Punjab-Haryana High CourtRajiv Malhotra vs Sanjay Malhotra & Ors on 22 January, 2016Author:Shekher DhawanBench:Shekher DhawanCR-6567-2014 [O&M]                                                              1
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              IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH


                                               CR-6567-2014 [O&M]
                                         Date of Decision : January 22nd , 2016

           Rajiv Malhotra                                                .... Petitioner

                                         Versus


           Sanjay Malhotra and others                                  .... Respondents


           CORAM : HON'BLE MR. JUSTICE SHEKHER DHAWAN.
           1. Whether Reporters of local papers may be allowed to see the judgment?
           2. To be referred to the Reporters or not?
           3. Whether the judgment should be reported in the Digest?



           Present Mr. Adarsh Jain, Advocate,
                   for the petitioner.

                                Mr.A.K.Sachdeva, Advocate and
                                Ms. Ayushi Sachdeva, Advocate,
                                for respondent No.1.

                                Mr. Rajinder Goyal, Advocate,
                                for the applicant in CM No. 2825-CII of 2015.


           SHEKHER DHAWAN, J.Present revision petition underArticle 227of the Constitution of

           India for setting aside the order dated 31.05.2014 passed by Civil Judge

           [Junior Division], Jagadhri whereby application filed by Sanjay Malhotra,

           defendant No.1,               [respondent no.1 herein]     for referring the matter to

           arbitration underSection 8of the Arbitration & Conciliation Act, 1996 [for

           short, "the Act"] was accepted.2.                   Relevant facts for the purpose of decision of the present revision

           petition ; that plaintiff - Rajiv Malhotra [petitioner herein] filed a suit forPARKASH SOM2016.01.25 16:40I attest to the accuracy andauthenticity of this documentCR-6567-2014 [O&M]                                                               2...possession for half share in the suit property by way of partition of the

           property situated at Industrial Area, Yamuna Nagar including plot Nos. E-8

           and        E-9 and for dissolution of firm, named,             M/s Maurya Timber, a

           partnership firm and for settlement of accounts.                  Relief of permanent

           injunction             was also sought to restrain defendant No.1 from alienating,

           transferring, conveying or charging the nature and construction over the

           property in dispute. During the pendency of the said suit, defendant No.1,

           Sanjay Malhotra moved an application underSection 8(1)of the Act with

           the plea that as the dispute is relating to the settlement of accounts of the

           partnership firm and as per clause [14] of the Partnership Deed dated

           1.4.2009, duly executed between the plaintiff and defendant No.1, the

           same be referred to the Arbitrator.3.                   Said application was contested by the plaintiff, inter alia, taking

           the pleas that the application was not maintainable as defendants No.2

           and 3 i.e.,              Haryana     State Industrial   & Infrastructure Development

           Corporation Limited                and    Uttar Haryana Bijli Vitran Nigam Limited

           respectively, are not party to the arbitration clause. More so, as per

           defendant No.1/applicant, Mrs. Raman Malhotra is the exclusive owner of

           the property in dispute, but she was not party to the arbitration clause.

           Moreover, the main suit was for partition of immovable property which is

           not covered by the arbitration clause and it was prayed that the application

           be dismissed.4.                   Learned counsel for the petitioner submitted        that the real

           controversy is whether the property is of Mrs. Raman Malhotra, mother of

           the plaintiff and defendant No.1 or of the firm. More so, an application forPARKASH SOM2016.01.25 16:40I attest to the accuracy andauthenticity of this documentCR-6567-2014 [O&M]                                                              3...impleading Mrs. Raman Malhotra as a party was moved before the trial

           Court. As per reply submitted by HSIIDC, plot No. E-8 was bifurcated in

           two equal parts by Sh. Mulakh Raj and Madhusudan Lal and the

           department also regularized the said bifurcation. The western part of plot

           No.E-8 fell to the share of Maurya Timber and the eastern portion fell to the

           share of Madhusudan Lal Malhotra. In the reply filed by Sanjay Malhotra,

           defendant No.1 to application filed under Order 39 Rules 1 & 2CPC, plea

           was taken that Mrs. Raman Malhotra is the exclusive owner in possession

           of the suit property which devolved upon her consequent upon the death of

           her husband, Shri Mulakh Raj Malhotra.5.                   Learned counsel for the petitioner also submitted         that as

           defendant Nos.2 and 3 are not party to the arbitration clause and the suit

           has been filed against all the three defendants, as such, the matter cannot

           be referred to the Arbitrator. He further submitted that relief claimed in the

           main suit is for partition and that cannot be the subject matter of arbitration

           as the arbitration clause pertains to differences amongst the partners with

           regard to ownership and that clause cannot be construed to be inclusive of

           dispute regarding partition of immovable property.6.                   Learned counsel for the petitioner also submitted that even relief

           cannot be bifurcated into two parts, i.e., one to be referred to arbitrator for

           adjudication and the other to be decided by the Civil Court. On this point,

           reliance has been placed upon the Supreme Court judgment ofSukanya

           Holdings (P) Ltd. Vs. Jayesh H. Pandya and another, 2003(5) SCC 53.Reliance was also placed upon a judgment from the Coordinate bench of

           this Court in M/sSharda Ginning Pressing & Oil Mills & Ors. Vs. Smt.PARKASH SOM2016.01.25 16:40I attest to the accuracy andauthenticity of this documentCR-6567-2014 [O&M]                                                             4...Bimla Devi 2007(1) RCR (Civil) 818, wherein view was taken by this

           Court that in a petition underSection 8of the Act, the litigation regarding

           dissolution and rendition of accounts of partnership cannot be adjudicated

           by the arbitrator and the said controversy can be decided the Civil Court

           alone and as such, the order passed by learned Court below is not in

           accordance with law and the same be set-aside.7.                   Learned counsel for respondent No.1 submitted that it is settled

           proposition of law that the plaint is to be read as a whole and if the entire

           plaint in the case in hand is considered, the controversy is for dissolution

           of firm and settlement of accounts only and that can be and should be

           decided by the Arbitrator only.               The parties had duly consented for

           arbitration clause mutually and the Court below has rightly passed the

           order and the present petition is without any merit and the same be

           dismissed.In support of his arguments, reliance has been placed upon

           decisions of Hon`ble Supreme Court inRaptakos Brett & Co. Ltd. Vs.

           Ganesh Property, AIR 1998 SC 3085; Addanki Narayanappa & Anr. Vs.

           Bhaskara Krishtappa and others, AIR 1996 SC 1300;Sukanya

           Holdings Pvt. Ltd. Vs. Jayesh H. Pandya and another2003(5) SCC 531

           and V.H.Patel & Co. and others Vs. Hirubhai Himabhai Patel and others

           2004(4) SCC 368.8.                   Learned counsel representing Mrs. Raman Malhotra [applicant in

           CM No.2825-CII of 2015] submitted that Mulakh Raj Malhotra became the

           owner in possession of Plot No. E-8 [Western side] on the basis of a Court

           decree dated 30.9.1986 and after his death,                applicant - Mrs. Raman

           Malhotra became the owner. Thereafter, Mrs. Raman Malhotra transferredPARKASH SOM2016.01.25 16:40I attest to the accuracy andauthenticity of this documentCR-6567-2014 [O&M]                                                           5...the said property to Sanjay Malhotra.9.                   Having considered the submissions made by learned counsel for

           the parties and appraisal of record, this Court is of the considered view

           that the controversy before the Civil Court on the basis of the plaint filed by

           Rajiv Malhotra was suit for possession of ½ share by way of partition i.e.,(i) ½ portion of Plot No. E-8, (ii) portion of plot No. E-9 and relief was also

           sought for dissolution of the partnership firm, namely, M/s Maurya Timbers,

           E-8, Industrial Area, Yamunanagar and settlement of accounts and for

           seeking permanent injunction for restraining defendant No.1 from

           alienating and creating any sort of charge over the suit property. The said

           suit was filed against three defendants, namely, 1). Sanjay Malhotra, (2).

           Haryana               State Industrial   & Infrastructure Development Corporation

           Limited and (3). Uttar Haryana Bijli Vitran Nigam Limited. Plea was raised

           by defendant No.1 to refer the matter to the Arbitrator in view of arbitration

           clause between the plaintiff and defendant No.1. Admittedly, defendants

           No.2 and 3 are not party to the partnership deed dated 1.4.2009. The

           relevant clause (14) of the partnership deed dated 1.4.2009 is extracted

           below:-"That in case of any differences amongst the partners with
                        regard to this partnership, the matter shall be referred to and
                        got decided by Arbitration in accordance with the provisions of
                        Indian Arbitration Act, in force."10.                  The above clause of partnership deed makes it ample clear that

           any dispute amongst the partners with regard to the partnership should be

           referred to the Arbitrator. This makes two factors clear that the matter

           could be referred to the Arbitrator firstly, if there was any differencePARKASH SOM2016.01.25 16:40I attest to the accuracy andauthenticity of this documentCR-6567-2014 [O&M]                                                        6...amongst the partners and secondly, the dispute must be regarding the

           partnership.             If the said clause No. 14 is looked into to the present

           controversy, which was subject matter of the suit, the present dispute is

           not amongst the partners alone. More so, the dispute is not with regard to

           the differences amongst the partners only. On that account alone, the

           matter could not be referred to the Arbitrator under clause (14) of the

           partnership deed.11.                  Hon`ble Supreme Court of India inSukanya Holdings's case

           [supra] while interpreting scope ofSection 8of the Act made it clear that if

           the subject matter of the suit falls partly within arbitration agreement and

           partly outside the same, such a matter cannot be referred to arbitration

           underSection 8of the Act because relief cannot be bifurcated. More so, if

           all the defendants to the suit are not parties or partners in the partnership

           firm, the terms of the partnership deed including the arbitration clause are

           not binding upon them. Further, there is no power conferred on the Court

           to add parties who are not parties to the agreement in the arbitration

           proceedings. ExceptSection 8of the Act, there is no other provision in the

           Act that in a pending suit, the dispute is required to be referred to the

           Arbitrator.12.                  Hon`ble Supreme Court of India also observed that underSection 8of the Act, the matter is not required to be referred to Arbital

           Tribunal if, (1). the parties to the arbitration agreement have not filed any

           such application for referring the dispute to the arbitrator; (2). in a pending

           suit, such application is not filed before submitting first statement on the

           substance of the dispute; or (3) such application is not accompanied by thePARKASH SOM2016.01.25 16:40I attest to the accuracy andauthenticity of this documentCR-6567-2014 [O&M]                                                             7...original arbitration agreement or duly certified copy thereof. However, the

           relevant language used inSection 8of the Act is "in a matter which is

           subject of an arbitration agreement'.                  Where, however, a suit is

           commenced "as to a matter" which lies outside the arbitration agreement

           and and is also between some of the parties who are not parties to the

           arbitration agreement, there is no question of application ofSection 8of

           the Act.13.                  Similar matter was before the Co-ordinate Bench of this Court in

           M/sSharda Ginning Pressing & Oil Mills's case [supra], where this

           Court was ceased of similar controversy and some of the parties to the

           litigation were not parties to the arbitration clause in the partnership deed

           and this Court took the view that in such cases, the matter could not be

           referred to the Arbitrator because primarily the suit should be in respect of

           a matter which the parties have agreed to refer and which comes within the

           ambit of arbitration clause.Identical view as taken by this Court inSanjeev Goyal Vs. H.L.Goyal and others, 2010(2) RCR (Civil) 44.Hon`ble Delhi High Court inOm Parkash Vs. Mrs. Usha Rani, 2002(1)

           RCR (Civil) 437 held that in such like cases involving                   rendition of

           accounts and dissolution of partnership, proceedings underSection 8of

           the Act is not maintainable because such a controversy is within the scope

           of the civil suit only and the only remedy for the partners is to file a civil

           suit for rendition of accounts and dissolution of partnership, which has

           been done by the plaintiff in the case in hand. However, the Court below

           has completely ignored these facts while passing the order under

           challenge and the said order stands set-aside being not in accordance withPARKASH SOM2016.01.25 16:40I attest to the accuracy andauthenticity of this documentCR-6567-2014 [O&M]                                                     8...law.14.                  Resultantly, the present petition stands allowed and the

           impugned order, dated 31.05.2014 passed by Civil Judge [Junior Division],

           Jagadhri, is set-aside.(SHEKHER DHAWAN)
                                                                 JUDGE
           January 22nd , 2016
           somPARKASH SOM2016.01.25 16:40I attest to the accuracy andauthenticity of this document