SANJEEV C BORDIA Vs. SUNILKUMAR MOHANSINGH BORDIA

JUDGEMENT

(1.) This appeal is directed against the judgment and order dated 14/8/2008 rendered by Ld. Judge, City Civil Court No. 10, Ahmedabad [for short 'the City Court'] in Civil Misc. Application No. 63/2008, whereby the City Court allowed said application filed by the respondent herein under section 34 of the Arbitration and Conciliation Act, 1996 [for short 'the Act'] and set aside the award dated 02/12/2007 rendered by the Ld. Sole Arbitrator. The original claimants, in the result, preferred this appeal. Thus, the appellants were original claimants and the respondent was original respondent in the said arbitration proceedings and, therefore, for the sake of convenience, the appellants and the respondent shall be hereinafter referred to as 'the claimants' and 'the respondent' respectively.

(2.) Both the parties happened to be partners of a partnership firm, which carried on business in clothes in the name and style of M/s. Sultansingh Mohansingh. A dispute took place amongst the partners, resulting into virtually bringing the business to a standstill with effect from April 2005. Notice exchanges took place between the partners. The claimants invoked the arbitration clause for appointment of Arbitrator to resolve their disputes regarding dissolution of the firm, accounts thereof and their 50% share in the property of the firm including the premises in question. The firm was carrying on its business in a rented premises situated at D/3-A, Maskati Market, Tower Gate, Ahmedabad, [the subject premises] belonging to Maskati Charitable Properties Trust [for short 'the Maskati Trust']. Since there was no unanimity regarding the name of Arbitrator, the claimants filed a petition being Arbitration Petition No. 3/2007 against the respondent in this Court. This Court vide order dated 23/3/2007 appointed the Ld. Sole Arbitrator to resolve all the disputes between the parties. The Ld. Arbitrator, after considering relevant documents produced by both the sides and considering the submissions advanced on behalf of both the sides, passed the award dated 2/12/2007 whereby the partnership firm in the name and style of M/s. Sultansingh Mohansingh was declared to have stood dissolved with effect from 17/8/2006. It was further declared that the partners would have share in the profits and losses as well as the assets of the firm in the proportion, namely claimant no. 1 40%, claimant no. 2 10% and respondent 50%. It was further declared that assets of the firm consist of the tenancy right in the subject premises situated in Maskati Market. It was further declared that the claimants jointly on one hand would take half share in the tenancy rights of the subject premises and the respondent will take half share in the tenancy rights of the subject premises by partitioning the subject premises in equal proportion in area. It was observed that although there was no likelihood of any dispute between the parties with regard to such partition of the shop premises, in case there arises any dispute, the tenancy rights of the shop premises will be taken by either the claimants jointly on one side or respondent on the other side as per the highest bid in the inter-se auction to be held and the value of the tenancy rights [it would include goodwill] will be divided by the parties according to their shares noted hereinabove. The respondent, who was claiming his exclusive right in the subject premises and, therefore, he challenged the award under section 34 of the Act before the City Court.

(3.) The City Court, by impugned judgment and order dated 14/8/2008 set aside the award mainly on the ground that the Ld. Arbitrator was not competent to resolve dispute regarding the tenancy rights as according to the City Court, the dispute can only be resolved regarding the tenancy rights by the Court of Small Causes at Ahmedabad as provided under section 28 of the Bombay Rents, Hotel and Lodging Houses Rates Control Act, 1947 [for short 'the Bombay Rent Act']. In arriving at such conclusion, the City Court relied upon certain decisions, which shall be discussed in this judgment at its appropriate time. The City Court, therefore, observed that when the Ld. Arbitrator had no jurisdiction to hear and decide the dispute of such nature, the award cannot be sustained and deserves to be set aside under section 34 of the Act. In arriving at such conclusion, in para. 35 of the impugned judgment and order, the City Court observed as under :