Telangana High Court
Acha Raghu Kumar vs Vangala Srinivas Reddy on 19 September, 2018
Author: V Ramasubramanian
Bench: V Ramasubramanian
*IN THE HIGH COURT OF JUDICATURE AT HYDERABAD
FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA
PRADESH
*HON'BLE SRI JUSTICE V.RAMASUBRAMANIAN
And
HON'BLE MS. JUSTICE J. UMA DEVI
+C.R.P.No.2445 of 2018
%Date: 19-09-2018
#Between:
Acha Raghu Kumar, S/o. Satyanarayana,
R/o.2-1-427/2, Nallakunta,
Hyderabad.
... Petitioner/respondent No.1/plaintiff
Vs.
1. Vangala Srinivas Reddy, S/o. Ram Reddy, Flat No.105, R/o.3-12-
126/105, P.S. Residency, P.S. Colony, Ganesh Nagar,
Ramanthapur, Hyderabad.
Respondent/Petitioner/Defendant No.5
2. Vanga Chandra Reddy, S/o. late Dharma Reddy, R/o. Plot No.92,
Road No.3, Tirumala Hills, Asmangadh, Hyderabad.
3. K. Raja Goud, S/o. Longamanaiah Goud, R/o. 1-8-607/8, Achaiah
Nagar, Nallakunta, Hyderabad.
4. Acha Satish Kumar, S/o. Balachandram, R/o. 2-1-340/1/1,
Nallakunta, Hyderabad.
5. K. Sunil Kumar, Goud, S/o. Late Nellakantam Goud, R/o. Plot
No.52, Jawahar Hill Colony, Sikh Road, Secunderabad.
... Respondents/defendants
! For the Petitioner : Mr. Rama Mohan Palanki
^ For the Respondents 1 & 2 : Mr. B. Chandrasen Reddy
<GIST:
> HEAD NOTE:
? Cases referred
2 VRS,J & JUD,J
C.R.P.No.2445/2018
HON'BLE SRI JUSTICE V.RAMASUBRAMANIAN
AND
HON'BLE MS. JUSTICE J. UMA DEVI
C.R.P.No.2445 of 2018
ORDER:(per VRS,J) Challenging an order passed by the trial court, allowing an application under Section 8 of the Arbitration and Conciliation Act, 1996, the plaintiff in the suit has come up with the above revision.
2. Heard Mr. Rama Mohan Palanki, learned counsel for the petitioner and Mr. B. Chandrasen Reddy, learned counsel appearing for the respondents 1 and 2.
3. The petitioner herein filed a suit in O.S.No.188 of 2011 on the file of the II Additional Senior Civil Judge's Court, Ranga Reddy District seeking - (1) dissolution of a partnership firm by name "Baker's "Q"; (2) rendition of accounts from 01.04.2009 to 31.03.2010; and (3) appointment of a Receiver to manage the day to day affairs of the firm.
4. The 5th defendant in the suit, before he could file his written statement, filed an application in I.A.No.729 of 2011 under Section 8 of the Arbitration and Conciliation Act, 1996. The said application was allowed by the trial Court by an order dated 13.02.2017. Aggrieved by the said order, the plaintiff has come up with the above revision.
5. In the application under Section 8, the 1st respondent herein claimed that Clause-11 of the partnership deed contained a provision for arbitration of the disputes among the partners. But this application was resisted by the plaintiff on the short ground that Section 59 of the Indian Partnership Act did not prohibit the filing of a suit and that the petition could not be allowed.
3 VRS,J & JUD,J C.R.P.No.2445/2018
6. But the Court below found that there was a clause for arbitration and that the application under Section 8 had to be allowed in view of the law laid down by this Court and the Supreme Court.
7. The contention of the learned counsel for the petitioner is that the arbitrator has no power to dissolve a firm and to direct rendition of accounts and that as per the law laid down by the Supreme Court, no arbitration would lie either for the winding up of a company or for the dissolution of a firm.
8. Before we proceed to consider the contentions of the learned counsel for the petitioner, it is necessary to clarify on 2 aspects. The 1st respondent herein, in his application filed under Section 8, sought a stay of further proceedings in the suit rather than for referring the matter for arbitration. But nevertheless, the application was under Section 8 and it was treated as one under Section 8 by the trial Court.
9. Similarly, the petitioner herein/plaintiff, as seen from paragraph- 10 of his counter to the application under Section 8 proceeded on a misconception as though it was an application under Order VII Rule 11 C.P.C. This misconception crept even into the contentions of the learned counsel for the petitioner, who argued that the application did not satisfy the requirements of Order VII Rule 11 C.P.C.
10. It must be clarified that an application under Section 8 of the Arbitration and Conciliation Act, 1996 is not an application under Order VII Rule 11 C.P.C. The application under Section 8 is regulated by the provisions of the special enactment. Therefore, the misconception on the part of the petitioner herein/plaintiff should be removed.
11. The only ground on which the impugned order is challenged is that the arbitrator has no power to dissolve a partnership firm and that 4 VRS,J & JUD,J C.R.P.No.2445/2018 just as a company registered under the Companies Act 1956 cannot be ordered to be wound up by the arbitrators, the relief of dissolution cannot also be granted by the arbitrators.
12. According to the learned counsel for the 1st respondent, the issue raised by the petitioner is covered directly by three decisions, one of the Rajasthan High Court, the second of the Punjab and Haryana High Court and the third of the High Court of Bombay, all of which followed a decision of the Supreme court.
13. In Jagdish Chandra v. Hari Narain1, a learned Judge of the Rajasthan High Court, following the decision of the Supreme Court in V. H. Patel and Company v. Hirubhai Patel2, held that the arbitrator has the power to decide whether or not the partnership shall be dissolved and to award its dissolution.
14. Similarly in Ashok Kumar Malhotra v. Kasturi Lal Malhotra3, a learned Judge of the High Court of Punjab & Haryana pointed out that while an order for winding up of a Company is an order in rem, an order for dissolution of partnership is an order in personam and that therefore Section 44 of the Indian Partnership Act, did not oust the jurisdiction of the arbitrator to consider the dissolution of the firm.
15. In Yogendra N. Thakkar v. Vinay Balse4, a learned Judge of the Bombay High Court, after relying upon the decision of the Supreme Court in V.H. Patel, came to the conclusion that though Section 44 refers to the dissolution of the firm by the Court, the said provision does not create a bar for an arbitrator to dissolve a partnership. In paragraph-65 of 1 2010 Law Suit (Raj) 942 2 (2000) 4 SCC 368 3 2012 SCC Online P & H, 2002 4 2018 (4) BomCR785 5 VRS,J & JUD,J C.R.P.No.2445/2018 the judgment, the learned Single Judge of the Bombay High Court pointed out that the power of dissolution of the partnership firm, on just and equitable grounds, is also an action in personam and not an action in rem.
16. We are in agreement with the views expressed by those 3 High courts. Therefore, we see no reason to entertain the civil revision petition. Hence it is dismissed. There shall be no order as to costs. As a sequel, pending miscellaneous petitions, if any, shall stand closed.
_________________________ V. RAMASUBRAMANIAN, J.
_______________ J. UMA DEVI, J.
______ September, 2018 Js.
6 VRS,J & JUD,J C.R.P.No.2445/2018 HON'BLE SRI JUSTICE V.RAMASUBRAMANIAN AND HON'BLE MS. JUSTICE J. UMA DEVI C.R.P.No.2445 of 2018 (Per VRSJ) _____ September, 2018 Js.