Whether suit filed by unregistered firm is tenable if it is for enforcement of statutory right or common law right?

  In our view, the questions arising in this matter could be directly answered with reference to the principles enunciated by this Court in the case of Raptakos Brett & Co. Ltd. v. Ganesh Property: (1998) 7 SCC 184, which have further been explained and applied by this Court in the cases of Haldiram Bhujiawala and Purushottam (supra). We may take note of the principles vividly exposited in the case of Haldiram Bhujiawala (supra) that to attract the bar of Section 69(2) of the Act of 1932, the contract in question must be the one entered into by firm with the third-party defendant and must also be the one entered into by the plaintiff firm in the course of its business dealings; and that Section 69(2) of the Act of 1932 is not a bar to a suit filed by an unregistered firm, if the same is for enforcement of a statutory right or a common law right. {Para 15}

Supreme Court

JUSTICE DINESH MAHESHWARI JUSTICE VIKRAM NATH

SHIV DEVELOPERS THROUGH ITS PARTNER SUNILBHAI SOMABHAI AJMERI Vs. AKSHARAY DEVELOPERS & ORS.

CIVIL APPEAL NO. 785 OF 2022

31st January 2022

Author: DINESH MAHESHWARI, J.

Citation: 2022 ALL SCR (ONLINE) 103

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Whether prosecution for dishonour of cheque filed by unregistered partnership firm is maintainable?

 In this background, there is no point in stretching

the bar which is in the nature of temporary bar to the suit to the

complaints under section 138 of the N. I. Act, which is in the

nature of penal provision with the object to inculcate faith in

banking transactions. The term ‘suit’ under Section 69(2) of the

Act of 1932 must receive its plain and simple meaning. It

cannot be stretched for securing immunity from criminal

prosecutions. The bar under Section 69(2) of the Act of 1932 is

liable to be confined only to enforcement of contractual

obligations.

20. The larger Bench in the case of A.V. Ramanaiah

(supra) fortified its view by observing that the bar contained

under Section 69 of the Act of 1932 is intended to prevent an

unregistered partnership firm to enforce a right arising out of a

contract against a third party, and that it is not intended to

create any such bar for the purposes of enforcing rights arising

out of statutes or for invoking the protection available under

any other statute.

21. For the foregoing reasons, we are in agreement with

the view expressed by the referral Judge.

22. In such conspectus, our answer to the question

referred is as under :-

“The prosecution of an accused under Section 138 of

the Negotiable Instruments Act, 1888, is not hit by

the bar created by sub-section (2) of Section 69 of

the Indian Partnership Act, 1932.”

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

NAGPUR BENCH

CRIMINAL APPLICATION (APPA) NO. 748 OF 2018

Narendra Amarnathji Kalda, Vs Balbirsingh s/o Motisingh Chawhan,

CORAM : P. N. DESHMUKH &

PUSHPA V. GANEDIWALA, JJ.

DATED : 07/02/2020.

JUDGMENT : (PER PUSHPA V. GANEDIWALA, J.)

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Whether eviction suit filed by unregistered partnership firm is maintainable?

Contention was raised that the suit was not maintainable since the same was filed by an unregistered firm. Repelling the contention court took the view that a suit for eviction is maintainable by an unregistered firm as such a suit is not a suit to enforce an agreement but a right therefor accrues to a landlord by reason of the provisions of the statute namely Rent Act. We are in agreement with the Patna High Court that the right of a landlord to determine a tenancy. arises under a statute, namely, Transfer of Property Act and later by Rent. Act. The Bombay High Court in Kajaria Traders (India) Ltd. v. Foreign Imports and Exports Association. MANU/MH/0013/1961 : AIR 1961 Bom 65 held that the right to make an application under section 8 of the Arbitration Act for appointment of an arbitrator or arbitrators is a statutory right and not arising from a contract, though it is not conferred in connection with a contract. Landlord is not enforcing his right arising from a contract, but seeking eviction on the basis of the provisions of the Rent Act which is a statutory right, therefore section 69(2) would not be a bar if a petition is filed by the unregistered firm as a landlord. The petition filed by an unregistered firm for eviction is therefore maintainable.

IN THE HIGH COURT OF KERALA

CRP. No. 606 of 1997 (D)

Decided On: 18.03.2004

 Dungarsi Ranchhodas  Vs.  Moolji Visanji

Hon'ble Judges/Coram:

K.S. Panicker Radhakrishnan and Pius C. Kuriakose, JJ.

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Whether unregistered partnership firm can file criminal complaint for dishonour of cheque?

 Perusal of Section 138 of the Act shows that it has to be a transaction which relates to legally enforceable debt or other liability. It is quite clear that under Section 69(2) of the Partnership Act, the complainant, unregistered partnership could not have legally enforced the debt. If being unregistered partnership it cannot legally enforce the debt, it is not legally enforceable debt and would go out of the purview of Section 138 of the N.I. Act. When complaint was filed complainant was not a registered partnership and thus could not have, at that time, filed the complaint. In this view of the matter, the reasonings recorded by the Hon'ble High Court in the matter of Mr. Amit Desai, supra, appear to be apt for consideration of the present matter. Adopting the said view in the matter of Mr. Amit Desai, supra, I find that the trial Court did not err while rejecting the complaint and acquitting the accused.

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

Criminal Appeal No. 426 of 2003

Decided On: 22.04.2016

Sai Accumulator Industries Sangamner Vs. Sethi Brothers Aurangabad

Hon'ble Judges/Coram:

A.I.S. Cheema, J.

Citation: 2017(2) DCR 359

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Whether Cheque bounce case is maintainable if unregistered partnership firm is not made accused?

 An interesting issue has come up for consideration before this
Court. The question involved in this case is whether an unregistered
Partnership Firm can also be brought within the purview of Section 141 of
the Negotiable Instruments Act, and in such cases whether the Partnership
Firm must be made as an accused along with the other partners, in order to
maintain a complaint for an offence under Section 138 of the Negotiable
Instruments Act ?
 Section 141 of the Negotiable Instruments Act deals with the
concept of vicarious liability, wherein for the offence committed by the
Company or a partnership firm, the directors or the partners, as the case
may, are deemed to be guilty of the offence when it is shown that they are
in charge of and responsible for the conduct of the day-to-day affairs of the
business or the firm, as the case may be. While interpreting the provision,
the Hon'ble Supreme Court has categorically held that the complaint cannot
be maintained against the directors of the Company, without making the
company as an accused person. This concept has been extended even for
Partnership Firms. The registration or non-registration of the Partnership
Firm will have no bearing insofar as 141 of the Negotiable Instruments Act is
concerned.
20. In view of the above discussion, this Court is not in agreement
with the submissions made by the learned counsel for the respondent. In
this case admittedly, the cheque was given in the name of the Partnership
Firm and after the cheque was dishonored, no statutory notice was issued to
the Partnership Firm, and the Partnership Firm was not made as an accused
in the complaint. Only the partners have been shown as accused persons in
this complaint. Such a complaint is unsustainable and not in accordance

with Section 141 of the Negotiable Instruments Act and the law laid down
by the Hon'ble Supreme Court. 
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 23.07.2019
CORAM
MR.JUSTICE N.ANAND VENKATESH
CRL.O.P No.13147 of 2015
and Crl.M.P.Nos.1 and 2 of 2015

Rangabashyam Vs. Ramesh 

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Whether application for appointment of arbitrator by partner of dissolved partnership firm is maintainable?

 The appellants (defendants) on being served
raised a preliminary objection contending therein
that since the partnership in question on which the
application under Section 20 of the Partnership Act
was founded was an “unregistered partnership",
therefore, in the light of the bar contained under
Section 69 (3) of the Partnership Act, the application

filed by the respondent was not maintainable,
therefore, it was liable to be dismissed as such.
8. The Civil Judge by order dated 18.03.1993
overruled the objection raised by the appellants
(defendants) and held that the application filed by
the respondent (plaintiff) is maintainable. The
appellants (defendants) felt aggrieved and filed writ
petition in the High Court at Allahabad under
Article 227 of the Constitution of India.
9. By impugned order, the High Court dismissed
the writ petition and upheld the order of the Civil
Judge, which has given rise to filing of this appeal
by way of special leave by the defendants in this
Court.
10. So, the short question, which arises for
consideration in this appeal, is whether the High
Court was justified in dismissing the appellants’
writ petition.

11. Having heard the learned counsel for the
parties and on perusal of the record of the case, we
are inclined to allow this appeal and while setting
aside the impugned order remand the case to the
High Court for deciding the writ petition afresh on
merits in the light of the observations made infra.
12. In our considered view, the need to remand
the case has occasioned because we find that the
High Court did not decide the issue, which was the
subject matter of the writ petition, keeping in view
the law laid down by this Court in the case of
Krishna Motor Service by its Partners vs. H.B.
Vittala Kamath, 1996 (10) SCC 88.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.3399 OF 2019
(Arising out of S.L.P.(C) No.21469 of 2012)

Bhagwan Das Goel Vs Pyare Kishan Agarwal 

Abhay Manohar Sapre, J.
Dated:April 04, 2019.

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Whether arbitrator can be appointed for dissolution of unregistered partnership firm?

The question, therefore, is: whether the respondent is entitled to a reference under Section 20 of Arbitration Act 1940? Admittedly, the partnership firm was not registered as required under Section 69(1) of the Partnership Act. The partnership deed does contain a clause for reference to arbitrate the disputes that should arise under the contract. The question, therefore, is: whether the exceptions to Sub-section (3) of Section 69 would apply to the facts of the case? Sub-section (3) of Section 69 envisages as under :

69. (3) The provisions of Sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect-

(a) the enforcement of any right to sue for the dissolution of a firm or for accounts or a dissolved firm, or any right or power to realise the property of a dissolved firm; or

(b) the powers of an official assignee, receiver or Court under the Presidency-towns Insolvency Act, 1909 (3 of 1909), or the Provincial Insolvency Act, 1920 (5 of 1920), to realise the property of an insolvent partner.

(Emphasis supplied)

6. The contention of Shri Javali is that since the words "other proceedings to enforce a right arising from a contract" clearly envisage that when a party to the contract seeks to enforce the right arising from the contract, the main part of Sub-section (3) stands attracted, the exceptions provided in the exclusionary clauses have no application. Therefore, the ratio in Jagdish Chandra Gupta's Case, though related to reference under Section 8 would apply to the facts of the case and that the reference is not maintainable. We find no force in the contention. The words "but shall not affect" require to be given meaning and effect thereof in the operation of the main part of Sub-section (3). But as seen, the exceptions engrafted in Sub-section (3) intend to exclude the embargo created by Sub-section (3) and intended to effectuate the exceptions enumerated therein. It is seen that the proviso given an exception stating that the main part of Sub-section (3) shall not affect (a) the enforcement of any right arising from dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm; it conferred interest to the partners, i.e. parties to the contract. Undoubtedly, Section 69 is mandatory in character and its effect is to render a suit by plaintiff in respect of a right vested in him or acquired under a contract which he entered into as a partner of a firm, whether existing or dissolved void. In other words, a partner of an erstwhile unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of the main part of Section 69(3) of the Act. In Jagdish Chandra's case at page 60 this Court interpreting main part of Sub-section (3) had held that "In our judgment, the words 'other proceeding' in Sub-section (3) must receive their full meaning untrammeled by the words 'a claim of set-off. The latter words neither intend nor can be construed to cut down the generality of the words 'other proceedings'. The sub-section provides for the application of the provisions of Sub-sections (1) and (2) to claims of set-off and also to other proceedings of any kind which can properly be said to be for enforcement of any right arising from contract except those expressly mentioned as exceptions in Sub-section (3) and Sub-section (4)."

7. If the right to dissolve the firm itself is in dispute and is subject matter of the suit, necessarily in the suit for dissolution of the partnership firm, if a party to the contract of partnership seeks a reference for arbitration to resolve that dispute, it would be a right from a contract arisen in the proceedings for enforcement of the right to dissolve the firm. In that event, necessarily, the main part of Sub-section (3) stands attracted and no such reference is valid in law. But in a case where the parties have already agreed for dissolution of the partnership by mutual consent, the partnership stood dissolved. There is no dispute as regards the right arising from the contract of a firm. The dispute is only with regard to working out the rights flown from dissolution for settlement of accounts of the dissolved firm or any right or power to realise the property of the dissolved firm etc. That right would form part of the exception engrafted in Sub-section (3) of Section 69. The object intended by the legislature appears to be that in spite of the defect of non-registration and the prohibition created in the main part of non-enforceability of the right arising from a contract, the parties having worked under that contract, to the limited extent of the enforcement of a right to realise the assets, settlement of the accounts of the dissolved firm or any right or power to realise the property of the dissolved firm are exceptions engrafted therein and gives right to the parties to enforce the same, independent of the right arising from the contract. Therefore, the parties are relieved from the prohibition created by operation of Section 69.

IN THE SUPREME COURT OF INDIA

Civil Appeals Nos. 7784-85 of 1996.

Decided On: 19.04.1996

Krishna Motor Service  Vs.  H.B. Vittala Kamath

Hon'ble Judges/Coram:

K. Ramaswamy and G.B. Pattanaik, JJ.

Citation:  1996 (10) SCC 88, AIR 1996 SC 2209

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How to interprete legally enforceable debt and liability in context of unregistered partnership firm?

The words,' legally enforceable debt or other liability' used in the
explanations to Section 138 of the Negotiable Instruments Act refer to the
enforceability in law of the debt or the liability in question and have no

reference to the right of the person enforcing it. If there is no legal impediment
for enforceability of a debt or other liability in general, disability of a particular
individual or entity to enforce such right to recover such debt or liability does
not render such debt or liability not legally enforceable debt or liability. The
intention of the legislature is to make non payment of amounts of cheques
despite service of notice as per the provisions of the Act an offence only when
the cheque has been issued for payment of a legitimate debt or liability. Amount
required to be paid as price of articles or goods is a legitimate debt or liability
and therefore it is a legally enforceable debt or liability. The disability of an
unregistered firm under Section 69(2) of the Indian Partnership Act to file a suit
to enforce a right arising out of a contract does not make such debt or liability
not a legally enforceable debt or liability.”

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
Cr. Appeal No. 140 of 2018

Date of decision : 11.09.2018.

M/s Uttam Traders Ranghri Vs  Tule Ram alias Tula Ram

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Whether complaint for dishonour of cheque filed by unregistered partnership firm is maintainable?

 I n the case in hand the complainant has a statutory claim in terms of
Section 138 N.I Act. Even otherwise Section 69 of the Partnership Act is
confined to enforcement of a right arising out a contract by instituting a suit or
other proceedings by an unregistered firm. The criminal complaint that has
been filed cannot be treated as a suit or other proceedings to enforce any rights
arising under a contract. Therefore, there is no bar to the criminal complaint
that has been filed and the non-registration of the firm would not bar the
prosecution of an accused on the ground that the firm was not registered.”
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
Cr. Appeal No. 140 of 2018

Date of decision : 11.09.2018.

M/s Uttam Traders Ranghri Vs  Tule Ram alias Tula Ram

Coram:
 Mr. Justice Tarlok Singh Chauhan, Judge.

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Whether suit filed by unregistered partnership firm is tenable?

At this stage, it would be relevant to refer to the observations of the Honorable Supreme Court in paragraph 26 of its judgment in M/s. Haldiram Bhujiawala & another Vs. M/s. Anand Kumar Deepak Kumar & another [MANU/SC/0144/2000 : AIR 2000 SC 1287], which reads as follows:-

"26. Further Section 69(2) is not attracted to any and every contract referred to in the plaint as the source of title to an asset owned by the firm. If the plaint referred to such a contract it could not only be a historical fact. For example, if the plaint filed by the unregistered firm refers to the source of the firm's title to a motor car and states that the plaintiff has purchased and received a Motor Car from a foreign buyer under a contract and that the defendant has unauthorisedly removed it from the plaintiff firm's possession, - it is clear that the relief for possession against defendant in the suit does not arise from any contract with defendant entered into in the course of plaintiff firms' business with defendants but is based on the alleged unauthorised removal of the vehicle from the plaintiff firm's custody by the defendant. In such a situation, the fact that the unregistered firm has purchased the vehicle from somebody else under a contract has absolutely no bearing on the right of the firm to sue the defendant for possession of the vehicle. Such a suit would be maintainable and Section 69(2) would not be a bar, even if the firm is unregistered on the date of suit....."

From the aforesaid, it is clear that even if the source of title to the JCB machine is based on agreement dated 27th November, 2014, its reference as made in the plaint is merely to indicate a historical fact.

11. The reliefs sought by the plaintiff would indicate whether the plaintiff is seeking enforcement of a right arising from a contract. One relief sought is to hand over the said machine to the plaintiff for a period of two years for using the same. This relief cannot be said to be based on a right arising from the contract. In Mukund Balkrishna Kulkarni [supra], it was held by the Honourable Supreme Court that before a plaintiff can be non-suited under provisions of Section 69(1) of the said Act, it must be shown that the suit has been filed by a person "suing as a partner in a firm" and that the suit must be to enforce a right arising from a contract. As can be seen from the nature of reliefs sought by the plaintiff, it cannot be said that the suit seeks to enforce a right arising from a contract.

Another relief sought is with regard to producing the account books, appointing a Receiver and distributing the amounts in question equally between the plaintiff and the defendant. In the aforesaid decision, it was further observed that the Hon'ble Supreme Court in view of the exception carved out by Section 69(3) of the said Act, a person suing as a partner can enforce a right under the contract for dissolution of the firm and accounts. A claim for half share in the firm's assets is a necessary corollary to a prayer for dissolution and without a prayer for specified shares in the firm's assets and business, the relief that may be granted in a suit for dissolution would be ineffective. Thus, the prayer made in the plaint for appointing a Receiver and distributing the amounts in question in equal share would be maintainable and would relate to the exception under Section 69(3) of the said Act. In Valji Shamji Chheda & others [supra], the aforesaid decision was relied upon and the suit therein was held to be maintainable.

12. There is another aspect of the matter. If the acts of the defendant prima facie are shown to be based on a misconduct committed by a partner, the suit for damages in that regard would not be barred by Section 69 of the said Act. This has been held in Chandrayya [supra]. The facts in that case indicate that a Partnership-Deed was executed between seven persons. However, one of the defendants had broken the lock put on the premises of the firm and had put his own lock. In that backdrop, the plaintiff filed a suit for recovery of certain amounts. Relying upon the judgment of the Division Bench in Navinchandra Jethabhai & another Vs. Moolchand Sadaram Gindodiya [MANU/MH/0059/1966 : AIR 1966 Bom. 111], it was held that the suit of said nature was essentially a suit for damages for a misconduct and the same would not be barred by Section 69 of the said Act. On reading the plaint averments, it is clear that the plaintiff has based the suit on the cause of action relating to the alleged misconduct of the defendant. The plaintiff has sought relief on that basis in the suit. The suit, therefore, would be maintainable and not barred by Section 69 of the said Act.

13. Thus, from the aforesaid, it is found that though there existed a partnership between the plaintiff and the defendant, the suit as filed was not based on any contract between the parties and that relief was sought in view of the alleged misconduct committed by the defendant. Non-registration of the partnership was, therefore, not fatal to the tenability of the suit. Hence, for aforesaid reasons which are distinct from the reasons assigned by the trial Court, I find that the application under provisions of Order-VII, Rule 11 of the Code was rightly rejected. The trial Court did not commit any jurisdictional error in that regard. 

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Civil Revision Application No. 7 of 2017

Decided On: 08.01.2018

Rupchand Vs. Laxman

Hon'ble Judges/Coram:

A.S. Chandurkar, J.

Citation: (2018) 2 MHLJ 356

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Whether plaint can be rejected on ground that partnership firm is not registered?

 In my considered opinion, if the cross-examination of the plaintiff is perused, it can be easily seen that he has specifically denied the suggestion that his partnership firm is not registered with the Registrar Office. The only admission given by him is that he has not placed on record any document to show that it was a registered partnership firm and he was the partner of the said firm. It is a different thing to say that partnership firm is not registered and another thing to say that no document is produced to show that it is a registered partnership firm and further denying the suggestion that it was not a registered partnership firm. In view thereof, the document, which is now produced on record by the respondents showing that one partnership firm in the name of "Safal Land Developers, Promoters and Builders", is registered with the Registrar of Firm in the year 1999 itself, needs to be taken into consideration.

7. As regards the dispute raised, that the name of the said partnership firm in the registration certificate is different from the name of the partnership firm stated in the title clause of the suit filed by the respondents before the trial court, it needs to be decided on the basis of evidence to be adduced before the trial court as to whether the registration certificate is of plaintiff's partnership firm or otherwise. Ultimately it is for the trial court to come to the conclusion in one way or other as to whether this registration certificate pertains to the partnership firm of the plaintiff or not. At this stage, the said certificate cannot be discarded on that ground especially when, the address of the plaintiff mentioned in the plaint is of the partner of the said partnership firm, whereas the address mentioned in the registration certificate is of the principal place of the office of the said partnership firm, and therefore, both these addresses are bound to be different.

8. Hence, having regard to these facts on record, in my considered opinion, no interference is warranted in the impugned order of the trial court, rejecting the petitioners' application for rejection of the plaint under Order VII Rule 11 CPC on the count that it is barred by the provisions of Section 69 of the Act.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Civil Revision Application No. 89/2016

Decided On: 22.06.2017

Hitendra Purushottam Kadu and Ors. Vs. Safal Developers

Hon'ble Judges/Coram:

Dr. Shalini Phansalkar Joshi, J.

Citation: 2018(1) MHLJ 256

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What is power and duty of court while dealing with application U/S 9 of arbitration Act?

On the power and duty of the Court dealing with
application under section 9 of the Act there are
observations of Apex Court in the case of Patel
Engineering (cited supra) and the observations of the
Honourable 6 Judges of the Apex Court at para No.18 are
as under:
“18, It is also not possible to accept the
argument that there is an exclusive
conferment of jurisdiction on the arbitral
tribunal, to decide on the existence or validity
of the arbitration agreement. Section 8 of the
Act contemplates a judicial authority before
which an action is brought in a matter which is
the subject of an arbitration agreement, on
the terms specified therein, to refer the
dispute to arbitration. A judicial authority as
such is not defined in the Act. It would
certainly include the court as defined in
Section 2 (e) of the Act and would also, in our
opinion, include other courts and may even
include a special tribunal like the Consumer
Forum (See Fair Air Engineers (P) Ltd. and
another V. N. K. Modi (1996 (6) SCC 385).
When the defendant to an action before a
judicial authority raises the plea that there is
an arbitration agreement and the subject

matter of the claim is covered by the
agreement and the plaintiff or the person who
has approached the judicial authority for
relief, disputes the same, the judicial
authority, in the absence of any restriction in
the Act, has necessarily to decide whether, in
fact, there is in existence a valid arbitration
agreement and whether the dispute that is
sought to be raised before it, is covered by the
arbitration clause. It is difficult to
contemplate that the judicial authority has
also to act mechanically or has merely to see
the original arbitration agreement produced
before it, and mechanically refer the parties
to an arbitration. Similarly, Section 9 enables
a Court, obviously, as defined in the Act, when
approached by a party before the
commencement of an arbitral proceeding, to
grant interim relief as contemplated by the
Section. When a party seeks an interim relief
asserting that there was a dispute liable to be
arbitrated upon in terms of the Act, and the
opposite party disputes the existence of an
arbitration agreement as defined in the Act or
raises a plea that the dispute involved was not
covered by the arbitration clause, or that the
Court which was approached had no
jurisdiction to pass any order in terms of
Section 9 of the Act, that Court has

necessarily to decide whether it has
jurisdiction, whether there is an arbitration
agreement which is valid in law and whether
the dispute sought to be raised is covered by
that agreement. There is no indication in the
Act that the powers of the Court are curtailed
on these aspects. On the other hand, Section
9 insists that once approached in that behalf,
-- the Court shall have the same power for
making orders as it has for the purpose of and
in relation to any proceeding before it”.
Surely, when a matter is entrusted to a Civil
Court in the ordinary hierarchy of Courts
without anything more, the procedure of that
Court would govern the adjudication [See
R.M.A.R.A. Adaikappa Chettiar and Anr. V. R.
Chandrasekhara Thevar (AIR 1948 P.C. 12).”
49. It is also laid down by the Apex Court in Patel
Engineering case, cited supra, that in the application
filed under section 11 of the Act the preliminary aspect
like existence of valid arbitration agreement needs to be
decided.
50. The aforesaid position of law shows that the larger
bench of the Apex Court in Jagdish Chandra's case (cited
supra) has laid down that the expression “other

proceeding” used in section 69 (3) of the Partnership Act
includes even the application filed under section 8 (2) of
Arbitration Act, 1940. In the case of Patel Engineering,
cited supra, the Apex Court has laid down that before
appointing Arbitrator under section 11 of the Act it is
necessary to consider the preliminary aspect like
existence of valid arbitration agreement. It is also laid
down that the court deciding the proceeding under
section 9 of the Act is also expected to consider the
existence of such agreement. When it is laid down that
reference of the dispute in a case, like the present one to
Arbitration, is not possible as such reference is barred,
this aspect needs to be considered in a proceeding filed
under section 9 of the Act and on this aspect the
applicant needs to make out prima facie case. The
Applicant needs to be necessarily “party” to the
agreement and so these aspects need to be considered.
51. Let us ascertain as to what is nature of the dispute
which Sanjay wants to refer to arbitration. This exercise
is necessary in view of the aforesaid position of law. The
definition of “Arbitration Agreement” can be found in

section 2 (1) (b) and section 7 of the Act. The provision
of section 7 of the Act shows that there can be
arbitration agreement (a) to submit all or certain
disputes to Arbitral Tribunal and (b) the dispute may
have arisen already before the making of the agreement
or may arise subsequent to the arbitration agreement.
The definition shows that the existence of “dispute” is
essential condition for appointment of Arbitrator. In view
of the position of law, already discussed the case of the
existence of dispute also needs to be made out to get
order under section 9 of the Act. It also needs to be kept
in mind that every dispute need not necessarily be
treated as a dispute giving cause of action for
Arbitration. Thus, the terms of reference are critical in
arbitration process. The 'dispute' and the terms of
reference need to be ascertained very cautiously when
there is objection like the objection available undersection 69 (3) of Partnership Act. When section 69 (3) of
Partnership Act has created a clear bar of referring some
disputes to Arbitration, it needs to be ascertained
whether the dispute raised is also barred due to this
provision, for reference. The provision of section 21 of

the Act can be referred in this regard.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
BENCH AT AURANGABAD
ARBITRATION APPEAL NO.: 6 OF 2015

Tapadiya Construction Ltd.,

V
Sanjay Suganchand Kasliwal,

CORAM:- T. V. NALAWADE, J.
DATED:- 3rd DECEMBER, 2015.
Citation: 2016(6) MHLJ 768 Bom

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Whether court can grant interim relief U/S 9 of Arbitration Act if unregistered partnership firm is in existence?

 The relevant clauses of partnership agreement are
already quoted. They show that the parties cannot put
to an end themselves to the contract unless the project
is completed. The submissions made and copy of
proceeding filed in this Court under section 11 of the Act
(Application No.12 of 2012) show the nature of dispute
which Sanjay has raised. There is a dispute that
Jugalkishor is not giving accounts of partnership firm to
Sanjay and the dispute has arisen between these two
partners regarding accounts of business of firm. As per
this record, Sanjay wants to settle this dispute amicably
and he wants to continue with the project and complete
it as provided under the agreement. Thus, Sanjay does
not want the relief of dissolution of the partnership in the
adjudication. Thus, the partnership is in existence and
Sanjay has no intention to go for dissolution of
partnership. In view of this nature of dispute raised by
Sanjay, this Court has no hesitation to hold that the bar
given by section 69 (3) of Partnership Act is applicable
against Sanjay and due to that even interim relief under

section 9 of the Act cannot be given.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
BENCH AT AURANGABAD
ARBITRATION APPEAL NO.: 6 OF 2015

Tapadiya Construction Ltd.,

V
Sanjay Suganchand Kasliwal,

CORAM:- T. V. NALAWADE, J.
DATED:- 3rd DECEMBER, 2015.
Citation: 2016(6) MHLJ 768 Bom

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Whether unregistered partnership firm can initiate arbitration proceeding?

Having regard to our conclusion that Arbitral Proceedings will not come under the expression "other proceedings" of Section 69(3) of the Partnership Act, the ban imposed under the said Section 69 can have no application to Arbitral proceedings as well as the Arbitration Award. Therefore, the appeal stands allowed, 
SUPREME COURT OF INDIA

M/s. Umesh Goel Vs. Himachal Pradesh Cooperative Group Housing Society Ltd.

[Civil Appeal No.7916 of 2009]

Fakkir Mohamed Ibrahim Kalifulla, J.

Dated: 29 June 2016
Citation:AIR 2016 SC3116,(2016) 11 SCC313

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