ASOKAN MANAGING PARTNER KARTHIYANI OIL MILLS Vs. JAYAN

JUDGEMENT

(1.) Defendants are the revision petitioners. The revision is directed against the order of the learned Additional Subordinate Judge refusing to refer the dispute for arbitration. The suit is filed by the respondent-plaintiff for a decree of permanent prohibitory injunction restraining the defendants 1 and 2 from purchasing any generator or other new assets using the partnership funds without the written consent of the plaintiff as partner of the firm. The suit also prays inter alia for rendering accounts.

(2.) The objection of the learned counsel for the revision petitioner in the I.A. to the maintainability of the suit is based on Cl. 20 of the partnership agreement which reads as follows :

(3.) Section 5 of the Arbitration and Conciliation Act, 1996 provides that no judicial authority shall intervene in reference to matters except as provided under this part. Section 7 of the Act states that an "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. In this context, the partnership agreement is a contract which has defined the legal relationship between the partners. The question whether the defendants partners are acting contrary to the terms of the agreement without the written consent of the plaintiff and whether they must render accounts are all matters that would come within the parameters of the partnership agreement which has defined the legal relationship. Therefore, there cannot be a dichotomy in reference to the constitution of the partnership on the one hand and the disputes arising under the terms of partnership on the other. Partnership agreement is a consolidated contract defining the constitution as well as the functioning of the partnership. Therefore, in my view, the distinction made by the learned Judge for refusing to refer the matter for arbitration cannot be sustained in the light of Section 5 read with Section 8 of the Act, a judicial authority before whom action is born has no other course except to refer the matter for arbitration in the facts and circumstances of the case.