A.M. PREMBHUSHAN Vs. N.S. THULASIDAS

JUDGEMENT

(1.) Petitioner and respondent entered into Ext.P1, unregistered partnership deed on 11.03.2005 with the object of carrying out business in partnership. But on 15.06.2007, as petitioner would contend the partners decided to stop the business and dissolve the partnership firm as per Ext.P2, agreement. It is the case of petitioner that at the time of dissolution respondent accepted his share value and value of machineries and acknowledged that no further amount is due to him. While so, petitioner got Ext.P3, notice dated 05.07.2007 on behalf of respondent seeking reference of the dispute to the Arbitrator. Petitioner gave Ext.P4, reply dated 09.07.2007 claiming that no dispute is involved since dues of the respondent has been paid and that was acknowledged by him. Later, this Court passed Ext.P5, order appointing Advocate K. Padmanabhan as the Arbitrator and referring the dispute to the Arbitrator. Petitioner, claiming that the said order was passed without notice to him filed R.P. No. 357 of 2008. In the Review Petition it was contended that since Ext.P1, partnership agreement is not registered no question of arbitration would arise in view of Sub-sections (2) and (3) of Section 69 of the Indian Partnership Act, 1932 (for short, "the Act"). This Court passed Ext.P6, order dated 25.06.2008 directing that the said contention of petitioner shall be decided by the Arbitrator as a first issue before proceeding further in the matter. Accordingly the Arbitrator has passed Ext.P7, interim award rejecting the contention of petitioner that in the absence of registration of partnership agreement, no arbitration as contemplated in Ext.P1, agreement is possible. Petitioner challenged that order before the learned District Judge in O.P. No. 333 of 2008 but, the challenge failed. Learned District Judge passed Ext.P8, order upholding Ext.P7, interim award passed by the Arbitrator. Hence this Writ Petition at the instance of petitioner urging that learned District Judge and the Arbitrator are not correct in holding that even in the absence of registration, dispute between the parties could be referred to the Arbitrator. It is contended by learned Counsel for petitioner that there was no dispute involved between the parties in the light of payment of amount due to the respondent and the latter acknowledging that no further amount is due to him. Learned Counsel has placed reliance on the decision of the Supreme Court in Loonkaran Sethia v. Ivan E. John and Ors., 1977 AIR(SC) 336.

(2.) It is not disputed that Ext.P1, agreement between the parties is not registered. The relevant clause in Ext.P1, agreement relating to "arbitration" reads as under:

(3.) Contention advanced is that in so far as Ext.P1, agreement is not registered, question of referring the dispute if any to the Arbitrator as per the above clause did not arise. For that purpose reliance is placed on Sub-sections (2) and (3) of Section 69 of the Act. Sub-Section (2) states that "no suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm". Sub-section (3) says that the provisions Sub-sections (1) and (2) shall apply also to a claim of set off or other proceeding to enforce a right arising from a contract, but shall not affect the claims referred to in clauses (a) and (b) of that sub-section. By virtue of the said provisions it is contended that non registration of partnership firm will affect maintainability of the "other proceeding to enforce a right arising from a contract" and according to the learned Counsel for petitioner here is a case where attempt is made by petitioner to enforce the arbitration clause in Ext.P1, agreement before the Arbitrator which must be treated as "other proceeding" to enforce a right arising from a contract and hence the reference of the arbitration is invalid.