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1994 Supreme(Guj) 190

Gujarat High Court
Judgename :K.R.VYAS
NARANBHAI AMTHALAL PANCHAL - Appellant
Versus
RAMCHANDRA SOMNATH PANCHAL - Respondent
C.A. 66 of 1979
Decided On : 07/22/1994

Advocates Appeared: H.M.PAREKH, J.R.Nanavati, M.C.SHAH

Headnote:

Indian arbitration Act – Section 30 – Indian Partnership Act, 1932 – Section 48 (b) (iii) – Benami Transactions (Prohibition) Act, 1988 – Indian Registration Act – Section 17 – Partnership firm – Arbitration Agreement/Clause – Award – Winding up work of the partnership, managing the debts, outstandings, stock of goods and to do other work as stated in the said agreement – Appellant challenged the impugned judgment on various grounds – The arbitration agreement is not an arbitration agreement as there is no valid Reference, and therefore, the award Exh. 83 is not an award in the eye of law – If the Court comes to the conclusion that there was a valid arbitration between the parties, in that case, the award is invalid as the arbitrators have miscounducted themselves in as much as the award is one-sided and biased with a view to benefitting the respondents Nos. 4 and 5 – Arbitrators have no jurisdiction to decide some of the points which are not referred to them, more particularly, there was no reference to decide the dispute with respect to shed No. 3 as the arbitrators have passed the awards with respect to shed No. 3 not refered to them and as such award is without jurisdiction – Decision by the arbitrator qua shed No. 3 is hit by the provisions of the benami Transactions (Prohibition) Act, 1988 – Award cannot be looked into as it is not registered as per the requirement of Sec. 17 of the Indian Registration Act – As arbitrators have taken legal advice in making the award, award vitiated – Held, It is clear from reading Sec. 48 (b) (iii) of Indian Partnership Act, 1932 – Supreme Court in the case of S. V. Chandra Pandian and Ors. (supra) has taken same view and held that arbitration award directing dissolution of the partnership firm and providing distribution of residue or surplus properties of dissolved firm among partners after settlement of accounts is not required to be registered under Sec. 17 (1) of the Registration act – In view of this, I do not find any merit in last submission of Mr. Parikh also. No other submissions have been advanced before me and since I find no substance in any of the submissions, the obvious conclusion would be that of dismissal of Appeal as well as the Appeal From Order – In result, Appeal From Order No. 66 of 1979 and the Civil Appeal no. 853 of 1979 are dismissed with costs and judgment and decree passed by the learned City Civil Judge, in Civil Misc. Application No. 311 of 1974 stands confirmed – Hence, considering all these aspects, the ends of justice shall be met if I direct that this judgment shall be stayed for a period of eight weeks from today on condition that the appellant shall deposit Rs. 21,498. 00 with 9% interest as awarded by the arbitrators from the date of the award till date which comes to about Rs. 63,173. 00 within four weeks from today – Also directed that appellant shall not effect any change to the shed in question and shall file an undertaking before this Court within one week from today stating that the aforesaid amount shall be deposited by him in this Court within four weeks from today failing which it will be presumed that appellant is not willing to deposit the amount – It will be open for the respondents Nos. 4 and 5 to withdraw the said amount if deposited by the appellant on furnishing security to the satisfaction of Registrar of this Court – Appeal From Order No. 66 of 1979 and the Civil Appeal no. 853 of 1979 are dismissed.

VYAS, J.

( 1 ) THE appellant as well as the respondents Nos. 4 and 5 formed partnership in the name and style of Maheshwari Plastics Engineering Works. One partner Mr. D. P. Patel continued as partner upto 15-1-1969, however, he was relieved from 16-1-1969 and the partnership between the appellant and the respondents nos. 4 and 5 continued. It appears that a partnership deed was subsequently executed on 18-8-1969. As usually happens in a partnership, certain disputes arose between the partners as a reuslt of which it was impossible for the partners to continue with the partnership firm and as such all the partners appointed the respondents Nos. 1, 2 and 3 who happended to be respectable gentlemen doing business and belonging to the community of the partners as arbitrators under a writing in the form of an agreement dated 7-4-1972 for resolving dispute, and winding up work of the partnership, managing the debts, outstandings, stock of goods and to do other work as stated in the said agreement. The arbitrators declared their award on 11-12-1973 and sent copy by registered post to the three partners and also filed the award in the Court to make the Rule of the Court by filing Civil Misc. Application No. 311 of 1974 against which the appellant has preferred Civil Misc. Application No. 425 of 1975 under Sec. 30 of the Indian arbitration Act challenging the award and seeking necessary orders to the effect that the award be not made the Rule of law. The learned City Civil Judge by allowing the parties to lead evidence on 27-11-1978 allowed the Civil Misc. Application No. 311 of 1974 filed by the arbitrators while the Civil Misc. Application no. 425 of 1975 filed by the appellant came to be dismissed with cost. The appellant has preferred this Civil Appeal against the judgment and order passed in Miscellaneous Civil Application No. 311 of 1974 as well as the Appeal From order against the order passed in Miscellaneous Civil Application No. 425 of 1975. Since both these matters arise out of the same judgment and similar facts, the same are being conveniently disposed of by this common judgment.

( 2 ) MR. H. M. Parikh, learned Advocate for the appellant challenged the impugned judgment on various grounds. The broad submissions of Mr. Parikh are as under : (i) The arbitration agreement Exh. 84 is not an arbitration agreement as there is no valid Reference, and therefore, the award Exh. 83 is not an award in the eye of law. (ii) If the Court comes to the conclusion that there was a valid arbitration between the parties, in that case, the award is invalid as the arbitrators have miscounducted themselves in as much as the award is one-sided and biased with a view to benefitting the respondents Nos. 4 and 5. (iii) The arbitrators have no jurisdiction to decide some of the points which are not referred to them, more particularly, there was no reference to decide the dispute with respect to shed No. 3 as the arbitrators have passed the awards with respect to shed No. 3 not refered to them and as such the award is without jurisdiction. (iv) The decision by the arbitrator qua shed No. 3 is hit by the provisions of the benami Transactions (Prohibition) Act, 1988. (v) The award cannot be looked into as it is not registered as per the requirement of Sec. 17 of the Indian Registration Act. (vi) As the arbitrators have taken legal advice in making the award, the award vitiated.

( 3 ) MR. J. R. Nanavati, learned Advocate for the respondents Nos. 4 and 5, on the other hand, supported the judgment passed by the trial Court in too.

( 4 ) BEFORE I proceed to consider the rival contentions, it is necessary to see the law on the subject regarding the challenge to the award of the arbitrators. In Smt. Santa Sila Devi and Anr. v. Dhirendra Nath Sen and Ors. , reported in air 1963 SC 1677, the Supreme Court has observed that :"where an award given by the arbitrator is filed in Court and it is challenged on the ground of its incompleteness, the Court has to bear



























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