Delhi District Court
M/S Akademia Books International vs Mr. Ashok Kumar Parwanda on 5 March, 2007
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IN THE COURT OF MRS. R. KIRAN NATH,
ADDL. DISTRICT JUDGE:DELHI.
SUIT NO: 357/04/03
Date of Institution: 22.12.2003
Date of Decision : 05.03.2007
In Re:
1. M/s Akademia Books International
A partnership firm through its
Partner Vipen Kumar Parwanda HUF
Through its Karta Mr. Vipen Kumar Parwanda
B-6, Skipper Corner, 88 Nehru Place,
New Delhi- 19
2. Vipen Kumar Parwanda HUF
Through its karta Mr. Vipen Kumar Parwanda
139, Swapan Kunj, Pocket-A-8, Kalkaji Extn.
New Delhi- 19 .... Plaintiffs
VERSUS
1. Mr. Ashok Kumar Parwanda
S/o Late Mr. R.A. Parwanda
R/o K-3-B, Kalkaji,
New Delhi- 19
Also at : G-4, Kalkaji,
New Delhi- 19
2. M/s Technip Books International
Through its Proprietor Mr. Gaurav Parwanda
S/o Mr. Ashok Kumar Parwanda
R/o K-3-B, Kalkaji,
New Delhi- 19
Also at: (a) D/D 14, Kalkaji Extn.
New Delhi- 19
(b) 4/12, Kalkaji Extn.
New Delhi - 19
M/s Akademia Books vs. Ashok Kumar
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3. M/s Tech Books International
Through its sole Proprietor
Mr. Ashok Kumar Parwanda
R/o K-3-B, Kalkaji,
New Delhi- 19
Also at : 4/12, Kalkaji Extn.
New Delhi- 19
4. M/s VSP Books International
Through its Proprietor
Mr. Ashok Kumar Parwanda
R/o K-3-B, Kalkaji,
New Delhi- 19
5. Technobooks.Com
Through its Proprietor/ Authorised Signatory
Mr. Ashok Kumar Parwanda
R/o G-8/C-E, Ground Floor
Eros Apartment,
56, Nehru Place,
New Delhi- 19
6. Varun Parwanda
S/o Mr. Ashok Kumar Parwanda
R/o G-8/C-E, Ground Floor
Eros Apartment,
56, Nehru Place,
New Delhi- 15
7. Mr. Gaurav Parwanda
S/o Mr. Ashok Kumar Parwanda
R/o K-3-B, Kalkaji,
New Delhi- 19
8. Mrs. Indu Parwanda
W/o Mr. Ashok Kumar Parwanda
R/o K-3-B, Kalkaji,
New Delhi- 19
.... Defendants
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M/s Akademia Books vs. Ashok Kumar
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:ORDER:(Application u/Sec. 8 of the Arbitration & Conciliation Act, 1996 This order shall dispose of an application under Sec. 8 of the Arbitration & Conciliation Act, 1996 (hereinafter called the Arbitration Act).
In brief the facts material for consideration of this application are that the plaintiffs have filed a suit for mandatory and permanent injunction and rendition of accounts against the eight defendants. It is the case of the plaintiffs that the plaintiff no.1 was a partnership firm constituted vide a duly registered partnership deed dated 27.6.1994. It was a partnership firm between the plaintiff no.2 and defendant no.1. It is further the case of the plaintiffs that defendant no.1 had invested Rs. 5,75,000/- as part of his share in the firm. This amount had also been given to him by the plaintiff. The defendant no.1 was a government servant. As per the partnership deed clause 12, it was stipulated that 'None of the partners shall involve himself and family members in the competitive business of books'. The firm was dealing in the distribution of books.
It is the grievance of the plaintiff that defendant no.1 started taking control of the business with malafide intentions to have his own firm. Subsequently, the defendant no.1 formed his four other firms either in his M/s Akademia Books vs. Ashok Kumar :4: own name or in the name of his family members, which firms were defendants no.2 to 5; and diverted all the business to them. The plaintiff had to go out of Delhi very frequently for his business and defendant no.1 succeeded in grabbing the firm and taking over all the business of the firm to his sole benefit. The defendants no.6 & 7 were sons of the defendant no.1 and defendant no.8 was the wife of defendant no.1. The defendants no.2 to 5 were the firms floated by defendant no.1, 7 and 8.
It is further the case of the plaintiffs that defendant no.1 had been running the said firms from his residence at Kalkaji. It is also his grievance that the defendant no.1 had given the address of the plaintiff firm as the address for defendants no.4 & 5 in the directory of Delhi State Booksellers and Publishers Association to misrepresent the public at large that they were part of the plaintiff no.1. On this, the plaintiff no.2 checked all the accounts and found discrepancies therein. The stocks manuscripts, orders, documents and other details were missing. The amount released in the name of various persons, had been utilized illegally by the aforesaid firms. The payments from clients had been taken by defendant no.1 in the name of his other firms misrepresenting that these other firms (defendants no.2 to 5) had taken over the business of plaintiff firm. The defendant no.1 had also redirected the payments of the various clients of the plaintiff firm M/s Akademia Books vs. Ashok Kumar :5: into his own account. Thus, the defendants were misappropriating the accounts of the firm to the detriment of the firm.
Hence the suit praying for a permanent injunction to restrain the defendants, their agents, servants, family members, assignees etc. from ever doing the competitive business of books in any manner whatsoever or from operating the firms i.e. defendants no.2 to 5. The plaintiff has also prayed for a permanent injunction to restrain the defendants, their agents, assignees etc. from taking over or collecting the books/payments/orders etc. from the clients/ customers of the plaintiff firm or to deal with any of the clients of the plaintiff firm in any manner whatsoever.
The plaintiff has also prayed for a permanent injunction to restrain the defendants from operating any of the bank accounts and to render the accounts of the business being carried on by defendants no.2 to
5. It has also prayed for a permanent injunction to restrain the defendants, their agents, family members, assignees etc. importing, exporting, publishing, printing any books or from using the e-mails of the plaintiff firm. It has also prayed for a direction to the defendants their agents, family members, assignees etc. to permanently close down all their companies/firms being run from doing the similar business as that of the M/s Akademia Books vs. Ashok Kumar :6: plaintiff.
In response to the said petition, the defendant no.1 moved an application under Section 8 of the Arbitration & Conciliation Act, 1996 (hereinafter called the Arbitration Act). It is the case of the applicant/defendant that plaintiff no.1-- the plaintiff firm had become defunct since July 2001 due to interse disputes between the partners i.e. himself and the plaintiff no.2, who were real brothers. Further that the partnership deed dated 27.6.1994 had an arbitration clause as clause 20, according to which any dispute amongst the partners with regard to the construction or effects of the deed or any part thereof or in respect of maintaining accounts etc, shall be referred to the Arbitrator.
It is further the case of the applicant/defendant that the present suit was for rendition of accounts; that the other defendants had been dragged into this litigation wrongly and with malafide intentions ; that the dispute ought to have been referred to the arbitration and this court would have no jurisdiction to entertain the suit.
The plaintiff has contested this application stating that the same was not maintainable as the claimed relief/prayer no.1 and 2 were outside M/s Akademia Books vs. Ashok Kumar :7: the purview of Section 8 of the Arbitration Act and only the civil court could grant the mandatory and permanent injunction and Arbitrator did not have that powers. Further that the defendants no.2 to 8 were not the parties to the said partnership deed and hence they could not be referred to arbitration. It was submitted that the partnership was still in existence. It was also submitted that the defendants no.1 to 8 were necessary and proper parties to the suit. The relief prayed for were outside the purview of the arbitration clause and only within the jurisdiction of this court.
I have heard the counsel for both the parties at length and have gone through the record carefully. Thereafter my opinion on this application is as under.
Along with this application, the defendant no.1 had also filed the copy of the partnership deed dated 27.6.1994, which is also admitted by the plaintiff. Clause 20 of the said deed reads as under :-
' Any disputes or differences, which may arise among the partners or their legal representatives, with regard to the construction or effects of this Deed or any part thereof or in respect of maintaining accounts, profits and losses of the or the rights and liabilities of the partners undo this Deed or at the time of dissolution or winding-up of the business or any matter relating to the firm shall be referred to the arbitrators and the provisio of Arbitration Act, 1940 shall apply.' M/s Akademia Books vs. Ashok Kumar :8: In the present case, it is seen that essentially the dispute had arisen between the partners of the partnership firm in respect of construction and effects of clause 12 of the partnership deed, which reads as under :-
'None of the partners shall involve himself and family members in the competitive business of books.' It is the case of the plaintiff no.2 that the defendant no.1 had floated various other companies/firms in the name of himself and his family members, who were dealing in the same business of books in which the plaintiff firm was dealing. The other defendants arrayed in the suit are the other companies/firms floated by the defendant no.1 in his own name and in the name of family members. The relief claimed by the plaintiff is essentially against the defendant no.1 who is alleged to have violated clause 12 of the partnership deed. The relief can thus, be sought by the plaintiff against the defendant no.1 with whom alone he has the privity of contract.
To claim this relief, it is for the plaintiff to show that the defendant no.1 had involved himself or any of the family members in the said business.
Section 8 of the Arbitration Act empowers the court to refer the parties to arbitration when there is an arbitration agreement. Sub Clause M/s Akademia Books vs. Ashok Kumar :9:
(i) of Section 8 of the Act provides as under:-
"A judicial authority before 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."
Thus, it is seen that where ever there is an arbitration agreement between the parties in respect of a dispute arising between them and which is the subject matter of the suit filed in the court; the court shall refer the parties to arbitration if a party so applies. However, the party is required to apply for reference of the matter to arbitration under the section not later than when submitting his first statement on the substance of the dispute. It was held by the Hon'ble Supreme Court in the case of , "Hindustan Petroleum Corporation Limited v. Pink City Midway Petroleum (2003) 6 SCC 503" that where the arbitration clause exists, the court has mandatory duty to refer the dispute arising between the parties to arbitrator. Civil court has no jurisdiction to continue with the suit once an application u/S 8 of the Act has been filed. The underlying idea being that once the parties agreed to resolve their disputes by arbitration and if one of the party comes to the court, the other party should be given the choice to still take the matter to the arbitration as agreed between them, before the M/s Akademia Books vs. Ashok Kumar :10: court embarks on the trial of the suit.
It was also held by the Hon'ble Supreme Court in the aforesaid case that even the objections regarding the applicability of the Arbitration clause in the agreement (partnership deed) to the facts of the case had to be raised before the Ld. Arbitrator for decision even though, it goes to the root of the jurisdiction.
I am, thus, of the opinion that in view of the clause 20 of the partnership deed between the plaintiff no.2 and defendant no.1, the suit is not maintainable. The application under Sec. 8 of the Arbitration & Conciliation Act, 1996 is thus, allowed. The suit is dismissed being not maintainable. The parties are directed to refer the matter to the arbitrator. File be consigned to record room.
ANNOUNCED IN THE OPEN COURT.
ON: 05th March, 2007.
J. (R. KIRAN NATH)
ADDL. DISTRICT JUDGE: DELHI.
M/s Akademia Books vs. Ashok Kumar