SHARMA ICE FACTORY Vs. JEWEL ICE FACTORY

JUDGEMENT

(1.) THIS is an appeal against an order of the Additional District Judge, Jammu, making an order of injunction absolute.

(2.) THE respondents filed an application before the Additional District Judge, Jammu, under Section 20 of the Arbitration Act, on the basis of an agreement between the parties dated May 31, 1973, that in view of certain differences having arisen between the parties the dispute may be referred to the arbitration of Mr. R. C. Gupta, as provided for in the agreement itself. This application was resisted by the appellants who submitted that the agreement was illegal and that it was procured under undue influence and that the respondents merely being partners of the firm could not enter into Association on behalf of the firm. The Additional District Judge after hearing the, parties accepted the contentions of the respondents and made the order of injunction absolute against the appellants directing them to deposit the entire sale proceeds in court and allowed inspection of the accounts of the factory by the Inspectors to be deputed by the respondents. Hence this appeal to us.

(3.) MR . Sharma. appearing in support of the appeal has submitted three points before us. In the first place, he has submitted that the arbitration agreement was itself void inasmuch as the parties could not have entered into association as members of separate firms. In support of his argument he has relied on a decision of the Supreme Court reported in AIR 1963 SC 1497, which has interpreted Section 11 of the Companies Act. It was further submitted that no case for issuance of an injunction against the appellant has been made out by the respondents and there is no averment in the application seeking injunction against the appellant that the respondents are likely to suffer irreparable loss which could not be compensated in money value. It was also submitted that having regard to the general balance of convenience no special equity was made out in favour of the respondents for granting an injunction. Lastly it was pointed out that the order of injunction, would amount to complete closure of the business of the appellant who will not be able to meet the expenses of the factory or disburse the salaries of its employees.