IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID MONDAY, THE 4TH OCTOBER 2010 / 12TH ASWINA 1932 WP(C).No. 17075 of 2008(G) ------------------------------------- OA.174/2004 of ADDL.SUB COURT, IRINJALAKUDA .................... PETITIONER(S): ----------------------- 1. M.K.V.KANDASWAMY NADAR, TIMBER MERCHANTS, HARDWARE AND CEMENT MERCHANTS PAVOOR CHATRAM, 627808, TAMILNADU.REP.BY PARTNER,K.PAUL RAJAN. 2. MKV SAW MILLS, PAVOOR CHATRAM,TAMILNADU. REP.BY PARTNER, K.PAUL RAJAN. 3. SARASWATHY TIMBER AND SAW MILLS PAVOOR CHATRAM,TAMILNADU. REP.BY PARTNER, K.PAUL RAJAN. 4. VIVEKANANDA (FIRM) TIMBER MERCHANTS 1/343, COURTALLAM ROAD, PIRANOOR BORDER SHENCOTTAI.REP. BY PARTNER/MANAGER, V.VIVEKANDAN. 5. ANJANEYA TIMBERS SHENCOTTAI, TAMILNADU.REP. BY PARTNER, V. VIVEKANDAN. BY ADV. SRI.RENJITH THAMPAN SMT.P.A.ANITHA RESPONDENT(S): ------------------------ 1. ABDUL NAZER, AGED 44,S/O. LATE E.K.SYED MUHAMMED, EDAVANAKKAT HOUSE T.K.S PURAM, KODUNGALLUR THRISSUR DISTRICT. 2. ABDUL GAFOOR, AGED 39, S/O. LATE E.K.SYED MUHAMMED, EDAVANAKKAT HOUSE T.K.S PURAM, KODUNGALLUR THRISSUR DISTRICT. 3. MOHAMMED SHEFEEF, AGED 25, S/O. SHAMSUDHEEN EDAVANAKKAT HOUSE 'MAHIMA' PUTHIYA ROAD, KARA, ERIYAD KODUNGALLUR THRISSUR DISTRICT. 4. SHAMSUDHEEN,AGED 47, S/O. E.K.SYED MOHAMMED, EDAVANAKKAT HOUSE 'MAHIMA' PUTHIYA ROAD, KARA, ERIYAD KODUNGALLUR THRISSUR DISTRICT. 5. MAHARAJA TIMBERS, PULLOOTT, P.O.KODUNGALLUR, REPTD. BY ITS MANAGING PARTNER. BY R1 & R2 ADV. SRI.K.K.JAYASOORIAN SRI.LAL K.JOSEPH SRI.A.A.ZIYAD RAHMAN SMT.SHEENA SAMUEL BY R3 & R4 SRI.K.A.JALEEL THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 04/10/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C)NO.17075/2008-G APPENDIX PETITIONER'S EXHIBITS: P1 COPY OF THE WRITTEN STATEMENT COUNTER CLAIM FILED BY THE PETITIONERS IN OS.NO. 174/2004 DATED 04-01-05. P2 COPY OF THE WRITTEN STATEMENT COUNTER CLAIM FILED BY THE PETITIONERS IN OS.NO. 174/2004 DATED 15-3-05. P3 COPY OF THE JUDGMENT IN OS.NO. 174/2004 OF THE SUB COURT IRINJALAKUDA DATED 27-10-2007. RESPONDENT'S EXHIBITS: NIL /TRUE COPY/ P.S.TO.JUDGE sts HARUN-UL-RASHID,J. ------------------------------- W.P.(C).NO. 17075 OF 2008 ------------------------------- DATED THIS THE 4TH DAY OF OCTOBER, 2010 JUDGMENT Petitioners are the defendants 5 to 9 in O.S.No.174/04 on the file of the Sub Court, Irinjalakuda. Respondents 1 and 2 herein are the plaintiffs in the suit. The suit was filed for dissolution of partnership. Plaintiffs 1 and 2 and defendants 1 and 2 are the partners of the 3rd defendant partnership firm. In the nature of the pleadings and prayers in the suit, the petitioners, who are defendants 5 to 9, and other defendants are not necessary parties. It is not known for what purpose the petitioners and other defendants are impleaded in the suit filed for dissolution of partnership. The suit was filed on the allegation that the defendants 1 and 2 committed fraud on the plaintiffs and misappropriated huge amounts from the over draft account maintained by the firm. It is also averred in the plaint that the proprietory concern was changed into a partnership on 5/8/1999 and the partnership deed was -2- WP(C).No.17075/08 executed on 18/9/1999. Subsequently, the partnership firm was re- constituted on 9/11/2002. As per the re-constituted partnership deed the plaintiffs and defendants 1 and 2 alone are the partners of the third defendant firm. It is further averred in the plaint that on 10/6/03 the partnership deed was re-constituted and the renewed partnership deed was executed on the said date. The plaintiffs seek for a declaration that the reconstituted deed of partnership dated 10/6/03 is not binding on them and prayed for dissolution of the partnership. 2. Defendants 1 and 2 filed separate written statements. Defendants 5 to 9 who are the petitioners herein, contended inter alia that the suit is a collusive suit between the plaintiff and defendants 1 to 3 and that the attempt is to defraud them and to avoid payments of the amount due to them. It is also contended that they had dealings with the firm and the principal amount of Rs.18,58,519/- is due to these defendants from the firm as per the bills and account statement signed by the 2nd defendant on behalf of the firm and that they are entitled to get a sum of -3- WP(C).No.17075/08 Rs.18,58,519/- together with interest at the rate of 18% per annum from the third defendant firm and its partners including the plaintiffs and defendants l and 2. The said defendant filed a counter claim for realisation of the said amount. Other defendants who are also the creditors of the 3rd defendant firm, filed written statements contending inter alia that the suit is a collusive one and that the amounts are due to them from the partnership firm. 3. Exts.P1 and P2 are the written statements with counter claims. It is averred in the writ petition that when the petitioners filed Exts.P1and P2 counter claims plaintiff and defendants 2 and 3 wanted to withdraw the proceedings so that the counter claim will not be adjudicated. For the purpose it is said that the respondents 1 to 5 wanted to hear the maintainability of the suit on the ground of existence of arbitration clause in the partnership deed. Petitioners, who are defendants 5 to 9 during the course of hearing, submitted before the court that even if the suit is not maintainable the counter claim has to be adjudicated. Petitioners also contended before the court that in view of the provisions in the -4- WP(C).No.17075/08 Arbitration and Conciliation Act, there is no necessity for dismissing the suit as not maintainable; but the court can refer the matter to the Arbitrator as regards the dispute between the respondents 1 to 4 who are the partners of the firm and the court can independently adjudicate the counter claim. The said contentions of the petitioners were repelled by the court below and the court passed Ext.P3 order holding that the suit itself is not maintainable in view of the Arbitration clause in the partnership deed and further held that the counter claim is also not maintainable. Petitioners sought for setting aside Ext.P3 order passed by the Sub court, Irinjalakuda and for a direction to the Sub Court, Irinjalakuda to adjudicate Exts.P1 and 2 counter claims and to pass a decree on merit. 4. Learned counsel for the petitioners submitted that even if the court finds that the suit has to be referred to arbitrator, their counter claim have to be numbered as original suits and it should be posted for trial. Clause 15 of the partnership deed provides for reference of the dispute for adjudication to an -5- WP(C).No.17075/08 arbitrator mutually agreed upon by the partners in writing whose decision shall be final and binding on all partners and their legal representatives. The court below rightly held that since there is an arbitration clause and the parties agreed for arbitration agreement the civil court has to refer the matter to the arbitrator. To that extent Ext.P3 judgment of the court below finding that the suit is not maintainable and that the matter has to be referred to the arbitrator is to be sustained. But the learned judge did not consider the contentions raised by the petitioners herein in the right perspective. Defendants 5 to 9 and other defendants contended that they have business transaction with the 3rd defendant partnership firm and lakhs and lakhs of rupees are due to them to be paid by the defendant firm. They contended that in order to avoid payment and to defraud them the plaintiffs and defendants 1 and 2 colluded together and filed the present suit. The petitioners contended before the court below that even if the suit is not maintainable their claim for realisation of the amount due to them has to be numbered as original suits and it is to be proceeded with. The court below did -6- WP(C).No.17075/08 not accept the contention of the petitioners stating that the question to be decided in the suit is whether third defendant firm was constituted as per Ext.A1 partnership deed or now the existence of the firm is as per Ext.B1 partnership deed and further held that if the dispute is solved, then only the court will be able to say from whom the amount due to the defendant 5 to 7,8, 9, 14 and 15 have to be realised. According to the learned Judge, the important point to be considered is whether the aforesaid defendants made a transaction with the partnership firm, which was constituted either by Ext.A1 or by Ext. B1. The learned Judge also held that it is not possible to re-number the written statements filed by all the aforesaid defendants and to try those claims together with the suit and therefore they can be put forward the claims by filing separate suits. Exts.P1 and P2 are the counter claims filed by the petitioners, which would show that the transaction between the defendants and the firm was prior to Ext.B1 partnership deed and that they are claiming amounts from the firm as it stood prior to Ext.B1partnership deed. Therefore, the finding of the court that the -7- WP(C).No.17075/08 point to be considered is as to whether the defendants 5 to 9 made a transaction with the partnership firm which was constituted either by Ext.A1 or by Ext.B1. The other reasons stated by the court is that it is not possible to re-number the separate written statements filed by all the aforesaid defendants and to try those claims together with the suit. Both the reasons stated by the learned Judge are not sustainable in law. Separate counter claims are preferred by the defendants. The dismissal of the suit or reference of the suit to an arbitrator are not reasons for not separately considering counter claims filed by the defendants. There is no difficulty in re- numbering separate counter claims filed by the defendants. Each and every counter claim preferred by each and every defendants are separate claims and therefore separate counter claims shall be numbered separately and shall be adjudicated by the court. The reasons stated for dismissing the counter claims reserving the right to file separate suits claiming amounts are not justified under any circumstances. Order VIII Rule 6-D of the CPC provides that if in any case in which the defendant sets up a counter claim, the suit of -8- WP(C).No.17075/08 the plaintiff is stayed, discontinued or dismissed and the claim may nevertheless be proceeded with. Rule 6-A of Order VIII enable the defendants in a suit to set up a counter claim against the claim of the plaintiffs. Clause 4 of Rule 6-A provides that the counter claim shall be treated as a plaint and are governed by the rules applicable to the plaint. The provisions I have narrated above, cast upon a duty of the court to proceed with the counter claim and decide the counter claim in accordance with law. The dismissal of the counter claims for the reasons stated in Ext.P3 therefore cannot stand. In the above facts and circumstances of the case, Ext.P3 judgment to that extent is set aside. Writ Petition is disposed of as above. Sd/- HARUN-UL-RASHID, Judge. kcv.