R.C. Lahoti, J.
1. The plaintiff has come up in appeal aggrieved by an order of the trial Court holding an application under Section 20 of the Arbitration Act, 1940 to be not maintanable on account of bar created by Section 69(1) of Partnership Act, 1932.
2. The plaintiff and defendants entered into a partnership on 15-12-1976. It appears; that the defendant No. 1 received certain payments relating to partnership and misappropriated the amount to his own use without distributing the same in accordance with the terms of partnership. On 1-6-1979, an application under Section 20 of the Arbitration Act was filed seeking filing of the partnership agreement, incorporating the arbitrationagreement, in the Court and, thereafter, taking account through arbitration of the amount due and payable to the plaintiff and awarding the same to the plaintiff.
3. The plaintiff also moved an application seeking an interim injunction restraining the defendant No. 1 from realising any other payments due to the partnership.
4. The defendant No. 1 filed a reply to the applications and took an objection therein that the partnership being not registered, the application was not maintainable. Therein, it was was also stated that the partnership had stood dissolved.
5. Soon on the filing of the reply and having noticed the objection raised by the defendant No. 1, the plaintiff filed an application (I.A. No. 4) on 27-6-1979 seeking an amendment in the main application that the partnership having been dissolved as per the stand taken by the defendant No. 1, himself, the plaintiff was entitled to settlement of accounts consequent to the dissolution of partnership and to realisation of the amount due to him.
6. Admittedly, this application for amendment remained pending and the trial Court having framed preliminary issues as to the maintainability of the main application, heard the parties on it and directed the application to be dismissed as stated hereinabove.
7. The learned counsel for the appellant has submitted that the application under Section 20 of the Arbitration Act was saved by Clause (a) of Sub-section (3) of Section 69 of the Partnership Act inasmuch as the plaintiff was seeking enforcement of his right to sue for accounts of a dissolved firm and the trial Court should not have dismissed his application without permitting the amendment prayed for.
8. The trial Court definitely erred in overlooking I.A. No. 4 and adjudicating upon the maintainability of the main application. The amendment was prayed for at a preliminary stage of the proceedings and possibility there could have been no objection to permit the amendment because the pleawas sought to be raised on the basis of a plea taken in the defence and further the basic structure of the main application remained the same. Really speaking, the amendment was an amplification of the pleadings already raised. The application deserved to be allowed and is hereby allowed.
9. The English Law of Partnership makes registration of firms compulsory and imposes a penalty for nonregistration. That drastic approach has not been followed in the Indian statute. Still, a firm not registered has been attached with disability to enforce its claims either against third parties or against fellow partners. One exception to this disability recognised by the Indian Law is that any unregistered partner in any firm registered or unregistered may sue for dissolution of the firm. This exception is made on the principle that registration is designed primarily to protect third parties and the absence of registration need not prevent the disappearance of an unregistered or imperfectly registered firm. (See report of Special Committee). In Chhotelal v. Gopaldas, AIR 1940 Nag 78, the scheme underlying Section 69 was summed up in the following words :--
'It is impossible to legislate entirely against unregistered partnership, but the intention of the Legislature was to discourage nonregistration as far as possible; to prohibit the enforcement of any right to sue for the dissolution of a firm, even though unregistered, or for accounts in the case of an unregistered firm which had been dissolved, would not have been practicable, since the moneys in possession of such a firm would not then be amenable to any realisation after the firm had in fact been dissolved, or the affairs of the firm were in such a state as to render dissolution in fact inevitable. It is for this reason that Sub-section (3)(a) has been enacted.'
10. If the Legislature has chosen to specifically save the enforcement of any right to sue for the dissolution of a firm or for account of a dissolved firm or any right or power to realise the property of a dissolved firm from the rigour of the disability attaching with non-registration, it is difficult to conceive that the Legislature would haveintended the disability to operate if one mode of enforcement of right was pursued but not when any other mode was pursued. Ordinarily, the parties approach the Court for enforcement of their rights and whenever they have a right to sue. However, when two persons agree to have their differences settled through arbitration, what they really mean is that the actual decision of the dispute will rest with a third person called an arbitrator. Still, the Court may have to intervene to regulate the arbitration proceedings or to give the award of the arbitrator sanction of law. The taw of Arbitration results in withdrawal of the dispute from the ordinary courts enabling the parties to substitute a domestic Tribunal. Nevertheless, the award has to be made a rule of the Court followed by a decree to be enforceable. When the proceedings are intiated under Section 20 of the Arbitration Act, they begin with the intervention of the Court and they end with the intervention of the Court when the arbitration award is made a rule of the Court. When the end result sought to be achieved is the dissolution of a firm or account of a dissolved firm or realisation of the property of a dissolved firm, even if the proceedings have been initiated under Section 20 of the Arbitration Act on account of an arbitration agreement being available between the parties, the party is in substance enforcing his right to sue for achieving the end result.
11. The learned counsel for the respondents has placed strong reliance on Jagdish Chandra v. Kajaria Traders, AIR 1964 SC 1882 and a Division Bench decision in Iqbal Singh v. Ram Narain, AIR 1977 All 352, in support of his submission that an application under Section 20 of the Arbitration Act is also hit by Section 69(1) of the Partnership Act.
12. In Jagdish Chandra's case (AIR 1964 SC 1882) (supra), 'K' and 'J' were partners. The partnership agreement contained an arbitration clause. Each partner was to supply a certain quantity of manganese ore to enable export. 'J' failed to carry out his part of the partnership agreement. 'K' wrote to 'J' for appointment of arbitrator to which 'J' did not agree. 'K' filed an application under Section 8(2) of the Arbitration Act seeking appointment ofarbitrator. Their Lordships held that the arbitration clause was a part of the agreement and the proceeding before the contract. Their Lordship held the proceeding to be a nature covered by Sub-sections (1) and (2) of Section 69 of the Partnership Act and not those mentioned as exceptions in Sub-section (3) and Sub-section (4). Undisputedly, it was not a case where 'K' had sought for dissolution of the firm or accounts of a dissolved firm etc. within the meaning of Sub-section (3) of Section 69.
13. In Iqbal Singh's case (AIR 1977 All 352) (supra), the Division Bench of Allahabad High Court applied Jagdish Chandra's case (AIR 1964 SC 1882) to an application under Section 20 of the Arbitration Act.
14. Application under Section 8 and thoseunder Section 20 of the Arbitration Act aredifferent and have a contrasting distinction.As held by the Division Bench of AllahabadHigh Court in Union of India v. GorakMohan, AIR 1964 All 477.
'The province of Section 3 and Section 20 is quite distinct. The former confers power upon the Court to appoint an arbitrator on an application under Section 8 where the parties do not concur in the appointment of an arbitrator and the latter entitles party to apply for filing of the arbitration agreement in Court and empowers the Court to make an order of reference to the arbitrator appointed by the parties and in the absence of such appointment to the arbitrator appointed by it. In the former case, after the Court has appointed an arbitrator, it is the parties who refer the dispute to him. In the latter case, it is the Court which refers the dispute. Where on an application under Section 8 the lower Court not only appointed an arbitrator but also referred the dispute to him, the order referring the dispute is without jurisdiction.'
Thus under Sections 8 and 9 of the Arbitration Act, the Court becomes defunctus officio having appointed an arbitrator. It cannot make a reference. Section 20 contemplates making a reference. In the context of Section 69 of the Partnership Act, an application under Section 8 or 9 merely seeking appointment of arbitrator can never be an application for the enforcement of any right to sue contemplated by Sub-section (3) but an application under Section 20 of the Arbitration Act in the context of the relief prayed for may amount to enforcement of any right to sue. This distinction with due respect to the Hon'ble Judges deciding Iqbal Singh's case (AIR 1977 All 353) (supra) has been lost sight of. In the opinion of this Court, Jagdish Chandra's case (AIR 1964 SC 1882) (supra) also does not have applicability to an application under Section 20 of the Arbitration Act.
15. In the present case, the plaintiff/ appellant has come to the Court for the relief of accounts of a dissolved firm, specially when the impugned application is read as amended. The application is saved by Clause (a) of Sub-section (3) of Section 69 of the Partnership Act and the non-registration of the firm does not have any effect on the maintainability of the application.
16. I am fortified in the view which I have taken by the decision of Delhi High Court in Jagat Mittar Saigal v. Kailash Chander Saigal, AIR 1983 Delhi 134.
17. As a result, the appeal is allowed. The impugned order of the Court below is set aside. It is directed that the trial Court shall proceed with the hearing of the application in accordance with law. There shall be no order as to costs of this appeal.
18. The plaintiff/appellant shall incorporate the amendment prayed for vide I.A. No. 4/79 in the main application under Section 20 of the Arbitration Act, subject to payment of Rs. 50/- by way of costs to the defendant No. 1.
19. Parties through their respective counsel are, directed to appear before the trial Court on 26-11-1990.