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2016 (11) TMI 544 - SUPREME COURT

2016 (11) TMI 544 - SUPREME COURT - TMI - Reference to arbitration - Non-filing of either original or certified copy of retirement deed and partnership deed along with application entailed dismissal of the application as per section 8(2) of 1996 Act - entitlement to make the reference relying on arbitration agreement - Whether dispute pertaining to unregistered partnership deed cannot be referred to an arbitration despite there being arbitration agreement in the deed of retirement/partnership de .....

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ified copy, but bringing original arbitration agreement on record at the time when the Court is considering the application shall not entail rejection of the application under Section 8(2). In the present case it is relevant to note the Retirement Deed and Partnership Deed have also been relied by the plaintiffs. Hence, the argument of plaintiffs that defendants' application I.A.No. IV was not accompanied by original deeds, hence, liable to be rejected, cannot be accepted. We are thus of the vie .....

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rs agreed to get the dispute settled by arbitration, it is not open for the appellants to contend that partnership being unregistered partnership, the dispute cannot be referred. The petitioners have not been able to show any statutory provision either in 1996 Act or in any other statute from which it can be said that dispute concerning unregistered partnership deed cannot be referred to arbitration. We thus do not find any substance in the third submission of the appellant. - Civil Appeal No. 1 .....

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t, I.A. No. IV was filed by the defendants/respondents under Section 8(1) of Arbitration and Conciliation Act, 1996, relying on arbitration agreement in retirement deed dated 25.07.2005(hereinafter referred to as retirement deed) as well as in the partnership deed dated 05.04.2006(hereinafter referred to as partnership deed). Learned District Judge has allowed the application filed by the defendant under Section 8(1) of 1996 Act. Parties to the suit were referred to the arbitration to settle the .....

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M/s Neo Subhash Beedi Works'. After his demise, his six sons, namely, late M. Narasimha Bhakta, late M. Subhaschandra Bhakta, late M. Prakashchandra Bhakta, late M. Ganesh Bhakta, late M. Gangadhar Bhakta and late M. Ashok Bhakta, constituted the partnership firm. (ii) M. Narsimha Bhakta retired from the firm as per the release deed dated 30.06.1986 and the remaining partners continued with the firm. (iii) M.Prakashchandra Bhakta died on 20.03.1995 and as per his Will, his minor son Master M .....

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ta, Defendant No. 5 and M. Vipin Bhakta(S/o late M. Ganesh Bhakta) and Master M. Anantesh Bhakta,1st Plaintiff. M.Gangadhar Bhakta expired and his estate is represented by the Plaintiff Nos. 2 & 3. 4. The suit for partition was filed by M. Prakaschandra Bhakta and others against M. Subhaschandra Bhakta and others, being O.S. NO. 4 of 1985. The preliminary decree was passed on 31.07.1986. M. Subhaschandra Bhakta and others filed FDP No. 24 of 1992 for preparation of final decree in which the .....

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of 2014 was filed by three Plaintiffs (appellants) against six Defendants who are Respondent Nos. 1 to 6 in this appeal praying for permanent prohibitory injunction restraining the Defendants or anyone claiming through them for transferring or alienating 'A' schedule property. Further, the permanent prohibitory injunction was sought against the Defendant regarding possession and enjoyment of property by Plaintiff. The Defendant had filed I.A.No.IV under Section 8(1) of Arbitration and C .....

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rned District Judge heard the I.A.No.IV as well as the objections raised by the Plaintiff and by an order dated 27.05.2014, pass the following order: I.A.No. IV filed under Section 8(1) of the Arbitration and Conciliation Act, 1996 by the defendants is allowed. The parties to the suit are referred to the Arbitration to settle their disputes and differences, in view of the Arbitration Agreement. The suit of the plaintiffs stands disposed off accordingly. 8. Learned Counsel appearing for appellant .....

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ertified copy thereof along with the application seeking reference to the arbitration. (ii) All the parties to the suit were not parties to the arbitration agreement as claimed in retirement deed and partnership deed. Hence, dispute could not have been refereed to the arbitrator. (iii) The firm being an unregistered firm, no reference to the arbitration can be made with regard to the dispute relating to unregistered firm. 9. Learned counsel appearing for respondents have refuted the submissions .....

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arty to the agreement. The Defendant No. 6 has not inherited any right in the partnership firm and was unnecessarily impleaded by the Plaintiff. Mere presence of Defendant No.6 as one of the Defendants does not preclude the implementation of arbitration agreement. With regard to nonfiling of retirement deed and partnership deed along with application I.A.No. IV of 2014, two submissions have been raised. Firstly, it is contended that the Plaintiff themselves has filed both retirement deed and par .....

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be rejected on this ground. There is no such provision which prohibits the adjudication of dispute by arbitration regarding an unregistered partnership firm. 10. We have considered the submissions of learned counsel for the parties and perused the records. 11. From the pleadings on records and submissions made, following three issues arises for consideration: (1) Whether nonfiling of either original or certified copy of retirement deed and partnership deed along with application I.A.No. IV dated .....

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merged from record in this respect need to be noted. Firstly, the plaintiffs in their plaint of O.S.No. 5 of 2014 have referred to and admitted the retirement deed dated 25.07.2005 and partnership deed dated 05.04.2006 in para 5 of the plaint. The plaintiffs themselves have filed the photocopies of deed of retirement dated 25.07.2005 as the document no. 6 in the list and photocopies of partnership deed dated 05.04..2006 as document no. 7 as have been noted in para 23 of the District Judge judgme .....

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on 09.05.2014. It is true that the application was not accompanied by the Retirement Deed and the Partnership Deed either the originals or the certified copies. On 12.05.2014 the original Retirement Deed and the Partnership Deed were produced by the defendants along with the list." 13. Section 8 which falls for consideration in the present case provides as follows: " 8. Power to refer parties to arbitration where there is an arbitration agreement- (1) A judicial authority before which .....

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nding before the judicial authority, an arbitration may be commenced or continued and an arbitral award made." 14. The appellants submit that subsection (2) of Section (8) provides that "the application referred to in subsection (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof." They submit that admittedly with the application I.A.No. IV filed on 09.05.2014, original or certified copy of the Retirement Dee .....

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ce the main relief being declaration of the deed to be void which could have been granted only by the Civil Court, the dispute could not be referred. Defendant filed Civil Revision which was allowed by the High Court. One of the submissions made before this court was that as per subsection (2) of Section (8), the application could not have entertained unless it was accompanied by original arbitration agreement or duly certified copy thereof. This court held that there is no whisper in the petiti .....

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tory provision and the dispute could not have been referred to arbitration. Learned counsel for the respondent has submitted that a copy of partnership deed was on the record of the case. However, in order to satisfy the requirement of subsection (2) of Section 8 of the Act, Defendant 3 should have filed the original arbitration agreement or a duly certified copy thereof along with the petition filed by him on 28.02.2005, which he did not do. Therefore, no order for referring the dispute to arbi .....

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judge bench of this Court has held that photocopies of lease agreement could be taken on record under Section 8 for ascertaining the existence of arbitration clause. Following was stated in paragraph 24: "24. The respondent Corporation placed on record of the trial court photocopies of the agreements along with an application under Section 8(1) of the Arbitration Act. The High Court, in our view, has rightly held that the photocopies of the lease agreements could be taken on record under S .....

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of section 8(2) if photocopies of the arbitration agreement is already on the record and not disputed by the parties. 17. There is one another aspect of the matter which is sufficient to uphold the order of the District Judge. Section 8(2) uses the phrase "shall not be entertained". Thus, what is prohibited is the entertainment of the application unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. 18. The word 'entertained' has spec .....

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ives it for consideration and disposal according to law it must be regarded as entertaining the suit or proceeding, no matter whatever the ultimate decision might be." The Blacks Law Dictionary also defines this word 'entertain' as follows: "To bear in mind or consider;esp., to give judicial consideration to <the court then entertained motions for continuance>" 19. In 1971 (3) SCC 124, Hindusthan Commercial Bank Ltd. Vs. Punnu Sahu (Dead) through Legal Representative .....

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p; and (b) Unless the applicant deposits such amount not exceeding twelve and half percent of the sum realised by the sale or furnishes such security as the Court may, in its discretion, fix except when the Court for reasons to be recorded dispense with the requirements of this clause: Provided further that no sale shall be set aside on the ground of irregularity or fraud unless upon the facts proved the Court is satisfied that the applicant has sustained substantial injury by reason of such irr .....

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at Clause (b) of the proviso did not govern the present proceedings as the application in question had been filed several months before that clause was added to the proviso. It is the contention of the appellant that the expression 'entertain' found in the proviso refers to the initiation of the proceedings and not to the sage when the Court takes up the application for consideration. This contention was rejected by the High Court relying on the decision of that Court in Kundan Lal Vs. J .....

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in Lakshmiratan Engineering Works Ltd. V. Asst. Comm., Sales tax, Kanpur, AIR 1968 SC 488. We are bound by that decision and as such we are unable to accept the contention of the appellant that Clause (b) of the proviso did not apply to the present proceedings." 20. Another relevant judgment is 1998 (1) SCC 732, Martin and Harris Ltd. Vs. VIth Additional District Judge and others. In the above case Section 21(1) proviso of U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, .....

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t behalf to the tenant not less than six months before such application, and such notice may be given even before the expiration of the aforesaid period of three years." In the above case, the application under Section 21(1) was filed by the landlord before expiry of period of three years from the date of purchase. It was held by this Court that word 'entertained' as employed in first proviso under Section 21(1) could not mean 'institution' of such proceedings. In Para 9 and .....

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notice is given by the landlord to the tenant seeking eviction under Section 21(1)(a) of the Act. The words, "the landlord has given a notice in that behalf to the tenant not less than six months before such application", would naturally mean that before filing of such application or moving of such application before the prescribed authority notice must have preceded by at least six months. Similar terminology is not employed by the legislature in the very same proviso so far as three .....

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mean taking cognizance of such an application by the prescribed authority by issuing summons for appearance to the tenantdefendant. It must be held that on the contrary the term 'entertain' would only show that by the time the application for possession on the grounds mentioned in clause (a) of Section 21(1) is taken up by the prescribed authority for consideration on merits, atleast minimum three years' period should have elapsed since the date of purchase of the premises by the la .....

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the statutory scheme of Section 9 of the said Act that the direction to the Court in the proviso to Section 9 was to the effect that the Court shall not proceed to admit to consideration an appeal which is not accompanied by satisfactory proof of the payment of the admitted tax. In the case of Hindusthan Commercial Bank the term 'entertain' as found in the proviso to Order XXI Rule 90 Code of Civil Procedure(CPC) fell for consideration of the Court. Hegde,J., speaking for a Bench of two .....

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n regarding 'entertaining such application' on any of these grounds would necessarily mean the consideration of the application on the merits of the grounds on which it is base. In the present case, therefore, it must be held that when the legislature has provided that no application under Section 21(1)(a) of the Act shall be entertained by the prescribed authority on grounds mentioned in clause (a) of Section 21(1) of the Act before expiry of three years from date of purchase of propert .....

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n filed by the party under Section 8(1) unless it is accompanied by original arbitration agreement or duly certified copy thereof. The filing of the application without such original or certified copy, but bringing original arbitration agreement on record at the time when the Court is considering the application shall not entail rejection of the application under Section 8(2). 23. In the present case it is relevant to note the Retirement Deed and Partnership Deed have also been relied by the pla .....

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esented by his mother and next friend was party to the Retirement Deed. The mother of plaintiff namely Smt. Usha A. Bhakta has signed the retirement deed for self and on behalf of her minor children, the plaintiff No. 1. Plaintiff No. 2 and 3 claiming their rights through one of the partners Shri Gangadhar Bhakta, their father, who was party to the retirement deed. In paragraph 23 of the judgment, Learned District Judge had returned the following findings: "...therefore, the plaintiff no. 1 .....

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5..." Thus it was only defendant no. 6 who was not party to the retirement deed or partnership deed. Both 5th and 6th defendants are issues of late M. Prakashchandra Bhakta. 25. Learned Counsel for the respondents have submitted that it was case of the plaintiffs themselves that by virtue of Will executed by M.Prakashchandra Bhakta it was only defendant no. 5 who became entitled to benefits of partnership and defendant no. 6 was not given any share. 26. The plaintiffs admittedly are parties .....

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d Partnership deed cannot be referred. 27. Learned District Judge has noted that defendant no.6 has not inherited any share either in Partnership deed or in the schedule property and hence there is no question of bifurcation of either cause of action or parties. Relevant findings in this context have been returned by District Judge in paragraph 40 to the following effect: 40...It is only defendant No. 6 was not the party to either the Retirement Deed or the Partnership Deed where there is an Arb .....

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h Beedi Works'. Therefore, there is no question of bifurcation of either cause of action or parties if the same is to be referred to the Arbitration as per the Arbitration Clause formed in the Retirement Deed dated: 25.07.2005 and the Partnership Deed dated 05.04.2006... We fully endorse the above view taken by Learned District Judge. ISSUE NO. 3 28. The submission by the petitioner is that partnership being an unregistered partnership, no reference can be made to the arbitration. In the pre .....

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