Madras High Court
S.Nagarajan vs Chanchal Kanwar on 27 November, 2012
Author: Vinod K.Sharma
Bench: Vinod K.Sharma
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 27/11/2012 CORAM THE HON'BLE MR.JUSTICE VINOD K.SHARMA A.No.3614 of 2012 in C.S.No.471 of 2011 M/S.BLUE WHALE LOGISTICS NO.65,THAMBU CHETTY STREET, II FLOOR, CHENNAI-1, REP. BY ITS PARTNER S.NAGARAJAN S.NAGARAJAN NEW NO.1D, OLD NO.19 C/5, POONDI THANGAMAL STREET, NEW WASHERMANPET, CHENNAI-81. VS CHANCHAL KANWAR OLD NO.33,GENERAL MUTHIAH STREET, SUIT NO.14, II FLOOR, SOWCARPET, CHENNAI-79. ORDER
This application has been filed under Order XIV Rule 8 of O.S.Rules r/w Section 8 of the Arbitration and Conciliation Act, 1996, for directing the parties to refer the dispute, which is the subject matter of the suit, in C.S.No.471 of 2011 to arbitration as per Clause-20 of the Partnership Deed dated 12.12.2008.
2. The plaintiff / non applicant filed a suit for dissolution of the 1st defendant firm M/s.Blue Whale Marine Services and for a decree for a sum of Rs.21,67,500/- (Rupees Twenty One Lakhs Sixty Seven Thousand and Five Hundred only), being the share capital of the plaintiff. The prayer is also to render true and proper accounts of the Firm.
3. The Clause-20 of the Partnership Deed reads as under:
"20.ARBITRATION:
In the event of any dispute, doubt or question arising out of this instrument of partnership or as to the interpretation, operation or enforcement of the terms of this partnership between the parties hereto, such disputes shall be referred to and settled by recourse to arbitration to be done in accordance with the provisions of THE ARBITRATION ACT, 1940, with any amendment thereof."
4. The Partnership Deed also stipulates that any partner may retire from the partnership on giving not less than three months' notice in writing to the other partners of his intention in that behalf, and the partner so giving notice shall cease to be a partner in the partnership business on the expiry of such notice period.
5. The Partnership Deed did not stipulate dissolution of the partnership either on the retirement of partners or on account of death of a partner or his / her incompetence to be a partner.
6. Along with the suit, an application was filed for appointing an Advocate Receiver. On notice, defendants / applicants have moved an application to refer the dispute, which is the subject matter of the suit in C.S.No.471 of 2011 for arbitration as per Clause-20 of the Partnership Deed dated 12.12.2008.
7. Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') stipulates that when a case is brought before a judicial authority, which is the subject of an arbitration agreement, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. It further stipulates that the application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
8. In this case, the applicant has neither filed the original nor certified copy of the arbitration agreement, i.e. partnership deed. However, this defect stands cured, as the plaintiff has placed on record the Partnership Deed, containing arbitration clause, therefore it is not in dispute that arbitration clause exists between the parties.
9. The affidavit filed in support of the pleadings reads as under:
"1. I respectfully submit that I am the 2nd applicant in the above application and the 2nd defendant in the suit. I am one of the partner in the 1st applicant partnership firm and as such I am well acquainted with the facts of the case. I am filing this application both for myself and as well as for the 1st applicant, the partnership firm herein.
2. I respectfully submit that the respondent/plaintiff had filed the present suit for dissolution of the 1st applicant partnership firm.
3. I respectfully submit that I am filing the present application under Section 8 of the Arbitration and Conciliation Act, 1996 for a dispute that arose between the applicants and the respondent to be referred to Arbitration.
4. I respectfully submit that I had started a proprietorship concern for a transport business in the name and style of M/s.Blue Whale Logistics in the year 2007 and in order to develop and improve my business of transportation, I had obtained loan through some private financiers. One such financier is Mr.Poonamchand, father of the respondent / plaintiff, who was earlier lending money on interest to my proprietorship concern. Thereafter in order to further expand my business, I had opted to get a bank loan and managed to obtain a Cash Credit of Rs.10,00,000/- for my proprietorship concern through the Corporation Bank. Mr.Poonamchand was continuing his money lending to my concern and his rate of interest for which he wanted to hold stakes and become a partner with my proprietorship concern thereby making the same into a partnership firm in the same name and style. Mr.Poonamchand wanted to become a partner in my business through his daughter, Ms.Chanchal Kanwar, the respondent/plaintiff herein and the respondent/plaintiff had entered into a Partnership Deed with me on 12.12.2008 registered with the Registrar of Firms, Madras (North) as S.No.831/08 dated 23.12.2008. I agreed for the said partnership with the respondent / plaintiff on the instructions of Mr.Poonamchand, so as to expand the transport business with the financial service from Mr.Poonamchand.
5. I respectfully submit that thereafter as soon as Mr.Poonamchand entered into the said partnership firm through his daughter, he started to manage all the affairs and accounts of the 1st applicant partnership firm with the support of his daughter, the respondent/plaintiff herein. After the partnership deed Mr.Poonamchand, with his influence had managed to hike the cash credit facility with the Corporation Bank from Rs.10 Lakhs to Rs.50 Lakhs for which my mother, Mrs.Geetha, had furnished her property with land and building situated at Old No.19C/5, New No.1D, Poondi Thangammal Street, New Washermanpet, Chennai-600 081 as collateral for the above said cash credit. Along with the above said security, the Corporation Bank has also made the hypothecation of book debts of the 1st applicant partnership firm in the form of receivable assignment of business transaction not exceeding 90 days. Even, Mr.Poonamchand had collected Rs.1,50,000/- from me as facilitation money to make arrangements with the bank to exceed the cash credit facility from Rs.10 Lakhs to Rs.50 Lakhs.
6. I respectfully submit that Mr.Poonamchand after induction of the respondent/plaintiff as partner in the 1st applicant partnership firm had obtained my signature in few hundreds of cheques of the 1st applicant partnership firm and he always misuses the said cheques for his personal expenses including credit card payments, personal loan payments etc., with the help of his daughter, the respondent/plaintiff herein. Mr.Poonamchand himself credits most of the money of the 1st applicant partnership firm into his personal account through the above said cheques holding with him and makes the payment towards the monthly interest for his alleged three finance channels 1) Shree Finance (In the name of Mr.Poonamchand himself), 2) Shubh Finance (In the name of Mr.Poonamchand's wife) and 3) P.Mukesh Kumar (Mr.Poonamchand's son).
7. I further respectfully submit that Mr.Poonamchand, with the help of his daughter, the respondent/plaintiff herein had misused many of the 1st applicants cheques and managed to pay towards the interest alleged to be payable to his family finances according to his whims and fancies and he also withdrew cash through his staff using some of the said cheques. He never discloses any ledger accounts or records for the same. He always says that because of late payment from the customer, the rate of interest carries interest upon interest and Mr.Poonamchand cleverly answers that he only has the ability of adjusting those accounts and advised me not to interfere in his tallying of accounts. But, I was only able to get extract a meager amount from Mr.Poonamchand that too always to meet the immediate expenses such as repairs, spares, diesel etc., for the trailers and was not able to incur much profit because of the high rate of interest fixed by Mr.Poonamchand towards his family finances to be paid by the 1st applicant firm. Mr.Poonamchand, calculates the rate of interest from 5% to 10% if the number of days of collection from the customers increases from 30 days to 60 days and would fix the interest upon interest and named it as over due interest and will calculate as one month period for even the period of 15 days.
8. I further respectfully submit that initially Mr.Poonamchand was financing for my Proprietorship concern of transport business for a heavy rate of interest through different names of finances which he and his family runs. At first I had accepted his rate of interest only in order to expand my transport business. Mr.Poonamchand alone wanted to join my transport business as a partner and he made his daughter, the respondent/plaintiff herein as a partner along with me and started a partnership concern in the same name of my erstwhile Proprietorship concern viz., M/s.Blue Whale Logistics. Originally it was decided by me to close the Proprietorship concern and I did not invite Mr.Poonamchand to join the concern as a partner. It was only Mr.Poonamchand who had opted to become a partner in the 1st applicant firm and insisted me to join his daughter as a partner since he cannot join as he is lending money to my proprietorship concern for a heavy rate of interest. Since, I asked Mr.Poonamchand to reduce the rate of interest, he suddenly opted to join with me as a partner. It was Mr.Poonamchand had made ready the Partnership Deed of the 1st applicant firm and the contents were all drafted by him and I had signed upon the instructions of Mr.Poonamchand that too for the sake of expansion of the said business.
9. I respectfully submit that though the business was developed, the accounts of the 1st applicant firm, were handled only by Mr.Poonamchand through the help of his daughter, the respondent / plaintiff herein and the details of the accounts were never furnished by him to me saying that he only knows how to tally the accounts of the 1st applicant firm as per his wish so as to adjust it towards the payment of interest to the bank rooted through his family finances and his personal debts. Only a part of the firms fund was utilized in payment of installments for the trailors and most of the funds were swindled by Mr.Poonamchand through the other partner who is none other than his own daughter in the name of adjusting the accounts of the 1st applicants firm. Mr.Poonamchand was maintaining the accounts of the firm with the consent and help of his daughter and used all the transactions in my name.
10. I respectfully submit that I have been paying the dues regularly to the Corporation Bank without any default till date even when the respondent nor her father was co-operating to run the 1st applicant partnership firm. Only when I had questioned Mr.Poonamchand, about the irregularities in handling the accounts of the partnership firm, he had instructed his daughter to file the present suit for dissolution of partnership. In order to save her father Mr.Poonamchands sin of swindling the 1st applicants funds, the respondent had cleverly filed the present suit to show that she and her father are Ms and Mr. Clean. The respondent/plaintiff even did not attend the office of the 1st applicant firm for even a single day and only his father Mr.Poonamchand was acting on her behalf.
11. I respectfully submit that moreover the respondent/plaintiff had very cleverly made arrangements for filing the present suit on the behest of her father Mr.Poonamchand, thereby entering into three non registered Deed of Assignment on a single day on 20.06.2011 one with her father Mr.Poonamchand, the other with her mother Mrs.P.Parasdevi and the other one with her brother Mr.P.Mukesh Kumar, that too with Non Judicial Stamp papers bearing continuous serial numbers, all assigning the respondent/plaintiff to recover the debts to her 3 family finance entities from the 1st applicant partnership firm in which the respondent/plaintiff herself is also one of the partner. These Deeds of Assignment filed along with the plaint were made ready purposely for filing the present suit since the present suit was also filed in the month of June 2011 and the Deeds were also entered in the very same month. In all the three Deeds it was stated that several attempts were taken to recover the said debts, but not even a single notice was issued to the 1st applicants firm and these are all only an afterthought contents only to suit the averments in the plaint. These acts of the respondent / plaintiff would prove that her only intention in entering into 1st respondent partnership firm is to swindle more and more money from the partnership firm to her family and also to Mr.Poonamchand.
12. I respectfully submit that the respondent/plaintiff has created a full fledged story to suit her statements and averments in the plaint and had filed an application along with the suit, for a relief of appointing an Advocate Receiver to take control of the business of the 1st applicant firm which is not maintainable since any dispute with regard to the 1st applicant partnership firm has only to be referred to arbitration as per the terms of the Partnership Deed based on which the present suit has been filed.
13. I also respectfully submit that moreover the respondent/plaintiff had violated the terms and conditions of the Partnership Deed dated 12.12.2008 more particularly Clause-12 and Clause-20 of the said Deed.
Clause 12 (RETIREMENT OF PARTNERS) reads as:- The retirement of any partner shall not dissolve the partnership as to the other partners. Any partner may retire from the partnership on giving not less than three months notice in writing to the other partners of his intention in that behalf and the partner so giving notice shall cease to be a partner in the partnership business from the expiry of such notice.
Clause 20 (ARBITRATION) reads as:- In the event of any dispute, doubt or question arising out of this instrument of partnership or as to the interpretation, operation or enforcement of the terms of this partnership between the parties hereto, such disputes shall be referred to and settled by recourse to arbitration to be done in accordance with the provisions of THE ARBITRATION ACT, 1940, with any amendment thereof.
Since Clause-12 would clearly specify that there shall be a written notice of not less than three months from any partner of ceasing to be a partner in the 1st applicants partnership business and Clause-20 would specify that in the event of any dispute, doubt or question arising out of the said partnership, the parties to the Deed shall refer such disputes to arbitration to be done in accordance with the provisions of the Indian Arbitration Act, and its amendments thereof. The respondent/plaintiff had cleverly given a goby to the terms and conditions of the said Partnership Deed and did not issue any such notice as stated above. The 2nd respondent/plaintiff had also not chosen to refer the dispute to an arbitrator as per the terms and conditions of the above said Partnership Deed and had rushed to the court with false and frivolous allegation against me thereby violating the important terms of the said Deed. Therefore the suit itself is not maintainable and this Honble Court lacks jurisdiction to hear the suit.
14. I respectfully submit that Section 8(1) of the Arbitration and Conciliation Act, 1996 provides for preferring an application before the Court wherein an action is brought in a matter which is the subject of an arbitration agreement and the Court shall refer the subject matter and parties to arbitration. The partnership deed dated 12.12.2008 in the present matter also lays down that any dispute, doubt or question shall be referred to arbitration.
15. I respectfully submit that this Honble Court and the Honble Apex Court has repeatedly held and confirmed the law that whatever the parties to a contract have agreed that the disputes shall be resolved by arbitration, the civil courts shall have no jurisdiction over the same. It is well settled law that once an application has been filed under Section 8 of the Arbitration and Conciliation Act, 1996, it is mandatory on the part of the Civil Court which has entertained the suit to refer the parties to arbitration for resolving the disputes.
16. I respectfully submit that I have filed the present application before filing my written statement in the above suit. Since the matter in view of the arbitration clause found in the Deed of Partnership dated 12.12.2008 I am filing the present application. I am herewith filing the duly certified copy of the above said partnership deed dated 12.12.2008, as per the requirement of the Arbitration and Conciliation Act, 1996 before this Honble Court to refer the matter for arbitration. Hence this application.
10. The reading of the affidavit shows that the application is not strictly in terms of Section 8 of Arbitration and Conciliation Act, as the only requirement under Section 8 of the Act is to move an application, stating that the dispute raised in the suit is covered under the arbitration clause for referring the matter to arbitration. It was also prerequisite to file a copy of the arbitration agreement. The provisions of Order XIV Rule 8 are also not applicable.
11. The application is opposed by filing counter, on the ground that this application has been filed only to delay the orders to be passed in O.A.No.571 of 2011 filed for appointment of Advocate Receiver, therefore, deserves to be dismissed. The objection is also taken that the plaintiff has submitted to jurisdiction of the Hon'ble Court by participating in the proceedings, therefore the application is not maintainable. It is also the case of respondents that the matter raised in the dispute is not covered under arbitration agreement.
12. Learned counsel for the applicants / defendants vehemently contended, that as per the provisions of Section 8 of the Arbitration and Conciliation Act, reference of dispute to arbitration for adjudication is mandatory on the part of the Civil Court under the 1996 Act, when it is covered under an arbitration agreement between the parties.
13. It was contended by the learned counsel for the applicants that arbitration clause in the Partnership Deed stipulates that any dispute, doubt or question arising out of this instrument of partnership or as to the interpretation, operation or enforcement of the terms of this partnership between the parties, shall be referred to and settled by recourse to arbitration. It is wide enough to cover the question of dissolution. Therefore, the matter in dispute deserves to be referred to arbitration.
14. In support of this contention, that it is mandatory to refer the matter for arbitration, learned counsel for the applicants / defendants relied upon a judgment of this Court in the case of Sri Lakshmi Enterprises vs. R.Ramakrishnan, 2007 (2) CTC 818, judgments of this Court in India Cements Capital Finance Ltd. vs. Kwality Spinning Mills Ltd., 2000 (II) CTC 267, and M/s.Sugal & Damani Finlease Ltd. vs. P.Subramania Reddy, 2000 (III) CTC 74. Reliance was also placed on the judgment of the Hon'ble Supreme Court in the case of Hindustan Petroleum Corpn. Ltd. vs. Pinkcity Midway Petroleums, (2003) 6 SCC 503, wherein it was held that where arbitration clause exists, court has a mandatory duty to refer dispute arising between the contracting parties to arbitrator, and that Civil Court has no jurisdiction to continue with the suit once an application under Section 8 has been filed.
15. Reliance was also placed on the judgment of the Hon'ble Supreme Court in the case of Shin-Etsu Chemical Co. Ltd. vs. M/s.Aksh Optifibre Ltd and another, 2005 (4) CTC 297, where again the Hon'ble Supreme Court was pleased to lay down that under Section 8 of the Act, the court has a mandatory duty to refer the parties to arbitration, if the conditions stipulated under Section 8 are satisfied and there is no discretion with the Court.
16. There can be no dispute with this proposition, as it is now well settled that if a Civil Suit is brought with regard to the matter covered under the arbitration clause then on an application moved under Section 8 of the Act, it is mandatory for the Court to refer the parties to arbitration.
17.The question in this case to be decided is;
"whether the suit for dissolution of Partnership would be covered under the arbitration clause between the parties or not?".
18. Learned counsel for the applicants in support of his contention, that suit for dissolution of Partnership and rendition of accounts would be covered under the arbitration clause, placed reliance on the judgment of the Hon'ble Delhi High Court in Shukaran Devi vs. SH.Om Prakash Jain and another, (I.A.No.8802/2005 in CS(OS) No.991 of 2005), decided on 22.08.2006, wherein the following clause was held to include the dispute of dissolution:
"That if any dispute shall arise between the parties in respect of the conduct of business of the partnership or in respect of interpretation, operation or enforcement of any of the terms and condition of this deed or in respect of any other matter, cause or thing whatsoever herein otherwise provided for, the same shall be referred for adjudication to the arbitration in accordance with the provisions of the Indian Arbitration act for the time being in force."
19. It was answered, that the dispute regarding dissolution of partnership firm would be covered under the arbitration agreement.
20. Reliance was also placed on the judgment of the Hon'ble Supreme Court in the case of V.H.Patel & Company and others vs. Hirubhai Himabhai Patel and others, (2000) 4 SCC 368, wherein the Hon'ble Supreme Court considered the following question:
"Before the Supreme Court, it was primarily contended on behalf of the petitioner firm that: (i) the reference to arbitration in the consent terms did not include any issue concerning dissolution of the firm; (ii) the pleadings in the civil suits contained no claim for dissolution, and that a new plea on that subject could not be raised by way of amendment. It was also emphasised that the parties had not referred all the disputes between them to arbitration; and (iii) the terms in the partnership deed did not provided for dissolution of the firm "at will", but by "mutual agreement"; therefore dissolution could only be ordered by the Court on the "just and equitable" ground, that dissolution would not be within the jurisdiction of the arbitrator."
Answered the question as under:
"12. So far as the power of the arbitrator to dissolve the partnership is concerned, the law is clear that where there is a clause in the articles of partnership or agreement or order referring all the matters in difference between the partners to arbitration, the arbitrator has power to decide whether or not the partnership shall be dissolved and to award its dissolution. (See Phoenix v. Pope8) Power of the arbitrator will primarily depend upon the arbitration clause and the reference made by the court to it. If under the terms of the reference all disputes and differences arising between the parties have been referred to arbitration, the arbitrator will, in general, be able to deal with all matters, including dissolution. There is no principle of law or any provision which bars an arbitrator to examine such a question. Although the learned counsel for the petitioner relied upon a passage of Pollock and Mulla, quoted earlier, that passage is only confined to the inherent powers of the court as to whether dissolution of partnership is just and equitable, but we have demonstrated in the course of our order that it is permissible for the court to refer to arbitration a dispute in relation to dissolution as well on grounds such as destruction of mutual trust and confidence between the partners which is the foundation therefor."
21. Reliance was further placed on the judgment of the Hon'ble Supreme Court in the case of Prabhu Shankar Jaiswal vs. Sri Sheo Narain Jaiswal and Others, 1997-2-L.W.683, wherein the Hon'ble Supreme Court was pleased to lay down that even dispute regarding dissolution of an unregistered firm can be referred to arbitration.
22. The application is opposed by the learned counsel for the plaintiff / non applicant, on the ground that in the suit, there are serious allegations as to fraud and malpractice committed in account books and also manipulation of finances of partnership firm, therefore, the case does not warrant to be tried and decided by the arbitrator.
23. In support of this contention, learned counsel for the plaintiff / non applicant relied on the judgment of the Hon'ble Supreme Court in the case of N.Radhakrishnan vs. Maestro Engineers and others, (2010) 1 SCC 72, wherein the Hon'ble Supreme Court was pleased to lay down as under:
"15. The appellant had on the other hand contended that the subject matter of the suit was within the ambit of the arbitration clause since according to him the dispute related to his retirement and the settlement of his dues after he was deemed to have retired according to the respondents. Further, it was his contention that he partnership deed dated 6th of December, 2005 was not a valid one as it was not framed in compliance with the requirements under the Partnership Act. Therefore, the argument of the respondents that the subject matter of the suit did not fall within the ambit of the arbitration clause of the original partnership deed dated 7th of April, 2003, cannot be sustained. We are in agreement with the contention of the appellant to this effect.
16. It is clear from a perusal of the documents that there was a clear dispute regarding the reconstitution of the partnership firm and the subsequent deed framed to that effect. The dispute was relating to the continuation of the appellant as a partner of the firm, and especially when the respondents prayed for a declaration to the effect that the appellant had ceased to be a partner of the firm after his retirement, there is no doubt in our mind that the dispute squarely fell within the purview of the arbitration clause of the partnership deed dated 7th of April, 2003. Therefore, the Arbitrator was competent to decide the matter relating to the existence of the original deed and its validity to that effect. Thus the contention that the subject matter of the suit before the 1st Addl. District Munsif Court at Coimbatore was beyond the purview of the arbitration clause, cannot be accepted.
17. Having found that the subject matter of the suit was within the jurisdiction of the Arbitrator, we now proceed to decide whether the Arbitrator was competent to deal with the dispute raised by the parties.
20. The learned counsel for the respondents on the other hand argued that when a case involves substantial questions relating to facts where detailed material evidence (both documentary and oral) needed to be produced by either parties, and serious allegations pertaining to fraud and malpractices were raised, then the matter must be tried in court and the Arbitrator could not be competent to deal with such matters which involved an elaborate production of evidence to establish the claims relating to fraud and criminal misappropriation.
21. In our opinion, the contention of the respondents relating to the jurisdiction of the Arbitrator to decide a dispute pertaining to a matter of this proportion should be upheld, in view of the facts and circumstances of the case. The High Court in its impugned judgment has rightly held that since the case relates to allegations of fraud and serious malpractices on the part of the respondents, such a situation can only be settled in court through furtherance of detailed evidence by either parties and such a situation can not be properly gone into by the Arbitrator.
22. Reliance was placed by the learned counsel for the appellant on a decision of this Court in the case of Hindustan Petroleum Corpn. Ltd. vs. Pinkcity Midway Petroleums [2003 (6) SCC 503], wherein this Court in Para 14 observed:
"If in an agreement between the parties before the civil court, there is a clause for arbitration, it is mandatory for the civil court to refer the dispute to an arbitrator. In the instant case the existence of an arbitral clause in the Agreement is accepted by both the parties as also by the courts below. Therefore, in view of the mandatory language of section 8 of the Act, the courts below ought to have referred the dispute to arbitration".
The learned counsel for the appellant relying on the above- mentioned observations of this Court in the aforesaid judgment submitted that the High Court was wrong in ignoring the ratio of the case and should have accordingly allowed the petition of the appellant for setting aside the order of the trial court.
23. The learned counsel appearing on behalf of the respondents on the other hand contended that the appellant had made serious allegations against the respondent alleging that they had manipulated the accounts and defrauded the appellant by cheating the appellant of his dues, thereby warning the respondents with serious criminal action against them for the alleged commission of criminal offences. In this connection, reliance was placed in a decision of this Court in 1the case of Abdul Kadir Shamsuddin Bubere vs. Madhav Prabhakar Oak and Another,[ AIR 1962 SC 406] in which this court under para 17 held as under:
"17. There is no doubt that where serious allegations of fraud are made against a party and the party who is charged with fraud desires that the matter should be tried in open court, that would be a sufficient cause for the court not to order an arbitration agreement to be filed and not to make the reference."
In our view and relying on the aforesaid observations of this Court in the aforesaid decision and going by the ratio of the above mentioned case, the facts of the present case does not warrant the matter to be tried and decided by the Arbitrator, rather for the furtherance of justice, it should be tried in a court of law which would be more competent and have the means to decide such a complicated matter involving various questions and issues raised in the present dispute.
24. This view has been further enunciated and affirmed by this Court in the decision of Haryana Telecom Ltd. vs. Sterlite Industries (India) Ltd.[ AIR 1999 SC 2354], wherein this court under para 4 observed :
"4. Sub-section (1) of section 8 provides that where the judicial authority before whom an action is brought in a matter, will refer the parties to 1 arbitration the said matter in accordance with the arbitration agreement. This, however, postulates, in our opinion, that what can be referred to the Arbitrator is only that dispute or matter which the Arbitrator is competent or empowered to decide."
25. The learned counsel for the respondent further elaborated his contention citing the decision of the High Court of Judicature at Madras in the case of Oomor Sait HG Vs. Asiam Sait, 2001 (3) CTC 269, wherein it was held:
"Power of civil court to refuse to stay of suit in view of arbitration clause on existence of certain grounds available under 1940 Act continues to be available under 1996 Act as well and the civil court is not prevented from proceeding with the suit despite an arbitration clause if dispute involves serious questions of law or complicated questions of fact adjudication of which would depend upon detailed oral and documentary evidence.
The civil court can refuse to refer matter to arbitration if complicated question of fact or law is involved or where allegation of fraud is made.
Allegations regarding clandestine operation of business under some other name, issue of bogus bills, manipulation of accounts, carrying on similar business without consent of other partner are serious allegations of fraud, misrepresentations etc., and therefore application for reference to Arbitrator is liable to be rejected."
We are in consonance with the above-referred decision made by the High Court in the concerned matter.
26. In the present dispute faced by us, the appellant had made serious allegations against the respondents alleging him to commit malpractices in the account books and manipulate the finances of the partnership firm, which, in our opinion, cannot be properly dealt with by the Arbitrator. As such, the High Court was justified in dismissing the petition of the appellant to refer the matter to an Arbitrator. In this connection, it is relevant to refer the observation made by the High Court in its impugned judgment:
"The above decision squarely applies to the facts of the present case. In the present case as well there is allegation of running rival firm, interference with the smooth administration of the firm. As already stated since the suit has been filed for declaration to declare that the revision petitioner is not a partner with effect from 18.11.2005, and for consequential injunction restraining the petitioner from disturbing the smooth functioning of the first respondent firm, the issue relates to the causes which compelled the respondents to expel the revision petitioner from the partnership firm and the necessity to reconstitute the firm by entering into a fresh partnership deed. Therefore such issues involve detailed evidence which could be done only by a civil court...."
24. Reliance was also placed on the judgment of the Hon'ble Supreme Court in the case of Haryana Telecom Ltd. vs. Sterlite Industries (India) Ltd., (1999) 5 SCC 688, wherein the Hon'ble Supreme Court was pleased to lay down that the dispute regarding winding-up of petition cannot be referred to arbitration, as the jurisdiction vests with the Company Court only.
25. The contention of the learned counsel for the plaintiff is that there is no clause of dissolution of partnership, therefore, under equitable clause, it is only Court, which has jurisdiction to entertain and decide the dispute regarding dissolution.
26. Though this argument looks attractive on the face of it, but in view of the judgment of the Hon'ble Supreme Court in the case of Olympus Superstructures Pvt. Ltd. vs. Meena Vijay Khetan and others, (1999) 5 SCC 651, holding the word 'Court' includes Arbitrator, and if that is so, then the power to be exercised by the Court can also be exercised by the Arbitrator.
27. The reading of Clause-20 of the Partnership Deed, reproduced above, shows that it covers all disputes, which would include the dispute regarding dissolution and rendition of accounts of the firm.
28. Keeping in view of the fact, that it is mandatory for the Court to refer the matter to arbitration, this application is allowed as prayed for. No costs.
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