Civil Revision Application No. 140 of 2013

21st November, 2013

Petitioner Counsel: Mr. P.M. SHAH, Mr. S.P. SHAH
Respondent Counsel: Mr. P.K. SAMDANI, Mr. R.F. TOTALA, Mr. AMOL GANDHI, Mr. P.S. MEHTA, Mr. P.K. LAKHOTIYA

Cases Cited:
Abdul Kadir Shamsuddin Bubere Vs. Madhav Prabhakar Oak, AIR 1962 SC 406 [Para 13,22,40,41]
Branch Manager, magma Leasing and Finance Limited and another Vs. Potluri Madhavilata and another, 2009 ALL SCR 2368=(2009) 10 SCC 103 [Para 28]
Heyman Vs. Darwins Ltd., 1942 AC 356 [Para 28]
P.R. Shah, Shares and Stock Brokers Private Limited Vs. B.H.H. Securities Private Limited and others, 2011 ALL SCR 2586=(2012) 1 SCC 594 [Para 33,37]
Sukanya Holdings (P) Ltd Vs. Jayesh H. Pandya and another, 2003(3) ALL MR 325 (S.C.)=(2003) 5 SCC 531 [Para 38]
Booz Allen and Hamilton Inc. Vs. SBI Home Finance Limited and others, 2011(7) ALL MR 786 (S.C.)=(2011) 5 SCC 532 [Para 41]
S.B.P. & Co. Vs. Patel Engineering Ltd., 2006(1) ALL MR 156 (S.C.)=2005 (8) SCC 618 [Para 45]

JUDGMENT

JUDGMENT :- Rule. Rule made returnable forthwith. With consent of learned counsel for both the sides, heard finally.

2. Aggrieved by the order dated 15/3/2013 passed by the Joint Civil Judge Senior Division, Aurangabad in Special Civil Suit no. 257 of 2012, rejecting the application of the present petitioner/original defendant no.1 for referring the parties to arbitration under section 8 of the Arbitration and Conciliation Act, 1986 (for short "the Act"), the present Civil Revision Application is filed.

3. For the sake of convenience, the petitioner herein would be termed as defendant no.1, respondent no.1 would be termed as plaintiff while respondent nos.2 to 4 would be termed as defendant nos.2 to 4 as arrayed in the trial court.

4. Admittedly the composition of the three partnership firms involved in the present dispute is as under:

PARTNERSHIP FIRM	EXISTING PARTNERS	STATUS IN SUIT	SHARES
M/s. Kasliwal Bhagyoday	1]Jugalkishor Chaganlal Tapadia 2]Sanjay Suganchand Kasliwal	Plaintiff Defendant No.1	40% 60%
M/s. T.K. Developers (Reconstituted)	1]Jugalkishor Chaganlal Tapadia 2]Sanjay Suganchand Kasliwal 3]Venugopal Omprakash Jaju 4]Vijaykumar Ramprasad Jaju	Plaintiff  Defendant No.1 Defendant No.3 Defendant No.4	25% 42% 17% 16%
M/s. Kasliwal Tarangan (Reconstituted)	1]Jugalkishor Chaganlal Tapadia 2]Sanjay Suganchand Kasliwal 3]Neelam Pankaj Gangwal	Plaintiff Defendant No.1 Defendant No.2	25% 65% 10%

5.The clause regarding the arbitration agreement in each of the agreements of partnership firms is as under :

PARTNERSHIP FIRM	ARBITRATION CLAUSE
M/s.Kasliwal Bhagyoday	If any dispute or difference arise between the partie hereto touching the business of the firm or interpretation of any provision hereof or otherwise, relating to the firm and its business the same shall be referred to three Arbitrators to be appointed by the consent of both partners and in case of this disagreement such of the partner shall appoint one Arbitrator. Both the Arbitrators will appoint third Arbitrator and thereupon the majority decision of arbitration will be final and the Arbitration shall be governed by the Arbitration Act 1940.
M/s T.K. Developers (Reconstituted)	CLAUSE NO. 17 :- If any dispute or difference arise between the             parties hereto touching the business of the firm or interpretation of  any provision hereof or otherwise, relating to the firm and its business the same shall be referred to three Arbitrators and the Arbitration shall be governed by the provisions of Arbitration Act 1940.
M/s Kasliwal Tarangan (Reconstituted)	CLAUSE NO. 17 :- If any dispute or difference arise between the             parties hereto touching the business of the firm or interpretation of any provision hereof or otherwise, relating to the firm and its business      the same shall be referred to three Arbitrators to be appointed by the consent of the all the partners and in case of this disagreement each of the partner shall appoint one Arbitrator and the Arbitration shall be governed by the provisions of Arbitration Act 1940.

6. Plaintiff and defendant no.1 are known as builders and developers and have certain projects which are developed jointly. The dispute in essence is regarding suit properties as given in the schedules and annexed to plaint.

Pleadings in the plaint :

7. The defendant no.1 being the active partner of the present partnership firm by playing fraud, continuously withdrew amount of Rs.36,14,48,582/- during preceeding three years from the accounts of those firms and by making jugglery, rotated amount in other firms and in his individual account. From the funds, he has purchased and acquired the properties as detailed in Schedule "A" in his individual name. Since he utilized the funds of the above said firms in law the suit properties are assets of the above referred firms.

It was further pleaded that the present suit is not related to the dispute in between the partners of the partnership firm but relates to the right of the partnership firms as owner and possessor of the suit properties as the activities are carried by defendant no.1 with malafide intention and fraudulently to make unlawful gains. The issues involved in the present matter require recording of detailed evidence which could be done by civil Court only.

So far as rest of the defendants i.e. defendant nos.2 to 4 are concerned, it was submitted that the plaintiff has no claim against those defendants, however, as all the three firms are in existence, those defendants would be co-owner of the property purchased by defendant no.1 in his own name as per their share and therefore they are added as parties to the present suit.

In the circumstances, declaration regarding all the scheduled properties is sought that those are the properties of the three partnership firms and the plaintiff and defendants are co-owners and joint possessors of the same.

8. In the circumstances, defendant no.1present petitioner appeared in the suit and filed application under section 8 of the Act. He submitted that since the claim of the plaintiff is that all the suit properties are the properties of 3 partnership firms being acquired and purchased by defendant no.1 in his individual name etc., the dispute requires to be referred to the Arbitrator in view of the above arbitration clauses.

9. The plaintiff objected the said application vide his written reply. His submission in the reply in short are as under:-

i)That though the properties are purchased by defendant no.1 in his individual name, the funds are not of any single firm but of three partnership firms. Further, the plaintiff filed suit on several causes of action as the plaintiff and defendant no.1 are common partners in all the three firms. Further the firms are not parties to the proceedings.

ii) That section 8 of the Act provides that entire subject matter of the suit should be subject matter of the arbitration agreement. Such agreement is not in existence. The plaintiff has united the causes of action as the plaintiff and defendant no.1 are common partners in three firms. In the circumstances, there cannot be bifurcation of the subject matter as the entire subject matter of the suit is not the subject matter of the agreement.

iii) The matter is of civil nature related to title. Declaration is sought under section 14 of the Partnership Act and hence the proceeding is governed by the civil jurisdiction. The matter does not relate to the touching the business of the firm.

iv) Further, as per the provisions of section 8 (2) of the Act, filing of the original arbitration agreement or duly certified copy thereof is mandatory.

10. The learned Civil Judge Senior Division upon hearing the parties and referring to the authorities relied on by them came to the conclusion as under:-

(i) Though some of the parties are partners of rest of the firms there is no arbitration agreement between all the parties which is the requirement of section 8 of the Act.

(ii) There is no arbitration agreement which would govern all the parties and all the suit properties;

(iii) Bifurcation of cause of action or parties to the suit referring the matter to the arbitration, cannot be allowed and

(iv) In view of the peculiar nature of the suit, it is not possible to separate the cause of action or parties or refer the matter to the arbitration.

11. During arguments it has become an admitted fact that preceding the filing of the suit, lengthy correspondence was made between the plaintiff and defendant no. 1 . Vide letter dated 2/5/2012, the defendant no.1 has communicated the plaintiff that sofaras those partnership firms are concerned (out of which in the present suit the firm M/s. Kasliwal Tarangan is involved), the dispute has arisen between the parties. Since the dispute could not be settled amicably, the defendant no.1 was invoking the arbitration clause of respective partnership deeds of each of the partnership firms. Therefore, he decided to refer the matter to the sole Arbitrator. He proposed the names of three arbitrators and asked the plaintiff to accord consent to any one of them within thirty days from the receipt of the letter.

12. Plaintiff vide his reply dated 21/5/212 has inter-alia replied that in fact the parties have earlier approached Chartered Accountant Mr. Pankaj Agrawal, Mr. Deepak Sawaji, M.L.A. Mr. Pradeep Jaiswal etc. Even the award in the form of M.O.U. was prepared by Mr. Gangwal on 6/8/2011 but the defendant no.1 failed to fulfill his part. In the circumstances, the plaintiff informed that he had no hesitation to refer the dispute to the sole Arbitrator suggested by defendant no.1 subject to the condition that defendant no.1 would agree to abide by the award of the Arbitrator in whatever form it may come. For the purpose, the plaintiff demanded fresh written agreement to that effect. Thereafter, various letters were shooted between the parties.

13. Thereupon, the defendant no.1 filed six applications under section 11 of the Act for appointment of the Arbitrator regarding those partnership firms referred in the letter as detailed above. One of the application i.e. Arbitration Application no. 10 of 2012 was heard by another learned Single Judge and vide order dated 3/10/2012, the said Application concerning the dispute between the present parties regarding M/s Shree Vinayak Builders and Developers was allowed. Three of the objections raised by the present plaintiff were rejected. One of the objections was that as the allegations of fraud are involved in the dispute in view of the ratio of Abdul Kadir Shamsuddin Bubere V/s. Madhav Prabhakar Oak AIR 1962 S.C. 406, those serious allegations should be tried in open Court. The learned Single Judge however rejected all the objections and appointed Hon'ble Shri Justice A.B. Naik (Retd.) as Arbitrator to resolve the dispute. Review Application no. 312 of 2012 seeking review of the said order was dismissed by the learned Single Judge on 25/3/2012. Aggrieved by these decisions, the plaintiff filed Special Leave to Appeal (Civil) CC 9088 of 2013 in the Supreme Court of India. Before the Supreme Court, the parties agreed that the Arbitral Tribunal be constituted of three personalities i.e. 1) Justice N.P. Chapalgaonkar (Retd.), President ; 2) Justice A.B. Naik (Retd.), Member and 3) Justice M.G. Gaikwad (Retd.).

14. It is an admitted fact that during the pendency of the present proceedings, the defendant no.1 has withdrawn the said dispute. Mr. P.M. Shah, learned Senior Counsel i/b. Mr. S.P. Shah for the petitioner submits that for the bank purposes, defendant no.1 is in dire need of money however during the pendency of the arbitration proceedings the problem was solved and hence he withdrew the arbitration.

15. Before me both the sides made elaborate submissions on each and every aspect of the controversy as detailed supra. Mr. P.M. Shah learned Senior Counsel for the petitioner/ defendant no. 1 submitted as under :-

The common reading of the arbitration clauses in three agreements of partnership would show that whatever the dispute between the partners of the partnership firm may arise, the same is to be referred either to the single Arbitrator or the Tribunal consisting of three personalities. Mere ingenious drafting of a suit would not make the dispute between the parties beyond the reach of the arbitration agreements. The dispute as per the plaint itself is essentially between the plaintiff and defendant no.1 who are the common partners in all the partnership firms. The declaration is sought that the suit properties belong to the partnership firms. In the circumstances, the dispute cannot be said to be beyond the arbitration agreement. Merely because defendant nos.2 to 4 are arrayed as parties to the suit, it cannot be said that the parties are strangers to the arbitration agreement. No bifurcation of cause of action or parties is needed. The issue as to whether the suit properties are properties of the three partnership firms can be decided by the Arbitral Tribunal. There was no need to file any original or certified copy of the arbitration agreement in the admitted facts of the case. In the circumstances, he submits that the Revision Application be allowed.

16. On the other hand, Mr. Samdani learned Senior Counsel i/b. Mr. R.F. Totla for the respondent no.1 submitted as under:-

That each of the agreement of partnership firm contains different arbitration clauses. Subject matter of the suit and subject matter of the agreement is not same. As per the provisions of section 8 of the Act there should be a arbitration agreement of the parties to the suit and subject matter of the agreement should be subject matter of the suit. As the parties to the suit in the present case are not parties to each and every clause of agreement in separate partnership agreement and as the subject matter of the suit is declaration to the title of the properties of three firms jointly it is not possible to bifurcate the parties or separate the cause of action. Further, the pleadings would show that the defendant no.1 has played a fraud on the plaintiff. This plea can only be considered by the civil Court in open. Further, any transfer of any of the suit properties by the defendant no.1 would not bind the transferor by the award of the arbitrator. Further the original or the certified copy of the agreements are not filed on record. In the circumstances, referring the authorities which would be discussed lateron, he submitted that the revision application be dismissed.

17. On the basis of this material, following points arise for my determination.

I) Whether the Civil Revision Application is liable to be dismissed for want of original or certified copy of the arbitration agreement?

II) Whether the arbitration agreement exists between all the parties to the suit?

III) Whether the subject matter of the suit is the subject matter of the arbitration agreement ?

REASONS :

18. As to point no. (I) :-

Though Mr. P.K. Samdani, learned Senior Counsel for the plaintiff, submits that in view of the provisions of Section 8 of the Act it is necessary to file original or certified copy of the arbitration agreement, it is to be noted that in the present case, the plaintiff himself has filed the copies of all the partnership agreements containing the arbitration agreement. The same are also filed by the defendant No.1. Therefore, there is no dispute that the arbitration agreements exist between the parties and the specific terminology of the agreements is before us. In that view of the matter, merely for non-filing of the original or certified copy of the agreement, the application could not have been dismissed by the learned Trial Court. Point No. (I) is, therefore, answered in the negative.

19. As to point no. (II) and (III):-

The gist of the pleadings, as already summarized hereinabove, would show that aggrieved by the alleged misuse of term in the agreement, the defendant No. 1 has unilaterally withdrawn the amount from the banks, as detailed in the pleading and misappropriated the same for the purposes of acquiring the schedule properties in his own name. Therefore, the declaration that the properties are assets of all the three firms with consequential relief is sought.

Relevant provisions of Section 8 of the Arbitration and Conciliation Act, 1996.

20. Section 8 (1) of the Act runs as under :

"8. Power to refer parties to arbitration where there is an arbitration agreement:-

(1) A judicial authority before which an action is 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."

21. In view of the above provision, it would be necessary to examine as to whether the subject matter of the suit and the subject matter of the arbitration agreement/agreements is one and the same and as to whether all the parties to the suit are the parties to the arbitration agreement/agreements or not.

Subject matter of the suit :

22. Mr. P.K. Samdani, learned Senior Counsel for the plaintiff, submits that the suit is not related to the dispute between the partners of the partnership firm but relates to the rights of the firms as owner and possessor of the suit properties. Further, as the defendant No. 1 had, with malafide intention and fraudulently, withdrawn some of the funds of the three partnership firms and invested the same in the scheduled properties, the issues involved in the present matter require a detailed inquiry which could be done only in Civil Court, in view of the ratio in "Abdul Kadir Shamsuddin Bubere V/s. Madhav Prabhakar Oak" AIR 1962 S.C. 406 (cited supra).

23. It is to be noted that the plaintiff claims that the three of the partnership firms shall be declared as owner of the scheduled properties as those are acquired by the defendant No. 1 from the funds of the partnership firms.

24. A distinction is sought to be made that as the relief is sought in favour of the partnership firms that those are the owners of scheduled properties, it is not a dispute between the partners of the partnership firms i.e. the parties to three different arbitration agreements but regarding the rights of the partnership firms. It was further submitted that since the cause of action cannot be bifurcated, the parties cannot be referred to the arbitration.

25. We have already perused the contents of the relevant clauses in each of the partnership agreements where under the parties have agreed to refer certain dispute to the arbitration. It shows that any dispute or difference arising between the parties touching the business of the firm or otherwise, relating to the firm and its business, will have to be referred to the three arbitrators as per the procedure detailed in each of the agreements.

26. It is needless to state the established principle that a partnership firm is not an independent entity as such in law but is a convenient name given to a business carried by the partners. The plaintiff claims that the scheduled properties acquired by defendant No. 1 in his individual name are in fact properties of the three partnership firms , in the proportion as detailed supra. This is, in fact, a claim that the partners of the respective partnership firms are owners of the scheduled properties in the proportion as declared in the agreement to constitute three partnership firms.

27. Besides this, the terms of the agreements and more particularly "dispute relating to firm or its business" is wide enough to include the dispute which is raised in the present suit by the plaintiff.

28. Mr. P.M. Shah, learned Senior Counsel for the petitioner, relies on the ratio in "Branch Manager, magma Leasing and Finance Limited and another Vs. Potluri Madhavilata and another" (2009) 10 S.C.C. 103 : [2009 ALL SCR 2368] wherein observation in "Heyman V. Darwins Ltd." 1942 AC 356 are relied, which run as under :

"..... If, however, the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them as to whether there has been a breach by one side or the other, or as to whether circumstances have arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen 'in respect of,' or 'with regard to,' or 'under' the contract, and an arbitration clause which uses these, or similar, expressions, should be construed accordingly. By the law of England (though not, as I understand, by the law of Scotland), such an arbitration clause would also confer authority to assess damages for breach, even though it does not confer upon the arbitral body express power to do so."

In the circumstances, in my view, there is no need of any bifurcation of any cause of action as the action brought by the plaintiff is the subject of all the arbitration agreements.

Parties to the agreement

and parties to the suit

29. All the parties to the present suit are the parties to three different arbitration agreements contained in three different agreements to constitute three partnership firms. While plaintiff and defendant No. 1 are the partners in M/s Kasliwal Bhagyoday, the plaintiff and defendants No. 1 and 2 are the partners in M/s Kasliwal Tarangan - partnership firm. In last of the partnership firm i.e. M/s T.K. Developers, all the parties to the present suit except defendant No. 2 are the partners.

30. It is trite to repeat here the history and purpose behind the enactment of the Arbitration and Conciliation Act, 1996 in place of the Arbitration Act, 1940 and other allied earlier Acts.

31. In order to have a unified legal framework for the settlement of dispute arising out of the commercial relations, model laws and rules were recommended by the General Assembly of the United Nations, submitted by the United Nations Commission on International Trade Law (UNCITRAL). In the result the present unified Act i.e. the Arbitration and Conciliation Act, 1996 is enacted by the Parliament.

32. The Scheme of the Act would show that where the arbitration agreement exists between the parties, a judicial intervention shall not be made unless provided in the Act.

33. In the case of "P.R. Shah, Shares and Stock Brokers Private Limited Vs. B.H.H. Securities Private Limited and others" (2012) 1 S.C.C. 594 : [2011 ALL SCR 2586], when two separate sets of arbitration agreements covering the dispute were existing between three parties but all the parties to the dispute were not parties to all the arbitration agreements, it was held that denial of single arbitration against some of the parties on the ground that arbitration agreements exist only against some of the parties would lead to multiplicity of proceedings, conflicting decisions and would cause injustice. Therefore adjudication of dispute by a single arbitral tribunal was held proper.

34. In paragraphs No. 19 and 20, the following observations were made :

"19.If A had a claim against B and C, and there was an arbitration agreement between A and B but there was no arbitration agreement between A and C, it might not be possible to have a joint arbitration against B and C. A cannot make a claim against C in an arbitration against B, on the ground that the claim was being made jointly against B and C, as C was not a party to the arbitration agreement. But if A had a claim against B and C and if A had an arbitration agreement with B and A also had a separate arbitration agreement with C, there is no reason why A cannot have a joint arbitration agreement against B and C. Obviously, having an arbitration between A and B and another arbitration between A and C in regard to the same claim would lead to conflicting decisions. In such a case, to deny the benefit of a single arbitration against B and C on the ground that the arbitration agreements against B and C are different, would lead to multiplicity of proceedings, conflicting decisions and cause injustice. It would be proper and just to say that when A has a claim jointly against B and C, and when there are provisions for arbitration in respect of both B and C, there can be a single arbitration.

20. In this case though the arbitration in respect of a non-member is under Byelaw 248 and arbitration in respect of the members is under Byelaw 282, as the Exchange has permitted a single arbitration against both, there could be no impediment for a single arbitration. It is this principle that has been applied by the learned Single Judge, and affirmed by the Division Bench. As the first respondent had a single claim against the second respondent and the appellant and as there was provision for arbitration in regard to both of them, and as the Exchange had permitted a common arbitration, it is not possible to accept the contention of the appellant that there could not be a common arbitration against the appellant and the second respondent."

35. Mr. Samdani, learned Senior Counsel for the plaintiff, however, tried to distinguish the facts by pointing out that in the case before the Hon'ble Supreme Court, the arbitration clause was not in the nature of an ad-hoc agreement executed between the parties, but was an institutional arbitration under the Bye-Laws of the Exchange.

36. Here in the present case, there are three separate arbitration agreements between the parties to the respective partnership firm. No stranger is party to the present suit. Further, the registered address of present three partnership firms is one and the same i.e. 215/216, First Floor, Building No. 3, Apana Bazar, Jalna Road, Aurangabad.

37. In view of the above factual situation, merely because in the case of "P.R. Shah, Shares and Stock Brokers Private Limited Vs. B.H.H. Securities Private Limited and others" (cited supra), the institutional arbitration under the Bye-Laws of the Stock Exchange was sought to be enforced, while in the present case there being arbitration agreements between the parties, it cannot be said that the ratio in "P.R. Shah, Shares and Stock Brokers Private Limited Vs. B.H.H. Securities Private Limited and others", [2011 ALL SCR 2586] (cited supra) is not applicable in the present case.

38. The reliance of Mr. P.K. Samdani, learned Senior Counsel for respondent No.1, on the ratio in "Sukanya Holdings (P) Ltd Vs. Jayesh H. Pandya and another" (2003) 5 S.C.C. 531 : [2003(3) ALL MR 325 (S.C.)] is misplaced. In the said case, in a suit for dissolution of partnership firm alongwith a challenge of the conveyance deed executed by the partnership firm in favour of one third party, application under section 8 of the Arbitration and Conciliation Act, 1996 was filed. In those circumstances, it was observed that as the arbitration clause is not binding on all the parties to the suit, only some part of the subject matter is covered by the agreement to refer the matter to the arbitration. In the circumstances, it was held that as there is no provision in the Act for bifurcating the suit in two parts, there cannot be any reference to the Arbitral Tribunal.

39. In the present case, as already pointed out, all the parties to the suit are partners in three partnership firms and in between them, the arbitration agreements exist. The ratio, therefore, in the facts of the present case, is not applicable.

In the result, all the parties to the suit can be referred to a single Arbitral Tribunal.

PLEADINGS OF FRAUD :

40. Mr. Samdani, learned Senior Counsel for the plaintiff further submits that as the plaintiff has pleaded that the defendant No. 1 has played a fraud on the plaintiff and rest of the defendants, by withdrawing some of the funds of the three partnership firms, the matter requires to be scrutinized in an open Court and not in a private chamber by any arbitrator. He has relied on the ratio of "Abdul Kadir Shamsuddin Bubere V/s. Madhav Prabhakar Oak" AIR 1962 S.C. 406 (cited supra).

41. It is to be, however, noted that the pleadings would show that by taking undue advantage of the clause in each of the partnership agreements, the defendant No. 1 has unilaterally withdrawn some of the amount and acquired the scheduled properties in his personal name. The allegations would amount to misappropriation. In the circumstances, without going into the question of effect of enactment of the Arbitration and Conciliation Act, 1996, on the ratio of "Abdul Kadir Shamsuddin Bubere V/s. Madhav Prabhakar Oak" AIR 1962 S.C. 406 (cited supra), when the Arbitration Act of 1940 was in force, the argument can not be accepted.

Similar is the case regarding ratio relied on by Mr. Samdhani for the plaintiff of "Booz Allen and Hamilton Inc. V. SBI Home Finance Limited and others" (2011) 5 S.C.C. 532 : [2011(7) ALL MR 786 (S.C.)], wherein the issue was as to whether the dispute regarding right in rem though covered by arbitration clause, cannot be referred to the arbitration. In the present case, no right in rem is in dispute.

APPLICABILITY OF THE ARBITRATION AND CONCILIATION ACT, 1996

42. The clauses under which the parties to the present suit agreed to refer certain disputes to the arbitration, as detailed supra, refers to the Arbitration Act, 1940. All the agreements are admittedly entered into after the enforcement of the present Arbitration and Conciliation Act, 1996. In the circumstances, the objection was raised. Consequently, on the strength of the provisions of Section 85 of the Arbitration and Conciliation Act, 1996, it was submitted that existence of the agreement prior to 1996 is a precondition for referring the dispute.

43. It is to be noted that section 85 of the Act provides that where a dispute is referred for arbitration before the enforcement of the present Act under the previous Act, then unless otherwise agreed by the parties, the provisions of the earlier enactment would apply. However, if the arbitration proceedings had commenced after the enforcement of the Arbitration and Conciliation Act, 1996, the provisions of this Act would apply to the said arbitration proceedings.

It is to be noted that the agreements between the parties are entered into after 1996. In the circumstances, the reference to the earlier Act of 1940 in the agreement is clearly a mistake. The intention of the parties is to refer the dispute as stated in the agreement, to the arbitration and in that view of the matter, mere reference to the earlier Act in the agreement would not make any difference for referring the dispute between the parties as per the provisions of the present Arbitration and Conciliation Act, 1996.

Protection of the properties :

44. The apprehension of the plaintiff that the arbitral tribunal would not be able to reach a stranger in case the defendant no. 1 creates any third party interest needs no consideration as the provisions of Section 9 of The Act provides right to seek interim measures from the court in this regard.

45. Much arguments were advanced on behalf of both the sides on the question as to whether the power to appoint arbitrator either under section 8 or section 11 of the Act, is administrative in nature or a judicial one, thereby affecting the provisions of section 16 of the Act where under the arbitrator can even rule on its own jurisdiction. The ratio of the case of S.B.P. & Co. V. Patel Engineering Ltd." 2005 (8) S.C.C. 618 : [2006(1) ALL MR 156 (S.C.)], was also pressed into service by the plaintiff. However, since we have come to the conclusion that the Arbitral Tribunal to be appointed would have the jurisdiction to decide the dispute in the present suit, there is no need to advert to ratio of the case relied on by the learned Senior Counsel.

CONCLUSIONS :

46. The plaintiff himself prior to the filing of the present suit, has agreed for referring the dispute between the parties to the arbitration as regards one of the partnership firms involved in the present dispute i.e. M/s Kasliwal Tarangan, though put certain conditions before referring the dispute. As regards the dispute between the parties regarding one another firm, namely, M/s Shri Vinayak Builders and Developers, though the present plaintiff opposed application under section 11 of the Act in this Court, ultimately agreed before the Supreme Court for appointment of Arbitral Tribunal. There is no difference in the present action and the subject matter of the arbitration agreement. Difference between the parties to the agreements and parties to the suit is not crucial as all the parties are the partners of the partnership firms in whose favour relief is sought, being governed by three arbitration agreements. In the circumstances, no bifurcation of cause of action or separation of parties is needed in the present matter.

47. Resultantly, the order of the learned trial court is set aside. Instead, the revision application is allowed with costs and the application filed by the present petitioner/ original defendant No. 1 in Special Civil Suit No. 257/2012 is allowed. The parties in the suit are referred to arbitration. The arbitral tribunal shall consist of :-

1.Justice Shri. N.P. Chapalgaonkar (Retd.), Chairman

2.Justice A.B. Naik (Retd.), Member

3. Justice M.G. Gaikwad (Retd.), Member

to which the parties have agreed in Supreme Court of India in a different dispute.

The Tribunal to enter upon the reference, as expeditiously as possible, on remuneration and other terms and conditions, to be fixed by the Tribunal in consultation with parties. Rule made absolute accordingly.

Ordered accordingly.