In the High Court of Punjab and Haryana at Chandigarh Civil Revision No. 2727 of 2009 (O&M) Date of decision: December 04, 2009 Sanjeev Goyal .. Petitioner Vs. H.L. Goyal and others .. Respondents Coram: Hon'ble Mr. Justice A.N. Jindal Present: Mr. Mukul Aggarwal, Advocate for the petitioner. Mr. Sumeet Mahajan, Sr. Advocate with Mr. Sham Lal Bhalla, Mr. Amit Kohar and Mr. Ekant Aggarwal, Advocates for the respondent No.1. Mr. Rahul Rampal, Advocate for the respondents No. 2 and 3. A.N. Jindal, J This revision petition is directed against the order dated 1.4.2009 passed by the Additional Civil Judge (Sr. Division), Ludhiana, dismissing the application filed by the petitioner-Sanjeev Goyal (herein referred as 'the petitioner') under Sections 8, 22 and 23 of the Indian Arbitration Act for referring the matter to the arbitrator to be appointed by each partner or to the sole arbitrator consented by all the partners or in consensus to the sole arbitrator appointed by the court in accordance with the agreement dated 1.4.1987 relating to the dispute arising between the partners of M/s Sanjeev Woolen Mills. The facts as culled out from the record are that vide partnership deed dated 1.4.1987 (Annexure P1), a partnership firm in the name and style of M/s Sanjeev Woolen Mills came into existence. Since the dispute arose between the partners regarding profit of the partnership business, the respondent No.1 felt himself ousted and due to loosing of faith by him, he sent a telegram dated 12.5.1993 (Annexure R-1/3) dissolving the partnership firm. In the meantime, Sanjeev Kumar Goyal filed an application under Sections 8, 22 and 23 of the Indian Arbitration Act, 1940 (herein referred as the 'Arbitration Act of 1940') for making reference to the arbitrator for resolving the dispute between the partners vide application Annexure P-4. Civil Revision No. 2727 of 2009 -2- The said application was contested by the respondent No.1 by filing reply dated 19.10.2007 (Annexure P5), wherein, it was pleaded that the respondents No.2 and 3 as well as the petitioner had filed application under Section 34 of the Arbitration Act of 1940 in the Civil Suit No.484 of 1993 instituted by the respondent No.1 on 8.11.1993 for dissolution of the firm and rendition of the account. The said application of the petitioner was dismissed by the Civil Judge (Sr. Division), Ludhiana vide order dated 17.3.1998 and the said order was confirmed by the learned Additional District Judge, Ludhiana. Due to lack of filing of any other appeal or revision, the said order attained finality. It was also pleaded that Sanjeev Woolen Mills is not a registered firm under the Indian Partnership Act, therefore, appointment of the arbitrator is barred under Section 69 of the Indian Partnership Act. It is also pleaded that the suit filed by the respondent No.1 for rendition of the accounts is still pending and is on the verge of culmination. Many allegations regarding forgery have also been levelled by the respondent No.1 stating that the petitioner and the respondents No.2 and 3 have opened common front against the respondent No.1 and they have been dealing with the property of the firm and they have created a fraudulent document and that they had sold the property of the firm in favour of the Home Concept Crafts Pvt. Ltd. For a sum of Rs.20 crores, whereas, the papers of the sale consideration have been shown to be that of only Rs.2 crores. It was further stated that since the suit is dealing with the events prior to filing of the suit as well as subsequent thereto, the same is required to be decided by the civil court and cannot be referred to the arbitrator. It was also averred that the application under Section 8 does not survive after filing of the civil suit as the only option available with the petitioner was to move an application under Section 34 of the Arbitration Act, 1940 and there cannot be any reference to the Arbitrator after the civil suit is directed to be proceeded with by dismissing the application under Section 34 of the Arbitration Act of 1940. On merits, it was pleaded that since the civil suit has already been filed for dissolution of the firm, rendition of accounts, permanent injunction restraining the partners from carrying out the business of the firm and the suit for declaration that the alleged transaction dated 4.1.2005 is illegal null and void and does not bind the plaintiff/respondent No.1 in any Civil Revision No. 2727 of 2009 -3- manner, therefore, the matter could be decided by the civil court alone. The aforesaid application was dismissed by the trial court on 17.3.1998, therefore, this application filed again on 28.5.1993 is liable to be dismissed in view of the specific bar created by Section 35 of the Arbitration Act of 1940. Arguments heard. Record perused. Learned counsel for the respondent No.1 has strenuously contended that the petitioner has placed on record unamended copy of the plaint showing pendency of the civil suit between the partners, whereas the during the pendency of the civil suit No.484 of 8.11.1993, the petitioner and the respondent No.2 had sold the property bearing No.44-C measuring 8100 sq. meters along with built up structure having covered area of 1080 sq. m. on 4.1.2005, for a sale consideration of Rs.20 crores, whereas, in the papers the sale consideration is shown to be only Rs.2 crores. It has been further contended that on coming to know about the sale carried on 4.1.2005, he moved application for amendment of the plaint and for impleading the vendee of the plot i.e. Home Concept Crafts Pvt. Ltd. Through its Director Kapil Kumar as party to the suit. He has also sought additional relief of joint possession of the aforesaid property. Ultimately, the said application was allowed vide order dated 6.12.2006 (Annexure R-1/4). Now the dispute in the civil suit also involves Home Concept Crafts Pvt. Ltd. And Kapil Kumar who are not party to the arbitration agreement and contrary to the partnership deed dated 1.4.1987, as such the matter cannot be referred to the arbitrator. It is settled law that the dispute could not be split up and only the civil court has the jurisdiction and the matter is not liable to be referred to the arbitrator. In the civil suit filed by the respondent No.1 for dissolution of the firm and rendition of accounts, the petitioner and the respondents No.2 and 3 have already filed the written statement on 17.8.1999, issues were framed on 7.8.2000, cross examination of the plaintiff (now respondent No.1) was conducted by the defendants (now petitioner and respondents No.2 & 3) on various dates. Cross examination of defendants No.1 to 3 was closed and the case was put for the cross examination of defendants No.4 and 5. As such, at this stage of the suit, it is not desirable and tenable to refer the dispute to the arbitration. It is well settled proposition of law that in a suit for dissolution of partnership and Civil Revision No. 2727 of 2009 -4- rendition of accounts the case is to be adjudicated by the court itself and not by the arbitrator, as such, the application moved under Section 8 of the Arbitration Act is liable to be dismissed. Reliance has been placed on the judgment delivered by this Court in case M/s Sharda Ginning Pressing & Oil Mills & Ors. v. Smt. Bimla Devi, 2007 (1) RCR (Civil) 818 , wherein it was observed as under :- “....... It is not in dispute that defendants No.6 and 7 are not parties to the agreement of partnership deed dated 1.4.1991 and therefore, the matter did not fall within the ambit of arbitration clause No.15 referred to above. The learned Trial Court was right in coming to the conclusion that in view of judgment of Hon'ble Supreme Court in Sukanya Holding's case, the matter cannot be referred to the arbitration. The suit should be in respect of a matter which the parties have agreed to refer and which comes within the ambit of arbitration agreement. When a suit is commenced as to a matter which lies outside the arbitration agreement and is also between the some of the parties who are not parties to the arbitration agreement, there is no question of moving application under Section 8 as the word “matter” referred to in Section 8 indicates the entire subject matter of the suit should be subject matter of arbitration agreement. Not only this, it has been held by this Court in the case of M/s Makkar Cotton Mills' case (supra) by relying upon the judgment of Hon'ble Supreme Court in Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. 1999 (3) RCR (Civil) 619 that the suit for dissolution of partnership and rendition of accounts has to be adjudicated by the civil court itself and not by the arbitrator. In view of this authoritative pronouncement , the learned Trial Court was right in rejecting the application.....” For the foregoing reasons, the instant petition being unmerited is hereby dismissed. December 04, 2009 (A.N. Jindal) deepak Judge