Kerala High Court
Asokan, Managing Partner, Karthiyani ... vs Jayan on 11 February, 1998
Equivalent citations: AIR1998KER256, AIR 1998 KERALA 256, ILR(KER) 1998 (2) KER 768, (1998) 2 CIVILCOURTC 168, (1998) 1 KER LJ 460, (1998) 1 KER LT 430, (1998) 3 CIVLJ 114
ORDER P. Shanmugam, J.
1. Defendants are the revision petitioners. The revision is directed against the order of the learned Additional Subordinate Judge refusing to refer the dispute for arbitration. The suit is filed by the respondent-plaintiff for a decree of permanent prohibitory injunction restraining the defendants 1 and 2 from purchasing any generator or other new assets using the partnership funds without the written consent of the plaintiff as partner of the firm. The suit also prays inter alia for rendering accounts.
2. The objection of the learned counsel for the revision petitioner in the I. A. to the maintainability of the suit is based on Clause 20 of the partnership agreement which reads as follows :
"Disputes if any and questions in connection with this partnership or this deed, arising between the parties shall be settled by resort to arbitration."
The learned Subordinate Judge construed Clause 20 as applying only to disputes connected with the partnership or interpretation of the partnership document and the relief sought for do not come under Clause 20.
3. Section 5 of the Arbitration and Conciliation Act, 1996 provides that no judicial authority shall intervene in reference to matters except as provided under this part. Section 7 of the Act states mat an "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. In this context, the partnership agreement is a contract which has defined the legal relationship between the partners. The question whether the defendants partners are acting contrary to the terms of the agreement without the written consent of the plaintiff and whether they must render accounts are all matters that would come within the parameters of the partnership agreement which has defined the legal relationship. Therefore, there cannot be a dichotomy in reference to the constitution of the partnership on the one hand and the disputes arising, under the terms of partnership on the other. Partnership agreement is a consolidated contract defining the constitution as well as the functioning of the partnership. Therefore, in my view, the distinction made by the learned Judge for refusing to refer the matter for arbitration cannot be sustained in the light of Section 5 and with Section 8 of the Act, a judicial authority before whom action is born has no other course except to refer the matter for arbitration in the facts and circumstances of the case. 4. Learned counsel appearing for the respondent-plaintiff submits that he wants to safeguard the interest of the property of the firm and it is essential that interim orders should be obtained. Section 9 of the Act enables a party to seek for interim orders. The respondent-plaintiff has not so far taken steps to move for an interim order. It is further pointed out that the proper Court to seek for such an order would be a Court (that) comes within the definition of Section 2 (e) of the Act. Therefore, it is for the petitioner to move the appropriate Court for an appropriate relief under Section 9 of the Act. If any such application is filed, the concerned Court will dispose of the same as early as possible.
With the above observations and direction, the Civil Revision Petition is dismissed.