TaxTMI 
TaxTMI 
2003 (1) TMI 536
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....y the party in difference, the dispute may be referred to arbitrator in which case the 1st partner (Shri Kamal Nath Monga) shall have the right to appoint any person as the sold arbitrator for the decision of the disputed matter and the arbitrator's decision shall be conclusive and biding on all the parties. As stated above the reference of any such dispute or arbitration shall not in any way affect the continuity of the business of the firm in any manner- Clause 16: That if for any reason the decision of the 1st partner (Shri Kamal Nath Monga) for the dispute regarding interrogation of this deed or any of the affairs of the firm arising between the partners or any one of them is not available, then in that case the party at difference shall abide by the decision of the majority, even as regards retirement or payment of the deceased partners share to his heirs and if the party at difference even then is not satisfied, he shall have no right to go to court against the firm and the difference shall be got resolved by means of Arbitration as provided for under the Arbitration Act, 1940 without in any way affecting the right of the remaining partners to continue to carry on the busin....
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....ve lost its meaning and significance. In another words, according to him, the contention of the plaintiff is that, according to the plaintiff, clause 15 has become irrelevant or "Otiose". 7. I find with reference to page 9 of the plaint itself, that the plaintiff has himself actually used this word "Otiose", though the submission has also been made to the effect, that this clause should be declared as void. 8. According to Shri Bhatia, once the existence of the arbitration clause has been accepted, and only its irrelevancy or redundancy is pleaded, then that would be the end of the matter as far as the objection to section 8 of the application is concerned. 9. According to learned senior counsel for defendant, the contention of the plaintiff regarding the arbitration clause having become irrelevant or "Otiose" and/or on that account becomes void, is a principle unheard in law, and therefore no cognizance need be taken on this objection. 10. He submits that the entire concept under the Arbitration Act, 1996, has suffered a seal change and that moreover presently the statute specifically observes that the arbitration clause in independent of the other provisions in terms of secti....
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....loquence, I find that the new Act has brought in a significant change. In terms of section 5 of the new Act, it is stipulated that notwithstanding anything contained in any other law for the time being in force, in matters governed by Part-I of the new Act, no Judicial Authority, should intervene except where so provided in the said part (viz. Part-I). 15. Part-II of the new Act deals with the enforcement of foreign awards which is a subject with which we are not concerned. All the statutory provisions involved in the present case fell in Part-I, and therefore, the strong prohibition against judicial intervention except where so provided under Part-I of the new Act, cannot be lost-sight of. 16. Under the Scheme of the new act, and in particular section 16 thereof, competence has been conferred on the Arbitral Tribunal to rule on its jurisdiction, including giving ruling on any objection with respect to the existence or validity of the arbitration agreement. It is further provided in section 16(2) that such a plea will have to be raised not later than the submission of the statement of defence. 17. In terms of section 16(6), in case any parties are aggrieved of such decision, the....
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....aised by the applicant. Reliance was placed on the decision of the Apex Court in Haryana Telecom Ltd.'s case (supra) wherein it was held that the Arbitrator would have no jurisdiction to order winding up of a company, because the said power was a power conferred with the Court under the Companies Act. Reference was also made by the respondent to the decision of the Punjab and Haryana High Court reported as Narinder Singh Randhawa v. Hardial Singh Dhillon AIR 1985 (Punj. & Har.) 41, where it was held that after the dissolution of a partnership, the question of rendition of accounts could not be gone into by the Arbitrator and ought to be decided by a Civil Court. The learned Senior Counsel appearing on behalf of the petitioner in that case, apart from relying on the decision of the Apex Court in Smt. Kalpana Kothari v. Sudha Yadav [2002] 1 SCC 203, Konkan Railway Corpn. Ltd. v. Rani Construction (P.) Ltd. [2002] 1 SCC 388 (sic ), had also placed reliance on the decision of the Supreme Court in V.H. Patel & Co. v. Hirubhai Himabhai Patel [2000] 4 SCC 368 and Olympus Superstructures (P.) Ltd.'s case (supra) in support of the submission that even where the dissolution is sought on ju....
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....elation to section 8(1) of the 1996 Act Hon'ble D.K. Jain, J., after reciting the nature of objections of the respondent, has referred to the Apex Court decision in Smt. Kalpana Kothari's case (supra), where it was held as under :- "...In striking contrast to the said scheme underlying the provisions of the 1940 Act, in the new 1996 Act, there is no provision corresponding to section 34 of the old Act and section 8 of the 1996 Act mandates that the judicial authority before which an action has been brought in respect of a matter, which is the subject-matter of an arbitration agreement, shall refer the parties to arbitration if a party to such an agreement applies not later than when submitting his first statement. The provisions of the 1996 Act do not envisage the specific obtaining of any stay as under the 1940 Act, for the reason that not only the direction to make reference is mandatory but notwithstanding the pendency of the proceedings before the judicial authority or the making of an application under section 8(1) of the 1996 Act, the arbitration proceedings are enabled, under section 8(3) of the 1996 Act to be commenced or continued and an arbitral award also made unhampere....
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....w Act, I do not propose to render any finding on this aspect, since it will be open to the Arbitrator to whom the matter is referred, to decide also this question whether the dispute or difference, is an arbitrable dispute or not. 22. As regards the objection of the plaintiff that serious allegations of fraud and falsifications, have been made and therefore the matter must be decided "in open Court", I find that to be an unsustainable contention. Arbitration clauses cannot be given go-bye simply on the basis of what type of the allegations are chosen to be made out by the parties to the litigation, except perhaps where there are serious disputes regarding fraud in relation to the execution of the arbitration agreement itself. 23. As regards the contention of the plaintiff that the use of the word "may", and on the allegedly optional nature of the clause is concerned, to my mind, if clauses 15 and 16 are read together, there can be no manner of doubt regarding the certainty of recourse to arbitration for resolution of disputes. No doubt, the word "may" has been used in clause 15, but as is well settled, the word "may" often means "shall", and this is one such case. 24. In any eve....
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....ion in case after meeting, the partners are not able to iron out their differences within a period of one week thereafter (unless of course the said period be enlarged by consent of all partners). 31. Thereafter, Shri Kamal Nath Monga shall within one week thereof give his decision on the disputes between the parties forming the present subject matter of the present suit, including also any further differences as may come to light pursuant to the efforts at amicable settlement/conciliation. 32. In case that decision is accepted by all the partners, that would be the end of the matter. In case any difference persists, then Shri Kamal Nath Monga shall refer the matter to an arbitrator. 33. Although the clause does not restrict the choice of arbitrator by Sh. Kamal Nath Monga in any manner, however, during the course of hearing, pursuant to the efforts made at an earlier stage, calling upon both parties to agree on a common name of Arbitrator, and for reference to be made by consent without deciding this application on merits, Shri Madan Bhatia, learned Senior Counsel for defendants 1-4, had assured this Court that whenever in the part the subject-matter cropped up, the defendant N....