SMT. PREM LATA AND ANR. versus MIS ISHAR DASS CHAMAN LAL AND ORS .

Citation: [1995] 1 S.C.R. 168 · Decided: 10-01-1995 · Supreme Court of India · Bench: K. RAMASWAMY, SUJATA V. MANOHAR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
SMT. PREM LATA AND ANR. 
v. 
~. 
MIS ISHAR DASS CHAMAN LAL AND ORS . 
. JANUARY 10, 1995 
B 
[K. RAMASWAMY AND SUJATA V. MANOHAR, JJ.) 
Arbitration Act, 1940-Section 2(}-Reference to Arbitration provided 
'r 
for in partnership deed of an unregistered Jinn-Suit under S.20 maintainable. 
c 
Partnership Act, 1939-Section 69(3)-Not an embargo to reference of 
disputes to arbitration, if such provision present in the partnership deed of an 
unregistered firm. 
One ID and his two sons by a partnership deed dated 13.12.65 
D 
.constituted an unregistered firm. With the death of the eldest son on 6.3.78. 
the partnership firm stood dissolved. The appellants, the widow and the 
... ~
alleged son of the deceased, called upon the erstwhile partners, the respon-
~ 
~ 
dents herein, to render the accounts of the firm. The respondents did not 
render the accounts and the appellants invoked Clause 16 of the Partner-
ship Deed and called upon them to refer the dispute to the named ar-
E bitrators. Since the respondents refused to refer the dispute the appellants · 
invoked the jurisdiction of the civil court under Section 20 of the Arbitra-
tion Act, 1940. 
The Trial Court allowed the suit. In revision, the High Court held 
that S.69(1)&(3) of the Partnership Act, 1939 excluded the application of 
-r 
F 
S.20 of the Arbitration Act and consequently the application under S.20 
for reference to arbitration was not maintainable. 
In appeal to this Court, it was contended that S.69(3) (a) carved out 
an exception to S.69(1), (2) and main (3). As a result there was no 
G prohibition for the appellants to invoke Clause 16 of the partnership deed 
to enforce their rights so their application/suit under S.20 of the Arbitra-
tion Act was maintainable. 
).\ 
The respondents contended that 'to sue' as envisaged in S.69(1) and 
4 
main (3) included an entitlement to enforce the right created under the 
H partnership deed and since .the partnership firm was unregistered, the 
168 
'>-
PREM LATA v. l.D. CHAMAN LAL 
169 
rights under the deed, namely reference to arbitration under Clause 16, A 
was not available. The suit under s.20 of the Arbitration Act was therefore 
not maintainable. 
Allowing the appeal, this Court 
HELD : The alternate resolution forum agreed by the parties i.e. B 
reference to private arbitration, was a mode of enforcing the rights given 
under s.69(3) (a) of the Act and was an exception to sub-section (1) and (2) 
and main part of (3) of s.69. The enforcement included right of reference 
to arbitration in terms of Clause 16 of the partnership deed for disputes 
and difference arising between the parties. There was no embargo for filing C 
an application under s.20 of the Arbitration Act, 1940. The trial court is 
directed to refer the dispute to the named arbitrator. [173-G] 
Jagdish Chander Gupta v. Kajaria Traders (India) Ltd., [1964] 8 SCR 
50, relied on. 
D 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5491 of 
1985. 
From the Judgment and Order dated 7.5.85 of the Punjab & Haryana 
High Court in C.R. No. 660of1985. 
E 
Dhruv Mehta, S.K. Mehta, Aman Vachher and P.N. Puri for the 
Appellants. 
Satish Chandra, K.B. Rohtagi, S.K. Dhingra and Ms. AparnaRohtagi 
for the Respondents. 
The following Order of the Court was delivered : 
Application for substitution is allowed. 
F 
This appeal, by special leave, arises from the judgment of the learned 
Single Judge of the Punjab and Haryana High Court in Civil Revision No. G 
660185, dated May 7, 1985. 
M/s. Ishar Das Chaman Lal - partnership firm consists of Ishar Das, 
the father, Chaman Lal and O~ Prakash, his sons. By a deed of partnership 
dated 13.12.1965, the aforesaid partnership firm was constituted but the 
firm was not registered unders s. 69 of the Indian Partnership Act. Chaman H 
170 
SUPREME COURT REPORTS 
(1995] 1 S.C.R. 
A 
Lal, the eldest son died on 6.3.1978, by obvious reasons of which the 
partnership stood dissolved. By the death of one of the members,,_ it is no 
longer possible to adhere to the original contract. The appellants - the 
widow and alleged son of the deceased Chaman Lal - called upon the 
respondents to render the accounts of the firm. Since they did not do so, 
B 
c 
invoking Clause (16) of the partnership deed, the appellants had called 
upon the respondents to refer the dispute to M/s. Tara Chand and Hans 
Raj Jain, Income-tax practitioners, the named arbitrators in the contract, 
to resolve the dispute: Since the respondents had re

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