Back
IN THE HIGH COURT OF ALLAHABAD
N. N. MITHAL, G. D. DUBEY
CHHOTE LAL - Appellant
Versus
U.P.STATE ELECTRICITY BOARD - Respondents
F. A. F. O. 476 Of 1979
Decided On : 07/04/1989
ARBITRATION ACT, 1940 - SECTION 20 - PARTNERSHIP ACT, 1932 - SECTION 69 - UNREGISTERED PARTNERSHIP - ENFORCEMENT OF RIGHT ARISING FROM CONTRACT - BARRED - ARBITRATION CLAUSE - NOT ENFORCEABLE.
Fact of the Case:
An unregistered partnership firm entered into a building contract with the respondent. The partnership was dissolved, and one of the partners, the appellant, filed an application under Section 20 of the Arbitration Act, 1940, seeking to refer a dispute to arbitration. The respondent contested the application, arguing that the dispute was not covered by the arbitration clause and that the appellant was not entitled to maintain the suit as the partnership was unregistered.
Finding of the Court:
The court held that the dispute was not covered by the arbitration clause and that the appellant was not entitled to maintain the suit. The court found that the partnership was unregistered and that the appellant was seeking to enforce a right arising from a contract entered into by the partnership, which was barred under Section 69 (2) and (3) of the Partnership Act, 1932.
Issues: Whether the dispute was covered by the arbitration clause.
Ratio Decidendi: The court held that the dispute was not covered by the arbitration clause and that the appellant was not entitled to maintain the suit. The court found that the partnership was unregistered and that the appellant was seeking to enforce a right arising from a contract entered into by the partnership, which was barred under Section 69 (2) and (3) of the Partnership Act, 1932.
Final Decision: The appeal was dismissed.
( 1 ) THIS is an appeal against an order rejecting the application under S. 20 of the Arbitration Act, 1940 on the ground that the alleged dispute was not covered by the Arbitration clause and that the appellant was not competent to maintain the proceeding.
( 2 ) IN order to have a clear picture of the situation it is necessary to have a few background facts. The appellant along with one Ashok Kumar was carrying on partnership business in the name of M/s. Supreme Traders. On 17-2-1974 the said partnership entered into a building contract with the respondent. However, it is alleged that Ashok Kumar transferred his share in the partnership to the plaintiff Chhote Lal. A suit was filed by him against Ashok Kumar seeking declaration of his rights and on 3-11-1986, the Civil Court declared that the appellant was the sole proprietor of the firm Supreme Traders. Subsequent to it, the present proceedings under Section 20 of the Arbitration Act were initiated for referring the dispute to arbitration. The basis of the application was that although the plaintiff had executed the work of the value of Rs. 1,69,092-62 he was only paid a sum of Rs. 1,46,000/- and thus a sum of Rs. 23,092-62 remained unpaid. It is this amount along with security amount of Rs. 16,000/- and some other claims which the appellant claimed from the defendant for which he wanted the dispute to be referred to arbitration.
( 3 ) THE claim was contested by the respondent and was mainly pleaded that the partnership firm which had entered into the building contract being unregistered, the plaintiff was not entitled to claim any amount as the suit was barred under Section 69 (2) of the Indian Partnership Act. It was also contended that the dispute sought to be referred to arbitration was not covered by the arbitration clause.
( 4 ) THE learned Court below came to the conclusion that the dispute was not covered by the arbitration clause and that the plaintiff was not entitled to maintain the suit. Aggrieved the appellant has come up before this Court.
( 5 ) IN spite of the list being revised, the learned counsel for the respondent was not present so as to place his view point on the question how the dispute was not covered by the arbitration clause. However, it is not necessary to enter into that controversy as the appeal is bound to fail even if we were to assume that the dispute was covered by the arbitration clause.
( 6 ) IT is not disputed that a proceeding under Section 20 of the Arbitration Act is in the nature of a suit and would be covered by Section 69. Section 69 of the Indian Partnership Act is in these terms :"69. Effect of non-registration- (1) no suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. (2) no suits to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. (3) The provisions of sub-sections (1) -and (2) shall apply also to a claim of set off or other proceeding to enforce a right arising from a contract but shall not affect- (a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm; or (b) the powers of an official assignee, receiver or Court under the Presidency-towns Insolvency Act, 1909 (3 of 1909) or the Provincial Insolvency Act, 1920 (5 of 1920), to realise the property of an insolvent partner. (4) This section shall not apply- (4) to firms or to partners in firms which have no place of business in the territor
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
