Section 9 of the Arbitration and Conciliation Act, 1996 (for short the Act) - Respondents 1, 2, 4 to 6 and 11 and 12 herein (petitioners in I.A.) filed the above I.A. under Order VII Rule 11 r/w Section 151 CPC to reject the O.P. as it does not contain cause of action and that the petitioner herein has no locus standi to file the O.P. as admittedly she was not a party to the firm originally constituted on 19-04-1988.= the pleadings are not complete and some of the respondents have not been served, the same cannot be a ground to wait for service of the respondents especially when no adverse order is passed against the respondents. Though several respondents have been impleaded as parties, they are not at all necessary parties for deciding the application under Section 9 of the Act. As the O.P. filed by the petitioner herein under Section 9 of the Act is without jurisdiction, non service of some of the respondents does not in any manner affect the impugned order.= For the foregoing reasons, we have no hesitation to hold that filing of O.P.1949 of 2013 by the petitioner herein for the relief sought for is duly misconceived and is not maintainable. Though rejection of O.P. does not come within the parameters of Order VII Rule 11 CPC, but in the facts and circumstances of the case and from the admitted documents available on record and the allegations in the O.P. do not fulfill the requirements under Section 9 of the Act. Considering these aspects, the trial Court rightly allowed I.A.No.2437 of 22013 in O.P.No.1949 of 2013 and the said order needs no interference by this Court.
THE HONBLE SRI JUSTICE K.C.BHANU AND THE HONBLE SMT JUSTICE ANIS
CIVIL REVISION PETITION No.3872 OF 2014.
31-12-2014
S.LakshmiPetitioner
M/s Reliance Builders, Hyderabad And others .Respondents
Counsel for the Petitioner: Mr.M.V.Durga Prasad
Counsel for the Respondents : Mr.S.Ravi for R1.
Mr.S.Niranjan Reddy,
For R2 to 8 and 13
Mr.KVR Chowdary,
For R9 to R12
Mr.T.Bala Mohan Reddy,
For R15
<Gist :
>Head Note:
? Cases referred:
1.(1987) 1 SCC 288
2.(2007) 7 SCC 125
3.AIR 2000 CaL.207
4.2010 (1) ALD 453 (DB)
5.2011 LAW SUIT (MAD) 2685
6.AIR 1984 AP 10
7.(2010) 13 SCC 88
8. (2010) 2 SCC 273
9.(2005) 8 SCC 618
10.(2007) 6 SCC 798
11.AIR 2006 SC 2422
12.(2002) 4 SCC 105
13.(2002) 5 SCC 510
14.AIR 1975 SC 1297
15.(2013) 9 SCC 374
16.AIR 1954 SC 215
THE HONBLE SRI JUSTICE K.C.BHANU
AND
THE HONBLE SMT JUSTICE ANIS
CIVIL REVISION PETITION NO.3872 OF 2014
ORDER: (per the HONBLE SRI JUSTICE K.C.BHANU)
This revision is directed against the order and decree,
dated 06-06-2014 in I.A.No.2437 of 2013 in O.P.No.1949 of
2013 on the file of the II Additional Chief Judge, City Civil
Courts, Hyderabad.
2. Originally petitioner herein (1st respondent in I.A.)
filed the above O.P.No.1949 of 2013 under Section 9 of the
Arbitration and Conciliation Act, 1996 (for short the Act)
seeking the following reliefs.
1. To appoint Advocate Commissioner to forthwith inspect
the office of the 1st respondent situated at 101,102,
Venkatarama Towers, M.No.3-6-69, Opposite Old
Skyline Theatre Basheerbagh, Hyderabad-29 as well as
the residences/offices of the respondents No.2 to 14 and
seize all the books of accounts , vouchers, cash books,
cheque books, income-tax returned, assessment orders,
audited balance sheets and all other material evidence
pertaining to the 1st respondent firm both paper and
electronic form, including the hard diskettes either
installed or separately kept in the systems and also
portable hard disks found during the execution of
warrant in all such premises along with the all the
books of account and submit the same in a sealed cover
before the Court to be sent to the Arbitrator adjudicating
the disputes between the parties.
2. To direct the respondent Nos. 1 to 14 to cooperate with
the Advocate-Commissioner and deliver all other
documents and books mentioned in clause (1) above to
the Advocate-Commissioner.
3. To grant ex-parte ad-interim injunction restraining the
respondent Nos.1 to 13 from anyway dealing with the
affairs of the 1st respondent firm either by way of
alienating the assets including petition A schedule
properties or withdrawing the funds or incurring any
liabilities or obligations on behalf of or in the name of 1st
respondent firm with or without any prefixes or suffixes
or registration numbers.
4. To grant ad-interim injunction restraining the
respondent Nos. 1 to 13 from entering into any
transaction or deed or document of conveyance in
respect of item No.1 of the petition A schedule in favour
of the respondent No.15 or any other person.
5. To direct the respondent Nos. 19 to 26 not to permit any
further transaction hereafter, particularly any debit or
withdrawal of funds or by way of overdraft or other
kinds of advances, except those permitted by this Court.
6. To direct the respondent Nos.16 to 18 not to enter into
any further transactions or documents with the
respondent Nos. 1 to 13 in respect of the ventures under
development with the 1st respondent except with the
prior permission of this Court.
6A To grant ad-interim injunction restraining the
respondent Nos. 27 and 28 from dealing with or entering
into any transactions by way of alienation or otherwise
creating any interest in respect of item Nos. 1 to 3 of the
petition A schedule in favour of any persons
7. And to pass such other order or orders as this Court
may deem fit and proper in the circumstances of the
case.
3. It is averred in the O.P. that 1st respondent firm
was originally constituted as a partnership firm under a
partnership deed, dated 19-04-1988 of which respondents 2
to 6 along with the respondents 11 to 13 were partners. It
was under the partnership deed , dated 27-11-1991 under
which Smt.Ashrafunnisa Begum, Sultan Naseeruddin and
Sultan Rasheemuddin were inducted as partners. Again it
was reconstituted under the partnership deed, dated
02-07-1992 under which the petitioner along with
respondents 7 to 9 were inducted as partners and respondent
No.10 who was minor then admitted to the benefits of
partnership of the 1st respondent firm. Under the same
partnership deed, respondents 11 to 13 along with
Smt.Ashrafunnisa Begum, Sultan Naseeruddin and Sultan
Rasheemuddin retired from the 1st respondent firm.
Respondents 11 to 13 along with respondents 2 to 6 are now
claiming that the firm, which was reconstituted and stood
dissolved long back by partnership dated 27-11-1991 is still
subsisting and is distinct from the reconstituted firm under
the partnership deed, dated 02-07-1992. 2nd respondent was
managing the 1st respondent firm from its inception and
continued to be the Managing Partner of the reconstituted
firm and he was given all the powers under the partnership
deeds executed from time to time to constitute and
reconstitute of the 1st respondent firm and finally the firm
reconstituted under the partnership deed, dated 02-07-1992
alone has been carrying on the business in the name and
style of M/s Reliance Builders from 1988 till date and all the
transactions including the deeds of sale, purchase and
development have been executed by or on behalf of and in the
name of M/s Reliance Builders by the 2nd respondent.
Thereafter, it came to the light that the 2nd respondent
created bogus sale deeds in favour of his son and niece and
other partners and their family members. This attitude of the
2nd respondent has given rise to certain differences in the
middle of 2012. Thereupon, the petitioner prevailed over her
husband and father-in-law to negotiate with the 2nd
respondent and settle all the differences and disputes. The
entire business of all its ventures has been carried on in the
name and style of M/s Reliance Builders only. There is no
other firm with the same name or with another prefixes or
suffixes. The letter heads, registered deeds, agreements by
and in favour of 1st respondent firm are made only in the
name of M/s Reliance Builders and reconstituted firm was
dissolved by notice of one of the partners. It cannot carry on
new business as it was duly wound up after settlement of
accounts, discharge of liabilities and distribution of all its
assets in accordance with Section 48 of the Partnership Act.
Hence, the O.P.
4. Respondents 1, 2, 4 to 6 and 11 and 12 herein
(petitioners in I.A.) filed the above I.A. under Order VII Rule
11 r/w Section 151 CPC to reject the O.P. as it does not
contain cause of action and that the petitioner herein has no
locus standi to file the O.P. as admittedly she was not a party
to the firm originally constituted on 19-04-1988.
5. It was averred in the affidavit filed in support of
I.A. that the firm which was constituted on 19-04-1988 with
Registration No.659/89 is totally different and distinct with
that of the partnership firm which was constituted on
27-11-1991 and reconstituted on 02-07-1992 with
Registration No.4680/92 and the differences between the
Reliance Builders bearing Regn.No.659/89 and Reliance
Builders bearing Regn.No.4680/92 have been incorporated in
the tabular form. The firm bearing Regn.No.659/89 dated
03-03-1989 is with the following partners
viz.,1) M.Srinivasa Rao, 2) M.Kaleswara Rao, 3)
V.Ramakrishna, 4) Mrs.M.Padmaja Rao, 5) Mrs.V.Venkata
Vajramma, 6) Mrs.V.Mani, 7) Mrs.V.Venkata Anitha and 8)
Mrs.M.Rajeswari. The said firm was flouted under the name
and style of M/s Reliance Builders and there is no change in
the constitution of the partners from the inception till this
day and the income tax returns are being filed in the firm
Registration Number and its PAN No.AAAFR9780Q. The
partnership deed, dated 27-11-1991 consisting of 11 partners
for the purpose of construction of commercial/residential
complex upon the land resumed by demolishing the building
bearing No.3-6-69 situated at Basheerbagh, Hyderabad under
the name and style of M/s Reliance Builders. The said
partnership firm was reconstituted on 02-07-1992 with its
original partners and 5 new partners were inducted. The
said partnership deed was registered on 02-07-1992 with
Regn.No.4680/92. The petitioner herein is no way concerned
or associated with the 1st respondent firm and that she is only
a partner in M/s Reliance Builders bearing Regn. No.4680/92
and the said firm did not undertake or execute any other
work till today and that the registration number, pan
number and other activities of the two firms are distinct and
different and in no way interconnected and taking advantage
of nomenclature of the two firms being the same, the
petitioner herein proclaiming openly that they will cause
disruption of the activities of the petitioners firm and that the
M/s Reliance Builders bearing Regn.No.659/89 which was
constituted on 19-04-1988 never dissolved and it is
subsisting till date and pursuing the business activities
unhampered all these years and that there is no arbitration
clause in the partnership deed bearing Regn.No.659/89 and
this fact has been clearly noted in I.A.No.1221/12 in
O.S.No.1948 of 2012 on the file of the V Senior Civil Judge,
City Civil Court, Hyderabad. In that suit, the petitioner filed
I.A.No.1248 of 2012 in O.S.No.1948 of 2012 praying the
Court to refer the parties to the arbitration in terms of Cl.11
of partnership deed, dated 02-07-1992. The said petition was
dismissed and the same was confirmed by this Court in CRP
No.815 of 2013. But, however, when the matter was carried to
the Honble Supreme Court in S.L.P. (C) No.6208 of 2013, the
matter was remanded to this Court, but the petitioner herein
withdrew the CRP No.815 of 22013 after remand from the
Supreme Court. Therefore, the order of the trial Court in
I.A.No.1248 of 2012 in O.S.No.1948 of 2012 was not
disturbed and it is still in operation. Hence, the I.A.
6. The petitioner herein (1st respondent in I.A.) filed
counter affidavit in the said I.A. stating that the proceedings
under Section 9 of the Act are summary and interlocutory in
nature and Order VII Rule 11 has no application. The O.P.
discloses cause of action, which are traversed in great detail.
There is no dispute that the deed of reconstitution, dated
02-07-1992 including the petitioner herein as a partner
contains arbitration clause. The tax returns and registrations
are part of the fraudulent scheme of the petitioners and the
truth or otherwise of these allegations can be gone into only
by the arbitrator under Section 16 of the Act and beyond the
scope of the present application and the documents filed by
the petitioners are created for the purpose of denying the
share of this respondent, which are ex-facie bogus and
spurious. The allegations in Pars 6 to 11 in the I.A. are false
and the petitioner herein reiterated the contents of O.P. and
denied each and every allegation in the I.A. Hence, the
petitioner herein prayed to dismiss the I.A.
7. The learned trial Judge after considering the
material on record, came to the conclusion that the petitioner
herein failed to fulfill the conditions as laid down under
Section 9 of the Act to initiate proceedings before the Court
and that she is not entitled to file O.P. and accordingly
allowed I.A. rejecting O.P.No.1949 of 2013. Hence, this
revision.
8. Mr.M.V.Durga Prasad, learned counsel appearing
for the petitioner contended that I.A. filed by some of the
respondents under Order VII Rule 11 CPC is not
maintainable, that the proceedings under Section 9 of the Act
are in the nature of summary proceedings, that without
notices being served on some of the respondents, the trial
Judge ought not to have passed the impugned order, that
I.A. filed by the respondents does not disclose any grounds
incorporated in Order VII Rule 11 CPC, that whether there is
any reconstitution of firm or not and whether the petitioner is
a partner or not are questions of fact, which have to be
resolved by an arbitrator and the same has no bearing under
Section 9 of the Act, that under Order VII Rule 11 CPC, the
Court has to see only the plaint and documents filed along
with the plaint to ascertain whether it discloses cause of
action or not, but not the documents filed by the respondents
to know whether the allegations made out a cause of action
or not, that it is not in dispute that the petitioner herein is a
partner of the 1st respondent firm by virtue of the
reconstitution deed, dated 02-07-1992, that the documents
filed by the respondents in I.A. cannot be looked into at the
stage of Order VII Rule 11 CPC and the contentions raised by
the respondents with reference to the pleadings and
documents are yet to be proved and hence, they cannot be
looked into, that there is no denial of firms managing
partner, business office, staff, stationery and other
advertisement material and it is one and the same in respect
of both firms, that when the pleadings are not complete, the
impugned order is passed and thereby causing miscarriage of
justice and that this is not the stage to consider the case of
the petitioner and hence, he prays to set aside the impugned
order.
9. On the other hand, Mr.S.Ravi, learned senior
counsel appearing for the respondent No.1 contended that
PAN numbers of two firms is entirely different and income tax
returns are being submitted separately for the firm bearing
Regn.No.659/89 and also firm bearing Regn.no.4680/92, that
there is no impediment under law that in the same name two
firms can be registered and they can be operated from one
place, that in the firm bearing Regn.No.659/89, the petitioner
herein is not admittedly a partner and that firm has not been
dissolved in terms of Section 63 of the Indian Partnership Act,
1932 (for short the Partnership Act), that the firm bearing
Regn.No.4680/92 is constituted for specific purpose and for
developing only one property, , that the O.P. under Section 9
of the Act is not maintainable in view of the fact that there
was no arbitration clause in the said firm bearing
Regn.No.659/89 and filing Original Petition is nothing but
abuse of process of law and that considering the facts of the
case, the trial Judge rightly allowed the I.A. and the same
needs no interference by this Court.
10. Mr.S.Niranjan Reddy, learned counsel appearing
for the respondents 2 to 8 and 13 contended that while
dealing with O.P. under Section 9 of the Act, the Court has to
decide whether it is valid arbitration agreement in terms of
Section 7 of the Act, that under Section 9 of the Act, the party
invoking the jurisdiction should be a party to the agreement
and the said agreement should contain arbitration clause,
that unless these two conditions are satisfied, such a person
has no right to initiate the proceedings, that the documents,
and material papers have been brought to the notice of the
Court seeking to reject the O.P., that the petitioner failed to
demonstrate about the constitution of firm, dated
19-04-1988, which was reconstituted on 27-11-1991 and
again reconstituted on 02-07-1992 and therefore, there is no
cause of action, that the findings in I.A.1248 of 2012 in
O.S.No.1948 of 2012 on the file of the V Senior Civil Judge,
Hyderabad have become final and the said order is in
operation and the petitioner cannot re-agitate in some other
form and as the petitioner failed to demonstrate
reconstitution of firm, she is not entitled to claim any reliefs.
11. Mr.K.V.R.Chowdary, learned counsel appearing for
respondents 9 to 12 and Mr.T.Bala Mohan Reddy, learned
counsel appearing for respondent No.15 contended that the
petitioner is not a party within the meaning of Section 2 (b) of
the Act, that there was no pleading with regard to
constitution of the firm originally in the year 1988 or that firm
was reconstituted in the year 1992, that as CRP 815 of 2013
was withdrawn, the order in I.A.No.1248 of 2012 in
O.S.No.1948 of 2012 on the file of V Senior Civil Judge,
Hyderabad, has become final, that though leave is granted by
this Court, it does not mean the said order has not been set
aside in clear terms, that filing of application is nothing but
abuse of process of law and hence, he prays to dismiss the
revision.
12. Learned counsel for the parties relied on several
decisions, which will be referred to at appropriate place.
13. For entertaining O.P. under Section 9 of the Act,
two requirements are to be satisfied viz., 1) the party invoking
the jurisdiction should be a party to the agreement and 2)
such agreement must contain arbitration clause. Unless the
above two conditions are fulfilled, no person has a right to
initiate proceedings under Section 9 of the Act. Section 9 of
the Act reads thus:
9. Interim measures by court:- A party may, before or
during arbitral proceedings or at any time after the making
of the arbitral award, but before it is enforced in accordance
with Section 36, apply to a court:-
(i) for the appointment of a guardian for a minor or a
person of unsound mind for the purpose of arbitral
proceedings; or
(ii) for an interim measure of protection in respect of any
of the following matters, namely:-
(a) the preservation, interim custody or sale of any
goods which are the subject matter of the
arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any
property or thing which is the subject matter of
the dispute in arbitration, or as to which any
question may arise therein and authorizing for
any of the aforesaid purposes any person to enter
upon any land or building in the possession of
any party, or authorizing any samples to be taken
or any observation to be made or experiment to be
tried, which may be necessary or expedient for the
purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a
receiver;
(e) such other interim measure of protection as may
appear to the court to be just and convenient,
and the Court shall have the same power for making orders as it
has for the purpose of, and in relation to, any proceedings before
it.
14. The word party is defined under Section 2 (h) of
the Act, which means a party to an arbitration agreement.
Section 2 (b) of the Act defines arbitration agreement which
means an agreement referred to in Section 7.
Section 7 of the Act reads thus:
7.Arbitration agreement:- (1) In this Part, arbitration
agreement means an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or
which may arise between them in respect of a defined legal
relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an
arbitration clause in a contract or in the form of a separate
agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained
in-
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means
of telecommunication which provide a record of the
agreement; or
(c) an exchange of statements of claim and defence in
which the existence of the agreement is alleged by one
party and not denied by
(5) The reference in a contract to a document containing an
arbitration clause constitutes an arbitration agreement if the
contract is in writing and the reference is such as to make that
arbitration clause part of the contract.
A conjoint reading of the above two definitions and the
definition of arbitration agreement means a person invoking
the jurisdiction under Section 9 of the Act must be one of the
parties to the agreement and such an agreement must be in
writing singed by the parties. Such a contract/agreement to a
document must contain arbitration clause. For the purpose
of invoking jurisdiction under Section 8 or 9 or 11 of the Act,
the above conditions have to be fulfilled. If any one of the
conditions have not been fulfilled, it can safely be said that
the Court in which an application under Section 9 of the Act
is filed, is without jurisdiction. In the absence of these two
conditions, the Court cannot usurp the jurisdiction under
Section 9 of the Act and it would be a futile or meaningless
exercise to be taken up by the arbitrator.
15. The entire edifice of the petitioners case is that 1st
respondent firm was constituted by partnership deed, dated
19-04-1988 for which, the respondents 2 to 6 along with
respondents 11 to 13 were partners and it was reconstituted
under partnership deed, dated 27-11-1991 under which three
more partners were inducted and again it was reconstituted
under partnership deed, dated 02-07-1992 under which the
petitioner along with respondents 7 to 10 were inducted as
partners. By virtue of the partnership deed, dated
02-07-1992, respondents 11 to 13, Smt.Ashrafunnisa Begum,
Sultan Naseeruddin and Sultan Rasheemuddin retired from
1st respondent firm.
16. On the other hand, it is the specific case of the
respondents that respondents, 1,2, 4 to 6 and 11 and 12 that
the partnership deed, dated 03-03-1999 with Regn.
No.659/89 (for convenience, it shall be referred to first firm)
which was registered in pursuance of agreement, dated
19-04-1988 is a distinct and separate from that of the firm
constituted on 27-11-2991, which was registered on
02-07-1992 with Regn.No.4680/92 (for convenience, it shall
be referred to as second firm) and the second firm was
constituted for specific purpose of construction of
commercial/residential building upon land resumed by
demolishing the building bearing No.3-6-69 situated at
Basheerbagh, Hyderabad and that PAN number for the first
firm is AAAFR9780Q whereas the PAN number for the second
firm is AAAFR9779F. It is also the specific case of the
respondents that first firm has not been dissolved nor
reconstituted and that there is no recital in the deed of
second firm to the effect that it was reconstituted in
pursuance of dissolution of the first firm or inducted new
partners into second firm.
17. It is not in dispute before this Court that there is
no arbitration clause in the agreement of the first firm
whereas Cl.23 of deed of partnership dated 27-11-1991
contains arbitration clause. Similarly the said agreement,
which was registered with Registrar of firms and came into
effect from 02-07-1992 contains arbitration clause. After
dissolution of the first firm, second firm was constituted or
second firm was reconstituted in pursuance of first firm, then
certainly the Court will have jurisdiction to entertain
application under Section 9 of the Act and pass appropriate
orders.
18. It is necessary to refer to the order, dated 05-02-
2013 in I.A.No.1248 of 2012 in O.S.No.1948 of 2012, which
was filed under Section 8 of the Act to stay the suit by
referring the parties to arbitration in terms of clause 11 of
partnership deed, dated 02-07-1992. A categorical finding
was recorded to the effect that in the partnership deed, dated
19-04-1988, the petitioner is not a party and it does not
contain any arbitration clause and that the petitioner came
up with the present petition in respect of partnership deed,
dated 09-07-1992 which is totally different and the
respondents therein are not concerned with the questioning
of partnership deed, dated 09-07-19192 and accordingly,
dismissed the application. Challenging the same, the
petitioner herein filed CRP 815 of 2013 before this Court. A
division bench of this Court vide order, dated
15-04-2013 held thus:
It is the specific case of the 1st respondent that the relief of
injunction prayed for by it, is in relation to their activity
and business covered by Ex.R2. Admittedly, the petitioner
is not a party to that. In case the arrangement under
Ex.R2 was either dissolved or merged with the one, which
was brought into existence through Ex.R5 and thereafter.
Ex.R7, then again, the request of the petitioner could have
been acceded to. However, a perusal of Ex.R2 on the one
hand and Exs.R5 and R7 on the other, prima facie,
discloses that these two are separate and independent
arrangements. The mere fact that some of the partners are
common to both the arrangements does not, by itself,
indicate the merger or the unity.
The trial Court in our opinion has arrived at just and
correct conclusion that the dispute in the suit is not the
subject matter of the arrangement under Ex.R7 and
thereby, the arbitration clause does not govern the
situation. At any rate, the question as to whether the
subject matter of the suit is covered by the partnership
deed, Ex.R7, can certainly be identified as an issue to be
decided in the suit.
19. While observing, this Court directed the trial Court
to frame an issue as to whether the partnership brought into
existence through Ex.R5 and reconstituted through Ex.R7 is
in continuation of one constituted under Ex.R2 or whether
these two arrangements are independent of each other.
Challenging the same, the petitioner herein filed Civil Appeal
No.6208 of 2013 in Special Leave petition (Civil) No.21920 of
2013. The Honble Supreme Court, vide order, dated
26-07-2013 held thus:
To appreciate the rivalised submissions assiduously
propounded at the Bar, we have carefully scrutinized the
orders passed by the learned trial Judge and that of the High
Court. The trial Court as is evincible expressed the view
after referring to the numerous authorities that the suit did
not relate to the partnership deed, dated 02-07-1992 but
pertains to the deed dated 19-4-1988 which does not contain
any arbitration clause. A contention was urged before the
High Court relating to continuity of the arrangement and the
applicability of the arbitration clause incorporated in the
partnership deed, dated 2-7-1992. It is perceptible from the
order passed by the High Court that it has referred to the
documents but really not addressed to the thrust of the
dispute by referring to the averments made in the civil
revision and the proponements made by the counsel on
behalf of the revisionist before it. In fact, we are inclined to
think there was no justification to direct the trial Judge to
frame an issue to find out whether the suit is covered by the
partnership deed. To return a finding as regards the
attractability of Section 8 of the 1996 Act, it was necessary
on the part of the High Court to scrutinize the clauses and
other assertions to arrive at a definite conclusion so that
there could have been apposite adjudication. We may
hasten to state that Mr.P.P.Rao, learned senior counsel
urged this Court to go through the entire document to
establish the point that there is no arbitration clause that
would govern the lis in question. We are disposed to think
that the said exercise should have been studiedly
undertaken by the High Court and thereafter in case the
controversy had traveled to this Court that would have been
appropriately dealt with. We clearly perceive that the High
Court has not really dealt with the core issue in a considered
manner.
In view of our aforesaid premised reasons, we set aside the
order passed by the High Court and remit the matter for
reconsideration, regard being had to the observations made
hereinafter and decide the same in accordance with the as
within a period of six weeks. Be it noted, we have not
expressed any opinion on the merits of the matter.
20. In pursuance of the remand order, the CRP 815 of
2013 came up for hearing before this Court. This Court, vide
order, dated 04-10-2013 held thus:
The revision was dismissed by this Court on merits on
15-04-2013. The petitioner filed Civil Appeal No.6208 of
2013 before the Honble Supreme Court. The Civil Appeal
was allowed by the Honble Supreme Court and their
lordships directed this Court to hear the matter afresh and
to decide the issue here itself.
After remand, the revision was listed for hearing on
02-09-2013. At the request of the learned counsel for the
petitioner, the matter was adjourned to today. It was made
amply clear that since the Honble Supreme Court stipulated
time for disposal of the revision, no further adjournment
would be granted.
Today, learned counsel for the petitioner sought to file
documents running into about 1000 pages. We made it clear
to him that the revision has to be decided on the basis of the
material that was available before the trial Court and it
would not be proper for us to decide the legality or otherwise
of the order passed in the I.A. on the basis of the additional
material of such a large volume. With this, learned counsel
for the petitioner sought permission of this Court to
withdraw the civil revision petition without prejudice to the
right of his client to file a fresh application duly enclosing the
additional material, which is now available with him.
Permission is accorded and the civil revision petition is
dismissed as withdrawn, leaving it open to the petitioner to
file fresh application duly enclosing the material. In case,
such application is filed, the trial Court shall decide the
same on its own merits, after hearing both the parties.
The miscellaneous petition filed in this revision shall also
stand disposed of. There shall be no order as to costs.
21. From the above order, it is clear that liberty was
given to the petitioner to file fresh application duly enclosing
the material and if such application is filed, the trial Court
shall decide the same on its own merits, after hearing both
parties. From the above order, it is clear that the order of the
trial Court, dated 05-02-2013 was not specifically set aside.
Therefore, the findings recorded in I.A.No.1248 of 2012 in
O.S.No.1948 of 2012 have become final. From the order of
this Court, dated 04-10-2013, leave is granted to file fresh
application under Section 8 of the Act duly enclosing all
relevant documents. Admittedly, petitioner herein has not file
fresh application under Section 8 of the Act in terms of leave
granted by this Court. The prayer sought for in I.A.No.1248
of 2012 which is filed under Section 8 of the Act r/w Section
1151 CPC reads as follows For the reasons stated in the
accompanying affidavit, the petitioner prays that this Honble
Court may be pleased to forthwith stay the suit by referring
the parties to arbitration in terms of clause (11) of the
partnership deed, dated 02-07-1992 and pass such other
order or orders as this Honble Court may deem fit and
proper in the circumstances of the case. As the petitioner
has not filed fresh application, the findings in the order, dated
05-02-2013 attained finality. But, the learned counsel for the
petitioner vehemently contended that since leave is granted, it
can be inferred that the order has impliedly set aside.
Withdrawing of suits is governed by Order XXIII of CPC.
Withdrawal are two types. 1) absolute withdrawal i.e.,
withdrawal by the plaintiff without the leave of the Court and
2) qualified withdrawal i.e., withdrawal with the leave of the
Court. Primary object of Rule 1 of Order XXIII CPC is to allow
the plaintiff to exercise his right to proceed with the litigation
in his own way and also to ensure fair trial on merits.
Question is when the party wants to withdraw the suit even
with the leave of the Court, can it be said that the order
passed is impliedly set aside.
22. On this aspect, learned counsel for the petitioner
relied on a decision reported in SHEONONDAN PASWAN V STATE
OF BIHAR , wherein it was held thus (para 12)
There was one contention of a preliminary nature advanced
by Mr. Nariman on behalf of Dr. Jagannath Mishra and that
contention was that on a proper reading of the order on the
review petition, made by A.N. Sen, J it was clear that the
Review bench did not exercise the power of review and set
aside the order made by the Original bench. The argument
was that the order made by the Original bench stood
unquashed and unreserved and it was therefore not
competent to the Constitution bench to rehear the appeal on
merits as if the order of the Original bench did not exist. It
was also urged by Mr. Nariman on behalf of Dr. Jagannath
Mishra that the order made by the Review bench was not
legal and valid since it was a non-speaking order which did
not contain any reasons why the order of the Original bench
should be reviewed. This contention was of course not
strongly pressed by Mr. Nariman 'but in any event we do not
think that it has any substance. It is undoubtedly true that
the order of the Review bench did not in so many terms set
aside the order of the Original bench and used a rather
unhappy expression, namely, "I. ...admit the review petition".
But it is clear that when the Review bench used the
expression "I...... admit the review petition" it plainly
unequivocally meant that it was allowing the review petition
and setting aside the order of the Original bench, otherwise
it is difficult to understand how it could possibly "direct the
re-hearing of the appeal". The appeal could be re-heard only
if the review petition was allowed and the order of the
Original bench was set aside and therefore obviously when
the Review bench directed re-hearing of the appeal, it must
by necessary implication be held to have allowed the review
petition and set aside the order of the Original bench. We
cannot allow the true meaning and effect of the order of the
Review bench to be obfuscated by a slight ineptness of the
language used by the Review bench. We must look at the
substance of the order rather than its apparent form. We
must therefore proceed on the basis that the order of the
Original bench was set aside and re-hearing of the appeal
directed by the Review bench.
The above decision has no application to the present
facts of the case because in the factual back ground when a
review petition was admitted, it is understood rehearing of the
appeal. If the contention of the learned counsel for the
petitioner is to be accepted that when leave is granted, the
order under challenge would be set aside, every petitioner in
Civil Revision Petition withdraws the revision seeking leave of
the Court and thereby there would not be any adjudication in
the revision by the High Court. If this contention is to be
accepted, it is nothing but encouraging the party to withdraw
revision after leave of the Court. Therefore, unless the order of
withdrawal contains a specific observation that the order
under challenge was set aside, implied inference of setting
aside the order under challenge under revision cannot be
drawn. Even assuming for a moment that leave has been
granted, the leave relates to only to file a fresh application
along with all the documents under Section 8 of the Act to
stay the suit by referring the parties to the arbitration in
terms of clause 11 of the partnership deed, dated 02-07-1992
but not otherwise.
23. In pursuance of the leave granted by this Court,
the petitioner has not taken any steps to file the application
under Section 8 of the Act along with necessary documents.
Therefore, the findings of the learned trial Judge in
I.A.No.1248 of 2012 in O.S.No.1948 of 2012 have become
final. The petitioner cannot be permitted to re-agitate the
same in another form i.e., filing application under Section 9 of
the Act.
24. Learned counsel for the petitioner vehemently
contended that the provisions of Order VII Rule 11 CPC has
no application as the proceedings under Section 9 of the Act
were summary in nature and the petition filed by respondents
does not disclose any grounds to reject the same at the
threshold. For that purpose, he relied on a decision reported
in ADHUNIK STEELS LTD V ORISSA MANGANESE AND MINERALS
(P) LTD. , wherein it was held thus (para 21):
It is true that the intention behind Section 9 of the
Act is the issuance of an order for preservation of the
subject matter of an arbitration agreement. According to
learned counsel for Adhunik Steels, the subject matter of
the arbitration agreement in the case on hand, is the
mining and lifting of ore by it from the mines leased to
O.M.M. Private Limited for a period of 10 years and its
attempted abrupt termination by O.M.M. Private Limited
and the dispute before the arbitrator would be the effect of
the agreement and the right of O.M.M. Private Limited to
terminate it prematurely in the circumstances of the case.
So viewed, it was open to the court to pass an order by way
of an interim measure of protection that the existing
arrangement under the contract should be continued
pending the resolution of the dispute by the arbitrator. May
be, there is some force in this submission made on behalf of
the Adhunik Steels. But, at the same time, whether an
interim measure permitting Adhunik Steels to carry on the
mining operations, an extraordinary measure in itself in the
face of the attempted termination of the contract by O.M.M.
Private Limited or the termination of the contract by O.M.M.
Private Limited, could be granted or not, would again lead
the court to a consideration of the classical rules for the
grant of such an interim measure. Whether an interim
mandatory injunction could be granted directing the
continuance of the working of the contract, had to be
considered in the light of the well-settled principles in that
behalf. Similarly, whether the attempted termination could
be restrained leaving the consequences thereof vague would
also be a question that might have to be considered in the
context of well settled principles for the grant of an
injunction. Therefore, on the whole, we feel that it would
not be correct to say that the power under Section 9 of the
Act is totally independent of the well known principles
governing the grant of an interim injunction that generally
govern the courts in this connection. So viewed, we have
necessarily to see whether the High Court was justified in
refusing the interim injunction on the facts and in the
circumstances of the case.
25. He further relied on a decision reported in NISSHO
IWAI CORPN V VEEJAY IMPLEX , wherein it was held thus (para
10):
NOWHERE in this Part any Civil Court is conferred with
jurisdiction expressly to decide the question of factual
existence or validity and legality of the arbitration
agreement. This Section is coupled with non-obstante
clause. So it is of mandatory nature. By this Section the Civil
Court particularly this Court is stripped off
jurisdictionconferred upon it under Clause 12 of the Letters
Patent. When Clause 12 is not invokable so leave thereunder
granted by this Court is also not sustainable. On this score
also this application is bound to succeed. As such leave
granted, Clause 12 of the Letters Patent is revoked. All
interim orders, if any, stand vacated.
26. He further relied on a decision reported in SPA
AGENCIES (INDIA) PRIVATE LIMITED V HARISH RAWTANI ,
wherein it was held thus (para 8):
Section 17(1) of A and C Act is couched in broad language
and confers power on arbitral tribunal to pass interlocutory
orders as may be considered necessary. In our considered
opinion, having regard to the phraseology in Section 17(1),
an arbitrator can pass all orders as may be necessary. These
orders may include an order - for injunction, to furnish
security, to appoint commissioner to take evidence (in
addition to Section 27), to appoint experts etc. But any such
interim order shall be directed only to parties to arbitral
proceedings and not to third party, and any interim order by
the arbitrator cannot go beyond the reference of arbitration
agreement. Be it also noted that a petition under Section 9 is
not a suit before a Civil Court, but a remedy provided to
party to an arbitration agreement to seek interim order in
relation to subject matter of the arbitration pending
adjudication.
27. He further relied on a Judgment in W.P.No.34689
of 2009 in case of M/S SOVEREIGN DEVELOPERS AND
INFRASTRUCTURES LIMITED V PARAMOUNT VIJETHA HOLDING,
wherein it was held thus (para 5):
IN my opinion, a proceeding for an interim measure under
Section 9 of the Arbitration Act is almost like an
interlocutory application in a suit and hence such a
proceeding cannot be construed as a suit within the meaning
of Section 10 of the Code of Civil Procedure. Therefore,
Section 10 of the Code of Civil Procedure is not applicable to
proceedings under Section 9 of the Arbitration Act.
Accordingly, I find no legal infirmity in the impugned order to
warrant interference under the extraordinary jurisdiction of
this Court under Articles 226 & 227 of the Constitution of
India
From the above decisions, it is clear that the application
under Section 9 of the Act has to be dealt with by relying
upon the principles governing the grant of interim injunction.
It is also clear that proceedings under Section 9 of the Act are
summary in nature. It is also clear that petition under
Section 9 of the Act is not a suit before a civil Court and it is
almost like an interlocutory application in a suit. Application
under Section 9 of the Act is totally independent provision.
28. He further relied on a decision reported in
KASTURI AND SONS LTD V K.C. PALANI SKWAMY , wherein it was
held thus (para 89):
The shares being goods, under the sale of goods Act as
well as of Companies Act are covered under the provisions
of Section 9 of the Arbitration & Conciliation Act and this
Court can issue injunction against the person in possession
of the goods which are subject matter of arbitration
proceedings, even if they were not the parties.
This decision has no application because, the petitioner
admittedly is not a party to the first firm.
29. The grant of interim injunction is a discretionary
remedy and in exercise of judicial discretion in granting or
refusing to grant, the Court will take into consideration the
following as guidelines as held by this Court in a decision
reported in N.V.CHOWDARY V HINDUSTAN STEEL WORKS
CONSTRUCTION LTD.,
1.Whether the person seeking temporary injunction has
made out a prima facie case- This is sine quo non.
2.Whether the balance of convenience is in his favour, that
is, whether it could cause greater inconvenience to him if
the injunction is not granted than the inconvenience which
the other side would be put to if the injunction is granted.
As to that, the governing principle is whether the party
seeking injunction could be adequately compensated by
awarding damages and the defendant would be in a
financial position to pay them.
3. Whether the person seeking temporary injunction would
suffer irreparable injury. It is, however, not necessary that
all the three conditions must obtain. With the first
condition as sine quo non at least two conditions should be
satisfied by the petitioner conjunctively and a mere proof of
one of the three conditions does not entitle a person to
obtain temporary injunction.
From the above decision, it is clear that the first
condition of prima facie case is sine quo non. Unless the first
condition is satisfied, the question of consideration of other
two conditions or any one of them may not arise.
30. It is contended by the learned counsel for the
petitioner that the trial Court placed reliance in the judgment
of Supreme Court in Aravind Constructions Co. (P) Ltd (10
supra)., for a proposition which was not laid down and that
the observations in that decision do not amount a ration
decidendi in terms of Article 141 of the Constitution of India.
Learned counsel for the petitioner relied on a decision
reported in DAVINDER SINGH AND OTHERS V STATE OF PUNJAB
AND OTHERS , wherein it was held thus (para 18):
A judgment, as is well known is the authority for the
proposition which it decides and not what can logically be
deduced from. This Court in the case of Union of India v.
Major Bahadur Singh (2006) 1 SCC 368, has observed:
"The courts should not place reliance on decisions without
discussing as to how the factual situation fits in with the
fact situation of the decision on which reliance is placed.
Observations of the courts are neither to be read as Euclid's
theorems nor as provisions of the statute and that too
taken out of their context. These observations must be read
in the context in which they appear to have been stated.
Judgments of the courts are not to be construed as
statutes. To interpret words, phrases and provisions of a
statute, it may become necessary for judges to embark into
lengthy discussions but the discussion is meant to explain
and not to define. Judges interpret statutes, they do not
interpret judgments. They interpret words of statutes; their
words are not to be interpreted as statutes."
The court has proceeded to add:
"Circumstantial flexibility, one additional or different fact
may make a world of difference between conclusions in two
cases. Disposal of cases by blindly placing reliance on a
decision is not proper."
31. He further relied on a decision reported in
BHUWALKA STEEL INDUSTRIES LIMITED V BOMBAYH IRON AND
STELL LABOUR BOARD AND ANOTHER , wherein it was held
thus (paras 67 and 68):
On the other hand, Shri Singhvi, Learned Senior
Counsel for the respondents urged that the rule of stare
decisis was not and could not be viewed as an absolute rule.
Reliance was also placed on the decision in Sarva Shramik
Sanghatana (KV), Mumbai Vs. State of Maharashtra and
Ors. [2008 (1) SCC 494]. So also Smt. Indira Jaising,
Learned Senior Counsel for the respondents repelled this
argument relying on the decisions in Maharashtra State
Road Transport Corporation Vs. State of Maharashtra and
Ors. (cited supra) and Danial Latifi and Anr. Vs. Union of
India [2001 (7) SCC 740]. Our attention was also invited to
treatise by Justice G.P. Singh, (11th Edition). It was urged
by Shri Singhvi that in the aforementioned judgments of the
Bombay High Court, excepting the judgment in Century
Textiles and Industries Ltd. Vs. State of Maharashtra (cited
supra), this question has not fallen for consideration at all.
The Full Bench and more particularly, the Learned Single
Judge (Hon'ble Deshmukh, J.) has rejected this argument
that this question was not squarely before Hon'ble Rege, J.
in his two judgments in C. Jairam Pvt. Ltd. Vs. State of
Maharashtra (cited supra) and S.B. More and Ors. Vs. State
of Maharashtra and Ors. (cited supra) nor was it before the
Division Benches in Judgments in Lallubhai Kevaldas and
Anr. Vs. The State of Maharashtra and Ors. (cited supra),
Irkar Sahu's and Anr. Vs. Bombay Port Trust (cited supra),
Century Textiles and Industries Ltd. Vs. State of
Maharashtra (cited supra) including this Court judgment in
Maharashtra Rajya Mathadi Transport and Central Kamgar
Union Vs. State of Maharashtra and Ors. (cited supra). The
Learned Single Judge noted the argument that it was
expressed in Lallubhai Kevaldas and Anr. Vs. The State of
Maharashtra and Ors. (cited supra) that the Act did not
apply to the manual workers in the scheduled employment,
who were protected by the other labour legislations and the
said judgment was followed thereafter in the case of Century
Textiles and Industries Ltd. Vs. State of Maharashtra (cited
supra) and, therefore, on principle of stare decisis, the
settled position of law should not be disturbed. The Learned
Judge has also noted the decision in State of Gujarat Vs.
Mirzapur Moti Kureshi Kassab Jamat and Ors. (cited supra).
The Learned Single Judge then, relying on the judgment of
this Court in M/s. Good Year India Ltd. Vs. State of Haryana
[AIR 1990 SC 781], commented that the precedent is an
authority only for what it actually decides and not for what
may remotely or logically follow from it. The Learned Single
Judge then went on to hold that what is binding is the ratio
decidendi of the judgment. The Learned Judge noted that
this question did not fall for consideration either in the two
judgments by Hon'ble Rege, J. in C. Jairam Pvt. Ltd. Vs.
State of Maharashtra (cited supra) and S.B. More and Ors.
Vs. State of Maharashtra and Ors. (cited supra) or even in
the judgment in Lallubhai Kevaldas and Anr. Vs. The State
of Maharashtra and Ors. (cited supra). In our view, the
Learned Judge was absolutely correct in so holding. Close
examination of judgments by Hon'ble Rege, J., as also
judgment in Lallubhai Kevaldas and Anr. Vs. The State of
Maharashtra and Ors. (cited supra) will show that the
question about the correct interpretation and scope of the
Section 2(11) of the Mathadi Act did not fall for consideration
in those cases.
THIS Court, in Sarva Shramik Sanghatana (KV),
Mumbai Vs. State of Maharashtra and Ors. (cited supra) has
specifically quoted from the decision in Quinn Vs. Leathem
[1901 Appeal Cases 495] as follows:-
"Before discussing Allen Vs. Flood [1898 Appeal Cases
1] and what was decided therein, there are two observations
of a general character, which I wish to make; and one is to
repeat what I have very often said before - that every
judgment must be read as applicable to the particular facts
proved or assumed to be proved, since the generality of the
expressions which may be found there are not intended to be
expositions of the whole law, but are governed and qualified
by the particular facts of the case in which such expressions
are to be found. The other is that a case is only an authority
for what it actually decides. I entirely deny that it can be
quoted for a proposition that may seem to follow logically
from it. Such a mode of reasoning assumes that the law is
necessarily a logical code, whereas every lawyer must
acknowledge that the law is not always logical at all."
(Emphasis supplied)
The Court therein again referred to the decision in
Ambica Quarry Works Vs. State of Gujarat [1987 (1) SCC
213] and upheld the observations therein to the effect that:-
"18. The ratio of any decision must be understood in
the background of the facts of that case. It has been said
long time ago that a case is only an authority for what it
actually decides and not what logically follows from it."
The Court further relied upon the decisions in
Bhavnagar University Vs. Palitana Sugar Mill (P) Ltd. [2003
(2) SCC 111], Bharat Petroleum Corpn. Ltd. Vs. N.R.
Vairamani [2004 (8) SCC 579] and finally, the decision in
British Railways Board Vs. Herrington [All ER 761] and has
quoted the following observations therefrom:-
"There is always peril in treating the words of a speech
or a judgment as though they were words in a legislative
enactment, and it is to be remembered that judicial
utterances are made in the setting of the facts of a particular
case. 11. Circumstantial flexibility, one additional or
different fact may make a world of difference between
conclusions in two cases. Disposal of cases by blindly
placing reliance on a decision is not proper."
Now, when we examine all the Bombay High Court's
judgments on the basis of this ratio, it is clear that excepting
the decision in Century Textiles and Industries Ltd. Vs. State
of Maharashtra (cited supra), such position could not be
obtained. There can be no dispute about the importance
attached by this Court in the above mentioned cases, as
relied upon by the appellants, which favour the consistency
of law.
There is no dispute about the proposition of law laid
down by the Supreme Court because ratio of decision
has to be understood with reference to the factual
background. In order to have a correct perception of the
ratio decidendi of a case, it is necessary to have a close
look at the factual back ground of judgment itself. It is
not everything said by a judge which has a force of ratio
decidendi. In other words every observation found in a
judgment is not a ratio. The decision of Supreme Court
is an authority for the proposition which it decides. It is
based upon facts.
32. Learned counsel appearing for the respondents
contended that in the absence of any procedure laid
down under special statute, the general principle of
procedure could be applicable. For that he relied on a
decision reported in SBP & CO. V PATEL ENGINEERING LTD
AND ANOTHER , wherein it was held thus (para 19):
IT is also not possible to accept the argument that there is
an exclusive conferment of jurisdiction on the arbitral
tribunal, to decide on the existence or validity of the
arbitration agreement. Section 8 of the Act contemplates a
judicial authority before which an action is brought in a
matter which is the subject of an arbitration agreement on
the terms specified therein, to refer the dispute to
arbitration. A judicial authority as such is not defined in
the Act. IT would certainly include the court as defined in
Section 2(e) of the Act and would also, in our opinion,
include other courts and may even include a special
tribunal like the Consumer Forum (See Fair Air Engineers
(P) Ltd. and another v. N.K.Modi ). When the defendant to
an action before a judicial authority raises the plea that
there is an arbitration agreement and the subject matter of
the claim is covered by the agreement and the plaintiff or
the person who has approached the judicial authority for
relief disputes the same, the judicial authority, in the
absence of any restriction in the Act, has necessarily to
decide whether, in fact, there is in existence a valid
arbitration agreement and whether the dispute that is
sought to be raised before it, is covered by the arbitration
clause. IT is difficult to contemplate that the judicial
authority has also to act mechanically or has merely to see
the original arbitration agreement produced before it, and
mechanically refer the parties to an arbitration. Similarly,
Section 9 enables a court, obviously, as defined in the Act,
when approached by a party before the commencement of
an arbitral proceeding, to grant interim relief as
contemplated by the section. When a party seeks an interim
relief asserting that there was a dispute liable to be
arbitrated upon in terms of the Act, and the opposite party
disputes the existence of an arbitration agreement as
defined in the Act or raises a plea that the dispute involved
was not covered by the arbitration clause, or that the court
which was approached had no jurisdiction to pass any
order in terms of Section 9 of the Act, that court has
necessarily to decide whether it has jurisdiction, whether
there is an arbitration agreement which is valid in law and
whether the dispute sought to be raised is covered by that
agreement. There is no indication in the Act that the powers
of the court are curtailed on these aspects. On the other
hand, Section 9 insists that once approached in that behalf,
"the court shall have the same power for making orders as
it has for the purpose of and in relation to any proceeding
before it". Surely, when a matter is entrusted to a Civil
Court in the ordinary hierarchy of courts without anything
more, the procedure of that court would govern the
adjudication [See R.M.A.R.A. Adaikappa Chettiar and anr.
v. R.Chandrasekhara Thevar]
33. He further relied on a decision reported in ARVIND
CONSTRUCTIONS CO. (P) LTD. V KALINGA MINING CORPORATION
AND OTHERS , wherein it was held thus (para 15):
The argument that the power under Section 9 of the Act is
independent of the Specific Relief Act or that the restrictions
placed by the Specific Relief Act cannot control the exercise
of power under Section 9 of the Act cannot prima facie be
accepted. The reliance placed on Firm Ashok Traders and
Anr. Vs. Gurumukh Das Saluja and Ors. [(2004) 3 S.C.C.
155] in that behalf does not also help much, since this Court
in that case did not answer that question finally but prima
facie felt that the objection based on Section 69 (3) of the
Partnership Act may not stand in the way of a party to an
arbitration agreement moving the court under Section 9 of
the Act. The power under Section 9 is conferred on the
District Court. No special procedure is prescribed by the Act
in that behalf. It is also clarified that the Court entertaining
an application under Section 9 of the Act shall have the
same power for making orders as it has for the purpose and
in relation to any proceedings before it. Prima facie, it
appears that the general rules that governed the court while
considering the grant of an interim injunction at the
threshold are attracted even while dealing with an
application under Section 9 of the Act. There is also the
principle that when a power is conferred under a special
statute and it is conferred on an ordinary court of the land,
without laying down any special condition for exercise of that
power, the general rules of procedure of that court would
apply. The Act does not prima facie purport to keep out the
provisions of the Specific Relief Act from consideration. No
doubt, a view that exercise of power under Section 9 of the
Act is not controlled by the Specific Relief Act has been taken
by the Madhya Pradesh High Court. The power under
Section 9 of the Act is not controlled by Order XVIII Rule 5 of
the Code of Civil Procedure is a view taken by the High Court
of Bombay. But, how far these decisions are correct, requires
to be considered in an appropriate case. Suffice it to say that
on the basis of the submissions made in this case, we are
not inclined to answer that question finally. But, we may
indicate that we are prima facie inclined to the view that
exercise of power under Section 9 of the Act must be based
on well recognized principles governing the grant of interim
injunctions and other orders of interim protection or the
appointment of a receiver.
According to the learned counsel for the petitioner, the
above decisions have no application because the correctness
of the view expressed by some High Courts in that regard is
left open to be decided in appropriate case. Therefore, it is
not a ratio within the meaning of Article 141 of the
Constitution of India.
34. Mr.KVR Chowdary, learned counsel for some of
respondents relied on a decision reported in M/S GROUPE
CHIMIQUE TUNISIEN SA V M/S SOUTHERN PETROCHEMICALS
INDUSTRIES CORPN LTD. , wherein it was held thus (para 6):
Whether there is an arbitration agreement or not, has to be
decided with reference to the contract documents and not
with reference to any contention raised before a court of law
after the dispute has arisen. Reference to pleadings before
the Jordanian Courts would have been relevant if the plea
was that the arbitration agreement between the parties is
contained in the exchange of statement of claim and defence
in which the existence of the agreement is alleged by one
party and not denied by the other (as contemplated under
Section 7(4)(c) of the Act). Be that as it may. Section 2(b) of
the Act defines 'arbitration agreement' as meaning an
agreement referred to in Section 7 (extracted below) :
"7. Arbitration agreement. - (1) In this Part, "arbitration
agreement" means an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which
may arise between them in respect of a defined legal
relationship, whether contractual or not. (2) An arbitration
agreement may be in the form of an arbitration clause in a
contract or in the form of a separate agreement. (3) An
arbitration agreement shall be in writing. (4) An arbitration
agreement is in writing if it is contained in (a) a document
signed by the parties; (b) an exchange of letters, telex,
telegrams or other means of telecommunication which
provide a record of the agreement; or (c) an exchange of
statements of claim and defence in which the existence of
the agreement is alleged by one party and not denied by the
other. (5) The reference in a contract to a document
containing an arbitration clause constitutes an arbitration
agreement if the contract is in writing and the reference is
such as to make that arbitration clause part of the contract."
35. Bearing the above principles in mind, it has to be
seen whether the petitioner has prima facie case for invoking
the jurisdiction of the trial Court?
36. The entire case of the petitioner rests upon the
first partnership deed, which contain arbitration clause and
the second partnership firm is reconstitution of first
partnership firm. Though it is a question of fact, but at the
same time, prima facie it has to be proved by the petitioner
basing on the material on record that the second partnership
firm is reconstituted in terms of first partnership firm. If the
first firm is reconstituted as second firm, then there is no
difficulty in accepting the case of the petitioner because there
is no dispute that the deed of second firm contains an
arbitration clause. There is enough material filed by the
respondents to show that first firm is separate and distinct
with that of the second firm. The first firm bearing
Regn.No.659/89, second firm bearing Regn.No.4680/92 and
PAN numbers of these two firms are different and the material
also would go to show that income tax returns are being filed
separately for first and second firms. There is no recital in
the deed of second firm that it was reconstituted in
pursuance of first firm or first firm was dissolved. Section 91
of the Indian Evidence Act, 1872 reads thus:
91.Evidence of terms of contracts, grants and other
dispositions of property reduced to form of document:-
When the terms of a contract, or of a grant, or of any other
disposition of property, have been reduced to the fofmr of a
document and in all cases in which any matter is required
by law to be reduced to the form of a document, no
evidence shall be given in proof of the terms of such
contract, grant or other disposition of property, or of such
matter, except the document itself, or secondary evidence of
its contents in cases in which secondary evidence is
admissible under the provisions hereinbefore contained.
It is a cardinal rule of evidence, not one of technicality,
but of substance, which it is dangerous to depart from that
where written documents exist, they shall be produced as
being a best evidence of their own contents. Therefore,
Section 91 of the Evidence Act restricts any evidence to
contradict the terms of written contract. In the absence of any
recital in the second deed of partnership that it was
reconstituted, the contention of the petitioner that it is
reconstituted firm is wholly untenable and it is without any
basis. The deed of second partnership contains all the terms
of contract. Therefore, the petitioner is debarred from raising
any contentions contrary to the terms and conditions of
second deed of agreement, which is reduced into writing.
Admittedly, the petitioner is not a party to the first deed of
agreement. When it is not shown that the first firm was
merged or reconstituted in the second firm, it can be
presumed that the first firm is continues to be in existence. If
really, the first firm was dissolved or changed, a person
specifically authorized by the firm should give a notice to the
Registrar of such change of dissolution. Section 63 of the
Partnership Act reads as follows:
63. Recording of changes in and dissolution of a firm:-
(1) When a change occurs in the constitution of a registered
firm any incoming, continuing or outgoing parktner and
when a registered firm is dissolved any person who was a
partner immediately before the dissolution, or the agent of
any such partner or person specially authorized in this
behalf, may give notice to the Registrar of such change or
dissolution, specifying the date thereof; and the Registrar
shall make a record of the notice in the entry relating to the
firm in the Register of Firms, and shall file the notice along
with the statement relating to the firm filed under Section
59.
Recording of withdrawal of a minor:- (2) When a minor
who has been admitted to the benefits of partnership in a
firm attains majority and elects to become or not to become a
partner and the firm is then a registered firm, he, or his
agent specially authorized in ths behalf, may give notice to
the Registrar that he has or has not become a partner, and
the Registrar shall deal with the notice in the manner
provided in sub-section (1).
37. It is mandatory on the part of the Registrar to
record notice and file notices along with the statement
relating to the firm when once the firm gives a notice. The
object of said provision is in the interest of trading public as
well as partners. It would be easy to prove the existence of
the firm in case a dispute between the parties among the
partners themselves or between the trading public and firm.
To show that the second firm is reconstituted, the
proceedings of the Registrar in terms of Section 63 of the
Partnership Act have not been filed by the petitioner. When
the petitioner prima facie fails to prove that the second firm
was reconstituted in pursuance of first firm in pursuance of
the first firm, she is not entitled to file an application under
Section 9 of the Act because, admittedly she is not a party to
the first firm and also the deed of first firm does not contain
any arbitration clause.
38. Coming to the balance of convenience, it must be
shown by the petitioner that the comparative mischief of the
inconvenience which is likely to arise from withholding the
injunction will be greater than that which is likely to arise
by granting it. The name of first firm and second firm is one
and the same. The Income Tax Returns are being submitted
by first firm by referring it as M/s Reliance Builders (Old)
even after constitution of second firm. In all these returns
and statement of account, the name of petitioner was not
reflected right from the year 1988. Admittedly, disputes arose
between the parties in the year 2012. After constitution of
second firm, tax returns are filed in the name of M/s Reliance
Builders (new). Personal/individual income tax returns
submitted by petitioner to show that there are two firms
namely Reliance Builders (old) and Reliance Builders (new).
On the admitted documents (Income Tax Returns) it is clear
that first firm is separate and distinct with that of second
firm.
39. Coming to the aspect of irreparable injury, the
petitioner has not come to Court with clean hands.
Suppressing important aspects a petition is filed under
Section 9 of the Act. There is no iota of evidentiary material
to show that the first firm was reconstituted as second firm.
Even if the injunction is refused, she would not suffer
irreparable loss which cannot be compensated in terms of
damages. It cannot be said that the income tax returns being
submitted by both firms are fabricated foreseeing the disputes
would crop up between the parties in the year 2012.
40. When it goes to the jurisdiction of entertaining an
application under Section 9 of the Act, the Court has to reject
the same. The question of jurisdiction can be raised by the
respondents in the O.P. by duly bringing to the notice of the
Court about jurisdiction of the Court. Therefore, though
Order VII Rule 11 CPC has no application, still the issue can
be decided whether the facts of the case falls under Section 9
of the Act.
41. Learned counsel for the petitioner relied on a
decision reported in BHATIA INTERNATIONAL V BULK TRADING
S.A. AND ANOTHER , wherein it was held thus (para 29):
WE see no substance in the submission that there would be
unnecessary interference by courts in arbitral proceedings.
Section 5 provides that no judicial authority shall intervene
except where so provided. Section 9 does not permit any or
all applications. It only permits applications for interim
measures mentioned in clauses (i) and (ii) thereof. Thus
there cannot be applications under Section 9 for stay of
arbitral proceedings or to challenge the existence or validity
of arbitration agreements or the jurisdiction of the arbitral
tribunal. All such challenges would have to be made before
the arbitral tribunal under the said Act.
There is no dispute about the law laid down by the apex
Court. It is also clear that Section 9 of the Act permits
application for interim measures as mentioned therein. The
main purpose of granting interim measures is the
preservation of property in dispute till legal rights and
conflicting claims of parties before arbitral proceedings are
adjudicated. Interference is called for by the Court when the
application under Section 9 of the Act itself is not
maintainable.
42. It is contended by the learned counsel for
respondents that the order impugned in this Court is
appealable under Section 37 of the Act and even Section 37
has no application, the aggrieved person has to file revision
before this Court under Section 115 of CPC but not under
Article 227 of the Constitution of India. Learned counsel for
the respondents relied on a decision reported in ITI LTD V
SIEMENS PUBLIC COMMUNICATIONS NETWORK LTD., , wherein
it was held thus (paras 21 and 22):
Provisions of S. 37 of the Act of 1996 bars second appeal and not
revision under S. 115 of the Code of Civil Procedure. THE power
of appeal under S. 37(2) of the Act against order of Arbitral
Tribunal granting or refusing to grant an interim measure is
conferred on Court. Court is defined in S.2(e) meaning the
'principal Civil Court of original jurisdiction' which has
'jurisdiction to decide the question forming the subject-matter of
the arbitration if the same had been the subject-matter of the
suit.' THE power of appeal having conferred on a Civil Court all
procedural provisions contained in the Code would apply to the
proceedings in appeal. Such proceedings in appeal are not open
to second appeal as the same is clearly barred under sub-secton
(3) of S. 37. But I agree with the conclusion reached by brother
Hegde, J. that the supervisory and revisional jurisdiction of High
Court under S. 115 of the Code of Civil Procedure is neither
expressly nor impliedly barred either by the provisions of S. 37 or
S. 19(1) of the Act. Section 19(1) under Chapter V of Part I of the
Act merely states that the Arbitral Tribunal shall not be bound by
the Code of Civil Procedure. THE said action has no application to
the proceedings before Civil Court in exercise of powers in appeal
under S. 39(2) of the Act.
THE supervisory jurisdiction to be exercised by the High Court
under S. 115 of the Code is for the purpose of correcting
jurisdictional error if any committed by Subordinate Court in
exercise of power in appeal under S. 37(2) of the Act. THE
approach made to the revisional Court under S. 115 of the Code
is not a resort to remedy of appeal. In appeal, interference can be
made both on facts and law whereas in revision only errors
relating to jurisdiction can be corrected. Such revisional remedy
is not expressly barred by the provisions of the Act. We have also
not found any implied exclusion of the same on examination of
the scheme and relevant provisions of the Act
43. Learned counsel for the petitioner relied on the
judgment in C.A.No.9699 of 2014, dated 14-10-2014 in case
of SAMEER SINGH V ABDUL RAB, wherein it was held thus (para
22):
Whether the executing Court in the obtaining
circumstances, has correctly expressed the view that it has
become functus officio or not and thereby it has jurisdiction
or not, fundamentally pertains to rectification of a
jurisdictional error. It is so as there has been no
adjudication. If a subordinate court exercises its
jurisdiction not vested in it by law or fails to exercise the
jurisdiction so vested, the said order under Section 115 of
the Code is revisable as has been held in Joy Chand Lal
Babu V Kamalaksha Chaudhury and others (AIR 1949
SC 239). The same principle has been reiterated in
Keshardeo Chamria v Radha Kissan Chamria and others
(air 1953 sc 23) and Chaube Jagdish Prasad and another
v Ganga Prasad Chaturvedi (AIR 1959 sc 492). Needless
to emphasise, the said principle is well-settled. After the
amendment of Section 115 CPC w.e.f. 1.7.2002 the said
power is exercised under Article 227 of the Constitution as
per the principle laid down in Surya Dev Rai (supra). Had
the executing court apart from expressing the view that it
had become functus officio had adjudicated the issues on
merits, the question would have been different for in that
event there would have been an adjudication.
44. He further relied on a decision reported in
BABBUMAL RAICHAND OSWAL V LAXMIBAI R.TARIE AND
ANOTHER , wherein it was held thus (para 7):
It would, therefore, be seen that the High Court cannot,
while exercising jurisdiction under Art. 227, interfere with
findings of fact recorded by the subordinate court or
tribunal. Its function is limited to seeing that the
subordinate court or tribunal functions within the limits of
its authority. It cannot correct mere errors of fact by
examining the evidence and reappreciating it. What Morris,
L. J., said in Rex v. Northumberland Compensation Appeal
Tribunal ( (1952-1 All ER 122) in regard to the scope and
ambit of certiorari jurisdiction must apply equally in relation
to exercise of jurisdiction under Art. 227. That jurisdiction
cannot be exercised:
"as the cloak of an appeal in disguise. It does not lie in order
to bring up an order or decision for rehearing of the issues
raised in the proceedings."
If an error of fact, even though apparent on the face, of the
record, can not be corrected by means of a writ of certiorari
it should follow a fortiori that it is not subject to correction
by the High Court in the exercise of its jurisdiction under
Art. 227. THE power of superintendence under Article 227
cannot be invoked to correct an error of fact which only a
superior court can do in exercise of its statutory power as a
court of appeal. THE High Court cannot in guise of
exercising its jurisdiction under Art.227 convert itself into a
court of appeal when the legislature has not conferred a right
of appeal and made the decision of the subordinate court or
tribunal final on facts.
45. He further relied on a decision reported in SAMEER
SURESH GUPTA THROUGH PA HOLDER V RAHUL KUMAR
AGARWAL , wherein it was held thus (para 7):
It may be true that a statutory amendment of a rather
cognate provision, like Section 115 of the Civil Procedure
Code by the Civil Procedure Code (Amendment) Act, 1999
does not and cannot cut down the ambit of High Court 's
power under Article 227. At the same time, it must be
remembered that such statutory amendment does not
correspondingly expand the High Court 's jurisdiction of
superintendence under Article 227. (k) The power is
discretionary and has to be exercised on equitable principle.
In an appropriate case, the power can be exercised suo
motu. (l) On a proper appreciation of the wide and unfettered
power of the High Court under Article 227, it transpires that
the main object of this article is to keep strict administrative
and judicial control by the High Court on the administration
of justice within its territory.
(m) The object of superintendence, both administrative and
judicial, is to maintain efficiency, smooth and orderly
functioning of the entire machinery of justice in such a way
as it does not bring it into any disrepute. The power of
interference under this article is to be kept to the minimum
to ensure that the wheel of justice does not come to a halt
and the fountain of justice remains pure and unpolluted in
order to maintain public confidence in the functioning of the
Tribunals and Courts subordinate to the High Court.
(n) This reserve and exceptional power of judicial
intervention is not to be exercised just for grant of relief in
individual cases but should be directed for promotion of
public confidence in the administration of justice in the
larger public interest whereas Article 226 is meant for
protection of individual grievance. Therefore, the power
under Article 227 may be unfettered but its exercise is
subject to high degree of judicial discipline pointed out
above. (o) An improper and a frequent exercise of this power
will be counterproductive and will divest this extraordinary
power of its strength and vitality. "
46. He further relied on a decision reported in
WARYAM SINGH AND ANOTHER V AMARNATH AND ANOTHER ,
wherein it was held thus (para 14):
THIS power of superintendence conferred by Article 227 is,
as pointed out by Harries, C. J., in - 'Dalmia Jain Airways
Ltd. v. Sukumar Mukherjee', AIR 1951 Cal 193 (SB) , to be
exercised most sparingly and only in appropriate cases in
order to keep the Subordinate Courts within the bounds of
their authority and not for correcting mere errors. As rightly
pointed out by the Judicial Commissioner in the case before
us the lower Courts in refusing to make an order for
ejectment acted arbitrarily. The lower Courts realised the
legal position but in effect declined to do what was by section
13(2)(i) incumbent on them to do and thereby refused to
exercise jurisdiction vested in them by law. It was, therefore,
a case which called for an interference by the Court of the
Judicial Commissioner and it acted quite properly in doing
so.
In our opinion there is no ground on which in an appeal by
special leave under Article 136 we should interfere. The
appeal, therefore, must stand dismissed with costs.
From the above decisions, it is clear that in certain
circumstances, jurisdiction under Article 227 of the
Constitution of India can be exercised when the Act does not
contemplate an appeal against an order under Section 9 of
the Act. The power of superintendance conferred on High
Courts under Article 227 of the Constitution of India over
subordinate courts and inferior tribunal is judicial as well as
administrative judicial review is to ensure that the Courts and
tribunals inferior to High Court have done what they were
required to do. Section 37 of the Act reads thus:
37. Appealabe orders:- (1) An appeal shall lie from the
following orders (and from no others) to the court authorized
by law to hear appeals from original decrees of the court
passing the order, namely:-
(a) granting or refusing to grant any measure under Se.9;
(b) setting aside or refusing to set aside an arbitral award
under Section 34.
(2) An appeal shall also lie to a court from an order of the
arbitral tribunal:-
(a) accepting he plea referred to in sub-section (2) or
sub-section (3) or section 16; or
(b) granting or refusing to grant an interim measure
under section 17.
(3) No second appeal shall lie from an order passed in appeal
under this section, but nothing in this section shall affect or
take away any right to appeal to the Supreme Court.
The present case does not cover under any one of the
clauses as referred to under Section 37 of the Act.
47. Insofar as exercising the revisional jurisdiction
under Section 115 CPC is concerned, the High Court may call
for the record of any case, which has been decided by any
Court subordinate to such High Court where no appeal shall
lie to satisfy itself on three aspects viz., 1) that the order
passed by the subordinate court is within its jurisdiction, 2)
in case one in which the Court ought to exercise jurisdiction
and 3) that in exercise of jurisdiction, the Court has not acted
illegally i.e., in breach of some provision of law or with
material irregularity i.e., by committing some error of
procedure in the course of trial which is material and that it
may affected the ultimate decision. The primary object of
Section 115 CPC is to prevent subordinate Courts from
acting illegally, arbitrarily and capriciously in exercise of their
jurisdiction. Therefore, the revisional power that is to say
supervisory over the subordinate Courts is to ensure that
errors of so grave nature as jurisdiction should be corrected
as soon as they brought to its notice. Even assuming for a
moment that the revisional jurisdiction can be exercised
under Article 227 of the Constitution of India in respect of
the present case, the trial Court has not committed any
illegality or there is no arbitrary action or the order under
challenge causes grave miscarriage of justice. The order
under challenge is in accordance with law.
48. For the foregoing reasons, we have no hesitation to
hold that filing of O.P.1949 of 2013 by the petitioner herein
for the relief sought for is duly misconceived and is not
maintainable. Though rejection of O.P. does not come within
the parameters of Order VII Rule 11 CPC, but in the facts and
circumstances of the case and from the admitted documents
available on record and the allegations in the O.P. do not
fulfill the requirements under Section 9 of the Act.
Considering these aspects, the trial Court rightly allowed
I.A.No.2437 of 22013 in O.P.No.1949 of 2013 and the said
order needs no interference by this Court.
49. Though it is contended by the learned counsel
appearing for the petitioners that the pleadings are not
complete and some of the respondents have not been served,
the same cannot be a ground to wait for service of the
respondents especially when no adverse order is passed
against the respondents. Though several respondents have
been impleaded as parties, they are not at all necessary
parties for deciding the application under Section 9 of the Act.
As the O.P. filed by the petitioner herein under Section 9 of
the Act is without jurisdiction, non service of some of the
respondents does not in any manner affect the impugned
order.
50. Accordingly, the Civil Revision Petition is
dismissed. No order as to costs. Miscellaneous petitions, if
any, pending in this revision shall stand closed.
-----------------------
K.C.BHANU, J
-----------------
ANIS, J
DATED: 31ST DAY OF DECEMBER, 2014
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