IMPORTANT POINT
There is no provision in Arbitration and Conciliation Act that when subject matter of suit includes subject matter of arbitration agreement as well as other disputes, the matter is required to be referred to arbitration as splitting of causes or parties is not permissible.

Headnote:Arbitration and Conciliation Act, 1996-Section 8-Suit for dissolution of partnership firm accounts and challenging conveyance deed executed by firm-Third parties who purchased flats i.e. stock in trade of firm were joined as defendants application by appellant under Section 8 of the Act-High Court dismissed application holding that suit apart from relief of dissolution and accounts, other reliefs were also prayed and all defendants to suit were not parties or partners-Appeal-No provision in the Act that when subject matter of suit included subject of arbitration agreement as well as other disputes, matter was required to be referred to arbitration-No provision in the Act for splitting the cause or parties-Words a matter in Section 8 of the Act indicated entire subject matter of suit should be subject to arbitration agreement-Section 89 CPC could not be resorted to for interpreting Section 8 to split cause of action or parties-Impugned order called for no interference.

JUDGMENT

Shah, J.-This appeal by special leave is directed against the judgment and order dated 18-9-2001 passed by the High Court of Bombay in Arbitration Petition No. 500 of 2001.

2. Appellant and respondent Nos.1 and 2 entered into a partnership agreement on 30th April 1992 for carrying on business in the name and style of M/s Hetali Construction Company to develop the land belonging to Ms Jaykirti Mehta who brought the said land as her capital contribution. Land was valued at Rs.65,51.000/-. A Plan for construction of building was submitted in April 1992 and on 20.1.1993, commencement certificate was issued. It is submitted that till issue of commencement certificate, appellant s contribution in the said partnership was to the extent of Rs. 1,25,00,000/- as capital contribution. By award dated 11.3.1993, Ms. Jaykirti Mehta was directed to stand retired from the partnership firm. It was agreed that after retirement of Ms. Mehta, other partners were to continue with the partnership. It is submitted that the appellant provided a fund of Rs. 60,88,000/- to the said partnership firm for being paid to Ms. Jaykirti Mehta which was paid to her along with the amount of Rs. 5,24,000/- in terms of the Award dated 11.3.1999. Further, a sum of Rs.47,50,000/- was paid to one Mr. Kirti Desai to settle the suit filed by him. The partnership firm entered into an agreement with M/s Laxman Commercial and Finance Ltd. and accordingly construction was started. It is contended that from 1996 to 1998, respondents took away some amount from the partnership without contribution to capital construction. On 7.4.1998, five flats were sold to the creditors of the partnership firm in order to repay the loans and excess amount was paid to the firm. In April 1999, M/s Laxman Commercial and Finance Ltd. sold flats No.401 to 701 to different purchasers. On 23.6.1999, the partnership firm executed a Deed of Conveyance subject to rights of other parties in favour of M/s West End Gymkhana Ltd. in respect of disposed of flats. On 1.1.1999, respondent No.1 wrote to the Income Tax Officer to complete the assessment of the partnership firm. Accordingly, assessment order was passed on 30.3.2000.

3. Thereafter, respondent No.1 filed suit No. 1991 of 2000 in the High Court of Bombay for dissolution of partnership firm and accounts and inter alia challenging the conveyance deed executed by partnership firm in favour of M/s West End Gymkhana Ltd. Respondent No.1 also took out a notice of motion No.1576 of 2000 for various interim reliefs.

4. On the same day, appellant filed an application under Section 8 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the Act ). That application was kept for hearing along with the notice of motion.

5. Subsequently, respondent No.1 filed fresh suit bearing No. 2812 of 2001 for dissolution of the suit firm, accounts and other reliefs including the relief for setting aside the transfer of suit flats in favour of various defendants. The respondent withdrew the suit filed on 9th May, 2000.

6. The appellant filed an arbitration petition No.500 of 2001 under Section 8 of the Act. That application was opposed by respondent No. 1 by contending that the subject matter of the suit is not between the contracting parties and the reliefs are claimed not only against respondent Nos.1 and 2 who are contracting parties but are claimed against remaining 23 parties, who are purchasers so-called tenants of the disputed flats.

7. The High Court by its judgment and order dated 18.9.2001 rejected application under Section 8 of the Act. The Court arrived at the conclusion that in the suit apart from the relief of dissolution and accounts, plaintiff has prayed for other reliefs. All the defendants to the suit are not parties or partners in the partnership firm and the terms of the partnership deed including the arbitration clause are not binding to them. Only part of the subject matter could at the most be referred to the arbitration. Furt

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2003 Supreme(SC) 457

IMPORTANT POINTThere is no provision in Arbitration and Conciliation Act that when subject matter of suit includes subject matter of arbitration agreement as well as other disputes, the matter is required to be referred to arbitration as splitting of causes or parties is not permissible.

IMPORTANT POINT
There is no provision in Arbitration and Conciliation Act that when subject matter of suit includes subject matter of arbitration agreement as well as other disputes, the matter is required to be referred to arbitration as splitting of causes or parties is not permissible.