RAM NANDAN PRASAD SINHA Vs. K M CONSULTANTS

JUDGEMENT

(1.) THE appellant was a member of the Bombay Stock Exchange and had appointed the respondent-firm as one of his sub-brokers. The respondent filed a complaint with the Investors Service Cell of the Stock Exchange, Mumbai against the appellant claiming certain amounts. However, thereafter the respondent withdrew its complaint and referred the dispute to arbitration under the bye-laws of the Stock Exchange without intervention of the Court. The respondent appointed Mr. Justice D. B. Deshpande (Retd.) as arbitrator whereas the appellant appointed Mr. Dinesh J. Shah, member of the Stock Exchange. An Award was made on 17-5-1999 by the arbitrators. Under the Award, the arbitrators have awarded an amount of Rs. 2,11,446. 73 with interest to the respondent. The principal ground on which the Award was challenged before the learned Single Judge was that the respondent was not a registered firm and, in any event, was not registered under the Indian Partnership Act at the material time and, therefore, could not make any claim in the arbitration proceedings and, therefore, the reference as well as the Award are void. It was also contended that one of the arbitrators, viz. , Mr. Justice D. B. Deshpande was not a member of the Stock Exchange and under the relevant bye-laws of the Stock Exchange, a non-member could not have been an arbitrator and, therefore, the award was invalid. A contention was also raised that the claim which was referred to the arbitration was barred by time. The learned Single Judge rejected all these contentions and upheld the award.

(2.) MR. Thakkar, learned Counsel appearing for the appellant, has contended that the effect of non-registration is fatal to the validity of the reference and the Award. The contention is based on section 69 of the Indian Partnership Act as amended by the State of Maharashtra. The provisions of section 69 as set out below :-

(3.) MR. Thakkar contends that the reference to the arbitration of the Bombay Stock Exchange constitute "other proceeding" under section 69 (3) of the Partnership Act. According to him, in view of sub-sections (1), (2) and (3) of section 69, no suit or proceeding shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered under the Partnership Act. Mr. Thakkar relied upon the decisions of the Supreme Court in (Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd.), A. I. R. 1964 S. C. 1882, and (Delhi Development Authority v. Kochhar Construction Work), 1998 (8) S. C. C. 559. He also relied upon the decision of the Division Bench of this Court in (Hemendra V. Shah v. The Stock Exchange, Bombay), 1996 (1) Bom. C. R. 270.