KAMAL SINGH Vs. SEKHAR CHAND

JUDGEMENT

(1.) THIS is an application on behalf of two minors named Kamal Singh Rampuria and Surendra Singh Rampuria through their natural guardian and next friend Kesar Bai 'inter alia' for setting aside and cancelling an agreement dated 28th March, 1950 for arbitration and/or declaring it invalid, inoperative & not binding on the petitioners or either of them. The matter arises in this way. The parties to this application are related to each other & their relationship would appear from a geneological table which is set out below: <FRM>JUDGEMENT_447_AIR(CAL)_1952.htm</FRM> It appear's from the said geneological table that the applicants before me Kamal Singh and Surendra Singh are the sons of one Hulaschand alias Bhanwarlal. Hulaschand had two wives. Kamal Singh is the son by the first wife, and Surendra Singh is the son by the second wife named Sushila. Sushila is a respondent in this application. The mother of Hulaschand, Kesar Bai, who is the widow of Sidhkaran, is the paternal grandmother of the minors Kamal Singh and Surendra Singh. She is purporting to act as the next friend in this application. The rest of the members of the family have also been made respondents in this application. At all material times, the .petitioners and the respondents formed three branches, namely, Bahadurmull's branch, Hazarimull's branch and Hiralal's branch. The petitioners & the respondent No. 16 belong to Bahalurmull's branch. Respondents. Nos. 1 to 10 belong to Hazarimull's branch & the respondents Nos. 11 to 15 to Hiralal' branch. The three branches as represented by their senior members constituted a partnership named Hazarimull, Hiralal, each branch having an equal share therein. Partnership deeds were executed from time to time. The last of such partnership deed was executed on the 24th March 1948 and in the said partnership deeds Sm. Sushila Debi for self and as mother and natural guardian of her minor sons Kamal Singh Rampuria and Surendra Singh Rampuria was a party. The parties to the suit have amongst them various properties. The principal properties are (a) the partnership itself under the name of. Hazarimull Hiralal, (b) large number of shares in a company known as Rampuria Properties Ltd., (c) large number of shares in Rampuria Cotton Mills Ltd., (d) Managing Agency of the said two Companies being Rampuria Properties Ltd., and Rampuria Cotton Mills Ltd. The said Managing Agency was being carried on by the said firm of Hazarimull Hiralal which, as I have already said, was the partnership firm. Hulaschand Rampuria died on the 18th November 1947 leaving Kesar Bai as his mother and the minors his two sons - and the respondent No. 16 Sushila as his widow. Under the Hindu Women's Right to Property Act (Act XVIII (18) of 1937) the respondent No. 16 Sm. Sushila Debi became entitled to share as a Hindu widow in the estate of Hulaschand deceased. On the 28th March, 1950 the respondent No. 16 Sm. Sushila Debi purporting to act as the natural guardian of the two minors executed an agreement along with other parties agreeing to refer disputes which had arisen amongst them to the sole arbitration of one Mangturam Jaipuria and authorised him to effect a partition of the said properties between the parties in the manner set out in the said agreement. The scheme of the said arbitration agreement entered into by the said Sushila Debi on behalf of herself and as natural guardian of Kamal Singh Rampuria and Surendra Singh Rampuria is as follows .In the recital portion of the said agreement it is inter alia stated that Sushila Debi, Kamal Singh Rampuria and Surendra Singh Rampuria representing the branch of Bhanwarlal Rampuria and others named therein (being the respondents to this application) carry on business in partnership under the name and style of Hazarimull Hiralal and the parties form a majority of the share -holders and have a controlling interest in the public limited liability company known as 'Rampuria Cotton Mills Ltd.' It is further recited that the parties hold practically all the shares in Rampuria Properties Ltd. and have a controlling interest therein and the parties also hold other properties jointly but in specified shares. The main terms of the said agreement are contained in paragraphs 3, 4 and 5 thereof. In paragraph 3 it is stated that the Arbitrator shall proceed to divide the joint properties and allot the same amongst the three! groups, each of which is entitled to one -third share thereof so as to effect a complete separation between the parties. I should have mentioned that in the said agreement Sm. Sushila Debi, for self and as natural guardian of Kamal Singh and Surendra Singh, has been stated to be the party of the first part, and the members of the other two groups as set out in the geneo -logical table, that is the, group of Hazarimull and Hiralal, have been described as parties of the second part and of the third part respectively. In paragraph 3 of the said arbitration agreement it is further provided that for the purpose of separation the parties of the first part shall be taken to_be as one group, the parties of the second part as another group and parties of the third part as another group. In paragraph 4 of the said agreement the principal joint properties have been set out, namely, shares in Rampuria Properties Ltd., shares in Rampuria Cotton Mills Ltd. and Managing Agency in Rampuria Cotton Mills Ltd., and the assets and liabilities and goodwill of Hazarimull Hiralal and it is further stated in the said paragraph that 5 lacs deferred shares and 44375 ordinary shares in Rampuria Cotton Mills Ltd., of the total face value of Rs. 9,43,750/ - held in the name of Hazarimull Hiralal together with the Managing Agency held by Hazarimull Hiralal should be auctioned by the Arbitrator amongst the three groups and so sold to the highest bidder amongst the three groups who shall pay in cash the price thereof to the other groups less the price of his share. It is further stated in the said paragraph that more than one group shall be entitled to bid jointly for the said shares and Managing Agency and if declared the highest bidder to set off their respective shares against the purchase price. In paragraph 4 of the said agreement there is a further clause to the effect, namely, that the firm of Hazarimull Hiralal including goodwill and all assets and liabilities (but excluding the Managing Agency of Rampuria Cotton Mills Ltd. and the 5,44,375 shares in Rampuria Cotton Mills Ltd.) shall be auctioned by the Arbitrator amongst the three groups and sold to the highest bidder who shall pay the price Of his share and if the Arbitrator is of opinion that a fair value has not been given at the said auction he may allot the said firm to any group at such valuation as he may consider fair and reasonable. Lastly, it is provided in the said paragraph that all other joint properties should be divided between the groups in equal shares and the Arbitrator shall be entitled to award owelty money where necessary. Then comes paragraph 5 which, to my mind, is very material for the purpose of this application. It is in these words:

(2.) THE application is really made under Section 33 of the Indian Arbitration Act which pro* vides that any party to an Arbitration agreement or any person claming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined, shall apply to the Court and the Court shall decide the question on affidavits. In the previous section, that is, Section 32 of the Indian Arbitration Act, it is provided that notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act. The nett result of these two sections is that where a party wants to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined, he cannot proceed by means of a suit but he must have to apply under the Indian Arbitration Act. Under the circumstances, the present application has been made in the matter of an Arbitration Act and in the matter of an arbitration between the minors on the one side and the respondents on the other.

(3.) WITH regard to the first contention, although Mr. Mukherjee in the beginning tried to maintain that even as a natural guardian Sm. Sushila Debi had no power to bind the minors by making a reference on their behalf to arbitration, but subsequently he realised his difficulty in maintaining such an extreme position and, if I have understood him correctly, he conceded that he could not go to that extent and relied on the other point raised by him. It is now well settled on the authorities both of this Court and also of the other High Courts that a natural guardian can bind the minors by making a reference to arbitration, but that power or authority is not an absolute power and is subject to certain conditions. The conditions under which a natural guardian can refer the disputes relating to the minors to the arbitration are, firstly, that she must not have an interest adverse to that of the minors and secondly the reference must be in any event for the benefit of the minors. Sir Shuts Mockeries in delivering judgment in the case of 'RAMJI v. SALIG RAM', 14 Cal L J 188, after reviewing a number of decisions relating to this point observed as follows: