2008 Supreme(Ori) 951

IN THE HIGH COURT OF ORISSA
Indrajit Mahanty, J.
DUSHASAN SAHOO AND ANOTHER - APPELLANT
Versus
GEETARANI MOHANTY AND OTHERS - RESPONDENT
ARBA No. 7 and 9 of 2008
Decided On : 01-07-2008

Headnote:

ARBITRATION - Appointment of Arbitrator - Interim Measures - Jurisdiction of Civil Court - Arbitration and Conciliation Act, 1996, Section 9 - Partnership - Reconstitution - Validity - Challenge - Maintainability of Application under Section 9 - Scope of Interim Order under Section 17.

Fact of the Case:

Smt. Geetarani Mohanty (Respondent-1) filed an Application for obtaining Mining lease at Raikela. Government of Orissa granted mining lease to Smt. Geetarani Mohanty. Smt. Geetarani Mohanty executed a General Power of Attorney in favour of Srinivas Sahoo (Appellant in ARNA No. 9/2008). State of Orissa executed a Lease Deed in respect of the said area in favour of Smt. Geetarani Mohanty. Partnership firm in the name and style of "M/s. Geetarani Mohanty" was formed with M/s. Geetarani Mohanty and Srinivash Sahoo having 55% and 45% shares respectively. Smt. Geetarani Mohanty made an application to the Government of Orissa for transfer of the mining lease in favour of the partnership firm. Government of Orissa accorded permission for transfer of the mining lease in favour of the prtnership firm M/s. Geetarani Mohanty. Smt. Geetarani Mohanty executed a Deed of Transfer in Form C of the mining lease in favour of partnership firm. Smt. Geetarani Mohanty issued a letter of Resignation for the partnership firm acknowledging having received her share as per books of account upon 31st March 1993. Deed of Retirement executed by Smt. Geetarani Mohanty retiring as a partner from the partnership firm. Deed of Reconstitution of the partnership firm M/s. Geetarani Mohanty inducting Dushashan Sahoo and Smt. Suprasanna Sahoo as partners in the reconstituted firm. Smt. Geetarani Mohanty purportedly issued a letter purportedly canceling the general Power of Attorney dated 10th January, 1991 in favour of Srinibash Sahoo. Mr. Srinivash Sahoo as the Managing Partner of M/s. Geetarani Mohanty filed Civil Suit No. 9 of 2006 in the Court of Civil Judge (Jr.Division), Bhubaneswar for permanent injunction against M/s. Geetarani Mohanty restraining her from interfering with the business, administration and activities in the firm. Civil Judge (Jr. Division), Bhubaneswar passed order of "status quo" in C.S. No. 49 of 2006. Smt. Geetarani Mohanty sought to invoke the arbitration clause by appointing an Arbitrator. Smt. Geetarani Mohanty filed Arbitration Petition No. 15 of 2008 before the court of District Judge, Khurda u/s 9 of the Arbitration and Conciliation Act, 1996. Learned District Judge, Khurda at Bhubaneswar passed the impugned judgment.

Finding of the Court:

The impugned order dated 17.3.2008 under Annexure-1, passed by the learned District Judge, Khurda in Arbitration Petition No. 15 of 2008 has been passed without jurisdiction and/or prematurely and is, therefore, set aside as being unsustainable in law. There exists no legal impediment for the proceeding in C.S. No. 49 of 2006 pending before the learned Civil Judge (Jr. Divn.), Bhubaneswar from continuing and accordingly, direct the learned Civil Judge (Jr. Divn.) to proceed with the matter and also consider the objections raised by the Respondent (Defendant in the said suit), u/s 8 of the 1996 Act on its own merit and in accordance with law.

Issues: Whether the impugned order dated 17.3.2008 under Annexure-1, passed by the learned District Judge, Khurda in Arbitration Petition No. 15 of 2008 has been passed without jurisdiction and/or prematurely?

Ratio Decidendi: The present case is covered by the judgment of the Hon'ble Supreme Court, rendered in the case of Atul Singh (supra). In order to get her share of the profits from the partnership business, it was absolutely essential for the Respondent Smt. Geetarani Mohanty, to have her 'letter of resignation" and "deed of retirement" dated 31.3.1993 as well as "deed of reconstitution" dated 1.4.1993, declared illegal, void and inoperative. Accordingly, the relief for such a declaration can only be granted by a Civil Court of competent jurisdiction and not by an arbitrator since the Respondent Smt. Geetarani Mohanty is not a party to the deed of reconstitution. Therefore, since an arbitrator under the partnership deed dated 1.4.1993 as illegal, void and inoperative, consequently, the learned District Judge was incompetent to pass any interim order on the application u/s 9 of the 1996 Act, filed by the Respondent Smt. Geetarani Mohanty.

Final Decision: Both the appeals are allowed in terms of the directions given hereinabove. There shall be no order as to costs.