PARTABMULL RAMESHWAR Vs. FULCHAND KANAHIYALAL AND CO

JUDGEMENT

(1.) THERE are six petitioners in this application. The petitioner No. 1 is a partnership firm, bearing the name and style of "Partabmull Rameshwar". It is registered under the Indian Partnership Act. The remaining five petitioners are its partners. They are also partners of a partnership firm carrying on business under the name and style "Shree Mahadeo Jute Mills Co." This latter firm is the owner of a jute mill and factory. The firm is not registered under the Partnership Act, Originally, the petition was filed in the firm name of Partabmull Rameshwar, stating that it carried on business under the name and style of "Shree Mahadeo Jute Mills Co." The fact is that those partners carry on business of partnership under the name and style of "Partabmull Rameshwar" which is the main business, but they also carry on various subsidiary businesses under different names, including that of "Shree Mahadeo Jute Mills Co." While the main firm of Partabmull Rameshwar is registered under the Partnership Act, the subsidiary firm of "Shree Mahadeo Jute Mills Co.," has not been so registered. As a result of this, a legal difficulty has arisen which will be examined in greater detail after I have stated the facts of this case. By a contract in writing bearing No. D/47,9 dated 28th July, 1960, the firm of "Shree Mahadeo Jute Mills Co." (hereinafter referred to as the "said firm") agreed to purchase from the respondents Messrs. Fulchand Kanahiyalal Co., 350 bales of Pakistan Jute Cuttings to be shipped and/or despatched during September and/or October, 1960, at the price of Rs. 101/- per bale of 181.4 Kilos, deliverable free at the Jute Mill of the said firm. The terms and conditions of the transaction will appear from the respective Bought and Sold Notes which were exchanged between the parties. The contract was subject to an arbitration clause whereby all disputes were agreed to be referred to the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry. According to the petitioner, the respondents committed a breach of contract and became liable to pay damages to the petitioners of a sum of Rs. 57,400/-. As the respondents did not pay the said claim and disputes and differences arose between the parties, the petitioners, on or about the 10th April, 1961 referred the disputes to the arbitration of the Bengal Chamber of Commerce and Industry. The respondent obtained an extension of time for filing a counter-statement before the Arbitrators. But instead of doing so, on or about the 7th July, 1961 made an application to this Court under Section 33 of the Arbitration Act read with Section 5, inter alia praying for adjudication as to the existence and validity of the said arbitration agreement and for incidental reliefs. In the said application, it was said by the respondents inter alia that the purported contract between the parties was illegal, void and inoperative and as such the arbitration clause contained therein was also illegal, void and inoperative. On the 14th September, 1961, G.K. Mitter, J., held that there was a valid and binding agreement between the parties to refer the matter to arbitration and the said application was dismissed with cost. On or about 7th October, 1961, the respondents instituted a suit in this Court being Suit No. 1776 of 1961 (Fulchand Kanhaiyalal Co. v. Shree Mahadeo Jute Mills Co.) in which they made practically the same allegations as they made in the application under Section 33 of the Arbitration Act, and prayed for a declaration that the said contract with its relative Bought and Sold Notes was illegal and inoperative and that the same should be declared as such and/or cancelled, and for incidental reliefs. Now the petitioners have made this application under Section 34 of the Arbitration Act for a stay of the said suit.

(2.) THE real point upon the merit that arises is as to whether, regard being had to the decision of Mitter, J., in the application under Section 33, it can any longer be urged that there is no valid arbitration agreement between the parties. If there is in existence a valid arbitration agreement, it is not argued before me that the scope of the suit is any different from the scope of the arbitration proceeding and, therefore, there is no defence to this application. In a similar matter in which the facts were almost identical -- Shree Bajrang Jute Mills Ltd. v. Fulchand Kanhaiyalal, I held the view that after a decision under Section 33 rejecting a challenge to the contract and to the arbitration agreement, a suit could no longer be allowed to proceed on identical grounds or even on grounds which should have been taken and were not taken in the application under Section 33. In the result, the suit was stayed in that case, under Section 34 of the Arbitration Act. Mr. Roy appearing on behalf of the petitioners has argued that the facts in this case are identical and therefore, the suit should be stayed. In fact, on the merits Mr. Ghose appearing on behalf of the respondents has advanced no argument which would justify any other conclusion than what I reached in my previous decision mentioned above. Mr. Ghose has, however, taken certain preliminary points which I shall now enumerate. As the application was originally made, the only petitioner was the firm of Partabmull Rameshwar. THE contract in question was not entered into by that firm but by the firm of Shree Mahadco Jute Mills Co. Although the partners of the two firms may be the same, the contract in question had nothing to do with the firm of Partabmull Rameshwar. It was therefore argued that the application itself was misconceived upon this ground alone. In my opinion, this stand was a valid one. Whether the partners considered one business to be the main business and the other a subsidiary, is not relevant. In law, such an application could not be made by Messrs. Partabmull Rameshwar who are neither a party to the con-tract nor a party to the arbitration agreement, or the reference to arbitration, or a party to the suit filed in this Court namely, Suit No. 1776 of 1961. THEre was, however, an application for amendment, which was allowed and all the partners of the firm of Shree Mahadeo Jute Mills Co., have now been added as petitioners in this application. I have already mentioned that the firm of Shree Mahadeo Jute Mills Co., is not registered under the Partnership Act. Even now, that firm has not been made a petitioner. It is, however, argued that a firm is only a compendious name for its partners and since all the partners are before the Court as parties, stating that they carry on business under the name and style of Shree Mahadeo Jute Mills Co., there is no longer any objection to the frame of the application. In a sense this is correct. All the partners of the said firm being before the Court, an application is maintainable. But the difficulty arises on the question of registration under the Partnership Act. It is argued by Mr. Ghose by way of a preliminary objection, that the application is not maintainable, because the firm of Shree Mahadeo Jute Mills Co., is not registered under the Partnership Act and that the application is barred by the provisions of Section 69 (3) of the Indian Partnership Act. THE contract was entered into with the firm and the suit has been brought against the firm. If an application under Section 34 requires registration under the Partnership Act it is argued that the provisions of Section 69 cannot be got rid of by making the application through the partners and not the firm. It is further argued that if this was permissible, then in every case the provisions of Section 69 could be got rid of and it would become A nullity. This is a valid argument.

(3.) MR. Roy has argued that this preliminary objection should not succeed for the following reasons: