29 April 1964
Supreme Court
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JAGDISH CHANDER GUPTA Vs KAJARIA TRADERS (INDIA) LTD.

Case number: Appeal (civil) 791 of 1962


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PETITIONER: JAGDISH CHANDER GUPTA

       Vs.

RESPONDENT: KAJARIA TRADERS (INDIA) LTD.

DATE OF JUDGMENT: 29/04/1964

BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. WANCHOO, K.N. GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA

CITATION:  1964 AIR 1882            1964 SCR  (8)  50

ACT: Arbitration    Act-Partnership    agreement-Provision    for referring   to   arbitration-Partnership   not   registered- Application in the High Court for appointment of arbitrator- If  maintainable-Interpretation of statute-Ejusdem  Generis- Noscitur a sociis-Indian Partnership Act, 1932 (9 of  1932), s. 69-Arbitration Act, 1940 (Act 10 of 1940), s. 8(2).

HEADNOTE: The respondent entered into a partnership agreement with the appellant.   But  this  was not registered.   There  was  an arbitration clause sti- 51 pulating that in case of dispute the matter will be referred for  arbitration in accordance with Arbitration  Act,  1940. Dispute  having  arisen  between  the  respondent  and   the appellant  the former wrote to the latter stating  that  the dispute be referred for arbitration and that the  respondent has appointed one K as the sole arbitrator.  On the  failure of  the appellant to agree to this the respondent  filed  an application under s. 8(2) of the Indian Arbitration Act  for the appointment of arbitrator.  The application was heard by a  Division  Bench  of  the  High  Court  before  which  the appellant contended that s. 69(3) of the Indian  Partnership Act,  1932  afforded  a  bar to  the  petition  because  the partnership  was not registered.  One of the  Judges  upheld the  contention while the other rejected it and  the  matter was referred to another Judge who held that the  application was  competent.   The present appeal was  filed  by  special leave granted by this Court. HELD:--(i)  Thai since the arbitration clause formed 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 one views the contract  between the parties as a whole or one  views  only the  arbitration clause it is impossible to think  that  the right  to  proceed to arbitration is not one of  the  rights which  are  founded on the agreement of  the  parties.   The words  of s. 69(3) "a right arising from a contract" are  in either sense sufficient to cover the present matters.

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(ii) Interpretation  ejusdem  genuris or noscitur  a  sociis need not always be made when showing particular classes  are followed try general words.  Before the general words can be so  interpreted  there  must be a  genus  constituted  or  a category disclosed with reference to which the general words can  and  are  intended to be  restricted.   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  dependent  in suit. Allen v.  Emerson, (1944) 1 K.B. 362, referred to. Hafiz  Qamar Din v. Nur Din, A.I.R. 1936 Lah.  136,  Babulal Dhan  Dhania  v. M/s.  Gautam & Co. A.I.R.  1950  Cal.  341, Kottamasu  sreemannarayanmurthy v. Chokka Arjanadtu,  A.I.R. 1939 Mad. 145, Jamal v.   Firm Umar Haji Karim, I.L.R. 1943 Nag. 540, and Ram Lal Harnam Das  Y. Bal Kishan, A.I.R. 1957 Punj. 159, distinguished. (iii)  The words "other proceeding" in sub-section (3)  must receive their full meaning untramelled by the words "a claim of  set off.   The latter words neither intend nor can be  construed to cut down the generality of the words "other  proceeding". The   sub-section  provides  for  the  application  of   the provisions of sub-sections (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 subsections (3) and (4). 52

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 791 of 1962. Appeal  by special leave from the judgment and  order  dated March 22, 1960, of the Bombay High Court in Award No. 18  of 1959. S.   T. Desai and I. N. Shroff, for the appellant. B.   C. Misra, for the respondent. April 29, 1964.  The Judgment of the Court was delivered by HIDAYATULLAH  J.-This  appeal by special leave  is  directed against an order of the High Court of Bombay dated March 22, 1960 in its ordinary original civil jurisdiction.  The facts are  simple.   By  a letter dated  July  30,  1955,  Messrs. Kajaria rraders (India) Ltd., who is the respondent here and Messrs.    Foreign  Import  and  Export  Association   (sole proprietory  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.  We are  not  concerned with the terms of the agreement but with one of its  clauses which provided: "That  in  case of dispute the matter will be  referred  for arbitration in accordance with the Indian Arbitration Act." The  company  alleged that Jagdish Chander Gupta  failed  to carry out his part of the partnership agreement.  After some correspondence,  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

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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 corn- 53 pany  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. Jagdish  Chander Gupta appeared and objected inter  alia  to the institution of the petition.  Two grounds were urged (i) that  s. 8(2) of the Indian Arbitration Act was  not  appli- cable  as it was not expressly provided in  the  arbitration clause  quoted  above  that the arbitrators were  to  be  by consent of the parties and (ii) that s. 69(3) of the  Indian Partnership Act, 1932 afforded a bar to the petition because the partnership was not registered.  The petition was refer- red by the Chief Justice to a Divisional Bench consisting of Mr. Justice Mudholkar (as he then was) and Mr. Justice Naik. The  two learned Judges agreed that in the circumstances  of the case an application under s. 8 of the Indian Arbitration Act was competent and that the court had power to appoint an arbitrator.  They disagreed on the second point: Mr. Justice Mudholkar  was  of the opinion that s. 69(3) of  the  Indian Partnership  Act  barred the application while  Mr.  Justice Naik  held  otherwise,  The case was then  referred  to  Mr. Justice K. T. Desai (as he then was) and he agreed with  Mr. Justice  Naik with the result that the application was  held to be competent. In this appeal it was not contended that the conclusions  of the learned Judges in regard to s. 8(2) were erroneous.  The decision was challenged only on the ground that s. 69(3) was wrongly  interpreted and the bar afforded by it was  wrongly disallowed.  Section 69 of the Indian Partnership    Act may be reproduced here : "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. 54 (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-sections(1) and (2)      shall apply also to a claim ofset-off or other      proceeding to enforce a rightarising 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. (4)  This section shall not apply- (a)  to firms or to partners in firms which have no place of business  in the territories to which this Act  extends,  or whose  places  of  business  in  the  said  territories  are situated  in areas to which, by notification  under  section 56, this Chapter does not apply, or

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(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  Cause  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 incidental to or arising from any such suit or claim ’Me section, speaking generally, bars certain suits and pro- ceedings  as  a consequence of  non-registration  of  firms. Sub- 55 s.   (1)  prohibits  the  institution  of  a  suit   between partners  inter se or between partners and the firm for  the purpose  of  .enforcing a right arising from a  contract  or conferred  by  the  Partnership  Act  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.   Sub-s.  (2) similarly  prohibits  a  suit by or on behalf  of  the  firm against  a third party for the purpose of  enforcing  rights arising  from a contract 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.  In the third sub-section  a claim  of set-off which is in the nature of a counter  claim is also similarly barred.  Then that subsection bars  "other proceedings".   The only doubt that has arisen in this  case is  regarding  the  meaning to be given  to  the  expression "other  proceeding".   One way to look at the matter  is  to give  these  words their full and natural  meaning  and  the other  way is to cut down that meaning in the light  of  the words that -precede them.  The next question is 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. Mr.  Justice  Mudholkar in reaching his conclusion  did  not interpret the expression "other proceeding" ejusdem  generis with  the words "a claim of set-off".  He held further  that the  application  was to enforce a right  arising  from  the contract of the parties.  Mr. Justice Naik pointed out  that the  words  used were not "any proceeding"  nor  "any  other proceedings" but "other proceeding" and that as these  words were juxtaposed with ’a claim of set off’ they indicated  a, proceeding  of  the nature of a claim in  defence.   On  the second  point  Mr.  Justice Naik held that this  was  not  a proceeding  to enforce a right arising from a  contract  but was  a claim for damages and such a claim, could  be  enter- tained  because  it was based on something which  was  inde- pendent  of the contract to supply ore.  He held  that  the, right which was being enforced was a right arising from  the Arbitration  Act and not from the contract of  the  parties. Mr.  Justice K. T. Desai agreed with most of  these  conclu- sions and suggeted that the words preceding "other proceed- 56 ing",  namely, "a claim of set-off" had  ’demonstrative  and limiting effect’.  He seems to have ascertained the  meaning of  the  expression "other proceeding" by reference  to  the meaning  of  the  words  "a claim  of  set  off",  which  he considered were associated with it. Ile  first  question to decide is whether the  present  pro- ceeding is one to enforce a right arising from the  contract of the parties.  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

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the   arbitration  clause  is  a  part  of   the   agreement constituting   the  partnership  it  is  obvious  that   the proceeding  which is before the court is to enforce a  right which arises from a contract.  Whether we view the  contract between  the  parties as ;a whole or view  only  the  clause about arbitration, it is impossible to think that the  right to proceed to arbitration is not one of the rights which are founded on the . agreement of the parties.  The words of  s. 69(3) "a right arising from a contract" are in either  sense sufficient to cover the present matter. It  remains, however, to consider whether by reason  of  the fact that the words "other proceeding" stand opposed to  the words  "a claim of set-off" any limitation in  their  eaning was contemplated.  It is on this aspect of the case that the learned  Judges have seriously differed.  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 wordsbut it is  not necessary that this rule must alwavs apply. The nature of the special words and the general words must e considered before the rule is applied.  In Allen v. Emerson  (1),  Asquith  J.  gave  interesting  examples   of particular  words  followed  by  general  words  where   the Principle  of ejusdem generis might or might not apply.   We ink   that  the  following  illustration  will   clear   any difflculty.  In the expression "books, pamphlets, newspapers and other (1)  [i944] 1 K.B. 362. 57 documents"  private  letters  may not be  held  included  it ’other  documents’ be intepreted 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’.   It follows,  therefore, that interpretation ejusdem generis  or noscitur a sociis need not always be made when words showiig particular  classes are followed by general  words.   Before the  general  words can be so interpreted there  must  be  a genus constituted or a category disclosed with reference  to which  the  general  words  can  and  are  intended  to   be restricted.  Here the expression "claim 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.   In respect of the first sub-secton  he  could give  only two examples.  They are (i) a claim by a  pledger of goods with an unregistered firm whose goods are  attached and who has to make an objection under 0. 21 r.   58 of the Code of Civil Procedure and (ii) proving a debt    before   a   liquidator.    The   latter   is    not raised as a defence  and cannot belong to the same genus as a "claim  of set-off".  The former can be made to fit but by a stretch of some  considerable imagination.  It is difficult for Lis  to accept that the Legislature was thinking of such far-fetched things  when it spoke of "other proceeding" ejusdem  generis with a claim of set-off.

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Mr. Justice Naik asked the question that if all  proceedings were to be excluded why was it not considered suffi cient to speak of proceedings along with suits in sub-ss. (1) and (2) instead  of framing a separate subsection about  proceedings and coupling ’other proceeding,’ with ’a 58 the  search  for the answer in the’ scheme  of  the  section itself  gives the clue.  The section thinks in terms of  (a) suits and (b) claims of set-off which are in a sense of  the nature  of suits and (c) of other proceedings.  The  section first  provides  for exclusion of suits in sub-ss.  (1)  and (2).   Then it says that the same ban applies to a claim  of set-off and other proceeding to enforce a right arising from a  contract.   Next it excludes the ban in  respect  of  the right  to  sue (a) for the dissolution of a  firm,  (b)  for accounts of. a dissolved firm and (c) for the realisation of the property of a dissolved firm.  The emphasis in each case is  on  dissolution  of the firm.  Then  follows  a  general exclusion of the section.  The fourth sub-section says  that the  section  as  a whole, is not to apply to  firms  or  to partners  and firms which have no place of business  in  the territories  of  India  or  whose  places  of  business  are situated  in the territories of India but in areas to  which Chapter  VII is not to apply and to suits or claims  of  set off  not  exceeding  Rs. 100 in value.   Here  there  is  no insistence   on  the  dissolution  of  the  firm.    It   is significant  that in the latter part of clause (b)  of  that section the words are "or to any proceeding in execution  or other proceeding incidental to or arising from any such suit or claim" and this clearly shows that the word  "proceeding" is not limited to a proceeding in the nature of a suit or  a claim of set-off.  Subsection (4) combines suits and a claim of set-off and then speaks of "any proceeding in  execution" and "other proceeding incidental to or arising from any such suit  or  clainm"  as  being outside the  ban  of  the  main section.   It  would  hardly have been necessary  to  be  so explicit if the words other  proceeding  in  the main section  had  a  meaning  as restricted  as  is  suggested  by  the  respondent.   It  is possible  that the draftsman wishing to make  exceptions  of different  kinds in respect of suits, claims of set-off  and other proceedings grouped suits in sub-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.  For convenience  of drafting this 59 scheme was probably followed and nothing can be spelled  out from the manner in which the section is sub-divided. Some  cases noticed by the High Court were cited to  us  but none of them appears to be really in point.  In Hafiz  Qamar Din v. Nur Din(’) and Babutal Dhandhania v. Messrs.  Gauttam and  Co.(’) proceedings were started on an award, in one  to make  it a rule of the Court and in the other to get it  set aside.   These cases are distinguishable because  they  deal with awards and it is not necessary to decide whether  after an  award the proceeding is one to enforce a  right  arising from  a  contract.  We do not refer to them.   In  Kottamasu Sreemannarayanamuthy  and  another v.  Chakka  Arjanadu()  a petition for adjudication of a partner as insolvent was held to be a right arising not from, a contract but from statute. Here the right that is being enforced through the medium  of the  Arbitration  Act arises from the contract  between  the

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parties  and  is a part of it. In Jamal v.  Firm  Umar  Haji Karim  (4  )  the bar of s. 69(3)  was  claimed  during  the execution of a consent decree and was disallowed.  Grille C. J. observed that the expression ’other proceeding’ indicated something which was ’sui generis of a claim of set-off’.  If the  partners of an unregistered firm. go to  court  without either asking for a dissolution of the firm or dissolving it themselves  and  enter into an agreement and  compose  their differences  it is possible to say that the  enforcement  of the  consent  decree is no more than the  enforcement  of  a right arising from a contract and is within the ban.  It is, however, not necessary to decide this point here. in Ram Lal Harnam  Das  v. Pal Krishan and others()  it  was  expressly pointed  out that the expression ’other proceeding’  in  the third sub-section applied to proceedings of the nature of  a claim of set-off and nothing else.  This case cannot be said to interpret the sub-section correctly.  Similarly, Mahendra v.  Gurdeyal(’), which lays down that s. 69 does not  bar  a partner of an unregistered partnership firm from applying to the  court under s. 8 of the Arbitration Act  for  referring the dispute (1)  A.T.R 1936 Lah. 136. (3)  A.I.R. 1939 Mad. 145. (5)  A.I.R. 1917 Punjab 159. (2)  A.r.R. 1950 Cal. 391. (4)  I.L.R. 1943 Nag. 540. (6)  I.L.R. 30 Pat. 109. 60 between partners to arbitrator as provided in the  condition of  their  agreement,  cannot be  accepted  as  sound.   The ,reason  given by the Divisional Bench that as s. 69  allows dissolution  and  accounts of  unregistered  partnership  it cannot bar such an application appears to us to be not quite in   Point. In our judgment, the words ’other proceeding’ in sub- s.   (3) must receive their full meaning untramelled by the words ’a claim of set-off’.  The latter words neither intend nor can be construed to cut down the generality of the words ’other  proceeding’.   The  sub-section  provides  for   the application  of  the provisions of sub-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. Appeal allowed