Case: Jagdish Chander Gupta Vs. Kajaria Traders (India) Ltd

sub-section about proceedings and coupling other proceeding with a claim of set-off? The question is a proper one to ask but the search for the answer in the scheme of the section itself gives the clue. The section thinks in terms of (a) suits and (b) claims of set-off which are in a sense of the nature of suits and (c) of other proceedings. The section first provides for exclusion of suits in sub-ss. (1) and (2). Then it says that the same ban applies to a claim of set-off and other proceeding to enforce a right arising from a contract. Next it excludes the ban in respect of the right to sue (a) for the dissolution of a firm, (b) for accounts of a dissolved firm and (c) for the realisation of the property of a dissolved firm. The emphasis in each case is on dissolution of the firm. Then follows a general exclusion of the section. The fourth sub-section says that the section as a whole, is not to apply to firms or to partners and firms which have no place of business in the territories of India or whose places of business are situated in the territories of India but in areas to which Chapter VII is not to apply and to suits or claims of set off not exceeding Rs. 100/- in value. Here there is no insistence on the dissolution of the firm. It is significant that in the latter part of clause (b) of that section the words are "or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim and this clearly shows that the word "proceeding is not limited to a proceeding in the nature of a suit or a claim of set-off. Sub-section (4) combines suits and a claim of set-off and then speaks of "any proceeding in execution and "other proceeding incidental to or arising from any such suit or claim as being outside the ban of the main section. It would hardly have been necessary to be so explicit if the words other proceeding in the main section had a meaning as restricted as is suggested by the respondent. It is possible that the draftsman wishing to make exceptions of different kinds in respect of suits, claims of set-off and other proceedings grouped suits in sub-secs. (1) and (2), set-off and other proceeding in sub-sec. (3) made some special exceptions in respect of them in sub-s. (3) in respect of dissolved firms and then viewed them all together in sub-s. (4) providing for a complete exclusion of the section in respect of suits of particular classes. For convenience of drafting this scheme was probably followed and nothing can be spelled out from the manner in which the section is sub-divided.8. Some cases noticed by the High Court were cited to us but none of them appears to be really in point. In Hafiz Qamer Din v. Nur Din, AIR 1936 Lah 136 and Babulal Dhandhania v. M/s. Gautma and Co., AIR 1950 Cal 391 proceedings were started on an award, in one to make it a rule of the Court and in the other to get it set aside. These cases are distinguishable because they deal with awards and it is not necessary to decide whether after an award the proceeding is one to enforce a right arising from a contract. We do not refer to them. In Sreemannarayanamurthy v. Arjanadu, AIR 1939 Mad 145 a petition for adjudication of a partner as insolvent was held to be a right arising not from a contract but from statute. Here the right that is being enforced through the medium of the Arbitration Act arises from the contract between the parties and is part of it. In Jamal v. Firm Umar Haji Karim, ILR (1943) Nag 540 : (AIR 1943 Nag 175) the bar of S. 69 (3) was claimed during the execution of a consent decree and was disallowed. Grille, C. J., observed that the expression other proceeding indicated something which was sui generis of a claim of set off. If the partners of an unregistered firm go to court without either asking for a dissolution of the firm or dissolving it themselves and enter into an agreement and compose their differences it is possible to say that the enforcement of the consent decree is no more than the enforcement of a right arising from a contract and is within the ban. It is, however, not necessary to decide this point here. In Ram Lal Harnam Dass v. Bal Krishan, (S) AIR 1957 Punj 159 it was expressly pointed out that the expression other proceedings in the third sub-section applied to proceedings of the nature of a claim of set-off and nothing else. This case cannot be said to interpret the sub-section correctly. Similarly, Mahendra v. Gurdeyal, ILR 30 Pat 109 : (AIR 1951 Pat 196) which lays down that S. 69 does not bar "partner of an unregistered partnership firm from applying to the court under S. 8 of the Arbitration Act for referring the dispute between partners to arbitrator as provided in the condition of their agreement, cannot be accepted as sound. The reason given by the Divisional Bench that as S. 69 allows dissolution and accounts of unregistered partnership it cannot bar such an application appears to us to be not quite in point.9. In our judgment, the words other proceeding in sub-s. (3) must receive their full meaning untrammeled by the words a claim of set-off. The latter words neither intend nor can be construed to cut down the generality of the words other proceeding. The sub-section provides for the application of the provisions of sub-secs. (1) and (2) to claims of setoff and also to other proceedings of any kind which can properly be said to be for enforcement of any right arising from contract except those expressly mentioned as exceptions in sub-sec. (3) and sub-sec. (4).

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]7. Mr. Justice Naik asked the question that if all proceedings were to be excluded why was it not considered sufficient to speak of proceeding along with suits in sub-ss. (1) and (2) instead of framing a separate sub-section about proceedings and coupling other proceeding with a claim of set-off? The question is a proper one to ask but the search for the answer in the scheme of the section itself gives the clue. The section thinks in terms of (a) suits and (b) claims of set-off which are in a sense of the nature of suits and (c) of other proceedings. The section first provides for exclusion of suits in sub-ss. (1) and (2). Then it says that the same ban applies to a claim of set-off and other proceeding to enforce a right arising from a contract. Next it excludes the ban in respect of the right to sue (a) for the dissolution of a firm, (b) for accounts of a dissolved firm and (c) for the realisation of the property of a dissolved firm. The emphasis in each case is on dissolution of the firm. Then follows a general exclusion of the section. The fourth sub-section says that the section as a whole, is not to apply to firms or to partners and firms which have no place of business in the territories of India or whose places of business are situated in the territories of India but in areas to which Chapter VII is not to apply and to suits or claims of set off not exceeding Rs. 100/- in value. Here there is no insistence on the dissolution of the firm. It is significant that in the latter part of clause (b) of that section the words are "or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim and this clearly shows that the word "proceeding is not limited to a proceeding in the nature of a suit or a claim of set-off. Sub-section (4) combines suits and a claim of set-off and then speaks of "any proceeding in execution and "other proceeding incidental to or arising from any such suit or claim as being outside the ban of the main section. It would hardly have been necessary to be so explicit if the words other proceeding in the main section had a meaning as restricted as is suggested by the respondent. It is possible that the draftsman wishing to make exceptions of different kinds in respect of suits, claims of set-off and other proceedings grouped suits in sub-secs. (1) and (2), set-off and other proceeding in sub-sec. (3) made some special exceptions in respect of them in sub-s. (3) in respect of dissolved firms and then viewed them all together in sub-s. (4) providing for a complete exclusion of the section in respect of suits of particular classes. For convenience of drafting this scheme was probably followed and nothing can be spelled out from the manner in which the section is sub-divided.8. Some cases noticed by the High Court were cited to us but none of them appears to be really in point.point.9. In our judgment, the words other proceeding in sub-s. (3) must receive their full meaning untrammeled by the words a claim of set-off. The latter words neither intend nor can be construed to cut down the generality of the words other proceeding. The sub-section provides for the application of the provisions of sub-secs. (1) and (2) to claims of setoff and also to other proceedings of any kind which can properly be said to be for enforcement of any right arising from contract except those expressly mentioned as exceptions in sub-sec. (3) and sub-sec. (4).way to look at the matter is to give these words their full and natural meaning and the other way is to cut down that meaning in the light of the words that precedeproceeding under the eighth section of the Arbitration Act has its genesis in the arbitration clause, because without an agreement to refer the matter to arbitration that section cannot possibly be invoked. Since the arbitration clause is a part of the agreement constituting the partnership it is obvious that the proceeding which is before the court is to enforce a right, which arises from a contract. Whether we view the contract between the parties as a whole or view only the clause about arbitration, it is impossible to think that the right to proceed to arbitration is not one of the rights which are founded on the agreement of the parties. The words of S. 69(3), "a right arising from a contractare in either sense sufficient to cover the presentfollows, therefore, that interpretation ejusdem generis or noscitur a sociis need not always be made when words showing particular classes are followed by general words. Before the general words can be so interpreted there must be a genus constituted or a category disclosed with reference to which the general words can and are intended to be restricted. Here the expression "claim ofdoes not disclose a category or a genus.are of two kindslegal and equitableand both are already comprehended and it is difficult to think of any right "arising from a contract which is of the same nature as a claim ofand can be raised by a defendant in a suit. Mr. B. C. Misra, whom we invited to give us examples, admitted frankly that it was impossible for him to think of any proceeding of the nature of a claim ofother than a claim ofwhich could be raised in a suit such as it described in the secondIn respect of the firsthe could give only two examples. They are (i) a claim by a pledge of goods with an unregistered firm whose goods are attached and who lias to make an objection under O. 21 R. 58 of the Code of Civil Procedure and (ii) proving a debt before a liquidator. The latter is not raised as a defence and cannot belong to the same genus as a "claim of set off. The former can be made to fit but by a stretch of some considerable imagination. It is difficult for us to accept that the Legislature was thinking of such farfetched things when it spoke of "other proceeding ejusdem generis with a claim of