NARBADABAI Vs. NATVERLAL CHUNILAL BHALAKIA

JUDGEMENT

(1.) THIS appeal arises out of a judgment and decree passed by Mr. Justice Shah. In order to understand the nature of the litigation and few facts may be staled. One Purshottamdas Jhaverchand died in 1932 leaving three sons Jetha-lal. Chunilal and Mulchand. Purshottamdas was doing two businesses in the name of "popatlal Mulchand. " One was a yarn business and the other was a cloth business which was started in 1932. On 2-9-1938, a partnership agreement was entered into between Chunilal, Mulchand and the sons of Jethalal who had died in 1937 and the effect of the partnership agreement was that the business of Fopatlal Mulchand (Yarn) was to be carried on by the three branches represented by the three sons of Purshottamdas. With regard, to the cloth business an outsider was also interested and in respect of this business a partnership agreement was entered into on 4-11-1942, and that partnership agreement also dealt with the shares and the rights of the three branches represented by the three sons of Purshottamdas. Two new businesses were started in October 1940. One was the business of Natverlal Chunilal which was a yarn business and the other was the business of Rasiklal Chhotalal which was a cloth business. Rasiklal was the name of the son of Chhotalal who was the son of Chunilal. In 1943 a writing was executed with regard to these new businesses and that agreement provided that the profit that may remain over after deduction of income-tax witn regard to these two businesses should be equally divided amongst the three branches represented by the three sons of Purshottamdas. There were disputes between the three branches with regard to the various businesses and these disputes were referred to arbitration on 28-12-1947. The reference to arbitration expressly stated that the award would be governed by the Indian Arbitration Act. Under this agreement four arbitrators were appointed. On 7-2-1943, the arbitrators gave their award and really the award was in two parts. The first part dealt with the business of Popatlal Mulchand (Yarn) and Popatlal Mulchand, the cloth business. The other part dealt with the two new businesses which had been started in 1940 and with regard to the business of Natverlal Chunilal, the award provided that it was agreed between Natverlal Chunilal and Mulchand Purshottamdas and Narottamdas Jethalal that the same shall bo divided and shared in equal shares by the three. This referred to the profits and less found on examining the accounts of Natverlal Chunilal for the Samvat years 2002, 2003 and part of 2004 ending with 31-1-1948. It further provided that the monies coming to the shares of Narottamdas Jethalal and Mulchand Purshottamdas were to be received or paid in cash. The reference was made to Narottamdas Jethalal, the son of Jethalal, and Mulchand Purshottamdas, the son of Purshottamdas Jhaverchand, because it is common ground that this firm of Natverlal Chunilal was being managed by Chunilal, the second son of Purshottamdas Jhaverchand. The award further provided that Narottamdas Jethalal and his brothers and Mulchand Purshottamdas and his family had no concern whatsoever with any business or works carried on hereafter, i. e. from the date 1-2-1948, in the name of Natverlal Chunilal, but Natverlal Chunilal had agreed to pay to the three, in accordance with the item three (above), the profits made from his current quota as long as the said quota continued. The award also provided that Narottamdas Jethalal was bound to pay the amount in cash in respect of his one-third share and Mulchand Purshottamdas and the members of his family were bound to pay the amount in cash in respect of their one-third share with regard to income-tax paid by Natverlal Chunilal in connection with dealings prior to the date 31-1-1943. A similar provision was made with regard to the business carried on in the name of Rasiklal Chhotalal. The plaintiff in the suit from which this appeal arises represents the branch of Chunilal and in the suit he has prayed for the accounts of the business of Natverlal Chunilal for the Samvat years 2002 and 2003 and for the period ending 31-1-1948, to be taken under the directions of the Court and for an order that defendants 1 to 4 and defendants 5 to 8 who represent the branches of Mulchand and Jethalal should be ordered to pay to the plaintiff such sum as may be found due respectively by each group to the plaintiff on taking accounts in respect of the business of Natverlal Chunilal. He has further asked for a relief in respect of the provision with regard to income-tax which was made in the award and the relief which he seeks is that defendants 1 to 4 and defendants 5 to 8 are respectively bound to pay to the plaintiff one third share each of the amount paid by the plaintiff since 7-2-1948, and that may have to be paid by the plaintiff hereafter in respect of the business of Natverlal Chunilal for the period ending 31-1-1943. He has also asked that defendants 1 to 4 may be ordered to pay to the plaintiff the sum of Rs. 10,760-8-0; being the one-third share of Rs. 32,281-8-0 paid by the plaintiff after 7-2-1948, as and by way of income-tax in respect of the business of Nawerlal Chunilal up to Samvat year 2001 and he has also prayed for a decree against defendants 5 to 8 with regard to an identical amount being their one-third share of the amount of income-las paid by the plaintiff after 7-2-1948.

(2.) THE delenciants filed a counter-claim to the suit and they wanted accounts to be taken of the firm of Natverlal Chunilal from its inception in 1997.

(3.) NOW, it seems to us that there is a preliminary and an insuperable difficulty in the way of the plaintiff in maintaining the suit. In paragraph 4 of the plaint the plaintiff himself sets out that there were disputes in December 1947 and January 1943 between the members of the branches of the three brothers, 'inter alia', regarding the estate of Purshottamdas Jhaverchand and certain partnership business carried on in the name of Popatlal Mulchand in Bombay and also the business carried on by the plaintiff in the name of Natverlal Chunilal, and he goes on to say that ultimately all the said disputes and differences were referred to the arbitration of certain named persons. He further avers that the arbitrators made their award dated 7-2-194s, in respect 'inter alia' of the business of Natverlal Chunilal. He further says that "the said Chunilal and the plaintiff and his brother Chliotalal, the said Mulchand and all the defendants except defendant 1 accepted and agreed to the said award and signed the same in token thereof. The said award is hereafter referred to as the said agreement dated 7-2-1948," It is rather curious that the plaintiff in his evidence admitted that there was a partnership between him and the other two branches in the firm of Natverlal Chunilal, and his case was not that the firm of Natverial Chunilal was a proprietary arm but that it was a partnership firm. That was also the contention of the defendants, and with very great respect to the learned Judge below, it seems difficult to understand why the learned judge should have found a case of co-ownership with regard to the profits of the firm of Natverlal Chunilal when the case of both the parties to the suit was that it constituted a partnership, and the first contention that was urged by the Advocate-General on behalf of the defendants was that if the plaintiff was a partner in the firm of Natverlal Chunilal, it would not be open to him to maintain an action with regard to the accounts of a limited period of that partnership, because as pointed out, the prayer of the plaintiff is confined to the taking of accounts of Samvat years 2002, 2003 and part of 2004 but he does not want accounts to be taken of the Samvat years 1997 to 2001. The Advocate-General says that it is well-established law that a partner can only file a suit for partnership accounts provided he wants all the accounts of the partnership to be taken. It is not open to him to pick and choose and to select a particular period of the partnership as the period of which accounts should be taken. The Advocate-General seems to be right in his contention. But the answer given, by Mr. M. V. Desai on behalf of the plaintiff is that this is not a suit for partnership accounts but this is a suit to enforce the award or agreement which has been referred to and which was given by the arbitrators on 7-2-19i8. Now, if that is the nature of the suit, the question arises whether a suit to enforce an award is maintainable. Realising the difficulty in his way, Mr. Desai, in the first place, attempted to argue that this was a suit to enforce an agreement that was arrived at between the parties subsequent to the award and his contention was that the award was merged in the agreement, that the rights of the parties were determined under that agreement and that the suit was maintainable to enforce that agreement which was something very different from the award. In our opinion, that contention is not open to Mr. Desai in view of his own pleadings. Paragraph 4 of the plaint makes the position perfectly clear. As already pointed out, it refers to disputes between the parties -- the disputes which relate to the subject-matter of the suit; it refers to reference to arbitration; it refers to the award and then it goes on to state that the parties "accepted and agreed to the said award and signed the same in token thereof. " There is no plea of any agreement subsequent to the award. The plea is that the award was accepted and agreed to. At the highest, this plea can only mean that the parties agreed not to challenge the award and to abide by the award. But the acceptance of the award and the agreement to abide by the award cannot change the nature of the award. If it was an award, it continued to be an award notwithstanding the fact that the parties have accepted it. It is difficult to accept the contention that merely on the parties abiding by the award and accepting the award the nature of the award changed and it, became an agreement and that the award was merged in the agreement. Mr. Desai has next attempted to argue that the document dated 7-3-1948, and which has been marked in the Court, below as Ex. A was not an award at all. Mr. Desai says that if one only looks at the two documents, Ex. A and Ex. G which is the other document executed by the arbitrators the distinction between the two documents is apparent. Mr. Desai says that whereas Ex. G states that there has been an adjudication by the arbitrators upon the disputes between the parties, Ex. A records an agreement between the parties. In our opinion, parties appearing before the arbitrators may agree to take an award by consent. They may agree not to have the adjudication by the arbitrators. They may reduce the terms of agreement to writing and they may ask the arbitrators to promulgate that agreement as an award; but the mere fact that the parties have agreed to the terms of the award and that there has been no adjudication by the arbitrators does not in any way change the nature of the award. Once parties have referred their disputes to a domestic forum, it is that domestic forum alone that can decide upon those disputes. The forum may decide upon those disputes by adjudicating upon those disputes; it may decide those disputes if the parties consent to take a decision on an agreement. Whether in one case or the other, the decision of the domestic forum, whether by consent or 'in invitum', is an award and has all the characteristics of an award. But the matter is not capable of argument because the plaintiff himself has described Ex. A as an award and has rightly so described it. Therefore, if the suit is filed to enforce Ex. A, as Mr. Desai concedes, then clearly it is not a suit to enforce an agreement which is in any way independent of the award or which has no concern with the award but it is a suit to enforce the award and therefore we have to consider the question whether in law it is permissible to a party who has referred the disputes between him and the defendants to an arbitrator and that arbitrator has given his award relating to those disputes, to file a suit in respect of the very subject-matter of those disputes because it is not disputed that the suit relates to the very disputes which were referred to the arbitration of the four arbitrators; nor is it disputed that Ex. A deals with these disputes and embodies the decision with regard to these disputes arrived at by consent between the parties.