The words 'other proceeding' in Section 69(3) of the Indian Partnership Act, 1932, should be interpreted narrowly and do not encompass arbitration proceedings under Section 8 of the Arbitration Act, 1940.

Headnote:
PARTNERSHIP ACT - SECTION 69 - ARBITRATION ACT - SECTION 8 - APPLICATION FOR APPOINTMENT OF ARBITRATOR - MAINTAINABILITY - INTERPRETATION OF SECTION 69(3) - SCOPE OF 'OTHER PROCEEDING' - APPLICABILITY TO ARBITRATION PROCEEDINGS.
Fact of the Case:

A partnership between the Petitioners and Respondents was formed to supply manganese ore to an American company. A dispute arose between the parties regarding the supply of manganese ore, and the Petitioners invoked the arbitration clause in the agreement. The Respondents challenged the maintainability of the petition under Section 69 of the Indian Partnership Act, 1932, arguing that the partnership was not registered and therefore could not enforce a right arising from a contract.
Finding of the Court:

The Court held that the application under Section 8 of the Arbitration Act, 1940, was maintainable and that the provisions of Section 69 of the Partnership Act did not bar such an application. The Court interpreted Section 69(3) narrowly, holding that the words 'other proceeding' referred only to proceedings similar to a claim of set-off and did not encompass arbitration proceedings.
Issues: 1. Whether the petition for the appointment of an arbitrator under Section 8 of the Arbitration Act, 1940, was maintainable in light of the provisions of Section 69 of the Indian Partnership Act, 1932. 2. Whether the words 'other proceeding' in Section 69(3) of the Partnership Act included arbitration proceedings.
Ratio Decidendi: 1. The Court reasoned that the right to apply for the appointment of an arbitrator under Section 8 of the Arbitration Act was a statutory right conferred by the Act and not a right arising from the contract between the parties. Therefore, Section 69 of the Partnership Act, which barred suits and certain proceedings to enforce rights arising from a contract, did not apply to the petition under Section 8. 2. The Court interpreted the words 'other proceeding' in Section 69(3) restrictively, holding that they should be read in light of the preceding words 'a claim of set-off' and should be limited to proceedings of a similar nature. The Court found that arbitration proceedings were not analogous to a claim of set-off and therefore did not fall within the scope of 'other proceeding'.
Final Decision: The Court answered the questions posed in the affirmative, holding that the petition for the appointment of an arbitrator was maintainable and that the provisions of Section 69 of the Partnership Act did not bar such an application.

JUDGMENT - 1. This matter has come up before me under Clause 36 of the Letters Patent for the determination of the questions following:--

"Whether in view of the provisions contained in Section 69 of the Indian Partnership Act, 1932, the present petition is maintainable and what provisions should be made for the costs of the parties to the Petition."

There has been a difference of opinion between Mr. Justice Mudholkar and Mr. Justice Naik as regards the answers to be given to the aforesaid questions.

2. I shall briefly state the facts giving rise to the aforesaid questions. The Petitioners are a Company registered under the Indian Companies Act, VII of 1913. The Petitioners carry on business as dealers in Manganese Ore. In or about July 1955, the Petitioners agreed to sell to Messrs. Phillip Brothers India Ltd., an American Company, 10,000 tons of manganese ore of 16/48 grade for shipment abroad during the period January to June 1956. The terms of shipment provided that 5,000 tons of manganese ore was to be shipped between January to March 1956 and the balance of 5,000 tons of manganese ore was to be shipped before 30th June 1956. In connection with the supply of these goods a contract was entered into between the petitioners and one Jagdish Chandra Gupta, who carried on business in the firm name and style of Messrs. Foreign Import and Export Association, the respondents before me. The terms of the agreement between them have been reduced to writing. The said writing is annexed as Ex. A to the Petition. Clauses 1, 2, 3, and 4 of the said agreement provide as under:-

"1. That you (the respondents) are an equal partner in abovesaid joint venture. The profit and loss therein to be shared between you and us (the Petitioners) equally i.e. Annas 8 in a rupee to your a/c and annas 8 in a rupee to our a/c on execution of the contract in full as per terms with the overseas buyers.

2. That both of us can make purchases of the goods for supply against the abovesaid contract at the market ruling price but the party while closing the deal finally with the local seller, should have the prior consent of the other party in writing. In case of difference of opinion in regard to price and a quantity to be purchased, the party who desires to purchase such quantity at such price can so purchase and such purchased goods will be adjusted against his share of 5,000 tons.

3. That both of us agree to invest equally. Advances, if necessary, are to be made equally to local sellers against the purchasers.

4. That we both agree to abide by the terms that are set out in the contract with the overseas buyers. That in case of dispute, the matter will be referred for arbitration in accordance with the Indian Arbitration Act."

In connection with the shipment of 5,000 tons of manganese ore which was required to be made between January to March 1956, the Petitioners called upon the respondents to supply 2,500 tons of man" ganese ore. The Respondents did not comply with that request. Under the circumstances, the petitioners themselves had to supply the full quantity of 5,000 tons of manganese ore to the American purchasers. The Petitioners served a notice on the respondents alleging that the respondents had committed a breach of the contract between the Petitioners and the respondents and that the Petitioners were entitled to claim damages from the respondents for their failure to supply 2,500 tons of manganese ore for shipment between January to March, 1956. The Petitioners claimed a sum of Rs. 1,50,000/- from the respondents as and by way of damages. The Petitioners further stated that the contract between the Petitioners and the respondents provided that in case of dispute the matter would be referred to arbitration in accordance with the Indian Arbitration Act. It was further stated that as it was incumbent upon the petitioners to proceed to enforce their claim against the respondents without further delay, they appointed Mr. R. J. Kolab, Advocate (O. S.) as an arbit

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