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1958 Supreme(Cal) 133

HIGH COURT OF CALCUTTA
P. C. Mallick
SM. PADMABATI PAUL - Appellant
Versus
PANNALAL PAUL - Respondent
Suit 3198  Of  1955
Decided On : MAY 12, 1958

An Arbitrator's power is defined in the order of reference, and an award made in excess of that power is invalid. However, the filing of an award is a ministerial act, and the Arbitrator's failure to file the award within the time limit does not amount to misconduct.

Headnote:

ARBITRATION - AWARD - VALIDITY - PARTNERSHIP DISSOLUTION - ARBITRATOR'S POWER - CREATION OF NEW PARTNERSHIP - DISTRIBUTION OF ASSETS AND LIABILITIES - COMPLIANCE WITH COURT ORDER - FILING OF AWARD - TIME LIMIT - EXTENSION OF TIME.

Fact of the Case:

A partnership dispute between the sons of Hari Narain Paul led to a suit for dissolution of partnership and accounts. During the pendency of the suit, an application for the appointment of a Receiver was made, and the defendants applied for a stay of the suit under Section 34 of the Indian Arbitration Act, 1940, based on an arbitration clause in the partnership agreement. A consent order of reference was passed, referring the matters to arbitration.

Finding of the Court:

The Arbitrator made an award dismissing the plaintiffs' claim and allotting all the assets and liabilities of the partnership to the defendants jointly, with an indemnity to the plaintiffs against any liability due to the partnership. The plaintiffs challenged the award on various grounds, including the Arbitrator's alleged excess of power in creating a new partnership, violation of Section 48 of the Partnership Act, and non-compliance with the court's order regarding the filing of the award.

Issues: 1. Whether the Arbitrator exceeded his power by creating a new partnership between the defendants after dismissing the plaintiffs' claim. 2. Whether the award is contrary to the provisions of Section 48 of the Partnership Act, 1932, and therefore void. 3. Whether the Arbitrator's failure to file the award within the time limit specified by the court amounts to misconduct.

Ratio Decidendi: 1. The Arbitrator did not create a new partnership between the defendants; he merely allotted the assets and liabilities to them jointly, leaving it open to them to carry on the business as a new partnership if they so desired. 2. The award does not violate Section 48 of the Partnership Act, as the right of a partner to have partnership assets applied to the payment of debts is a right against the other partners, which can be waived. 3. The filing of an award is a ministerial act, and the Arbitrator's failure to file the award within the time limit does not amount to misconduct. The court has the power to extend the time for filing the award.

Final Decision: The application to set aside the award was dismissed with costs.

P. C. MALLICK, J.

( 1 ) THIS is an application to set aside an award. The sons of One Hari Narain Paul deceased used to carry on two businesses, one business in Homoepathic medicines known as Paul and Co. at 82, Clive Street and another in paper known as Hari Narain Paul and Co. , at 103, Old China Bazar Street. These businesses were carried on in co-partnership. In August 1952, there was a dissolution of partnership and a new partnership agreement was entered into between three of the sons of Hari Narain, namely, Pannalal, Chunnial and Luxmi Narain, and the legal representatives of Jiban Chandra, another son of Hari Narain, who was dead. On 13-12-1955 the heirs of Jiban Chandra instituted a suit in this court for dissolution of partnership and accounts against the said three sons of Hari Narain. In the said suit the plaintiffs made an application for the appointment of Receiver. Thereupon, the defendants made an application under Section 34 of the Indian Arbitration Act for stay of the suit on the ground that the partnership agreement contained an arbitration clause.

( 2 ) IT appears that on 31-1-1957 a consent order of reference was passed by this court in both the suit and the pending matter under the Indian Arbitration Act. On the date of the order the following matters were pending: (1) the suit for dissolution of partnership, (2) an application for the appointment of Receiver in that suit, and (3) the application for stay of the suit under Section 34 of the Indian Arbitration Act.

( 3 ) MR. R. Chowdhury, learned counsel for the petitioners contends that it is a reference made in a pending suit under Chapter IV of the Indian Arbitration Act. The petition dated 14-1-1957 on which the order of reference was made, is a petition under Section 21 of the Arbitration Act, and the order of reference is made is under Section 23. The order consists of two parts. The first is the stay of the suit. That is clearly under Section 34. The second part which is the order of reference is made under Section 23 of the Act. It seems to me that Mr. Chowdhury is right in his submission that the reference was made under Section 23 of the Indian Arbitration Act in the pending Suit No. 3192 of 1956.

( 4 ) MR. D. K. Ghosh, the Arbitrator appointed by the order, thereupon entered upon the reference. He heard the parties and their witnesses and made his award on 25-7-1957. The Arbitrator sent the award along with all papers to the Registrar of this Court on 9-9-1957. The award was filed by the Registrar on 6-12-1957. Thereupon notice under Section 14 (2) of the Act was duly served on the parties. The instant notice to set aside the award was taken out by the defendants on 5-2-1958.

( 5 ) THE first point taken by Mr. Chowdhury to set aside the award is that the Arbitrator went beyond his power inasmuch as by the award a new partnership was created between the defendants after dismissing the plaintiffs with a certain sum of money to be paid by the defendants. The award is short and reads as follows:"i award that:-- 1. Pannalal Paul, Chunial Paul and Lakshman Chandra Paul are from this day entitled to the right title and interest in the businesses of Harinarayan Paul and Co. They will have all the assets of the said two businesses including 'good Will' and tenancy rights of the shop. They will be responsible for and bear all the debts and liabilities of the said two businesses in respect of Income-tax, Sales Tax Chartered Bank of India Ltd. , Titaghar Paper Mills Ltd. , Bholanath Paper House, arrears of rent and other small sundry debts;2. Sm. Padmabati Paul, Satya Charan Paul and Amarnath Paul will from this day have no right, title and interest in the said two businesses nor will they have any liability or debt of the said two businesses;3. Pannalal Paul, Chunilal Paul and Lakshman Chandra Paul will indemnify and reimburse Sm. Paul in case the latter suffers any loss on account of the aforesaid liabilities or debts of the said 2 businesses;4. Pan













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