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2004 Supreme(Cal) 429
High Court Of Calcutta
Subhro Kamal Mukherjee
IDCOL CEMENT LTD - Appellant
Versus
P.ROY CHOWDHURY AND COMPANY - Respondent
G. A. 4418 Of 2003
Decided On : 06/29/2004
ABHIJIT DEB, ABHRAJIT MITRA, GANESH JAJODIA, JISHNU CHAUDHURY, LAL RATAN MONDAL, S.B.SARAF
The subject matter of the suit cannot be bifurcated for arbitration and court proceedings. Any bifurcation would lead to delay, increased costs, and the possibility of conflicting orders.
Headnote:
ARBITRATION - REFERRING PARTIES TO ARBITRATION - CONDITIONS - ARBITRATION AGREEMENT - SUBJECT MATTER OF ACTION - OTHER DISPUTES - SPLITTING OF CAUSE OR PARTIES - NOT PERMITTED - ARBITRATION ACT, 1996, SECTIONS 8(1), (2).
Fact of the Case:
Plaintiff filed a suit for recovery of money against the defendant firm and its partners, alleging violation of an agreement by selling cement on credit. The defendant firm and one of its partners filed an application for referring the parties to arbitration as per the arbitration clause in the agreement. The plaintiff contended that the defendant purchasers were unnecessary parties and were added to avoid arbitration.
Finding of the Court:
1. The application by one partner in his individual capacity is not maintainable; it should be filed in the name of the firm. 2. The defendant purchasers, not being parties to the arbitration agreement, cannot be dragged to arbitration. 3. Impleading the defendant purchasers was necessary to determine the liability of the defendants.
Issues: 1. Whether the application for referring parties to arbitration is maintainable when filed by one partner in his individual capacity. 2. Whether the defendant purchasers, not being parties to the arbitration agreement, can be referred to arbitration. 3. Whether impleading the defendant purchasers was necessary to determine the liability of the defendants.
Ratio Decidendi: 1. The arbitration agreement is an independent contract between the plaintiff and the defendant firm. An application for arbitration should be filed in the name of the firm, not by one partner individually. 2. Section 8 of the Arbitration Act, 1996 requires the subject matter of the action to be the same as the subject matter of the arbitration agreement. The defendant purchasers are not parties to the arbitration agreement, so they cannot be referred to arbitration. 3. The plaintiff impleaded the defendant purchasers to determine the liability of the defendants. This was necessary to avoid conflicting orders from different fora.
Final Decision: The application for referring the parties to arbitration is rejected.
( 1 ) THE plaintiff instituted this C. S. No. 298 of 2001, inter alia, praying for a decree for Rs. 22,84,357. 18 paise as against the defendant Nos. 1 to 3 jointly and severally; decree for Rs. 16,71,252. 72 paise as against the defendant Nos. 4 to 16 jointly and severally; mandatory injunction directing the defendant Nos. 1 to 3 and each one of them to render true and faithful accounts of all the dealings and transactions entered into by the defendant Nos. 1 to 3 as the agent of the plaintiff and for the decree for such sum as might be found due and payable upon such accounts being taken; mandatory injunction directing the defendant Nos. 1 to 3 to allow inspection of the stocks, books and registers of the said defendants maintained in connection with the dealings and transactions entered into by defendant Nos. 1 to 3 as the agent of the plaintiff, interim interest and interest upon judgment at the rate of 24% per annum.
( 2 ) THE plaintiff alleged in the plaint that the plaintiff carried on business as manufacturer of cement and the defendant No. 1 was a partnership firm and the defendant Nos. 2 and 3 were its partners. The plaintiff appointed the defendant Nos. 1 to 3 as its handling, clearing and selling agent at Cossipore for cement manufactured by the plaintiff. Time to time agreements were entered into by and between the plaintiff and the defendant Nos. 1 to 3. the last of such agreement was dated August 10, 1997. One of the terms of the said agreement was that the defendant Nos. 1 to 3 would not sell cement on credit and would sell cement against advance payment only. In violation of the said agreement, the defendant Nos. 1 to 3 made various limited credit sales to different customers including defendant Nos. 4 to 16. After giving adjustments for all money paid by the defendant Nos. 1 to 3, the said defendant Nos. 1 to 3 were liable to pay rs. 22, 84, 357. 18 paise to the plaintiff. The defendant Nos. 4 to 16 being the purchaser of the said materials were jointly and severally liable to the plaintiff.
( 3 ) IN paragraph 13 of the said plaint it was stated by the plaintiff that the plaintiff made the defendant Nos. 4 to 16 as parties to the instant suit so that the question as to which of the defendants were liable and to what extent might be determined between the parties. It was stated that such adjudication was necessary inasmuch as the defendant Nos. 1 to 3 were contending that the purchasers were liable to the plaintiff while the purchasers, namely, the defendant Nos. 4 to 16, were contending that the defendant Nos. 1 to 3 were liable to the plaintiff.
( 4 ) IN said suit the defendant No. 2, namely, Panchu Gopal Roy Chowdhury, files this application being G. A. No. 4418 of 2003. In this application various prayers are made but Mr. Pratik Prakash Banerjee, learned advocate for the petitioner, at the time of hearing of this application limited his prayer concerning the relief to refer the parties to arbitration.
( 5 ) A copy of the agreement dated August 10, 1997 is annexed to this application. Undisputedly, the agreement contains an arbitration clause. The clause 43 of the said agreement, which contains the arbitration clause, runs as under:"43. Any dispute or difference arising out of or in connection with this agreement shall be referred to arbitration under section 11 of the Arbitration and Conciliation Act, 1996. The Managing Director or any other Chief Officer nominated by him shall be the Arbitrator and the said arbitration proceeding shall be binding on both the parties. "
( 6 ) MY attention has been drawn that the defendant Nos. 1 and 2 filed an application under Article 226 of the Constitution of India, inter alia, claiming renewal/extension of the said agreement dated August 10, 1997. The said writ petition was registered as W. P. No. 1697 of 1999. The plaintiff filed an affidavit-in-opposition in the said writ application taking the plea that the disputes raised in the said
