DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY,

SABBAVARAM,
VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE

REFERENCE TO DISPUTES RELATED TO PARTNERSHIP IN ARBITRATION

SUBJECT

LAW OF CONTRACTS -II

NAME OF THE FACULTY

MR. P. JOGI NAIDU

NAME OF THE STUDENT

UMA SHANKAR MISHRA

ROLL NO.
18LLB091

SEMESTER

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ACKNOWLEDGEMENT

I express my gratitude to our Contracts Faculty Mr. P. Jogi Naidu who has provided me with
a Wonderful opportunity to do a Project on the topic- Reference to Disputes Related to
Partnership in Arbitration. I tried my best to collect information from various sources
assimilate them and include them in the project. In spite these checks there are possibilities
that I may be wrong at some places for which I seek apologies.

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CONTENTS

1) Introduction 1

2) Case 1) Jagdish Chandra Gupta vs Ajaria Traders (India) Limited 5

3) Case 2) - Firm Ashok Traders and Another v Gurumukh Das Saluja and Others 9

4) Case 3) - Haldiram Bhujiawala v. Anand Kumar Deepak Kumar 13

5) Case 4) - Umesh Goel vs Himachal Pradesh Cooperative Group Housing Society 21

6) Case 5) Kamal Pushp Enterprise vs DR Construction 25

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INTRODUCTION

The Indian Partnership Act ,1932 (In short Partnership act) was enacted in 1932 and came
into force on 1st October 1932.The objective of this act was to define and amend the law
related to partnership. As per Section 5 Of the Partnership Act a Partnership of necessity
arises from Contract and not from status as Partnership is a Commercial Contract governed as
per Indian Contract Act, 1872. Section 39 to Section 55 Of the Indian Partnership Act ,1932
deal with Dissolution of Partnership. There can be various methods of Dissolution of
Partnership among them one of them is Arbitration. If the Dissolution of Partnership Deed is
governed By Arbitration Clause, then the Dissolution of deed would be governed by
Arbitration and Conciliation Act,1996.

Section 44 Of Indian Partnership Act, 1932 tells about the dissolution of Partnership.
According to section 44 (g) on any other ground which renders it just and equitable that the
firm should be dissolved. In the case of Yogendra N. Thakkar v Vinay Bales and others 1
the Bombay High Court considered the question that whether the power to dissolve a
partnership firm under section 44(g) of the Partnership Act vests only in the Court and cannot
be exercised by the arbitral tribunal or not. In that case it was held that said judgment that if
statutory right, as such, for invoking the arbitration clause is available for any aggrieved
partner to choose arbitration as a method of resolution of the disputes, certainly, there is no
need at all for section 44 to be separately enumerated as distinct from the contractual terms as
provided for under section 40 under which, the parties could agree upon the modality as to
the dissolution of the firm. A perusal of the said judgment clearly indicates that even the
Madras High Court has recognized that if an arbitration clause provides for dissolution of the
partnership firm and if such clause is wide, a partner can apply for dissolution of the
partnership firm even under section 44 of the Partnership Act, 1932. However, in the facts of
that case, in view of the arbitration clause not being wide, the Madras High Court took a view
that the relief of dissolution of the partnership firm on the grounds mentioned under section
44(g) of the Partnership Act would not be available in the facts and circumstances of that
case.

1
2018 Indlaw MUM 603

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Case 1) Jagdish Chandra Gupta vs Kajaria Traders (India) Limited AIR 1964 SC 1882

Facts - Kajaria Traders (India) Ltd., who is the respondent here and Messrs. Foreign Import
and Export Association (sole proprietor firm owned by the appellant Jagdish C. Gupta)
entered into a partnership to export between January and June 1956, 10,000 tons of
manganese ore to Phillips Brothers (India) Ltd., New York. Each partner was to supply a
certain quantity of manganese ore. In the contract there exists a clause stating that in case of
dispute the matter will be referred for arbitration in accordance with the Indian Arbitration
Act, 1940. Kajaria Traders alleged that Jagdish Chander Gupta failed to carry out his part of
the partnership agreement and appointed arbitrators and the Company filed a case In the
Division Bench of Bombay High Court. The company wrote to Jagdish Chander Gupta on
February 28, 1959 that they had appointed Mr. R. J. Kolah (Advocate O.S.) as their arbitrator
and asked Jagdish Chander Gupta either to agree to Mr. Kolah's appointment as sole
arbitrator or to appoint his own arbitrator. Jagdish Chander Gupta put off consideration and
on March 17, 1959 the company informed Jagdish Chander Gupta that as he had failed to
appoint an arbitrator within 15 clear days, they were appointing Mr. Kolah as sole arbitrator.
Jagdish Chander Gupta disputed this and the company filed on March 28, 1959 an application
under s. 8 (2) of the Indian Arbitration Act, 1940 for the appointment of Mr. Kolah or any
other person as arbitrator.

ISSUES INVOLVED

1) Whether the application under s. 8 (2) of the Arbitration Act can be regarded as a proceeding
"to enforce a right arising from a contract", and therefore, within the bar of section 69 of the
Indian Partnership Act.

2) Whether the present proceeding is one to enforce a right arising from the contract of the
parties.

JUDGEMENT OF BOMBAY HIGH COURT

The Division Bench of Bombay HC Consisting of Justice Mudholkar and Justice Naik
agreed with the First Contention of Mr. Jagdish Gupta that according to Section 8(2) which is
reproduced below for reference

:If the appointment is not made within fifteen clear days after the service of the said notice, the Court
may, on the application of the party who gave the notice and after giving the other parties an
opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who

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shall have like power to act in the reference and to make an award as if he or they had been appointed
by consent of all parties.

According to this Section Courts have Power to Appoint Arbitrators If there is a delay Of More than
15 days.

The Division Bench disagreed on Second Point Regarding Application of Section 69(3)

Section 69 of Indian Partnership act 1932 : 69. (1) No suit to enforce a right arising from a
contract or conferred by this Act shall be instituted in any Court by or on behalf of any
person suing as a partner in a firm against the firm or any person alleged to be or to have
been a partner in the firm unless the firm is registered and the person suing is or has been
shown in the Register of Firms as a partner in the firm.

(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on
behalf of a firm against any third party unless the firm is registered and the persons suing
are or have been shown in the Register of Firms as partners in the

(3) The provisions of sub-ss. (1) and (2) shall apply also to a claim offset-off or other
proceeding to enforce a right arising from a contract, but shall not affect-

(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a
dissolved firm, or any right or power to realise the property of a dissolved firm, or

(b) the powers of an official assignee, receiver or Court under the Presidency-towns
Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, to realise the property of an
insolvent partner.

Justice Mudholkar was of the opinion that s. 69(3) of the Indian Partnership Act barred the
application while Justice Naik decided it did not bar the Application Thereafter the Matter
went to Justice KT Desai who decided in support of Justice Naik view. Hence this Appeal

JUDGEMENT OF SUPREME COURT OF INDIA

Judgement Authored by Justice Mohammed Hidetaka.

ISSUE I

1) Whether the application under s. 8 (2) of the Arbitration Act can be regarded as a
proceeding "to enforce a right arising from a contract", and therefore, within the bar of
section 69 of the Indian Partnership Act.

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The proceeding 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) "- shall apply also to a claim of set-off or other proceeding
to enforce a right arising from a contract, but shall not affect-

(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a
dissolved firm, or any right or power to realise the property of a dissolved firm, or

(b) the powers of an official assignee, receiver or Court under the Presidency-towns
Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, to realise the property of an
insolvent partner.

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-ss. (1) and (2), set- off and other proceedings
in sub-s. (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

2) Whether the present proceeding is one to enforce a right arising from the contract of
the parties or relates to a Claim of Set- Off Independent of Contract?

The words of S.69(3) "- shall apply also to a claim of set-off or other proceeding to enforce
a right arising from a contract, but shall not affect-

(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a
dissolved firm, or any right or power to realise the property of a dissolved firm, or

(b) the powers of an official assignee, receiver or Court under the Presidency-towns
Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, to realise the property of an
insolvent partner.

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SET-OFF- Set-off is related to debts. It is the reciprocal claim made by the defendant. Set-
off can be used only under the suit for recovery of money. This can be better under by an
example. Suppose, A files a suit against B claiming that the latter is Rs.20,000 due to him.
Now, B also has a claim against A that he is Rs.10,000 in debt to the former, i.e., A is
Rs.10,000 in debt of B. Here, both are mutually indebted to each other, and they both have to
pay off the debts due to each other. Instead of filing a fresh suit altogether, B files a set-off
claim along with the written statement in response to the plaint filed by A.

In this Section the Phrase a right arising from a contract" is in either sense sufficient to cover
the present matter. But the Difficulty arises due to the words "other proceeding” and its
difference with the words Claim of set off. It is a Rule Of Interpretation Of statues that when
in a statute particular classes are mentioned by name and then are followed by general words,
the general words are sometimes construed ejusdem generis, i.e. limited to the same category
or genus comprehended by the particular words but it is not necessary that this rule must
always apply. In an Interesting Illustration given in Allen v. Emerson, [1944] 1 K.B. 362.
Asquith J. gave interesting examples of particular words followed by general words where
the Principle of ejusdem generis (. In the expression "books, pamphlets, newspapers and
other documents" private letters may not be held included it 'other documents' be interpreted
ejusdem generis with what goes before. But in a provision which reads "newspapers or other
document likely to convey secrets to the enemy", the, words 'other document' would include
document of any kind and would not take their colour from 'newspapers'. The expression
"claim of set-off" does not disclose a category or a genus. Set-offs are of two kinds legal and
equitable-and 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 of set-off and 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 of set off
other than a claim of set-off which could be raised in a suit such as is described in the second
sub-section. 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.

In our judgment, the words 'other proceeding' in sub-s. (3) must receive their full meaning
untrammelled 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

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provides for the application of the provisions of sub-ss. (1) and (2) to claims of set-off 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-s. (3)
and sub-s. (4). the appeal is, therefore, allowed. The decision of the High Court will be set
aside and the application under s. 8(2) of the Arbitration Act shall stand dismissed with costs
throughout on the applicant in the High Court.

Case 2 - Firm Ashok Traders and Another v Gurumukh Das Saluja and Others (AIR
2004 SC 1433)

Facts - The dispute is among 12 persons who are, or are alleged to be, or claim to be partners
in the firm M/s Ashok Traders, the respondent no. 1. These 12 private parties to the litigation
can be grouped into three, for the sake of convenience. Gurumukh Das Saluja, Sanjay Chawla
and Ajay Arora shall be collectively referred to as Group "A". Bhagwati Prasad Kulharai,
Badri Prasad Jaiswal and Harprasad Jaiswal shall be referred to as Group "B". Rajesh Jaiswal
Ram Sewak Sharma, Baljeet Singh Bhatia, Rajendra Prasad Jaiswal, Anil Kumar Shrivastava
and Sushil Kumar Shrivastava shall be referred to as Group "C". M/s. Ashok Traders are in
liquor trade. In the Deed of Partnership entered into on 27.2.2002 there were 7 partners
including Bhagwati Prasad Kulhara and 6 others. The partnership firm was registered with
Registrar of Firms. Six partners (i.e. other than Bhagwati Prasad Kulkhara) retired from the
partnership and a new partnership came to be constituted on 5.3.2002 evidenced by a Deed of
the even date wherein all the persons belonging to Groups A, B and C are partners. However,
the names of the new partners were not communicated to the Registrar of Firms. The firm
was awarded a liquor contract licence for Bhopal for the year 2002-03 at a licence fee of Rs.
66.51 crores. The existence of these two Deeds of Partnership and the factum of the first one
being registered and the second one being not registered with the Registrar of Firms are
admitted facts. For convenience sake, we would refer to the partnership dated 27.2.2002 as
Partnership-I, the Partnership dated 5.3.2002 are Partnership-II and the alleged partnership
dated 6.3.2003 as Partnership-III. The business ran smoothly up to February 2003 and then
differences and disputes are alleged to have arisen amongst the partners. Clause. 20 of the
Partnership Deed-II incorporates an Arbitration Clause. Group "B" alleges the existence of
yet another Deed of Partnership which is dated 6.3.2003 wherein the names of the members
of Group "A" are not to be found mentioned as partners. The partnership-II is also not
registered. On 6.3.2003 auction for IMFL and country-liquor shops (60 in number) for the
year 2003-04 was held at Bhopal. M/s Ashok Traders was declared to be successful bidder

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for a licence fee of Rs. 73.25 crores. The shops are running and have always remained
operational even during the present litigation. Disputes arose giving rise to complaints by the
members of Group "A" complaining of the violation of their rights as partners at the hands of
Group "B", Group "A" complained of their being denied access to accounts, of Group "B"
indulging into mismanagement of affairs and siphoning off of the funds and so on. Ajay
Arora (of Group "A") filed a civil suit which was held to be not-maintainable in view of S. 69
(3) of the Indian Partnership Act, 1932; the name of Ajay Arora having not been shown in the
Register of Firms as a partner of the firm. According to Group "A", a notice was issued on
2.6.2003 to the other partners invoking the arbitration clause and calling upon them to join in
the appointment of arbitrator/s consistently with the arbitration clause so as to adjudicate
upon the disputes between the partners. The contesting respondents do not admit the receipt
of the notice. On 22.7.2003, Gurumukh Das Saluja of Group "A" filed an application u/s. 9 of
the Arbitration and Conciliation Act, 1996 wherein the principal relief sought for is the
appointment of a receiver u/s. 9(ii)(d) of the Act to take charge of the entire business of the
firm. Other incidental injunctions are also sought for. Group "B" contested the application on
very many grounds and mainly by submitting that the application was not maintainable in
view of the bar enacted by S. 69(3) of the Partnership Act as the name of the applicant does
not figure in the Register of Firms as partner of the firm.

ISSUES –

1)Whether S. 69(3) of the Partnership Act creates a Bar on maintainability of an application

2) Whether by way in the event of the question of maintainability being decided for Group
"A the type of arrangement i.e. appointment of receiver or otherwise, would be Just,
Convenient and meet the ends of justice?

Arguments for Plaintiffs (Group B)

They raised the point that Group "A" being partners of the firm so far as the contract for the
year 2003-04 is concerned was vehemently denied. It was reiterated that the application was
hit by S. 69(3) of the Partnership Act and they also state that name of the Applicant was not
in the list of Registrar of Firms as a Partner

Arguments for Defendants (Group A)

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They filed an application u/s. 9 of the Arbitration and Conciliation Act, 1996 wherein the
principal relief sought for is the appointment of a receiver u/s. 9(ii)(d) of the Act to take
charge of the entire business of the firm

Judgement

Before giving the Judgement, we need to go through the order of High Court. The High
Court has allowed the appeal. It has held that the applicability of S. 69(3) is not attracted to
an application u/s. 9 of the Arbitration and Conciliation Act, 1996. But on merits the High
Court has found substance in the grievance raised by Group "A". The High Court has also
held that the business in the year 2003-04 was continuing under the Partnership Deed dated
5.3.2002, i.e., Partnership-II; and that prima facie the existence of the Partnership Deed dated
6.3.2003 (Partnership-Ill) was doubtful and accompanied by suspicious circumstances raising
doubts about the genuineness of any new partnership having come into existence on 6.3.2003
superseding the Partnership-II. The time or the stage for invoking the jurisdiction of Court
u/s. 9 can be (i) before, or (ii) during arbitral proceeding, or (iii) at any time after the making
of the arbitral award but before it is enforced in accordance with S. 36. With the
pronouncement of this Court in M/s Sundarum Finance Ltd. v. M/s NEPC India Ltd2.,
Indlaw SC 1959 the doubts stand cleared and set at rest and it is not necessary that arbitral
proceeding must be pending or at least a notice invoking arbitration clause must have been
issued before an application u/s. 9 is filed. suffice it to say that the right conferred by S. 9
cannot be said to be one arising out of a contract. The qualification which the person
invoking jurisdiction of the Court u/s. 9 must possess is of being a party to an arbitration
agreement A person not party to an arbitration agreement cannot enter the Court for
protection u/s. 9. This has relevance only to his locus standi as an applicant. This has nothing
to do with the relief which is sought for from the Court or the right which is sought to be
canvassed in support of the relief. Under the scheme of A & C Act, the arbitration clause is
separable from other clauses of the Partnership Deed. The arbitration clause constitutes an
agreement by itself. In short, filing of an application by a party by virtue of its being a party
to an arbitration agreement is for securing a relief which the Court has power to grant before,
during or after arbitral proceedings by virtue of S. 9 of the A & C Act. The relief sought for
in an application u/s. 9 of A & C Act is neither in a suit nor a right arising from a contract.
The right arising from the partnership deed or conferred by the Partnership Act is being
enforced in the arbitral tribunal; the Court u/s. 9 is only formulating interim measures so as to
2
AIR (1999) SC 565 1999

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protect the right under adjudication before the arbitral tribunal from being frustrated. S. 69 of
the Partnership Act has no bearing on the right of a party to an arbitration clause to file an
application u/s. 9 of A & C Act.

This Court asked for suggestions from both the parties to resolve Disputes and On behalf of
Group "A", a suggestion was mooted that l/5th of the shops may be allowed to be run by
them and remaining 4/5th may be allowed to be run by Group "B" and identical
precautionary or protective mechanism may be introduced as cross-checks and on basis of
which order of High Court is modified. 1) The business shall run as before under the actual
management and control of Group "B" but as receivers.

(2) The Commissioner of Excise, Madhya Pradesh shall appoint an official who has been
associated with the excise department of Madhya Pradesh, preferably a retired person, who
shall act as an observer. The observer shall keep a watch on the business of M/s. Ashok
Traders generally and in particular to see:

(i) that the business is run by receivers without any hindrance by any of the partners;

(ii) that the accounts are properly, truly and correctly maintained,

(iii) that the receipts and payments are properly vouched.

(iv) that the sale proceeds are properly accounted for and no part of the proceeds is siphoned
off and/or carried away unaccounted by anyone.

(3) All the sale proceeds shall be deposited day to day in a bank account to be opened in a
nationalised bank in the name of the 'Firms M/s Ashok Traders (under orders of the Court)'.
Any amounts to be withdrawn shall be only under the joint signatures of at least one
members of Group "B" or "C" and the observer, for the purpose of making payments to the
State Government, and on account of rent/licence fee of the shops, salary of the staff,
transport charges and other necessary expenses required for running day to day business.

(4) Though the conduct of the business is being allowed to be continued by Group "B" but
that is in their capacity of receivers as appointed by the Court. They must truly and strictly
perform their duties as receivers. Any deviation would be viewed seriously.

(5) The members of Group "A" and/or their representative/s, authorized in writing, shall
have a reasonable right to visit the shops during business hours and watch the activities
going on but without interfering with the business activities run by the receivers.

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(6) The observer shall be paid such monthly remuneration and reimbursed such expenses, as
may be considered reasonable and appointed by the Commissioner of Excise subject to
overall directions of the Trial Court.

(7) This arrangement shall continue till 31st March 2004 and also for such further period as
may be necessary for winding up of the business as per terms of the license of the State
Government (Excise Department).

(8) On finalization of the accounts duly audited by Chartered Accounts the net profit or loss,
if any, shall be distributed in accordance with the award given by the arbitrator or decision
by any competent forum.

(9) The receivers and observers shall be under the control of the trial Court. In case of any
difficulty in carrying out this order, the parties, the observer and the Excise Commissioner of
Madhya Pradesh or any officer subordinate to him shall be at liberty to seek directions from
the trial Court

Case 3) Haldiram Bhujiawala v. Anand Kumar Deepak Kumar (2000) 3 SCC 250
[Sections 69(2), 2(d)]

Facts -The suit was filed by the plaintiff for permanent Injunction restraining the defendants-
appellants, their partners, servants etc. from infringing the trade-mark No. 285062 and from
using the trademark/ name 'HALDIRAM BHUJIAWALA' or any identical name/mark
deceptively similar thereto, for damages in a sum of Rs. 6 lakhs and (3) for destruction of the
material etc. One Ganga Ram alias Haldiram, carried on business in the name Haldiram
Bhudia Wala, since 1941. In 1965, he constituted a partnership with his two sons Moolchand,
Shiva Krishnan and his daughter-in-law Kamla Devi, (wife of another son R. L. Aggarwal) to
carry on business under the same name. In December 1972, the said firm applied for
registration before the Registrar of Trade Marks for registration of the name Haldiram Bhujia
Wala – Chand Mai - Ganga Bishan Bhujiawala, Bikaner. The Registrar of Trade Marks
granted registration with the No. 285062. On 16 11-1974, the partnership was dissolved and
under the terms of the dissolution deed the above trade mark fell exclusively to the share of
Mool Chand, son of Ganga Bishan and father of plaintiffs, for the whole country (except
West Bengal). Thus, Sri Mool Chand became sole proprietor of the trade-mark in the said
area while Smt. Kamla Devi was given ownership of the trademark rights for West Bengal. It
is stated that. Sri Lala Ganga Bishan Haldiram executed his last will dated 3-4-1979 and also
reiterated the rights conferred by the dissolution deed on the respective parties. Ganga Bishan

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died in 1980. His will was later acted upon. Later, the testator's son, Sri Moolchand too died
in 1985 leaving behind his four sons, Shiv Kishen, Shiv Ratan, Manohar Lal and
Madhusudan. All of them got their names recorded as subsequent-joint proprietors. The latter
three formed a partnership in 1983 and were running a shop in Chandni Chowk, New Delhi
selling various goods under the abovesaid trade mark of Haldiram Bhujia Wala. In the
meantime, on 10-10-77. Mool Chand's brother Sri R. L. Aggarwal (husband of Kamla Mool
Chand's brother Sri R. L. Aggarwal (husband of Kamla Devi) and his son Prabhu Shankar,
Calcutta applied for registration of the trademark in Calcutta. In this very name at Calcutta
claiming to be full owners of the said trade mark without disclosing the dissolution deed
dated 16-11 74. When the Registrar objected on 14-4-78, they replied on 18-7-78 that they
alone were trading in this Haldiram Bhujiawala name in Calcutta. The defendants have no
right to use the said trade mark beyond Calcutta. The plaintiffs registered trade mark was, in
the usual course, renewed on 29-12-86 till 28-12-93.

The plaintiffs have also acquired a right on account of prior adoption and long user. The 1st
plaintiff firm, consisting of three sons of Moolchand and the 2nd plaintiff (the fourth son of
Moolchand) are joint owners of the trade mark (except in West Bengal).

The 1st defendant firm is a newly constituted firm intending to start its business and has been
formed by Ashok Kumar, son of Kamla Devi. The 2nd defendant is Ashok Kumar himself in
his individual capacity. They Have no right to use this trade mark outside West Bengal. The
plaintiffs came to know of the violation of trade mark by defendants 1 and 2 in December
1991 when defendants opened a shop at Arya Samaj Road, Karol Bagh, New Delhi. The
cause of action for the suit is the fact that defendants acted: in violation of the common law
and contractual rights of the plaintiff.

Plaintiff’s prayer – Plaintiff’s want permanent injunctions against use of their trademark by
defendant’s

Destruction of remaining material with defendant’s

Grant of Rs. 6 lakhs as damages

ISSUES

i)Whether Section 69(2) bars a suit by a. firm not registered on the date of suit where
permanent injunction and damages are claimed in respect of a trade mark as a statutory right
or by invoking Common Law principles applicable to a passing-off action?

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(ii) Whether the words 'arising from a contract' in Section 69(2) refer only to a situation
where an unregistered firm is enforcing a right arising from a contract entered into by the
firm with the defendant during the course of Its business or whether the bar under Section
69(2) can be extended to any contract referred to in the plaint unconnected with the
defendant, as the source of title to the suit property ?

Arguments of the parties

Counsel for Plaintiff’s—Senior Advocate Gopal Subramaniam

The suit of the plaintiff’s based on 2 rights which are Statutory Trademark right and
Common law Right of Passing Off -action

Section 69(2) of the Indian Partnership Act cannot come here as

The suit was not based on any contract between plaintiffs and defendants. The provision in
Section 69(2) did not apply if the right sought to be enforced did not arise out of a contract
between the plaintiffs' firm and the defendants. The reference in the plaint to the dissolution
deed dated 16.11.74 was merely a reference to a historical fact that that was the source of the
right of Moolchand and on his death, the said right to the trade mark devolved on his sons,
three of whom are joined in a firm (i.e. 1st plaintiff) and the fourth son is the second plaintiff.
The plaintiffs were not parties to (he deeds of dissolution. The defendants too were not
parties to the dissolution deed though their mother was. Hence, the bar under Section 69(2)
did not apply.

Counsel for defendant’s- Senior Advocate RF Nariman

1st plaintiff firm was not registered with the Registrar of Firms on the date of suit, that the
plaint repeatedly referred to the proprietary right of late Moolchand as having arisen out the
dissolution deed dated 16.11.1974 and that without reference to the said document - which
was in itself a contract - the plaintiffs could not prove their right to the trade mark through
Moolchand and the suit was barred since Section 69(2) referred to a right "arising from a
contract'. The plaintiffs right was based on the contract dated 16.11.74. The words 'arising
from a contract' were akin to the words 'arising out of a contract' used in Ruby General
Insurance Co. Ltd. v Pearey Lal Kumar and Anr,3 wherein while construing those words
in relation to an arbitration clause, this Court held that the said words held to be construed
widely. The learned counsel contended that, on the facts of this case and as stated in the
3
[1952] SCR 501

Page 15 of 26
plaint at several places, the 1st plaintiff was compelled to rely on the contract of dissolution
dated 16. 11.74 to prove title to the trade mark and thereby for an injunction and hence it was
not a right claimed under Common Law or under any statute, like the Trade Marks Act,1999

Judgement - Given by Justice M. Jagannath Rao and

Reasoning – Section 69 of Indian Partnership Act is reproduced below for reference

S. 69

1)No suit to enforce a right arising from a contract or conferred by this Act shall be instituted
in any Court by or on behalf of any person suing as a partner in a firm against the firm or any
person alleged to be or to have been a partner in the firm unless the firm is registered and the
person suing is or has been shown in the Register of Firms as a partner in the firm.

(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on
behalf of a firm against any third party unless the firm is registered and the persons suing are
or have been shown in the Register of Firms as partners in the firm.

(3) The provisions of sub-sections (1) and (2) shall apply also to a claim to set-off or other
proceedings to enforce a right arising from a contract, but shall not affect—

(a)the enforcement of any right to sue for the dissolution of a firm or for accounts of a
dissolved firm or any right or power to realise the property of a dissolved firm, or

(b)the powers of an official assignee, receiver or Court under the Presidency-towns

(4)This section shall not apply—(a)to firms or to partners in firms which have no place of
business in 31[the territories to which this Act extends], or whose places of business in 32[the
said territories], are situated in areas to which, by notification under 33[section 56], this
chapter does not apply, or(b)to any suit or claim of set-off not exceeding one hundred rupees
in value which, in the Presidency-towns, is not of a kind specified in section 19 of the
Presidency Small Causes Courts Act, 1882, or, outside the Presidency-towns, is not of a kind
specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887, or to any
proceeding in execution or other proceeding.

Page 16 of 26
 Issue -1 –

Whether Section 69(2) Of Indian Partnership Act bars a Suit not registered on the date of suit
where permanent Injunctions and Damages are Claimed in respect of Infringement Of
trademark as a Statutory Right or by Invoking Common Law Principle Applicable To passing
Off Action?

The question whether Section 69(2) is a bar to a suit filed by an unregistered firm even if a
statutory right is being enforced or even If only a Common Law right is being enforced came
up directly for consideration in this Court in M/s. Raptokas Brett Co. Ltd. v. Ganesh
Property4 :. In that case, Majumdar J speaking for the Bench clearly expressed the view that
Section 69(2) Of Indian Partnership Act, 1932 cannot bar the enforcement by way of suit
by an unregistered firm in respect of a statutory right or a common law right. On the
facts of that case, it was held the right to evict a tenant upon expiry of the lease was not a
right 'arising from a contract' but was a common law right or a statutory tight under
the Transfer of Property Act. The fact that the plaint in that case referred to a lease and to
Its expiry, made no difference. Hence, the said suit was held not barred. It appears to us that
in that case the reference to the lease in the plaint was obviously treated as a historical fact.
That case is therefore directly in point. Following the said judgment, it must be held in the
present case too that a suit is not barred by Section 69(2) if a statutory right or a common law
right is being enforced.

The next question is as to the nature of the right that is being enforced in this suit. It is well
settled that a passing off action is a common law action based on tort Bengal Waterproof
Ltd. v. Bombay Waterproof Manufacturing Company and Anr5 Therefore, in our opinion, a
suit for perpetual injunction to restrain the defendant not to pass-off the defendant's goods
as those of plaints by using the plaintiffs' trade mark and for damages is an action at
common law and is not barred by Section 69(2). The decision in M/s. Virendra Dresses
Delhi v. M/s. Varinder Garments6and the decision of the Division Bench of the Delhi High
Court in M/s. Bestochem Formulation v. M/s. Dinesh Ayurvedic Agencies 7 and Ors., RFA
(OS) 17/99 dt. 12.7.99) state that Section 69(2) does not apply to a passing-off action as the
suit is based on tort and not on contract. In our opinion, the above decisions were correctly
4
AIR1998 SC 3085
5
[1997] 1 SCC 99.
6
AIR (1983) Delhi 482
7
1952 SCR 501

Page 17 of 26
decided. (The special leave petition No. 18418 of 1999 against the latter was in fact
dismissed by this Court on 28.1.2000.) The learned senior counsel for the appellants no doubt
relied upon Ruby General Insurance Co. Ltd. v. Pearey Lal Kumar and Anr 8.. That was an
arbitration case in which the words "arising out of a contract" were widely interpreted but
that decision, in our view, has no relevance in interpreting the words "arising from a
contract" in section 69(2) of the Partnership Act. Likewise, if the reliefs of permanent
injunction or damages are being claimed on the basis of a registered trade mark and its
infringement, the suit is to be treated as one based on a statutory right under the Trade Marks
Act and is, in our view, not barred by Section 69(2). For the aforesaid reasons. In both these
situations, the unregistered partnership in the case before us cannot be said to be enforcing
any right "arising from a contract". Point 1 is therefore decided in favour of the plaintiffs-
respondents.

Issue 2 –

Whether the words 'arising from a contract' in Section 69(2) refer only to a situation where an
unregistered firm is enforcing a right arising from a contract entered into by the firm with the
defendant during the course of Its business or whether the bar under Section 69(2) can be
extended to any contract referred to in the plaint unconnected with the defendant, as the
source of title to the suit property ?

It is pertinent to know that what is the scope of the words 'enforcing a right arising under
the contract' used in Section 69(2)? Learned senior counsel for the appellants – Gopal
Subramaniam repeatedly drew our attention to the allegation in the plaint at various places
that it was only under the deed of dissolution dated 16-11-1974 that Moolchand, - the father
of the partners of the 1st plaintiff firm and the 2nd plaintiff became proprietor of the trade
mark for the whole of India (except West Bengal). That right devolved on the plaintiffs on
the death of Moolchand. Therefore, it was contended that the 1st plaintiff firm was definitely
seeking to enforce a right "arising from a contract", namely, the contract of dissolution dated
16-11-74. It was argued that the 1st plaintiff could not claim any injunction or damages
unless reliance was placed on the said contract and hence the suit was barred by Section
69(2). For the purpose of deciding this point, it is necessary to go into the question as to what
the legislature meant when it used the words 'arising from a contract' in Section 69(2) of
Indian Partnership Act,1932 Various Cases have been decided on this point favouring both

8
1952 AIR 119

Page 18 of 26
Plaintiff’s and Defendant’s it will be necessary to refer to the cases To find the legislative
intent Of the Act In Commissioner of Income-tax, A. P. v. Jayalakshmi Rice and Oil Mills
Contractor Co9. this Court refused to refer Report of Special Committee formed for
examining the draft Indian Partnership Bill ,1932 and refused to peruse it for construing
Section 59 of the Partnership Act. But This Bench believes that decision is no longer good
law as it was clearly dissented on this aspect in the judgment of the Constitution Bench in
R.S. Nayak v. A.R. Antulay10 Even after this judgement the Court referred to the Report of
similar Committees or Commissions

The English Law which was against use of this material changed its decision completely
after Pepper v. Hartin favour of admissibility of such material. The Indian Courts therefore
In in P. V. Narasimha Rao v. State11 accepted a restricted view of the English Decision
where they said that such Reports can be looked into for the purpose of knowing the
Legislative intent of the Act, but not for interpreting the provisions unless there is ambiguity.

In this case we find that there is considerable ambiguity in Section 69(2) as to what is
meant by the words 'arising out of a contract' due to the fact that the provision does not say
whether the contract in Section 69(2) is one entered into by the firm with the defendant
or with somebody else who is not a defendant, nor to whether it is a contract entered
into with the defendant in business or unconnected Para 17 read so the report states that
The English precedent in so far as it makes registration compulsory and imposes a penalty for
nonregistration has nor been followed due to Circumstances of India and Registration was
made voluntary but civil Court; and any partner who is not registered will be unable to
enforce his claims either against third parties or against fellow partners. Indian Courts have
Deviated from the Position and Para 18 and 19 of Report gives Further Clarity The Report
states in paras 18, 19 as follows: Once registration has been effected the statement recorded
in the register regarding the Constitution of the firm will be conclusive proof of the facts
therein contained against the partners making them and no partner whose name is on the
register will be permitted to deny that he is a partner - with certain natural and proper
exceptions. This should afford a strong protection to persons dealing with firms against false
denials of partnership and the evasion of liability by the substantial members of a firm".

9
SC [1971] 79 ITR 549
10
1984 CriLJ J613
1984 2 SCC 183
11
1998 CriLJ 2930

Page 19 of 26
 The English precedent referred to in para 17, has been partly followed in the sense that the
right to file Suit for cases which arose due to non registration is Followed but no penalties for
the right that is sought to be enforced by the unregistered firm and which is barred must be a
right arising out of a contract with a third party - defendant only in respect of the firm's
business transactions.

The above Report and provisions of the English Acts, in our view, make it. clear that the
purpose behind Section 69(2) was to impose a disability on the unregistered firm or its
partners to enforce rights arising out of contracts entered into by the plaintiff firm with third
party-defendant in the course of the firm's business transactions. In Raptokos Brett and
Co12, it was clarified that that the contractual rights which are sought to be enforced by the
plaintiff firm and which are barred under Section 69(2) are rights arising out of the contract"
and that it must be a contract entered Into by the firm with the third party defendants.

. The defendants in the present case are third parties to of dissolution dated 16-11-74and as
per Section 2(d) of Partnership Act third party means people who are not partners. Though
their mother, Kamla Devi was a party to the contract of dissolution. In fact, the said contract
of dissolution cannot be a contract within the scope of the Act.to which even the present 1st
plaintiff firm or its partners or the 2nd plaintiff were parties. Their father Moolchand was a
party and his right to the trade mark devolved into plaintiffs. The real crux of the question is
that the legislature when it used the words "arising out of a contract" in Section 69(2), it is
referring to a contract entered into in course of business transactions by the unregistered
plaintiff firm with its customers-defendants and the idea is to protect those in commerce who
deal with such a partnership firm in business. Such third parties who deal with the partners
ought to be enabled to know what the names of the partners of the firm are before they deal
with them in business. Further Section 69(2) is not attracted to any and every contract
referred to in plaint and only applies to business transactions and Trademark Cannot be
Included in Business transactions

For example, if the plaint filed by the unregistered firm refers to the source of the firm's
title to a motor car and states that the plaintiff has purchased and received a Motor Car
from a foreign buyer under a contract and that the defendant has unauthorizedly
removed it from the plaintiff firm’s possession, - it is clear that the relief for possession
against defendant in the suit does not arise from any contract with defendant entered
into in the course of plaintiff firms' business with defendants but is based on the alleged
12
AIR1998 SC 3085

Page 20 of 26
unauthorised removal of the vehicle from the plaintiff firm's custody by the defendant.
In such a situation, the fact that the unregistered firm has purchased the vehicle from
somebody else under a contract has absolutely no bearing on the right of the firm to sue
the defendant for possession of the vehicle. Such a suit would be maintainable and
Section 69(2) would not be a bar, even if the firm is unregistered on the date of suit. In the
present case it is unauthorised use Of Trademark which is Not a Right which arose due to
Contract between the Parties.

. Held - For the aforesaid reasons, it is clear that the suit is based on infringement of statutory
rights under the Trade Marks Act and common law principles of tort applicable to passing-off
actions. And is not the suit arising from enforcement of any rights arising out of a contract
entered into by or on behalf of the unregistered firm with third parties in the course of the
firm's business transactions. The suit is therefore not barred by Section 69(2). Of Indian
Partnership Act as it does not deal with Business transactions but trademark rights.

Case 4) Umesh Goel vs Himachal Pradesh Cooperative Group Housing Society (AIR
2016 SC 3116),

Facts- The Respondent/Cooperative Group Housing Society invited tenders for construction
of 102 dwelling units with basement. The appellant which was an unregistered partnership
applied for tender on 6-05-1998. The appellant was successful bidder and was awarded
contract worth Rs. 9.80Crores. The Appellant was granted letter of Intent and therefore on 9-
08-1998 the appellant company first raised its bills. the agreement for building 102 dwellings
was signed in the year 1999. However there. A dispute arose as between the Appellant and
the Respondent which necessitated the appellant to move the High Court by way of an
application under Section 9 of the Arbitration and Conciliation Act, 1996 to restrain the
Respondent from dispossessing the Appellant from the worksite till the work executed by the
Appellant is measured by the Commissioner to be appointed by the Court. A Commissioner
was also appointed by the High Court. The Appellant filed another application under Section
9 of the Act to restrain the Respondent from operating its bank accounts and from
dispossessing the Appellant. An arbitrator/an advocate named Mrs. Sangeeta Tomar was
appointed by the Respondent to adjudicate the dispute between them. As the appointment
came to be made by the Respondent, though, the Appellant earlier moved the High Court by
way of an arbitration application under Section 11(5) of the Act for appointment of an
independent arbitrator, the same was subsequently withdrawn. The Appellant participated in

Page 21 of 26
the arbitration proceedings before the arbitrator appointed by the Respondent. The claim of
the Appellant was allowed and the arbitrator passed the award on 05.05.2005 wherein the
claim of the appellant was allowed to the extent of Rs. 1,36,24,886.08 along with interest at
the rate of 12% from 01.06.2002 till the date of the award and further interest from the date of
award till its payment at the rate of 18% per annum. While resisting the claim of the
Appellant, the Respondent did not specifically raise any plea under Section 69 of the
Partnership Act, 1932 and later challenged the award before the High Court under Section 34
of Arbitration and Conciliation Act,1996 by filing an application which was dismissed by the
Single Judge by an order. The Respondent filed Review Application which was also
dismissed by the Single Judge. As against these orders, the Respondent preferred appeals.
Pending disposal of the appeals, an interim order was passed directing the Respondent to
deposit 50 percent of the amount.

Issue- Whether the expressions "other proceedings" contained in Section 69(3) of the
Partnership Act,1932 will include Arbitral proceedings and can be equated to a suit filed in a
Court and thereby the ban imposed against an unregistered firm can operate in the matter of
arbitral proceedings?

Arguments of Parties

Mr. Dhruv Mehta – Counsel for Appellants

In his submissions after drawing our attention to Section 69 which is stated below

1)No suit to enforce a right arising from a contract or conferred by this Act shall be instituted
in any Court by or on behalf of any person suing as a partner in a firm against the firm or any
person alleged to be or to have been a partner in the firm unless the firm is registered and the
person suing is or has been shown in the Register of Firms as a partner in the firm.

(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on
behalf of a firm against any third party unless the firm is registered and the persons suing are
or have been shown in the Register of Firms as partners in the firm.

(3) The provisions of sub-sections (1) and (2) shall apply also to a claim to set-off or other
proceedings to enforce a right arising from a contract, but shall not affect—

(a)the enforcement of any right to sue for the dissolution of a firm or for accounts of a
dissolved firm or any right or power to realise the property of a dissolved firm, or

Page 22 of 26
(b)the powers of an official assignee, receiver or Court under the Presidency-towns
Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, to realise the property of an
insolvent partner.

He drew our attention to Section 69(3) of the Partnership Act contended that when sub
sections (1) and (2) are read in to sub section (3) of Section 69, the expression "other
proceedings" mentioned in the said sub section (3) should be with reference to other
proceedings connected with a suit in a Court and cannot be read in isolation. He contented
that if it is read in that sense the expression "other proceedings" in sub section (3) can have
no relevance nor referable to Arbitral proceedings in isolation. He further contended that
going by the plain reading of the Statute and if the golden rule of construction is applied, an
arbitrator by himself is not a court for the purpose of Section 69 of the Statute and there is a
vast difference between an arbitrator and the Court, that though an arbitrator may exercise
judicial powers, he does not derive such powers from the State but by the agreement of the
parties under a contract and, therefore, he cannot be held to be a Court for the purpose of
Section 69 of the Partnership Act .

While referring to Section 36 of the 1996 Act , he submitted that it is only a statutory fiction
by which for the purpose of enforcement, the award is deemed to be a decree and it cannot be
enlarged to an extent to mean that by virtue of the said award to be deemed as a decree, the
arbitrator can be held to be a Court. Lastly, it was contended by him that in order to invoke
Section 69(3), three mandatory conditions are required to be fulfilled, namely, that (a) there
should be a suit and the other proceedings should be intrinsically connected to the suit, (b)
such suit should have been laid to enforce a right arising from the contract and (c) such a suit
should have been filed in a Court of law.

Mr. Amarendra Saran- Counsel for Respondents -He submitted that the expression "other
proceedings" will include arbitral proceedings and that the foundation for it must only be
based on a right in a contract. In support of the said submission, learned senior counsel
contended that this Court has held while interpreting Section 14 of the Limitation Act that
arbitral proceedings are to be treated on par with civil proceedings. He also submitted that
under Section 2(a) of the Interest Act , arbitral proceedings have been equated to regular suits
and, therefore, the expression "other proceedings" in Section 69(3) of the Partnership Act
should be held to include an Arbitral Proceeding on par with a suit and therefore, contented
that the arbitrator should be held to be a Court and the proceedings pending before it are to be

Page 23 of 26
treated as a suit and consequently other proceedings. By referring to Sections 35 and 36 of
the 1996 Act where an award of the arbitrator has been equated to a decree of the Court and
applicability of Civil Procedure Code for the purpose of execution has been prescribed, the
learned Senior Counsel contended that the arbitral proceedings should be held to be civil
proceedings before a Court.

Held -It was held as to how a reading of Section 69 as a whole does not permit of any
interpretation that would cover Arbitral proceedings, filing of a suit in a Court and that too in
respect of a right under a contract governed by the provisions of the Partnership Act, 1932
especially after the coming into force of the Arbitration and Conciliation Act, 1996 and the
proceedings governed by the special features contained in the said Act. Therefore, any
interpretation made under the Limitation Act while construing Section 14 to treat Arbitral
proceedings on par with civil proceedings could not be applied to the case on hand. In the
absence of such a specific provision, it will not be appropriate to import the definition Clause
under Section 2(a) of the Interest Act to the Partnership Act in order to apply Section 69(3)
of the Partnership Act, 1932. Going by Sections 35 and 36 of the Act, 1996 it could not be
held that the entire arbitral proceeding was a Civil Court proceeding for the purpose of
applicability of Section 69(3) of the Act, 1932. Having regard to conclusion that Arbitral
Proceedings will not come under the expression "other proceedings" of Section 69(3) of the
Act, 1932, the ban imposed under the said Section 69 can have no application to arbitral
proceedings as well as the Arbitration Award. The impugned order is set aside and the order
of division bench is restored.

Case 5) Kamal Pushp Enterprise vs DR Construction (AIR 2000 SC 2676)

Facts - Gas Authority of India Ltd., at Vijaypur, entered into a contract with the appellant to
execute certain works and the appellant in its turn had entered into a separate contract with
the respondent, indisputably an unregistered firm for carrying out the work, the execution of
which was undertaken by the appellant under its contract with 'GAIL. Disputes arose between
the appellant and the respondent. Thereupon, the appellant appears to have, invoking Section
8(2) of the Arbitration Act, 1940 , served a notice on the respondent seeking for consent for
the appointment of an Arbitrator, in terms of the arbitration clause, out of five proposed
Arbitrators and the respondent gave its consent for the appointment of a named Advocate, as
the Arbitrator. 3. The Arbitrator entered into the reference and the appellant filed its claim
and the respondent apart from opposing the claim of the appellant stated its own claim. The

Page 24 of 26
Arbitrator passed an Award in favour of the respondent and Suo moto filed the award before
the trial court under Section 14(2) of the Arbitration Act. When the Court issued notice to
both the appellant and the respondent, it is at this stage the appellant filed various objections,
one of which was based upon Section 69 of Indian Partnership Act,

Issue - 'Whether the proceedings regarding making the award rule of Court are maintainable
as the non-applicant firm is not a registered partnership firm under Section 69 of the
Partnership Act?

Arguments for Appellants – Represented by Counsel – Sanjay Parikh

He also contended that the courts below ought to have sustained the objection of the appellant
based upon Section 69 of the Partnership Act holding the proceedings to be barred on account
of the respondent being an unregistered firm. According to the learned counsel the
proceedings arising out of an award are certainly proceedings arising out of the agreement
between parties and would fall under the category of ''other proceedings envisaged in
Section 69 of the Partnership Act. Strong reliance was placed in this regard upon the
decision of this Court reported in Jagdish Chandra Gupta Vs. Kajaria Traders (India) ltd.
[AIR 1964 SC 1882); Raptakos Brett & Co. Ltd. Vs. Ganesh Property [(1998) 7 SCC 184，

Arguments for Respondents. - Represented by Advocate – Vimal Dave

He has contended that the provisions of Section 69 of the Partnership Act are no impediment
to the respondent getting relief as a defendant in the hands of the Arbitrator in a proceeding
initiated by the appellant itself and as long as the respondent was only a respondent and had
not initiated or commenced any proceedings of its own, there is no merit in the preliminary
objection raised, which, according to the learned counsel, has been rightly overruled.

Judgement - Given by Justice Doraiswamy Raju

The court referred to precedents in the cases of Jagdish Chandra Gupta Vs. Kajaria Traders
(India) ltd. [AIR 1964 SC 1888) where this Court construing the words, ''a claim of set off or
other proceeding to enforce a right arising from a contract .., it was held that 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) other proceedings and while the section first provides for exclusion of suits in sub-
sections (1) & (2) of Section 69 the same ban is also applied to a claim of set off and other
proceedings to enforce any right arising from a contract and also construed the words other
proceedings in sub-section (3) of Section 69 giving them their full meaning untrammelled by

Page 25 of 26
the words a claim of set off, and held that the generality of the words ''other proceedings are
not to be cut down by the latter words. The said case, being one concerning an application
before Court under Section 8(2) of the Arbitration Act, 1940 in the light of the arbitration
agreement, this Court finally held that since the arbitration clause formed part of the
agreement constituting the partnership the proceeding under Section 8(2) was in fact to
enforce a right which arose from a contract/agreement of parties. The prohibition contained in
Section 69 is in respect of instituting a proceeding to enforce a right arising from a contract in
any Court by an unregistered firm, and it had no application to the proceedings before an
Arbitrator and that too when the reference to the Arbitrator was at the instance of the
appellant itself. If the said bar engrafted in Section 69 is absolute in its terms and is
destructive of any and every right arising under the contract itself and not confined merely to
enforcement of a right arising from a contract by an unregistered firm by instituting a suit or
other proceedings in Court only, it would become a jurisdictional issue in respect of the
Arbitrators power, authority and competency itself, undermining thereby the legal efficacy of
the very award, and consequently furnish a ground by itself to challenge the award when it is
sought to be made a rule of Court. The case before us cannot be said to be one such and the
learned counsel for the appellant though was fully conscious of this fact, yet tried to assert
that it is open to the appellant to take up the objection based upon Section 69 of the
Partnership Act , at any stage even during the post award proceedings to enforce the award
passed. It has also been held that the award is, in fact, a final adjudication of a Court of the
party’s own choice and until impeached upon sufficient grounds in an appropriate
proceeding, award which is on the face of it regular, is conclusive upon the merits of the
controversy submitted for arbitration. Consequently, the post award proceedings cannot be
considered by any means, to be a suit or other proceedings to enforce any rights arising under
a contract

Page 26 of 26