Supreme Court of India
ANANTHESH BHAKTA REPRESENTED BY MOTHER USHA A.BHAKTA & ORS.versusNAYANA S. BHAKTA & ORS.
- Citation
- 2016 INSC 1026
- Decided
- 15 November 2016
- Disposal
- Dismissed
- Bench
- R K AGRAWAL
Holding
Section 8(2) requires the original or a certified copy of the arbitration agreement to be placed on record before the court entertains the application; its later production suffices, and the existence of a non‑party defendant or an unregistered partnership does not bar reference to arbitration.
Summary
The dispute concerned benefits under a retirement deed and a partnership deed of a beedi‑manufacturing firm, both containing arbitration clauses. The defendants filed an application under Section 8(1) of the Arbitration and Conciliation Act, 1996 seeking to refer the matter to arbitration, but did not attach the original arbitration agreement with the petition. The plaintiffs argued that the application should be dismissed under Section 8(2), that a non‑party defendant (No. 6) barred reference, and that the partnership being unregistered precluded arbitration. The Supreme Court held that Section 8(2) merely requires the original or a certified copy to be placed on record before the court considers the application; the later production of the original deeds satisfied the requirement. All plaintiffs were parties to the arbitration agreement, and the presence of a non‑party defendant did not defeat reference. Moreover, the fact that the partnership was unregistered did not bar arbitration where the deeds contained a valid arbitration clause. Consequently, the appeal was dismissed and the reference to arbitration upheld.
Issues considered
- Whether the failure to attach the original arbitration agreement or a certified copy with a Section 8(1) application mandates dismissal under Section 8(2) of the Arbitration and Conciliation Act, 1996.
- Whether the fact that one of the defendants was not a party to the arbitration agreement prevents the court from referring the dispute to arbitration.
- Whether a dispute arising out of an unregistered partnership deed can be referred to arbitration despite the lack of registration.
Legislation cited
- Arbitration and Conciliation Act, 1996s. 8(1), s. 8(2), s. 8(3)
- Registration Act, 1908
Subjects
ArbitrationSection 8(2)Arbitration agreementOriginal copy requirementParties to arbitrationUnregistered partnershipReference to arbitration
Judgment
[2016] 12 S.C.R. 62
A ANANTHESH BHAKTA REPRESENTED
BY MOTHER USHA A.BHAKTA & ORS.
v.
NAYANA S. BHAKTA & ORS.
B (CivilAppealNo.10837 of2016)
NOVEMBER 15, 2016
[R. K. AGRAWAL AND ASHOK BHUSHAN, JJ.)
Arbitration and Conciliation Act, 1996:
c s.8(2) - Interpretation of - Application for reference of
parties to arbitration not to be entertained unless accompanied by
original arbitration agreement or a duly certified copy thereof -
When not applicable - Held: s.8(2) has to be interpreted to mean
that the Court shall not consider any application for reference of
D parties to arbitration, unless acco111panied by original arbitration
agreement or duly certified copy thereof - However, filing the
application without such original or certified copy. but bringing
original arbitration agree111ent on record at the ti111e when the Court
is considering the application shall not entail rejection of the
application uls. 8(2) - On facts, the original Deeds of Partnership
E and Retirement from Partnership, containing arbitration clause, were
filed by respondents-defendants, three days after filing the
application seeking reference to arbitration - It was only after filing
of original deeds that the Court proceeded to decide the
application - Furthe1; the deeds were also relied 011 by the appellants-
plaintiffs themselves - Thus, appellants' plea that application of
F
respondents was liable to be rejected u/s;8, dismissed.
Disputes relating to benefits arising out of Deeds of
Partnership qnd Retirement from Partnership - Deeds containing
arbitration clause/agreement - Reference to arbitration -
G Permissibility - Plea of Plaintiffs that dispute in question cannot be
referred to arbitration since one of the defendants was not a party
to the arbitration agreement - Held: Not acceptable, since the
defendant was impleaded by. the plaintiffs themselves - Party -
Partnership.
Dfaputes concerning unregistered partnership deed, if can
H
62
ANANTHESH BHAKTA REPRESENTED BY MOTHER USHA 63
A.BHAKTA v. NAYANA S. BHAKTA
be referred to arbitration - Effect of such non-registration, 'if any - A
Held: On facts, both the Deeds of Partnership and Retirement from
Partnership contained an arbitration clause - Thus, when the
partners and those claiming through them agreed to get the dispute
settled by arbitration, it is not open for the appellants to contend
that partnership being unregistered partnership, the dispute cannot
B
be referred to arbitration - Registration Act, 1908 - Partnership.
Words and phrases - 'entertained' - Meaning of, in context
to s.8(2), Arbitration and Conciliation Act, 1996 - Explained.
Dismissing the appeal, the Court
HELD: 1.1 Section 8(2) of the Arbitration and Conciliation c
Act, 1996 has to be interpreted to mean that the Court shall not
consider any application filed by the party under Section- 8(1)
unless it is accompanied by original arbitration agreement or duly
certified copy thereof. The filing of the application without such
original o"r certified copy, but bringing original arbitration D
agreement on record at the time when the Court is considering
the application shall not entail rejection of the application under
Section 8(2). [Para 22] [76-E-F]
1.2 In the present case, only after the original Retirement
Deed and Partnership Deed were filed by the respondents- E
defendants on 12th May, the Court proceeded to decide the
respond-ents-defendants' application, seeking reference to
arbitration, on 9'h May. Further, the Retirement Deed and
Partnership Deed were also relied by the plaintiffs. Hence, the
argument that the defendants' application seeking reference to
arbitration was not accompanied by original deeds and hence, F
liable to be rejected, cannot be accepted. The Plaintiffs admittedly
were parties to the arbitration agreeme~t. On facts, it cannot be
said that merely because one of the defendants i.e. defendant no.
6 whom they had impleaded was not party to the arbitration
agreement, the dispute between the parties which essentially G
related to the benefits arising out of Retirement Deed and
Partnership deed cannot be referred. [Paras 21, 23, 26] [76-D-
E, G; 77-F-G]
1.3 In the present case there was no dispute between the
parties that both Retirement Deed and Partnership Deed
H
64 SUPREME COURT REPORTS [2016] 12 S.C.R.
A contained an arbitration clause. When the partners and those who
claim through partners agreed to get the dispute ~ettled by
arbitration, it is not open for the appella.nts to contend that
partnership being unregistered partnership, the dispute cannot
be referred. The appellants have not been able to show any
B statutory provision either in 1996 Act or in any other statute from
which it can be said that dispute concerning unregistered
partnership deed cannot be referred to arbitration. [Paras 28,
29) [78-F; 79-B-D)
Hindusthan Commercial Bank Ltd. v. Punnu Sahu
(Dead) throttgh Legal Representatives 1971 (3) SCC
c 124; Martin and Harris Ltd v. Vlth Additional District
Judge and others. 1998 (1) SCC 732 : 1997 (6) Suppl.
SCR 380 - relied on.
Atul Singh & Others v. Sunil Kumar Singh & Others.
2008 (2) SCC 602 : 2008 (1) SCR 44 - distinguished.
D
Bharat Sewa Sansthan v. U.P. Electronics Corporation
Ltd. 2007 (7) SCC 737 : 2007 (9) SCR 533 - referred
to.
P. Ramanatlta Aiyar's Atlvancetl Law Lexicon and
E Bfacks Law Dictionary - referred to.
Case Law Reference
2908 (1) SCR 44 distinguished Para 15
2007 (9) SCR 533 referred to Para 16
.1911 (3) sec 124 relied on Para 19
F
1997 (6) Suppl. SCR 380 relied on Para 20
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10837
of2016.
From the Judgment and Order dated 08.07.2014 of the High Court
G of Karnataka at Bangalore in CRP No. 219 of 2014.
G. V. Chandrashekar (For Ms. Anjana Chandrashekar), Advs.,
for the Appellants. ·
V. N. Raghupathy, Adv., for the Respondents.
The Judgment of the Court was delivered by
H
ANANTHESH BHAKTA REPRESENTED BY MOTHER USHA 65
A.BHAKTA v. NAYANA S. BHAKTA
ASHOK BHUSHAN, J. I. Leave granted. A
2. This appeal has been filed against judgment dated 08.07.2014
ofHigh Court ofKamataka in Civil Revision No. 219 of2014. The Civil
Revision was filed by the appellants against the judgment and order
dated 27'h May, 2014 of vacation District Judge, Mangalore in Original
Suit No. 5of2014 filed by the appellants/plaintiffs. In the Suit, I.A. No. B
IV was filed by the defendants/respondents under Section 8( I) of
Arbitration and Conciliation Act, 1996, relying on arbitration agreement
in retirement deed dated 25 .07.2005(hereinafter referred to as retirement
deed) as well as in the partnership deed dated 05.04.2006(hereinafter
referred to as partnership deed). Learned District Judge has allowed
the application filed by the defendant under Section 8( 1) of 1996 Act.
c
Parties to the suit were referred to the arbitration to settle the dispute as
per arbitration agreement. The High Court vide impugned judgment has
affirmed the order ofTrial Court with observation that parties can press
for an early trial. The Revision Petition was disposed of accordingTy.
Aggrieved against the judgment of High Court, the appellants/plaintiffs D
have filed this appeal.
3. The brief facts necessary to be noted for deciding this appeal
are:
(i) Late Ramabhakta had started a business of manufacture
and sales of 'Beedi' under the name 'Mis Neo Subhash E
Beedi Works'. After his demise, his six sons, namely, late
M. Narasimha Bhakta, late M. Subhaschandra Bhakta, late
M. Prakashchandra Bhakta, late M. Ganesh Bhakta, late
M. Gangadhar Bhakta and late M. Ashok Bhakta,
constituted the partnership firm. F
(ii) M. Narsimha Bhakta retired from the firm as per the
release deed dated 30.06.1986 and the remaining partners
continued with the firm.
(iii) M.Prakashchandra Bhakta died on 20.03.1995 and as
per his Will, his minor son Master M. Vinayaka Bhakta G
was admitted to the partnership as per partnership deed
dated 21.03.1995. On 06.03.1997, Subhaschandra Bhakta
died and his LRs, namely Defendant Nos. 1 to 4 became
partners. Ashok Bhakta died on 18.09.2001. The first
plaintiff is son of late Ashok Bhakta.
H
66 SUPREME COURT REPORTS r20l6112 S.C.R.
A (iv) On 25.07.2005, retirement deed was executed in which
Defendant Nos.l to 4 were stated to have retired from
partnership. The partnership deed dated 05.04.2006 was·
entered between late M. Gangadhar Bhakta, M. Vinayaka
Bhakta, Defendant No. 5 and M. Vipin Bhakta(S/o late M.
Ganesh Bhakta) and Master M. Anantesh B h a kt a, l "
B
Plaintiff. M.Gangadhar Bhakta expired and his estate is
represented by the Plaintiff Nos. 2 .& 3.
4. The suit for partition was filed by M. Prakaschandra Bhakta
and others against M. Subhaschandra Bhakta and others, being O.S.
NO. 4of1985. The preliminary decree was passed on 31.07.1986. M.
c Subhaschandra Bhakta and others filed FOP No. 24 of 1992 for
preparation of final decree in which the compromise petition dated
04.04.1994 was filed and compromise decree was passed on 05.04.1994.
As per the compromise decree, Item No. l of' A' schedule property
was allotted to M. Subhaschandra Bliakta and Item No. 2 was allotted
D to M. Prakashchandra Bhakta.
5. An agreement to sale dated 19.04.1993 was executed by M.
Prakashchandra Bhakta in favour of partnership firm. Similar agreement
to sell dated 19.04.1993 was also executed by M.Subhaschandra Bhakta
in favour of firm.
E 6. A Suit No. 5of2014 was filed by three Plaintiffs (appellants)
against six Defendants who are Respondent Nos. 1 to 6 in this appeal
praying for permanent prohibitory injunction restraining the Defendants
or anyone claiming through them for transferring or alienating' A' schedule
property. Further, the permanent prohibitory injunction was sought against
F the Defendant regarding possession and enjoyment of property by Plaintiff.
The Defendant had filed I.A.No.IV under Section 8( I) of Arbitration
and Conciliation Act, 1996 (hereinafter referred to as Act) on 09.05.2014,
praying to pass an order referring the parties to the arbitration for
adjudication of the disputes raised by the Plaintiff in the Suit. The
application was not accompanied by retirement deed and partnership
G deed.
7. On 12.05.2014, the original retirement deed and the partnership
deed were produced by the Defendant along with the list. The counter
affidavit to the application I.A. No. IV was also filed by the Plaintiff.
The Learned District Judge heard the I.A.No.IV as well as the objections
H
ANANTHESH BHAKTA REPRESENTED BY MOTHER USHA 67
A.BHAKTA v. NAYANA S. BHAKTA [ASHOK BHUSHAN, J.)
raised by the Plaintiff and by an order dated 27.05.2014, passed the A
following order:
· "I.A.No. IV filed under Section 8(1) of the
Arbitration and Conciliation Act, 1996 by the defendants
is allowed. :
The parties to the suit are referred to the B
Arbitration to settle their dispuies and differe11ces, in
view of the Arbitration Agreement.
The suit of the plaintiffs stands disposed off
accordingly. "
c
8. Learned Counsel appearing .for appellants in support of this
appeal raised following submissions:
(i) The application I.A.No.IV of 2014 praying for referring the
matter to arbitration was not accompanied by the original retirement
deed dated 25.07.2005 and partnership deed dated 05.04.2006, hence D
the application was liable to be dismissed under Section 8(2) and Learned
District Judge committed error in allowing the application. According to
Se((tion 8(2) of the Act, it is mandatory to file.the original arbitration
agreement or a duly certified copy thereof along with the application
seeking reference to the arbitration.
E
(ii) All the parties to the suit were not par.ties to the arbitration
·agreement as claimed in retirement deed and partnership deed. Hence,
dispute c·ould not have been refereed to the arbitrator.
(iii) The firm being an unregistered finn, no reference to the
arbitration can be made with regard to the dispute relating to unregistered
F
fim1.
9. Learned counsel appearing for respondents have refuted the
submissions and contends that Learned District Juoge after considering
all aspects of the matter have rightly ma<je the reference to the arbitrator.
It is s~bmitte4 that there was clear arbitration agrei;:ment in the retirement G
deed as well as in the partnership deed as has been noted by District
Judge and the suit could not h~ve proceeded. All the Plaintiffs as well as
Defendant Nos. I to 4 and Defendant No. 5 were parties to the arbitration
agreement either personally or claiming through the person who was
party to the agreement. The Defendant No. 6 has not inherited any right
I-I
68 SUPREME COURT REPORTS f2016l 12 S.C.R.
A ill the partnership firm and was unnecessarily imp leaded by the Plaintiff.
Mere presence of Defendant No.6 as one of the Defendants does not
preclude the implementation of arbitration agreement. With regard to
non-filing ofretirement deed and partnership deed along wid1 application
I.A.No. IV of 2014, two submissions have been raised. Firstly, it is
contended that the Plaintiff themselves has filed both retirement deed
B
and partnership deed along with the 1ist of documents and having admitted
both retirement deed and partnership deed, non-filing along with the
application I.A.No. IV was inconsequential. Secondly, the Defendant
themselves immediately after three days of filing their I.A.No. IV of
2014 had filed the original retirement deed and partnership deed on
c 12.05.2014 and at the time the matter was considered by District Judge,
original deeds were on the record. Hence, the application I.A.No. IV
was not liable to be rejected on this ground. There is no such provision
which prohibits the adjudication of dispute by arbitration regarding an
unregistered partnership firm.
D 10. We have considered the submissions of learned counsel for
the parties and perused the records.
11. From the pleadings on records and submissions made, following
three issues arises for consideration:
(I) Whether non-filing of either original or certified copy of
E retirement deed and partnership deed along with application I.A.No. IV
dated 09.05.2014 entailed dismissal of the application as per section 8(2)
of 1996 Act.
(2) Whether the fact that all the parties to the suit being not parties
to the retirement deed/partnership deed, the Court was not entitled to
F make the reference relying on arbitration agreement.
(3) Whether dispute pertaining to unregistered partnership deed .
cannot be referred to an arbitration despite there being arbitration
agreement in the deed ofretirement/pa11nership deed.
ISSUE N0.(1)
G
12. Two facts which emerged from record in this respect need to
be noted. Firstly, the plaintiffs in their plaint ofO.S.No. 5 of2014 have
referred to and admitted the retirement deed dated 25.07.2005 and
partnership deed dated 05.04.2006 in para 5 of the plaint. The plaintiffs
themselves have filed the photocopies of deed of retirement dated
H
ANANTHESH BHAKTA REPRESENTED BY MOTHER USHA 69
A.BHAKTA v. NAYANA S. BHAKTA [ASHOK BHUSHAN, J.]
25.07.2005 as the document no. 6 in the list and photocopies of partnership A
deed dated 05.04 .. 2006 as document no. 7 as have been noted in para
23 of the District Judge judgment.
Further, although initially the application filed by Defendant IA.No.
IV dated 09.05.2014 was not accompanied by copy of retirement deed
and partnership deed. The Defendant on 12.05.2014 filed the original B
retirement deed and partnership deed along with the list. It is useful to
note the findings recorded by District Judge in the above context in
paragraph 39 which is to the following effect:
to
"39. The materials 011 record clearly goes show that
IA.No. IV was filed by the defendants on 09. 05.2014. c
It is true that the application was not accompanied by
the Retirement Deed and the Partnership Deed either
the originals or the certified copies. On 12. 05.2014 the
original Retirement Deed and the Partnership Deed were
produced by the defendants along with the list. " .
D
13. Section 8 which falls for consideration in the present case
provides as follows:
·· 8. Power to refer parties to arbitration where there is ·
an arbitration agreement-
( l) A judicial authority before which an action is E
brought in a matter which is the subject of an arbitration
agreement shall, if a party so applies not later than when
submitting his first statement on the substance of the
dispute, refer the parties to arbitration.
(2) The application referred to in sub-section (1) shall F
not be entertained unless it is accompanied by the
original arbitration agreement or a duly certified copy
thereof
(3) Notwithstanding that an application has been made
under sub-section (1) and that the issue is pending G
before the judicial authority. an arbitration may be
commenced or continued and an arbitral award made. "
14. The appellants submit that sub-section (2) of Section (8)
provides that "the application referred to in sub-section (I) shall not be
entertained unless it is accompanied by the original arbitration a'grecment H
70 SUPREME COURT REPORTS [2016112 S.C.R.
A or aduly certified copy thereof." They submit that admittedly with the
application I.A.No. IV filed on 09 .OS .2014, original or certified copy of
the Retirement Deed and Partnership Deed was not filed.
IS. Learned Counsel to the appellants also placed reliance on a
judgment of this court reported in 2008 (2) SCC 602, Atul Singh &
B Othes Vs. Sunil Kumar Singh & Others. In the above case, defendant
had moved a petition on 28.02.200S praying for referring the dispute to
arbitration. The Trial Court had dismissed the petition on the ground that
the predecessor in interest of the plaintiff was not party to the Partnership
Deed executed on 17 .02.1992. Hence the main relief being declaration
of the deed to be void which could have been granted only by the Civil
c Court, the dispute could not be referred. Defendant filed Civil Revision
which was allowed by the High Court. One of the submissions made
before this court ~as that as per sub-section (2) of. Section (8), the
application could not have entertained unless it was accompanied by
original arbitration agreement or duly certified copy thereof. This court
D held that there is no whisper in the petition that the original agreement or
a duly certified copy is b'eing filed. There was non compliance of Section
8(2). Hence the reference could not have been made. Following was
stated by this court in paragraph 19:
" 19. There is no whisper in the petition dated
E 28.02.2005 that the original arbitration agreement or
a duly certified copy thereof is being filed along with
the application. Therefore, there was a clear non-
compliance with sub-section (2) of Section 8 of the 1996
Act which is a mandatory provision and the dispute
could not have been referred to arbitration. Learned
F couns,el for the respondent has submitted that a copy of
partnership deed was on ihe record of the case.
However, in order to satisfy the requirement of sub-
section (2) of Section 8 of the Act, Defendant 3 should
have filed the original arbitration agreement or a duly
G certified copy thereof along with the. petition filed by
him on 28.02.2005, which he did not do. Therefore, no
order for referring the dispute to arbitration could have
been passed in the suit. "
It is relevant to note that in Atul Sillgll 's case (Supra), the
H submission of respondent was notieed that the copy of the Partnership
ANANTHESH BHAKTA REPRESENTED BY MOTHER USHA 71
A.BHAKTA v. NAYANA S. BHAKTA [ASHOK BHUSHAN, J.]
Deed was on the record of the case, but the Court has not proceeded to A
examine as to when such copies are already on record what is the effect.
16. In this context, the reference is made to judgment of this Court
in 2007 (7) SCC 737, Bharat Sewa Sansthan Vs. U.P.E/ectronics
Corporation Ltd.
In °the above case, two judge bench of this Cou11 has held that B
photocopies of lease agreement could be taken on record under Section
8 for ascertaining the existence of arbitration clause. Following was
stated in paragraph 24:
"24. The respondent Corporation placed on record of
the trial court photocopies of the agreements along with c
an application under Section 8(1) of the Arbitration
Act. The High Court, in our vim; has rightly held that
the photocopies of the lease agreements could be taken
on record under Section 8 of the Arbitration Act for
ascertaining the existence of arbitration clause. Tlrns, D
the dispute raised by the appellant Sansthan against
the respondent Corporation in terms of the arbitratiOn
clause contained in the lease agreement is arbitral."
In the case of Atu/ Singh (Supra), which was also a judgment of
two Judge Bench, earlier judgment in Bharat Sewa Swist/um was not E
cited. However, for purposes of this case, we need not enter into the
issue as to whether there is a compliance of section 8(2) if photocopies
of the arbitration agreement is already on the record and not disputed
by the parties.
17. There is one another aspect of the matter which is sufficient
F
to uphold the order of the District Judge. Section 8(2) uses the phrase
"shall not be entertained". Thus, what is prohibited is the entertaimnent
of the application unless it is accompanied by the original arbitration
agreement or a duly certified copy thereof.
18. The word 'entertained' has specific meaning in P. Ranumatlw
G
Aiyar's Advanced Law Lexicon word 'entertained' has been defined
as:
" I. To bear in mind or conside1; esp, to give judicial
consideration to (the Court then entertained motions
for continuance).
H
72 SUPREME COURT REPORTS [2016] 12 S.C.R.
A 2. To amuse or please.
3. To receive(a person) as a guest or provide hospitality
to (a person).
The expression 'entertain' means to 'admit a thing
for consideration' and when a suit or proceeding is not
B thrown out in limine but the Court receives it for
consideration and disposal according to law it must be
regarded as entertaining the suit or proceeding, no
matter whatever the ultimate decision might be. "
The Blacks Law Diction(lry also defines this word 'ente1iain • as
c follows:
"To bear in mind or consider;esp., to give judicial
consideration to <the court then entertained motions
for continuance>"
19. In 1971 (3) SCC 124, Hitulustlu111 Commerci"I Bank Ltd.
D
Vs. Pu1111u Sa/tu (De"d) tlzrouglt Leg"/ Representatives, the word
'entertained' came for consideration as occurring in Order 21, Rule 90,
Proviso of Civil procedure Court. Para 2 of the Judgment notices the
amended Proviso which was to the following effect:
"2. The amended proviso with which we are concerned
E
in this appeal reads thus:
'Provided that no application to set aside a sale shall
be entertained-
(a) upon any ground which could have been taken by
F the applicant on or before the date on which the sale
proclamation was drawn up; and
(b) Unless the applicant deposits such amount not
exceeding twelve and half percent of the sum realised
by the sale or furnishes such security as the Cou.rt may,
G in its discretion, fix except when the Court for reasons
to be recorded dispense with the requirements of this
clause:
Provided further that no sale shall be set aside
011 the ground of irregularity or fraud unless upon the
H
ANANTHESH BHAKTA REPRESENTED BY MOTHER USHA 73
A.BHAKTA v. NAYANA S. BHAKTA [ASHOK BHUSHAN, J.]
facts proved the Court is satisfied that the applicant A
has sustained substantial injury by reason of :Such
irr(ff{Ularity or fraud. "
The contention of the appellant was that word 'entertain' refers
to initiation of the proceedings and not to the stage when the Court takes
up the application for consideration. The High Court had rejected the B
said contention. The above view of the High Court was approved by this
court in paragraph 4 of the judgment. Following was stated:
"4. Before the High Court it was contended on behalf
of the appellant and that contention was repeated in
this court, that Clause (b) of the proviso did not govern c
the present proceedings as the application in question
had been filed several months before that clause was
added to the proviso. It is the contention of the appellant
that the expression 'entertain 'found in the proviso refers
to the initiation of the proceedings and not to the sage
when the Court takes up the application for D
consideration. This contention was rejected b}l the High
Court relying on the dl'cision of that Court in Kwulan
Lal Vs. Jagan Nath S/iarnw, AIR 1962 All 547. The
sameview had been taken by the said High Court in
Dlioom Chand Jain V. Clianumlal Gupta, AIR 1962 All E
543 and Haji Rahim Bux and Sons V. Firm Samiu/la/1
and Sons, AIR 1963 All 320 and again in Malu1vir SingII
V. Gauri Sltankar, AIR 1964 All 289. These deeisions
have interpreted the expression 'entertain' as meaning
'adjudicate. upon' or 'proceed to consider on merits'.
-This view of the High Court has been accepted as F
correct by this Court in Lakslm1iratm1 EngilteerinK
Works Ltd. V. Asst. Comm., Sales tax, Kanpur, AIR 1968
SC 488. We are bound by that decision and as such we
are unable to accept the contention of the appellant
that Clause (b) of the proviso did not apply to the present ~ G
proceedings. "
20. Another relevant judgment is 1998 (1) SCC 732, Martin
and Harris Ltd. Vs. VIt/1 Additional District Judge and otllers. In
the above case Section 21 (1) proviso of U.P. Urban Builqings
(Regulation of Letting, Rent and Eviction) Act, 1972 (13 of 1972) H
74 SUPREME COURT REPORTS [2016112 S.C.R.
A word 'entertained' came for consideration. The proviso to Section
21 (1) was to the following effect:
" 8. Provided that where the building was in the
oq:upation of a tenant since before its purchase by the
landlord, such. purchase being made after the
B commencement of the Act, no application shall be
entertained on the grounds, mentioned in clause(a)
unless a period of three· years has elapsed since the
date of such purchase and the landlord has given a
notice in that behalf to the tenant not less than six months
before such application, and such notice may be given
c even before the expiration of the aforesaid period of
three years. "
In the above case, the application under Section 21 (1) was filed
by the landlord before expiry of period of three years from the date of
purchase. It was held by this Court that word 'entertained' as employed
D _in first proviso under Section 21 (I) could not mean 'institution' of such
proceedings. In Para 9 and I 0, following was laid down:
"9. Even that apart there is an. internal indication in
the first proviso to Section 21 (1) that the legislature has
made a clear distinction between 'entertaining' of an
E application for possession under Section 21 (l)(a) of
the Act and 'filing' of such application. So far as the
filing of such application is concerned it is clearly
indicated by the legislature that such application cannot
be filed before expiry of six months from the date on
which notice is given by the landlord to the tenant
F seeking eviction under Section 21 (l)(a) of the Act. The
words, "the landlord has given a notice in that behalf
to the tenant not less than six months before such
application", would naturally mean that before filing
of such application or moving of such application
G before the prescribed authority notice must have
preceded by at least six months. Similar terminology is
not employed by the legislature in the very same proviso
so far as three years' period for entertaining such
application on the grounds mentioned in clause (a) of
Section 21(1) a stage must be reached when the court
H
ANANTHESH BHAKTA REPRESENTED BY MOTHER USHA 75
A.BHAKTA v. NAYANA S. BHAKTA [ASHOK BHUSHAN, J.]
applied its· judicial mind and takes up the case for A
decision on merits concerning the grounds for
possession mentioned in clause (a) of Section 21(1) of
the Act. Consequently on the very scheme of this Act it
cannot be said that the word 'entertain' as employed by
the legislature in the first proviso to Section 21 (1) of
8
the Act would at least mean taking cognizance of such
an application by the prescribed authority by issuing
summons for appearance to the tenant-defendant. It
must be held that on the contrary the term 'entertain'
would only show that by the time the application for
possession on the grounds mentioned in clause (a) of c
Section 21(1) is taken up by the prescribed authority
for consideration on merits, at/east minimum three years'
period should have elapsed since the date of purchase
of the premises by the landlord
10. Leaned Senior Counsel, Shri Rao, for the appellant D
then invited our attention to two decisions of this Court
in the case of Lakshmiratan Engineering Works Ltd. V.
Asstt. Commr. (Judicial) I, Sales Tax and Hindus than
Commercial bank Ltd V. Punnu Sahu, In Laksh111irata11
Engineering this Court was concerned with the meaning
of the word 'enterluin' mentioned in the proviso to E·
Section 9 of the U.P. Sales Tax Act, 1948.
Hidayatullah,J., speaking for the Court observed in tlie
light of the statutory scheme of Section 9 of the said
Act that the direction to the Court in the proviso.JQ,;.
Section 9 was to ·the effect that the Court shall not F
proceed to admit to consideration an appeal which is
not accompanied by satisfactory proof of the payment
of the admitted tax. Jn the case of Hindusthan
Commercial Bank the term 'entertain' as found in the
proviso to Order XXJ Rule 90 Code of Civil
Procedure(CPC) fell for consideration of the Court. G
Hegde,J., speaking for a Bench of two learned Judges
of this Court in this connection observed that the term
'entertain' in the said provision means 'to adjudicate
upon' or 'to proceed to consider on merits' and did not
mean 'initiation of proceeding'. The aforesaid H
76 SUPREME COURT REPORTS [2016] 12 S.C.R.
A decisions, in our view, clearly show that when the
question of entertaining an application for giving relief
to a party arises and when such application is based
on any grounds on which such application has to be
considered, the provision regarding 'entertaining such
applicatio11' on any-of these grounds would necessarily
B
mea11 the co11sideratio11 of the application on the merits
of the grounds on which it is base. In the present case,
therefore, it must be held that when the legislature has
provided that no application under Section 21 (l)(a) of
the Act shall be entertained by the prescribed authority
c on grounds mentioned in clause (a) of Section 21 (1) of
the Act before expiry of three years from date of
purchase ofproperty by the landlord it must necessarily
mean consideration by the prescribed authority of the
grounds mentioned in clause (a) of Section 21 (1) of the
Act on merits." ·
D
21. In the present case as noted above, the original Retirement
Deed and Partnership Deed were filed by the defendants on 12th May
and it is only after filing of original deeds that Court proceeded to decide
the application I.A.No. IV.
22. Section 8(2) has to be interpreted to mean that the court shall
E
not consider any application filed by the party under Section 8( I) unless
it is accompanied by original arbitration agreement or duly certified copy
thereof. The filing of the application without such original or certified
copy, but bringing original arbitration agreement on record at the time
when the Court is considering the application shall not entail rejection of
F the application under Section 8(2).
23. In the present case it is relevant to note the Retirement Deed -
and Partnership Deed have also been relied by the plaintiffs. Hence, the
argument of plaintiffs that defendants' application I.A.No. IV was not
accompanied by original deeds, hence., liable to be rejected, cannot be
G accepted. We are thus of the view that the appellants submission that
the application of defendants under Section 8 was liable to be rejected,
cannot be accepted.
ISSUE NO. 2
24: The relevant facts and pleadings of the parties have been
H
ANANTHESH BHAKTA REPRESENTED BY MOTHER USHA 77
A.BHAKTA v. NAYANA S. BHAKTA (ASHOK BHUSHAN, J.]
marshaled by the trial court. Trial Court has returned the findings that A
the plaintiff no. I represented by his mother and next friend was party to
the Retirement Deed. The mother of plaintiff namely Smt. Usha A.
Bhakta has signed the retirement deed for self and on behalf of her
minor children, the plaintiff No. I. Plaintiff No. 2 and 3 claiming their
rights through one of the partners Shri Gangadhar Bhakta, their father,
B
who was party to the retirement deed. In paragraph 23 of the judgment,
Learned District Judge had returned the following_ findings:
·· ... therefore, the plaintiff no. 1 represented by his mother
and next friend Smt. Usha A. Bhakta is a party to the
Retirement Deed and plaintiffs 2 and 3 are claiming
their rights through one of the partner late Shri c
Gangadhar Bhakta, who was also a party to the
Retirement Deed. The Defendants 1 to 5 are also the
parties to this Retirement Deed. Therefore, except
defendant No. 6 all others are either personally or
through the persons from whom they are claiming the D
right are parties to the Deed of Retirement Deed dated
25.07.2005 ... "
Thus it was only defendant no. 6 who was not party to the
retirement deed or partnership deed. Both 5th and 6th defendants are
issues of late M. Pra]q).shchandra Bhakta. ·
E
25. Learned Counsel for the respondents have submitted that it
was case of the plaintiffs themselves that by virtue of Will executed by
M.Prakashchandra Bhakta it was only defendant no. 5 who became
entitled to benefits of partnership and defendant no. 6 was not given any
share.
F
26. The plaintiffs admittedly are parties to the arbitration agreement
as noted above. It does not lie in their mouth to contend that since one of
the defendants whom they have imp leaded was not party to the arbitration
agreement, no reference can be made to the arbitrator. In the facts of
the present case, it cannot be said that merely because one of the
defendants i.e. defendant no. 6 was not party to the arbitration agreement, G
the dispute between the parties which essentially relates to the benefits
arising out ofRetirement Deed and Partnership deed cannot be referred.
27. Learned District Judge has noted that defendant no.6 has not
inherited any share either in Partnership deed or in the schedule property
H
78 SUPREME COURT REPORTS [2016] 14 S.C.R.
A and hence there is no question of bifurcation of either cause of action or
parties. Relevant findings in this context have been returned by District
Judge in paragraph 40 to the following effect:
"40.. .Jt is only defendant No. 6 was not the party to
either the Retirement Deed or the Partnership Deed
B where there is an Arbitration Clause to refer all the
disputes and differences to the Arbitration. Even
according to the plaintiffs defendant No. 6 is not a
Partner nor she is a party to any of the documents and
further as per the Will executed by her father late Shri
Prakash Chandra Baktha, she has not inherited any
c right or share either in the Partnership Deed or in the
Schedule property. Moreover, the Plaint schedule
property according to the plaintiffs is the p~operty of
the Partnership Firm Mis. 'Neo Subhash Beedi Works'.
Therefore, there is no question of bifurcation of either
D cause of action or parties if the same is to be referred
to the Arbitration as per the Arbitration Clause formed
in the Retirement Deed dated: 25.07.2005 and the
Partnership Deed dated 05.04.2006... "
We fully endorse the above view taken by Learned DistrictJudge.
E ISSUE NO. 3
28. The submission by the appellants is that partnership being an
unregistered partnership, no reference can be made to the arbitration. In
the present case there is no dispute between the parties that both
Retirement deed and Partnership deed contain an arbitration clause. In
F Retirement deed which had been signed by retiring partners, continuing
partners and concurring partners, following was stated in clause 8:
".. .Jn case of any dispute or difference arising between
the parties, regarding the interpretation of the contents
of this Deed of Retirement or any other matter or
G transactions touching the said retirement, it shall be
referred to an arbitration under the provisions of the
Arbitration & Conciliation Act, 1996... "
Further, in partnership deed which was 05.04.2006, clause 26
contains an arbitration clause which is to the following effect:
H
ANANTHESH BHAKTA REPRESENTED BY MOTHER USHA 79
A.BHAKTA v. NAYANA S. BHAKTA [ASHOK BHUSHAN, J.]
" 26. ALL DISPUTES arising between the partners or A
their legal representatives about the interpretation of
this Deed or their rights and liabilities there under or
in relation to any other matters whatsoever touching
the partnership affairs shall be decided by an
Arbitration as provided by the Arbitration &
B
Conciliation Act, 1996." ·
When the partners and those who claim through partners agreed
to get the dispute settled by arbitration, it is not open for the appellants to
· contend that partnership being ui1registered partnership, the dispute carinot
be referred.
c
29. The appellants have not been able to show any statutory
provision either in 1996 Act or in any other statute from which it can be
said that dispute concerning unregistered partnership deed cannot be
referred to arbitration. We thus do not find any substance in the third
submission of the appellant.
D
30. In the result, we do not find any merit in this appeal which is
accordingly dismissed.
Divya Pandey Appeal dismissed.
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