SAIBALANI DEVI Vs. DIPTI BIKASH BHADURI

JUDGEMENT

(1.) Defendants in an action under Section 20 of the Arbitration Act, 1940 are the petitioners. The two plaintiffs filed an application under that section asking for reference to arbitration of the dispute between the partners of the partnership business known as Ranchi Restaurant. According to the plaint itself, the two plaintiffs, one Kedar Nath, and his daughter (defendant No. 1) were carrying on a partnership business known by the name of Ranchi Restaurant since 1948 April. In 1952, they entered into a partnership agreement in writing which was registered vide Exhibit-4. Kedar Nath admittedly was an Excise Licensee and the business of the Ranchi Restaurant included the sale of and dealing in liquor under the licence possessed by Kedar Nath. As there were certain disputes between the partners, the present application was filed under Section 20 of the Arbitration Act. To that, five defendants were implead-ed; Kedar Nath having died, his son (defendant No. 2) and one original partner (defendant No. 1, daughter of Kedar Nath), defendant No. 1's husband as defendant No. 3, defendant No. 1's son as defendant No. 5 and the Ranchi Restaurant as defendant No. 4. All the defendants in two written statements contested the plaintiffs' application saying that the partnership agreement was void and had been brought about by undue influence, misrepresentation and fraud. The Court below, however, after hearing both the sides, directed the defendants to file arbitration agreement and to choose arbitrator failing which the Court would appoint arbitrator or arbitrators for settling the disputes arising between the partners. Against that, the present application was filed.

(2.) Learned counsel appearing for the the petitioners contended that the partnership agreement cannot be enforced as it violated the Excise Act and the Rules made thereunder. According to the case of the plaintiffs, the excise licence which has been obtained by Kedar Nath and which was taken in the name of defendant No. 2, after the death of Kedar Nath cannot be made use of and converted into a partnership business in violation of statutory rules in that respect. There can be little doubt that formation of the partnership business out of that excise licence will amount to a transfer of the licence which is not permissible under the law. The case of Hadibandhu Behera v. Gopal Sahu, AIR 1943 Pat 374 and the case of Sudhansu Kanta v. Manindra Nath, 1965 BLJR 252= (AIR 1965 Pat 144) have laid down the principle which will Co to the very root of the partnership business of the Ranchi Restaurant. In my view, therefore, that partnership agreement could not be made the basis of a reference under Section 20 of the Arbitration Act.

(3.) Secondly, neither defendant No. 3 nor defendant No. 4, were parties to the partnership agreement though they are parties to the business. Defendant No. 3 who is the husband of defendant No. 1, is, in fact, in charge of the entire business of the Ranchi Restaurant, as stated in the pleading of the plaintiffs and defendant No. 4 is the Ranchi Restuarant itself. They being not the parties to the partnership agreement, cannot be brought before the arbitrators under Section 20 of the Arbitration Act. To meet this contention learned counsel for the opposite party urged that if a person is really interested in the partnership business but he was not included in the partnership agreement, he can be brought before the arbitrators. He relied on the case of Abdul Kadir Shamsuddin v. Madhav Prabhakar, AIR 1962 SC 406. I am afraid that the decision is just to the contrary. It laid down that if a person is interested in a business but was not included in the agreement of partnership, he cannot be taken before the arbitrator though other parties to the agreement can come for arbitration.