.No. IV was not liable to
be rejected on this ground. There is no such
provision which prohibits the adjudication of dispute
by arbitration regarding an unregistered partnership
firm.
10. We have considered the submissions of learned
counsel for the parties and perused the records.
11. From the pleadings on records and submissions
made, following three issues arises for
consideration:
(1) Whether nonfiling of either original or
certified copy of retirement deed and partnership
deed along with application I.A.No. IV dated
09.05.2014 entailed dismissal of the application as
per section 8(2) of 1996 Act.
(2) Whether the fact that all the parties to thePage 10
10
suit being not parties to the retirement
deed/partnership deed, the Court was not entitled to
make the reference relying on arbitration agreement.
(3) Whether dispute pertaining to unregistered
partnership deed cannot be referred to an arbitration
despite there being arbitration agreement in the deed
of retirement/partnership deed.
ISSUE NO.(1)
12. Two facts which emerged from record in this
respect need to be noted. Firstly, the plaintiffs in
their plaint of O.S.No. 5 of 2014 have referred to
and admitted the retirement deed dated 25.07.2005 and
partnership deed dated 05.04.2006 in para 5 of the
plaint. The plaintiffs themselves have filed the
photocopies of deed of retirement dated 25.07.2005 as
the document no. 6 in the list and photocopies of
partnership deed dated 05.04..2006 as document no. 7
as have been noted in para 23 of the District Judge
judgment.Page 11
11
Further, although initially the application
filed by Defendant I.A.No. IV dated 09.05.2014 was
not accompanied by copy of retirement deed and
partnership deed. The Defendant on 12.05.2014 filed
the original retirement deed and partnership deed
along with the list. It is useful to note the
findings recorded by District Judge in the above
context in paragraph 39 which is to the following
effect:
"39. The materials on record
clearly goes to show that I.A.No.
IV was filed by the defendants on
09.05.2014. It is true that the
application was not accompanied by
the Retirement Deed and the
Partnership Deed either the
originals or the certified copies.
On 12.05.2014 the original
Retirement Deed and the
Partnership Deed were produced by
the defendants along with the
list."
13. Section 8 which falls for consideration in the
present case provides as follows:
" 8. Power to refer parties to
arbitration where there is an
arbitration agreement
(1) A judicial authority beforePage 12
12
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.
(2) The application referred to in
subsection (1) shall not be
entertained unless it is
accompanied by the original
arbitration agreement or a duly
certified copy thereof.
(3) Notwithstanding that an
application has been made under
subsection (1) and that the
issue is pending before the
judicial authority, an arbitration
may be commenced or continued and
an arbitral award made."
14. The appellants submit that subsection (2) of
Section (8) provides that "the application referred
to in subsection (1) shall not be entertained unless
it is accompanied by the original arbitration
agreement or a duly certified copy thereof." They
submit that admittedly with the application I.A.No.
IV filed on 09.05.2014, original or certified copy
of the Retirement Deed and Partnership Deed was not
filed.
15. Learned Counsel to the appellants also placedPage 13
13
reliance on a judgment of this court reported in
2008 (2) SCC 602, Atul Singh & Othes Vs. Sunil Kumar
Singh & Others. In the above case, defendant had
moved a petition on 28.02.2005 praying for referring
the dispute to arbitration. The Trial Court had
dismissed the petition on the ground that the
predecessor in interest of the plaintiff was not
party to the Partnership Deed executed on 17.02.1992.
Hence the main relief being declaration of the deed
to be void which could have been granted only by the
Civil Court, the dispute could not be referred.
Defendant filed Civil Revision which was allowed by
the High Court. One of the submissions made before
this court was that as per subsection (2) of Section
(8), the application could not have entertained
unless it was accompanied by original arbitration
agreement or duly certified copy thereof. This court
held that there is no whisper in the petition that
the original agreement or a duly certified copy is
being filed. There was non compliance of Section
8(2). Hence the reference could not have been made.Page 14
14
Following was stated by this court in paragraph 19:
" 19. There is no whisper in the
petition dated 28.02.2005 that the
original arbitration agreement or
a duly certified copy thereof is
being filed along with the
application. Therefore, there was
a clear noncompliance with
subsection (2) of Section 8 of
the 1996 Act which is a mandatory
provision and the dispute could
not have been referred to
arbitration. Learned counsel for
the respondent has submitted that
a copy of partnership deed was on
the record of the case. However,
in order to satisfy the
requirement of subsection (2) of
Section 8 of the Act, Defendant 3
should have filed the original
arbitration agreement or a duly
certified copy thereof along with
the petition filed by him on
28.02.2005, which he did not do.
Therefore, no order for referring
the dispute to arbitration could
have been passed in the suit."
It is relevant to note that in Atul Singh's case
(Supra), the submission of respondent was noticed
that the copy of the Partnership Deed was on the
record of the case, but the Court has not proceeded
to examine as to when such copies are already on
record what is the effect. Page 15
15
16. In this context, the reference is made to
judgment of this Court in 2007 (7) SCC 737, Bharat
Sewa Sansthan Vs. U.P.Electronics Corporation Ltd.
In the above case, two judge bench of this Court
has held that photocopies of lease agreement could be
taken on record under Section 8 for ascertaining the
existence of arbitration clause. Following was stated
in paragraph 24:
"24. The respondent Corporation
placed on record of the trial
court photocopies of the
agreements along with an
application under Section 8(1) of
the Arbitration Act. The High
Court, in our view, has rightly
held that the photocopies of the
lease agreements could be taken on
record under Section 8 of the
Arbitration Act for ascertaining
the existence of arbitration
clause. Thus, the dispute raised
by the appellant Sansthan against
the respondent Corporation in
terms of the arbitration clause
contained in the lease agreement
is arbitral."
In the case of Atul Singh (Supra), which was
also a judgment of two Judge Bench, earlier judgmentPage 16
16
in Bharat Sewa Sansthan was not cited. However, for
purposes of this case, we need not enter into the
issue as to whether there is a compliance of section
8(2) if photocopies of the arbitration agreement is
already on the record and not disputed by the
parties.
17. There is one another aspect of the matter which
is sufficient to uphold the order of the District
Judge. Section 8(2) uses the phrase "shall not be
entertained". Thus, what is prohibited is the
entertainment of the application unless it is
accompanied by the original arbitration agreement or
a duly certified copy thereof.
18. The word 'entertained' has specific meaning in
P. Ramanatha Aiyar's Advanced Law Lexicon word
'entertained' has been defined as:
" 1. To bear in mind or consider,
esp, to give judicial
consideration to (the Court then
entertained motions for
continuance).
2. To amuse or please.
3. To receive(a person) as a
guest or provide hospitality to (aPage 17
17
person).
The expression 'entertain'
means to 'admit a thing for
consideration' and when a suit or
proceeding is not thrown out in
limine but the Court receives it
for consideration and disposal
according to law it must be
regarded as entertaining the suit
or proceeding, no matter whatever
the ultimate decision might be."
The Blacks Law Dictionary also defines this word
'entertain' as follows:
"To bear in mind or consider;esp.,
to give judicial consideration to
<the court then entertained
motions for continuance>"
19. In 1971 (3) SCC 124, Hindusthan Commercial Bank
Ltd. Vs. Punnu Sahu (Dead) through Legal
Representatives, the word 'entertained' came for
consideration as occurring in Order 21, Rule 90,
Proviso of Civil procedure Court. Para 2 of the
Judgment notices the amended Proviso which was to the
following effect:
"2. The amended proviso with which
we are concerned in this appeal
reads thus:
'Provided that no application to
set aside a sale shall bePage 18
18
entertained
(a) upon any ground which could
have been taken by the applicant
on or before the date on which the
sale proclamation was drawn up;
and
(b) Unless the applicant deposits
such amount not exceeding twelve
and half percent of the sum
realised by the sale or furnishes
such security as the Court may, in
its discretion, fix except when
the Court for reasons to be
recorded dispense with the
requirements of this clause:
Provided further that no sale
shall be set aside on the ground
of irregularity or fraud unless
upon the facts proved the Court is
satisfied that the applicant has
sustained substantial injury by
reason of such irregularity or
fraud."
The contention of the appellant was that word
'entertain' refers to initiation of the proceedings
and not to the stage when the Court takes up the
application for consideration. The High Court had
rejected the said contention. The above view of the
High Court was approved by this court in paragraph 4
of the judgment. Following was stated:
"4. Before the High Court it was
contended on behalf of the
appellant and that contention wasPage 19
19
repeated in this court, that
Clause (b) of the proviso did not
govern the present proceedings as
the application in question had
been filed several months before
that clause was added to the
proviso. It is the contention of
the appellant that the expression
'entertain' found in the proviso
refers to the initiation of the
proceedings and not to the sage
when the Court takes up the
application for consideration.
This contention was rejected by
the High Court relying on the
decision of that Court in Kundan
Lal Vs. Jagan Nath Sharma, AIR
1962 All 547. The sameview had
been taken by the said High Court
in Dhoom Chand Jain V. Chamanlal
Gupta, AIR 1962 All 543 and Haji
Rahim Bux and Sons V. Firm
Samiullah and Sons, AIR 1963 All
320 and again in Mahavir Singh V.
Gauri Shankar, AIR 1964 All 289.
These decisions have interpreted
the expression 'entertain' as
meaning 'adjudicate upon' or
'proceed to consider on merits'.
This view of the High Court has
been accepted as correct by this
Court in Lakshmiratan Engineering
Works Ltd. V. Asst. Comm., Sales
tax, Kanpur, AIR 1968 SC 488. We
are bound by that decision and as
such we are unable to accept the
contention of the appellant that
Clause (b) of the proviso did not
apply to the present proceedings."
20. Another relevant judgment is 1998 (1) SCC 732,Page 20
20
Martin and Harris Ltd. Vs. VIth Additional District
Judge and others. In the above case Section 21(1)
proviso of U.P. Urban Buildings (Regulation of
Letting, Rent and Eviction) Act, 1972 (13 of 1972)
word 'entertained' came for consideration. The
proviso to Section 21(1) was to the following effect:
" 8. Provided that where the
building was in the occupation of
a tenant since before its purchase
by the landlord, such purchase
being made after the commencement
of the Act, no application shall
be entertained on the grounds,
mentioned in clause(a) unless a
period of three years has elapsed
since the date of such purchase
and the landlord has given a
notice in that behalf to the
tenant not less than six months
before such application, and such
notice may be given even before
the expiration of the aforesaid
period of three years."
In the above case, the application under Section
21(1) was filed by the landlord before expiry of
period of three years from the date of purchase. It
was held by this Court that word 'entertained' as
employed in first proviso under Section 21(1) couldPage 21
21
not mean 'institution' of such proceedings. In Para 9
and 10, following was laid down:
"9. Even that apart there is an
internal indication in the first
proviso to Section 21(1) that the
legislature has made a clear
distinction between 'entertaining'
of an application for possession
under Section 21(1)(a) of the Act
and 'filing' of such application.
So far as the filing of such
application is concerned it is
clearly indicated by the
legislature that such application
cannot be filed before expiry of
six months from the date on which
notice is given by the landlord to
the tenant seeking eviction under
Section 21(1)(a) of the Act. The
words, "the landlord has given a
notice in that behalf to the
tenant not less than six months
before such application", would
naturally mean that before filing
of such application or moving of
such application before the
prescribed authority notice must
have preceded by at least six
months. Similar terminology is not
employed by the legislature in the
very same proviso so far as three
years' period for entertaining
such application on the grounds
mentioned in clause (a) of Section
21(1) a stage must be reached when
the court applied its judicial
mind and takes up the case for
decision on merits concerning the
grounds for possession mentioned
in clause (a) of Section 21(1) ofPage 22
22
the Act. Consequently on the very
scheme of this Act it cannot be
said that the word 'entertain' as
employed by the legislature in the
first proviso to Section 21(1) of
the Act would at least mean taking
cognizance of such an application
by the prescribed authority by
issuing summons for appearance to
the tenantdefendant. It must be
held that on the contrary the term
'entertain' would only show that
by the time the application for
possession on the grounds
mentioned in clause (a) of Section
21(1) is taken up by the
prescribed authority for
consideration on merits, atleast
minimum three years' period should
have elapsed since the date of
purchase of the premises by the
landlord.
10. Leaned Senior Counsel, Shri
Rao, for the appellant then
invited our attention to two
decisions of this Court in the
case of Lakshmiratan Engineering
Works Ltd. V. Asstt. Commr.
(Judicial) I, Sales Tax and
Hindusthan Commercial bank Ltd V.
Punnu Sahu. In Lakshmiratan
Engineering this Court was
concerned with the meaning of the
word 'entertain' mentioned in the
proviso to Section 9 of the
U.P. Sales Tax Act, 1948.
Hidayatullah,J., speaking for the
Court observed in the light of the
statutory scheme of Section 9 of
the said Act that the direction to
the Court in the proviso toPage 23
23
Section 9 was to the effect that
the Court shall not proceed to
admit to consideration an appeal
which is not accompanied by
satisfactory proof of the payment
of the admitted tax. In the case
of Hindusthan Commercial Bank the
term 'entertain' as found in the
proviso to Order XXI Rule 90 Code
of Civil Procedure(CPC) fell for
consideration of the Court.
Hegde,J., speaking for a Bench of
two learned Judges of this Court
in this connection observed that
the term 'entertain' in the said
provision means 'to adjudicate
upon' or 'to proceed to consider
on merits' and did not mean
'initiation of proceeding '. The
aforesaid decisions, in our view,
clearly show that when the
question of entertaining an
application for giving relief to a
party arises and when such
application is based on any
grounds on which such application
has to be considered, the
provision regarding 'entertaining
such application' on any of these
grounds would necessarily mean the
consideration of the application
on the merits of the grounds on
which it is base. In the present
case, therefore, it must be held
that when the legislature has
provided that no application under
Section 21(1)(a) of the Act shall
be entertained by the prescribed
authority on grounds mentioned in
clause (a) of Section 21(1) of the
Act before expiry of three years
from date of purchase of propertyPage 24
24
by the landlord it must
necessarily mean consideration by
the prescribed authority of the
grounds mentioned in clause (a) of
Section 21(1) of the Act on
merits."
21. In the present case as noted above, the original
Retirement Deed and Partnership Deed were filed by
the defendants on 12th May and it is only after
filing of original deeds that Court proceeded to
decide the application I.A.No. IV.
22. Section 8(2) has to be interpreted to mean that
the court shall not consider any application filed by
the party under Section 8(1) unless it is accompanied
by original arbitration agreement or duly certified
copy thereof. The filing of the application without
such original or certified copy, but bringing
original arbitration agreement on record at the time
when the Court is considering the application shall
not entail rejection of the application under Section
8(2).
23. In the present case it is relevant to note thePage 25
25
Retirement Deed and Partnership Deed have also been
relied by the plaintiffs. Hence, the argument of
plaintiffs that defendants' application I.A.No. IV
was not accompanied by original deeds, hence, liable
to be rejected, cannot be accepted. We are thus of
the view that the appellants submission that the
application of defendants under Section 8 was liable
to be rejected, cannot be accepted.
ISSUE NO. 2
24. The relevant facts and pleadings of the parties
have been marshaled by the trial court. Trial Court
has returned the findings that the plaintiff no. 1
represented by his mother and next friend was party
to the Retirement Deed. The mother of plaintiff
namely Smt. Usha A. Bhakta has signed the retirement
deed for self and on behalf of her minor children,
the plaintiff No. 1. Plaintiff No. 2 and 3 claiming
their rights through one of the partners Shri
Gangadhar Bhakta, their father, who was party to the
retirement deed. In paragraph 23 of the judgment,
Learned District Judge had returned the followingPage 26
26
findings:
"...therefore, the plaintiff no. 1
represented by his mother and next
friend Smt. Usha A. Bhakta is a
party to the Retirement Deed and
plaintiffs 2 and 3 are claiming
their rights through one of the
partner late Shri Gangadhar Bhakta,
who was also a party to the
Retirement Deed. The Defendants 1
to 5 are also the parties to this
Retirement Deed. Therefore, except
defendant No. 6 all others are
either personally or through the
persons from whom they are claiming
the right are parties to the Deed
of Retirement Deed dated
25.07.2005..."
Thus it was only defendant no. 6 who was not
party to the retirement deed or partnership deed.
Both 5th and 6th defendants are issues of late M.
Prakashchandra Bhakta.
25. Learned Counsel for the respondents have
submitted that it was case of the plaintiffs
themselves that by virtue of Will executed by
M.Prakashchandra Bhakta it was only defendant no. 5
who became entitled to benefits of partnership and
defendant no. 6 was not given any share.Page 27
27
26. The plaintiffs admittedly are parties to the
arbitration agreement as noted above. It does not lie
in their mouth to contend that since one of the
defendants whom they have impleaded was not party to
the arbitration agreement, no reference can be made
to the arbitrator. In the facts of the present case,
it cannot be said that merely because one of the
defendants i.e. defendant no. 6 was not party to the
arbitration agreement, the dispute between the
parties which essentially relates to the benefits
arising out of Retirement Deed and Partnership deed
cannot be referred.
27. Learned District Judge has noted that defendant
no.6 has not inherited any share either in
Partnership deed or in the schedule property and
hence there is no question of bifurcation of either
cause of action or parties. Relevant findings in this
context have been returned by District Judge in
paragraph 40 to the following effect:
“40...It is only defendant No. 6 was
not the party to either thePage 28
28
Retirement Deed or the Partnership
Deed where there is an Arbitration
Clause to refer all the disputes and
differences to the Arbitration. Even
according to the plaintiffs
defendant No. 6 is not a Partner nor
she is a party to any of the
documents and further as per the
Will executed by her father late
Shri Prakash Chandra Baktha, she has
not inherited any right or share
either in the Partnership Deed or in
the Schedule property. Moreover, the
Plaint schedule property according
to the plaintiffs is the property of
the Partnership Firm M/s. 'Neo
Subhash Beedi Works'. Therefore,
there is no question of bifurcation
of either cause of action or parties
if the same is to be referred to the
Arbitration as per the Arbitration
Clause formed in the Retirement Deed
dated: 25.07.2005 and the
Partnership Deed dated
05.04.2006...”
We fully endorse the above view taken by Learned
District Judge.
ISSUE NO. 3
28. The submission by the petitioner is that
partnership being an unregistered partnership, no
reference can be made to the arbitration. In the
present case there is no dispute between the parties
that both Retirement deed and Partnership deed
contain an arbitration clause. In Retirement deed
which had been signed by retiring partners,
continuing partners and concurring partners,
following was stated in clause 8:
“...In case of any dispute or
difference arising between the
parties, regarding the
interpretation of the contents of
this Deed of Retirement or any other
matter or transactions touching the
said retirement, it shall be
referred to an arbitration under the
provisions of the Arbitration &
Conciliation Act, 1996...”
Further, in partnership deed which was
05.04.2006, clause 26 contains an arbitration clause
which is to the following effect:
“ 26. ALL DISPUTES arising
between the partners or their legal
representatives about the
interpretation of this Deed or their
rights and liabilities there under
or in relation to any other matters
whatsoever touching the partnership
affairs shall be decided by an
Arbitration as provided by the
Arbitration & Conciliation Act,
1996.”
When the partners and those who claim
through partners agreed to get the dispute settled by
arbitration, it is not open for the appellants to
contend that partnership being unregistered
partnership, the dispute cannot be referred.
29. The petitioners have not been able to show any
statutory provision either in 1996 Act or in any
other statute from which it can be said that dispute
concerning unregistered partnership deed cannot be
referred to arbitration. We thus do not find any
substance in the third submission of the appellant.
30. In the result, we do not find any merit in this
appeal which is accordingly dismissed.
...........................J.
(R.K. AGRAWAL)
...........................J.
(ASHOK BHUSHAN)
NEW DELHI,
NOVEMBER 15, 2016.
Print Page
partnership being an unregistered partnership, no
reference can be made to the arbitration. In the
present case there is no dispute between the parties
that both Retirement deed and Partnership deed
contain an arbitration clause. In Retirement deed
which had been signed by retiring partners,
continuing partners and concurring partners,
following was stated in clause 8:
“...In case of any dispute or
difference arising between the
parties, regarding the
interpretation of the contents of
this Deed of Retirement or any other
matter or transactions touching the
said retirement, it shall be
referred to an arbitration under the
provisions of the Arbitration &
Conciliation Act, 1996...”
Further, in partnership deed which was
05.04.2006, clause 26 contains an arbitration clause
which is to the following effect:
“ 26. ALL DISPUTES arising
between the partners or their legal
representatives about the
interpretation of this Deed or their
rights and liabilities there under
or in relation to any other matters
whatsoever touching the partnership
affairs shall be decided by an
Arbitration as provided by the
Arbitration & Conciliation Act,
1996.”
When the partners and those who claim
through partners agreed to get the dispute settled by
arbitration, it is not open for the appellants to
contend that partnership being unregistered
partnership, the dispute cannot be referred.
29. The petitioners have not been able to show any
statutory provision either in 1996 Act or in any
other statute from which it can be said that dispute
concerning unregistered partnership deed cannot be
referred to arbitration. We thus do not find any
substance in the third submission of the appellant.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.10837 OF 2016
(ARISING OUT OF SLP(C)NO. 31179 OF 2014)
ANANTHESH BHAKTA REPRESENTED
BY MOTHER USHA A.BHAKTA & ORS.
VERSUS
NAYANA S. BHAKTA & ORS.
Dated:NOVEMBER 15, 2016.
2. This appeal has been filed against judgment
dated 08.07.2014 of High Court of Karnataka in Civil
Revision No. 219 of 2014. The Civil Revision was
filed by the appellants against the judgment and
order dated 27th May, 2014 of vacation District Judge,
Mangalore in Original Suit No. 5 of 2014 filed by the
appellants/plaintiffs. In the Suit, I.A. No. IV was
filed by the defendants/respondents under Section
8(1) of Arbitration and Conciliation Act, 1996,
relying on arbitration agreement in retirement deed
dated 25.07.2005(hereinafter referred to as
retirement deed) as well as in the partnership deed
dated 05.04.2006(hereinafter referred to as
partnership deed). Learned District Judge has allowed
the application filed by the defendant under Section
8(1) of 1996 Act. Parties to the suit were referred
to the arbitration to settle the dispute as per
arbitration agreement. The High Court wide impugned
judgment has affirmed the order of Trial Court with
observation that parties can press for an early
trial. The Revision Petition was disposed of
accordingly. Aggrieved against the judgment of High
Court, the appellants/plaintiffs have filed this
appeal.
3. The brief facts necessary to be noted for
deciding this appeal are:
(i) Late Ramabhakta had started a business of
manufacture and sales of 'Beedi' under the Page 3
3
name 'M/s Neo Subhash Beedi Works'. After his
demise, his six sons, namely, late M.
Narasimha Bhakta, late M. Subhaschandra Bhakta,
late M. Prakashchandra Bhakta, late M. Ganesh
Bhakta, late M. Gangadhar Bhakta and late M.
Ashok Bhakta, constituted the partnership firm.
(ii) M. Narsimha Bhakta retired from the firm
as per the release deed dated 30.06.1986 and
the remaining partners continued with the
firm.
(iii) M.Prakashchandra Bhakta died on
20.03.1995 and as per his Will, his minor son
Master M. Vinayaka Bhakta was admitted to the
partnership as per partnership deed dated
21.03.1995. On 06.03.1997, Subhaschandra
Bhakta died and his LRs, namely Defendant Nos.
1 to 4 became partners. Ashok Bhakta died on
18.09.2001. The first plaintiff is son of late
Ashok Bhakta.
(iv) On 25.07.2005, retirement deed Page 4
4
was executed in which Defendant Nos. 1 to 4
were stated to have retired from partnership.
The partnership deed dated 05.04.2006 was
entered between late M. Gangadhar Bhakta, M.
Vinayaka Bhakta, Defendant No. 5 and M. Vipin
Bhakta(S/o late M. Ganesh Bhakta) and Master
M. Anantesh Bhakta,1st Plaintiff.
M.Gangadhar Bhakta expired and his estate is
represented by the Plaintiff Nos. 2 & 3.
4. The suit for partition was filed by M.
Prakaschandra Bhakta and others against M.
Subhaschandra Bhakta and others, being O.S. NO. 4 of
1985. The preliminary decree was passed on
31.07.1986. M. Subhaschandra Bhakta and others filed
FDP No. 24 of 1992 for preparation of final decree in
which the compromise petition dated 04.04.1994 was
filed and compromise decree was passed on 05.04.1994.
As per the compromise decree, Item No. 1 of 'A'
schedule property was allotted to M. Subhaschandra
Bhakta and Item No. 2 was allotted to M.
Prakashchandra Bhakta.Page 5
5
5. An agreement to sale dated 19.04.1993 was
executed by M. Prakashchandra Bhakta in favour of
partnership firm. Similar agreement to sell dated
19.04.1993 was also executed by M.Subhaschandra
Bhakta in favour of firm.
6. A Suit No. 5 of 2014 was filed by three
Plaintiffs (appellants) against six Defendants who
are Respondent Nos. 1 to 6 in this appeal praying for
permanent prohibitory injunction restraining the
Defendants or anyone claiming through them for
transferring or alienating 'A' schedule property.
Further, the permanent prohibitory injunction was
sought against the Defendant regarding possession and
enjoyment of property by Plaintiff. The Defendant had
filed I.A.No.IV under Section 8(1) of Arbitration and
Conciliation Act, 1996 (hereinafter referred to as
Act) on 09.05.2014, praying to pass an order
referring the parties to the arbitration for
adjudication of the disputes raised by the Plaintiff
in the Suit. The application was not accompanied byPage 6
6
retirement deed and partnership deed.
7. On 12.05.2014, the original retirement deed and
the partnership deed were produced by the Defendant
along with the list. The counter affidavit to the
application I.A. No. IV was also filed by the
Plaintiff. The Learned District Judge heard the
I.A.No.IV as well as the objections raised by the
Plaintiff and by an order dated 27.05.2014, pass the
following order:
“I.A.No. IV filed under
Section 8(1) of the Arbitration and
Conciliation Act, 1996 by the
defendants is allowed.
The parties to the suit are
referred to the Arbitration to
settle their disputes and
differences, in view of the
Arbitration Agreement.
The suit of the plaintiffs
stands disposed off accordingly.”
8. Learned Counsel appearing for appellants in
support of this appeal raised following submissions:
(i) The application I.A.No.IV of 2014 praying for
referring the matter to arbitration was not
accompanied by the original retirement deed datedPage 7
7
25.07.2005 and partnership deed dated 05.04.2006,
hence the application was liable to be dismissed
under Section 8(2) and Learned District Judge
committed error in allowing the application.
According to Section 8(2) of the Act, it is mandatory
to file the original arbitration agreement or a duly
certified copy thereof along with the application
seeking reference to the arbitration.
(ii) All the parties to the suit were not parties to
the arbitration agreement as claimed in retirement
deed and partnership deed. Hence, dispute could not
have been refereed to the arbitrator.
(iii) The firm being an unregistered firm, no
reference to the arbitration can be made with regard
to the dispute relating to unregistered firm.
9. Learned counsel appearing for respondents have
refuted the submissions and contends that Learned
District Judge after considering all aspects of the
matter have rightly made the reference to the
arbitrator. It is submitted that there was clearPage 8
8
arbitration agreement in the retirement deed as well
as in the partnership deed as has been noted by
District Judge and the suit could not have proceeded.
All the Plaintiffs as well as Defendant Nos. 1 to 4
and Defendant No. 5 were parties to the arbitration
agreement either personally or claiming through the
person who was party to the agreement. The Defendant
No. 6 has not inherited any right in the partnership
firm and was unnecessarily impleaded by the
Plaintiff. Mere presence of Defendant No.6 as one of
the Defendants does not preclude the implementation
of arbitration agreement. With regard to nonfiling
of retirement deed and partnership deed along with
application I.A.No. IV of 2014, two submissions have
been raised. Firstly, it is contended that the
Plaintiff themselves has filed both retirement deed
and partnership deed along with the list of documents
and having admitted both retirement deed and
partnership deed, nonfiling along with the
application I.A.No. IV was inconsequential. Secondly,
the Defendant themselves immediately after three daysPage 9
9
of filing their I.A.No. IV of 2014 had filed the
original retirement deed and partnership deed on
12.05.2014 and at the time the matter was considered
by District Judge, original deeds were on the record.
Hence, the application I.A.No. IV was not liable to
be rejected on this ground. There is no such
provision which prohibits the adjudication of dispute
by arbitration regarding an unregistered partnership
firm.
10. We have considered the submissions of learned
counsel for the parties and perused the records.
11. From the pleadings on records and submissions
made, following three issues arises for
consideration:
(1) Whether nonfiling of either original or
certified copy of retirement deed and partnership
deed along with application I.A.No. IV dated
09.05.2014 entailed dismissal of the application as
per section 8(2) of 1996 Act.
(2) Whether the fact that all the parties to thePage 10
10
suit being not parties to the retirement
deed/partnership deed, the Court was not entitled to
make the reference relying on arbitration agreement.
(3) Whether dispute pertaining to unregistered
partnership deed cannot be referred to an arbitration
despite there being arbitration agreement in the deed
of retirement/partnership deed.
ISSUE NO.(1)
12. Two facts which emerged from record in this
respect need to be noted. Firstly, the plaintiffs in
their plaint of O.S.No. 5 of 2014 have referred to
and admitted the retirement deed dated 25.07.2005 and
partnership deed dated 05.04.2006 in para 5 of the
plaint. The plaintiffs themselves have filed the
photocopies of deed of retirement dated 25.07.2005 as
the document no. 6 in the list and photocopies of
partnership deed dated 05.04..2006 as document no. 7
as have been noted in para 23 of the District Judge
judgment.Page 11
11
Further, although initially the application
filed by Defendant I.A.No. IV dated 09.05.2014 was
not accompanied by copy of retirement deed and
partnership deed. The Defendant on 12.05.2014 filed
the original retirement deed and partnership deed
along with the list. It is useful to note the
findings recorded by District Judge in the above
context in paragraph 39 which is to the following
effect:
"39. The materials on record
clearly goes to show that I.A.No.
IV was filed by the defendants on
09.05.2014. It is true that the
application was not accompanied by
the Retirement Deed and the
Partnership Deed either the
originals or the certified copies.
On 12.05.2014 the original
Retirement Deed and the
Partnership Deed were produced by
the defendants along with the
list."
13. Section 8 which falls for consideration in the
present case provides as follows:
" 8. Power to refer parties to
arbitration where there is an
arbitration agreement
(1) A judicial authority beforePage 12
12
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.
(2) The application referred to in
subsection (1) shall not be
entertained unless it is
accompanied by the original
arbitration agreement or a duly
certified copy thereof.
(3) Notwithstanding that an
application has been made under
subsection (1) and that the
issue is pending before the
judicial authority, an arbitration
may be commenced or continued and
an arbitral award made."
14. The appellants submit that subsection (2) of
Section (8) provides that "the application referred
to in subsection (1) shall not be entertained unless
it is accompanied by the original arbitration
agreement or a duly certified copy thereof." They
submit that admittedly with the application I.A.No.
IV filed on 09.05.2014, original or certified copy
of the Retirement Deed and Partnership Deed was not
filed.
15. Learned Counsel to the appellants also placedPage 13
13
reliance on a judgment of this court reported in
2008 (2) SCC 602, Atul Singh & Othes Vs. Sunil Kumar
Singh & Others. In the above case, defendant had
moved a petition on 28.02.2005 praying for referring
the dispute to arbitration. The Trial Court had
dismissed the petition on the ground that the
predecessor in interest of the plaintiff was not
party to the Partnership Deed executed on 17.02.1992.
Hence the main relief being declaration of the deed
to be void which could have been granted only by the
Civil Court, the dispute could not be referred.
Defendant filed Civil Revision which was allowed by
the High Court. One of the submissions made before
this court was that as per subsection (2) of Section
(8), the application could not have entertained
unless it was accompanied by original arbitration
agreement or duly certified copy thereof. This court
held that there is no whisper in the petition that
the original agreement or a duly certified copy is
being filed. There was non compliance of Section
8(2). Hence the reference could not have been made.Page 14
14
Following was stated by this court in paragraph 19:
" 19. There is no whisper in the
petition dated 28.02.2005 that the
original arbitration agreement or
a duly certified copy thereof is
being filed along with the
application. Therefore, there was
a clear noncompliance with
subsection (2) of Section 8 of
the 1996 Act which is a mandatory
provision and the dispute could
not have been referred to
arbitration. Learned counsel for
the respondent has submitted that
a copy of partnership deed was on
the record of the case. However,
in order to satisfy the
requirement of subsection (2) of
Section 8 of the Act, Defendant 3
should have filed the original
arbitration agreement or a duly
certified copy thereof along with
the petition filed by him on
28.02.2005, which he did not do.
Therefore, no order for referring
the dispute to arbitration could
have been passed in the suit."
It is relevant to note that in Atul Singh's case
(Supra), the submission of respondent was noticed
that the copy of the Partnership Deed was on the
record of the case, but the Court has not proceeded
to examine as to when such copies are already on
record what is the effect. Page 15
15
16. In this context, the reference is made to
judgment of this Court in 2007 (7) SCC 737, Bharat
Sewa Sansthan Vs. U.P.Electronics Corporation Ltd.
In the above case, two judge bench of this Court
has held that photocopies of lease agreement could be
taken on record under Section 8 for ascertaining the
existence of arbitration clause. Following was stated
in paragraph 24:
"24. The respondent Corporation
placed on record of the trial
court photocopies of the
agreements along with an
application under Section 8(1) of
the Arbitration Act. The High
Court, in our view, has rightly
held that the photocopies of the
lease agreements could be taken on
record under Section 8 of the
Arbitration Act for ascertaining
the existence of arbitration
clause. Thus, the dispute raised
by the appellant Sansthan against
the respondent Corporation in
terms of the arbitration clause
contained in the lease agreement
is arbitral."
In the case of Atul Singh (Supra), which was
also a judgment of two Judge Bench, earlier judgmentPage 16
16
in Bharat Sewa Sansthan was not cited. However, for
purposes of this case, we need not enter into the
issue as to whether there is a compliance of section
8(2) if photocopies of the arbitration agreement is
already on the record and not disputed by the
parties.
17. There is one another aspect of the matter which
is sufficient to uphold the order of the District
Judge. Section 8(2) uses the phrase "shall not be
entertained". Thus, what is prohibited is the
entertainment of the application unless it is
accompanied by the original arbitration agreement or
a duly certified copy thereof.
18. The word 'entertained' has specific meaning in
P. Ramanatha Aiyar's Advanced Law Lexicon word
'entertained' has been defined as:
" 1. To bear in mind or consider,
esp, to give judicial
consideration to (the Court then
entertained motions for
continuance).
2. To amuse or please.
3. To receive(a person) as a
guest or provide hospitality to (aPage 17
17
person).
The expression 'entertain'
means to 'admit a thing for
consideration' and when a suit or
proceeding is not thrown out in
limine but the Court receives it
for consideration and disposal
according to law it must be
regarded as entertaining the suit
or proceeding, no matter whatever
the ultimate decision might be."
The Blacks Law Dictionary also defines this word
'entertain' as follows:
"To bear in mind or consider;esp.,
to give judicial consideration to
<the court then entertained
motions for continuance>"
19. In 1971 (3) SCC 124, Hindusthan Commercial Bank
Ltd. Vs. Punnu Sahu (Dead) through Legal
Representatives, the word 'entertained' came for
consideration as occurring in Order 21, Rule 90,
Proviso of Civil procedure Court. Para 2 of the
Judgment notices the amended Proviso which was to the
following effect:
"2. The amended proviso with which
we are concerned in this appeal
reads thus:
'Provided that no application to
set aside a sale shall bePage 18
18
entertained
(a) upon any ground which could
have been taken by the applicant
on or before the date on which the
sale proclamation was drawn up;
and
(b) Unless the applicant deposits
such amount not exceeding twelve
and half percent of the sum
realised by the sale or furnishes
such security as the Court may, in
its discretion, fix except when
the Court for reasons to be
recorded dispense with the
requirements of this clause:
Provided further that no sale
shall be set aside on the ground
of irregularity or fraud unless
upon the facts proved the Court is
satisfied that the applicant has
sustained substantial injury by
reason of such irregularity or
fraud."
The contention of the appellant was that word
'entertain' refers to initiation of the proceedings
and not to the stage when the Court takes up the
application for consideration. The High Court had
rejected the said contention. The above view of the
High Court was approved by this court in paragraph 4
of the judgment. Following was stated:
"4. Before the High Court it was
contended on behalf of the
appellant and that contention wasPage 19
19
repeated in this court, that
Clause (b) of the proviso did not
govern the present proceedings as
the application in question had
been filed several months before
that clause was added to the
proviso. It is the contention of
the appellant that the expression
'entertain' found in the proviso
refers to the initiation of the
proceedings and not to the sage
when the Court takes up the
application for consideration.
This contention was rejected by
the High Court relying on the
decision of that Court in Kundan
Lal Vs. Jagan Nath Sharma, AIR
1962 All 547. The sameview had
been taken by the said High Court
in Dhoom Chand Jain V. Chamanlal
Gupta, AIR 1962 All 543 and Haji
Rahim Bux and Sons V. Firm
Samiullah and Sons, AIR 1963 All
320 and again in Mahavir Singh V.
Gauri Shankar, AIR 1964 All 289.
These decisions have interpreted
the expression 'entertain' as
meaning 'adjudicate upon' or
'proceed to consider on merits'.
This view of the High Court has
been accepted as correct by this
Court in Lakshmiratan Engineering
Works Ltd. V. Asst. Comm., Sales
tax, Kanpur, AIR 1968 SC 488. We
are bound by that decision and as
such we are unable to accept the
contention of the appellant that
Clause (b) of the proviso did not
apply to the present proceedings."
20. Another relevant judgment is 1998 (1) SCC 732,Page 20
20
Martin and Harris Ltd. Vs. VIth Additional District
Judge and others. In the above case Section 21(1)
proviso of U.P. Urban Buildings (Regulation of
Letting, Rent and Eviction) Act, 1972 (13 of 1972)
word 'entertained' came for consideration. The
proviso to Section 21(1) was to the following effect:
" 8. Provided that where the
building was in the occupation of
a tenant since before its purchase
by the landlord, such purchase
being made after the commencement
of the Act, no application shall
be entertained on the grounds,
mentioned in clause(a) unless a
period of three years has elapsed
since the date of such purchase
and the landlord has given a
notice in that behalf to the
tenant not less than six months
before such application, and such
notice may be given even before
the expiration of the aforesaid
period of three years."
In the above case, the application under Section
21(1) was filed by the landlord before expiry of
period of three years from the date of purchase. It
was held by this Court that word 'entertained' as
employed in first proviso under Section 21(1) couldPage 21
21
not mean 'institution' of such proceedings. In Para 9
and 10, following was laid down:
"9. Even that apart there is an
internal indication in the first
proviso to Section 21(1) that the
legislature has made a clear
distinction between 'entertaining'
of an application for possession
under Section 21(1)(a) of the Act
and 'filing' of such application.
So far as the filing of such
application is concerned it is
clearly indicated by the
legislature that such application
cannot be filed before expiry of
six months from the date on which
notice is given by the landlord to
the tenant seeking eviction under
Section 21(1)(a) of the Act. The
words, "the landlord has given a
notice in that behalf to the
tenant not less than six months
before such application", would
naturally mean that before filing
of such application or moving of
such application before the
prescribed authority notice must
have preceded by at least six
months. Similar terminology is not
employed by the legislature in the
very same proviso so far as three
years' period for entertaining
such application on the grounds
mentioned in clause (a) of Section
21(1) a stage must be reached when
the court applied its judicial
mind and takes up the case for
decision on merits concerning the
grounds for possession mentioned
in clause (a) of Section 21(1) ofPage 22
22
the Act. Consequently on the very
scheme of this Act it cannot be
said that the word 'entertain' as
employed by the legislature in the
first proviso to Section 21(1) of
the Act would at least mean taking
cognizance of such an application
by the prescribed authority by
issuing summons for appearance to
the tenantdefendant. It must be
held that on the contrary the term
'entertain' would only show that
by the time the application for
possession on the grounds
mentioned in clause (a) of Section
21(1) is taken up by the
prescribed authority for
consideration on merits, atleast
minimum three years' period should
have elapsed since the date of
purchase of the premises by the
landlord.
10. Leaned Senior Counsel, Shri
Rao, for the appellant then
invited our attention to two
decisions of this Court in the
case of Lakshmiratan Engineering
Works Ltd. V. Asstt. Commr.
(Judicial) I, Sales Tax and
Hindusthan Commercial bank Ltd V.
Punnu Sahu. In Lakshmiratan
Engineering this Court was
concerned with the meaning of the
word 'entertain' mentioned in the
proviso to Section 9 of the
U.P. Sales Tax Act, 1948.
Hidayatullah,J., speaking for the
Court observed in the light of the
statutory scheme of Section 9 of
the said Act that the direction to
the Court in the proviso toPage 23
23
Section 9 was to the effect that
the Court shall not proceed to
admit to consideration an appeal
which is not accompanied by
satisfactory proof of the payment
of the admitted tax. In the case
of Hindusthan Commercial Bank the
term 'entertain' as found in the
proviso to Order XXI Rule 90 Code
of Civil Procedure(CPC) fell for
consideration of the Court.
Hegde,J., speaking for a Bench of
two learned Judges of this Court
in this connection observed that
the term 'entertain' in the said
provision means 'to adjudicate
upon' or 'to proceed to consider
on merits' and did not mean
'initiation of proceeding '. The
aforesaid decisions, in our view,
clearly show that when the
question of entertaining an
application for giving relief to a
party arises and when such
application is based on any
grounds on which such application
has to be considered, the
provision regarding 'entertaining
such application' on any of these
grounds would necessarily mean the
consideration of the application
on the merits of the grounds on
which it is base. In the present
case, therefore, it must be held
that when the legislature has
provided that no application under
Section 21(1)(a) of the Act shall
be entertained by the prescribed
authority on grounds mentioned in
clause (a) of Section 21(1) of the
Act before expiry of three years
from date of purchase of propertyPage 24
24
by the landlord it must
necessarily mean consideration by
the prescribed authority of the
grounds mentioned in clause (a) of
Section 21(1) of the Act on
merits."
21. In the present case as noted above, the original
Retirement Deed and Partnership Deed were filed by
the defendants on 12th May and it is only after
filing of original deeds that Court proceeded to
decide the application I.A.No. IV.
22. Section 8(2) has to be interpreted to mean that
the court shall not consider any application filed by
the party under Section 8(1) unless it is accompanied
by original arbitration agreement or duly certified
copy thereof. The filing of the application without
such original or certified copy, but bringing
original arbitration agreement on record at the time
when the Court is considering the application shall
not entail rejection of the application under Section
8(2).
23. In the present case it is relevant to note thePage 25
25
Retirement Deed and Partnership Deed have also been
relied by the plaintiffs. Hence, the argument of
plaintiffs that defendants' application I.A.No. IV
was not accompanied by original deeds, hence, liable
to be rejected, cannot be accepted. We are thus of
the view that the appellants submission that the
application of defendants under Section 8 was liable
to be rejected, cannot be accepted.
ISSUE NO. 2
24. The relevant facts and pleadings of the parties
have been marshaled by the trial court. Trial Court
has returned the findings that the plaintiff no. 1
represented by his mother and next friend was party
to the Retirement Deed. The mother of plaintiff
namely Smt. Usha A. Bhakta has signed the retirement
deed for self and on behalf of her minor children,
the plaintiff No. 1. Plaintiff No. 2 and 3 claiming
their rights through one of the partners Shri
Gangadhar Bhakta, their father, who was party to the
retirement deed. In paragraph 23 of the judgment,
Learned District Judge had returned the followingPage 26
26
findings:
"...therefore, the plaintiff no. 1
represented by his mother and next
friend Smt. Usha A. Bhakta is a
party to the Retirement Deed and
plaintiffs 2 and 3 are claiming
their rights through one of the
partner late Shri Gangadhar Bhakta,
who was also a party to the
Retirement Deed. The Defendants 1
to 5 are also the parties to this
Retirement Deed. Therefore, except
defendant No. 6 all others are
either personally or through the
persons from whom they are claiming
the right are parties to the Deed
of Retirement Deed dated
25.07.2005..."
Thus it was only defendant no. 6 who was not
party to the retirement deed or partnership deed.
Both 5th and 6th defendants are issues of late M.
Prakashchandra Bhakta.
25. Learned Counsel for the respondents have
submitted that it was case of the plaintiffs
themselves that by virtue of Will executed by
M.Prakashchandra Bhakta it was only defendant no. 5
who became entitled to benefits of partnership and
defendant no. 6 was not given any share.Page 27
27
26. The plaintiffs admittedly are parties to the
arbitration agreement as noted above. It does not lie
in their mouth to contend that since one of the
defendants whom they have impleaded was not party to
the arbitration agreement, no reference can be made
to the arbitrator. In the facts of the present case,
it cannot be said that merely because one of the
defendants i.e. defendant no. 6 was not party to the
arbitration agreement, the dispute between the
parties which essentially relates to the benefits
arising out of Retirement Deed and Partnership deed
cannot be referred.
27. Learned District Judge has noted that defendant
no.6 has not inherited any share either in
Partnership deed or in the schedule property and
hence there is no question of bifurcation of either
cause of action or parties. Relevant findings in this
context have been returned by District Judge in
paragraph 40 to the following effect:
“40...It is only defendant No. 6 was
not the party to either thePage 28
28
Retirement Deed or the Partnership
Deed where there is an Arbitration
Clause to refer all the disputes and
differences to the Arbitration. Even
according to the plaintiffs
defendant No. 6 is not a Partner nor
she is a party to any of the
documents and further as per the
Will executed by her father late
Shri Prakash Chandra Baktha, she has
not inherited any right or share
either in the Partnership Deed or in
the Schedule property. Moreover, the
Plaint schedule property according
to the plaintiffs is the property of
the Partnership Firm M/s. 'Neo
Subhash Beedi Works'. Therefore,
there is no question of bifurcation
of either cause of action or parties
if the same is to be referred to the
Arbitration as per the Arbitration
Clause formed in the Retirement Deed
dated: 25.07.2005 and the
Partnership Deed dated
05.04.2006...”
We fully endorse the above view taken by Learned
District Judge.
ISSUE NO. 3
28. The submission by the petitioner is that
partnership being an unregistered partnership, no
reference can be made to the arbitration. In the
present case there is no dispute between the parties
that both Retirement deed and Partnership deed
contain an arbitration clause. In Retirement deed
which had been signed by retiring partners,
continuing partners and concurring partners,
following was stated in clause 8:
“...In case of any dispute or
difference arising between the
parties, regarding the
interpretation of the contents of
this Deed of Retirement or any other
matter or transactions touching the
said retirement, it shall be
referred to an arbitration under the
provisions of the Arbitration &
Conciliation Act, 1996...”
Further, in partnership deed which was
05.04.2006, clause 26 contains an arbitration clause
which is to the following effect:
“ 26. ALL DISPUTES arising
between the partners or their legal
representatives about the
interpretation of this Deed or their
rights and liabilities there under
or in relation to any other matters
whatsoever touching the partnership
affairs shall be decided by an
Arbitration as provided by the
Arbitration & Conciliation Act,
1996.”
When the partners and those who claim
through partners agreed to get the dispute settled by
arbitration, it is not open for the appellants to
contend that partnership being unregistered
partnership, the dispute cannot be referred.
29. The petitioners have not been able to show any
statutory provision either in 1996 Act or in any
other statute from which it can be said that dispute
concerning unregistered partnership deed cannot be
referred to arbitration. We thus do not find any
substance in the third submission of the appellant.
30. In the result, we do not find any merit in this
appeal which is accordingly dismissed.
...........................J.
(R.K. AGRAWAL)
...........................J.
(ASHOK BHUSHAN)
NEW DELHI,
NOVEMBER 15, 2016.
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