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High Court Of Calcutta
Monoranjan Mallick
KANLKA GHOSH - Appellant
Versus
SILIGURI TEA BROKERS (P) LTD. - Respondent
Matter 1407 Of 1990
Decided On : 12/19/1990
PARTNERSHIP - VALIDITY OF AGREEMENT - ARBITRATION - SECTION 19 (2) (A) OF THE PARTNERSHIP ACT - POWER OF ATTORNEY - INJUNCTION - SECTION 33 OF THE ARBITRATION ACT - Locus standi of the petitioners to challenge the agreement - Agreement dated 22nd December 1989 declared as illegal and void - Special Suit No. 46 of 1990 dismissed - Application under section 41 of the Arbitration Act being matter No. 1360 of 1990 dismissed - Application of Siliguri Tea Brokers Pvt. Ltd. for stay of the Matter No. 1404 of 1989 rejected - Matter No. 1407 of 1989 disposed of without passing any order - Application of the United Bank of India for being added as a party to the proceeding has become infructuous - Petitions of Cytozyem Eastern India (P) Ltd. dismissed.
Fact of the Case:
Siliguri Tea Brokers Pvt. Ltd. filed a Special Suit under section 20 of the Arbitration Act against M/s. Rahut Syndicate, a partnership firm, praying for the Arbitration Agreement dated 22nd December, 1989 to be filed in court and for reference of the disputes to Arbitration. Ashok Rahut and others, claiming to be partners of Rahut Syndicate, filed an application under section 33 of the Arbitration Act challenging the existence and validity of the Tea Selling Agreement dated 22nd December 1989 containing the Arbitration Agreement.
Finding of the Court:
The court held that the petitioners had locus standi to challenge the agreement dated 22nd December 1989 as they were arraigned as defendants in the Mortgage Suit being O/c No. 2 of 1988 and there was no material before the Court to show that they had been validly removed from the partnership business. The court further held that the Power of Attorney dated 27th September, 1989 appointing S. H. S. Sukla and Sri Ram Avatar Agarwal to act as Constituted Attorney on behalf of the partnership firm of M/s. Rahut Syndicate was illegal and invalid as it was not executed by all the partners of the firm and was in violation of the interim injunction order passed by a competent civil court. The court also held that the agreement dated 22nd December 1989 together with the Arbitration Clause was illegal and void as it was entered into by the Power of Attorney holders who did not have the authority to refer the dispute to arbitration.
Issues: 1. Whether the petitioners had locus standi to challenge the agreement dated 22nd December 1989? 2. Whether the Power of Attorney dated 27th September, 1989 was valid? 3. Whether the agreement dated 22nd December 1989 together with the Arbitration Clause was valid?
Ratio Decidendi: 1. The court held that the petitioners had locus standi to challenge the agreement dated 22nd December 1989 as they were arraigned as defendants in the Mortgage Suit being O/c No. 2 of 1988 and there was no material before the Court to show that they had been validly removed from the partnership business. 2. The court held that the Power of Attorney dated 27th September, 1989 was illegal and invalid as it was not executed by all the partners of the firm and was in violation of the interim injunction order passed by a competent civil court. 3. The court held that the agreement dated 22nd December 1989 together with the Arbitration Clause was illegal and void as it was entered into by the Power of Attorney holders who did not have the authority to refer the dispute to arbitration.
Final Decision: The court allowed the application filed by the petitioners under section 33 of the Arbitration Act being matter No. 1404 of 1990 and declared the agreement dated 22nd December 1989 as void and of no effect. The court also dismissed the Special Suit No. 46 of 1990, the application under section 41 of the Arbitration Act being matter No. 1360 of 1990, the application of Siliguri Tea Brokers Pvt. Ltd. for stay of the Matter No. 1404 of 1989, and the petitions of Cytozyem Eastern India (P) Ltd.
( 1 ) SILIGURI Tea Brokers Pvt. Ltd. filed the Special Suit being No. 46 of 1990 under section 20 of the Arbitration Act against M/s. Rahut Syndicate, a partnership firm praying for the Arbitration Agreement dated 22nd December, 1989 to be filed in court and for reference of the disputes as specified in the said petition of section 20 of the Arbitration Act to be referred to Arbitration in terms of the Arbitration Agreement.
( 2 ) AN application under section 41 of the Arbitration Act being Matter No. 1360 of 1990 has also been filed by Siliguri Tea Brokers Pvt. Ltd. in which interim orders dated 10th May 1990 and 16th May 1990 have been obtained.
( 3 ) THE said Special suit as well as the petition under section 41 of the Arbitration Act has been contested by Ashok Rahut, Sm. Kanika Ghosh, Smt. Aparna Rahut, Smt. Sabitri Rahut, Sri Tapas Kumar Rahut, Sri Pradip Kr. Rahut and Smt. Lina Ghatak, Smt. Runa Naha and Sri Ajoy Kr. Rahut for and on behalf of Rahut Syndicate claiming to be the some of the alleged partners of M/s. Rahut Syndicate. An application under section 33 of the Arbitration Act being matter No. 1404 of 1990 has also been filed by those persons claiming to be the partners of Rahut Syndicate challenging the existance and validity of the purported Tea Selling Agreement dated 22nd December 1989 containing the purported Arbitration Agreement and for declaring the same to be void and of no effect and/or determined and/or cancelled and/or not binding upon the parties and also for consequential reliefs for staying the orders dated 10th May 1990 and 16th May 1990 by Satyabrata Mitra, J. under section 41 of the Arbitration Act in Matter No. 1360 of 1990.
( 4 ) SILIGURI Tea Brokers Private Ltd. has filed an application being Matter No. 1405 of 1990 praying for stay of the alleged partners' petition under section 33 of the Arbitration Act being Matter No. 1404 of 1990.
( 5 ) MATTER No. 1407 of 1990 has also been filed by the self-same partners praying for vacating the orders dated May 10, 1990 in Matter No. 1360 of 1990.
( 6 ) THE United Bank of India has also filed an application for being added as a party in Matter No. 1360 of 1990 on the allegations that as the Tea garden which is the subject matter of the dispute is hypothecated with the United Bank of India and the United Bank of India has filed O /c (Mortgage) Suit No. 2 of 1988 in the court of the Assistant District Judge, Jalpaiguri against the partners and guarantors and Joint Receivers have been appointed in that suit the said Bank is a necessary party in the proceeding because any order passed in the application under section 41 behind the back of the bank in view of the specific orders passed by the Assistant District Judge, Jalpaiguri in the said pending suit would affect the interest of the bank and the bank will be highly prejudiced if the bank is not permitted to intervene in the proceeding. Cytozyem Eastern India (P) Ltd. has also filed this petition for being added as party to the special suit No. 460 of 1990 and in this connected proceedings.
( 7 ) ALL these matters being inter-connected have been taken up together for reasons of convenience. I have decided to take up the Matter No. 1404 of 1990 along with the Special Suit No. 46 of 1990 and Matter No. 1407 of 1990 which is a petition of the Siliguri Tea Brokers Pvt. Ltd. for stay of the petition under section 33 of the Arbitration Act first for hearing and orders.
( 8 ) WHAT is revealed from all these court proceedings, is that main dispute between the concerned parties is whether the agreement dated 22nd December 1989 is a valid document or not. The petitioners claiming to be some of the partners of Rahut Syndicate in Matter No. 1404 of 1990 have challenged the validity of the said agreement. If the contention of these petitioners are accepted then automatically the Special Suit in question as well as the application under section 41 of the Arbitration Act filed by Siliguri Tea
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