Workman Finance Corp. vs Ghulam Ahmed Lone & anr.

(1) The petitioner filed an application u/s 20 of the Arbitration Act on 20111978, seeking a direction to the respondent to file the arbitration

agreement in Court and for a reference of the disputes which had arisen between the parties to the named arbitrator. In para I of the application, it

was averred that the petitioner is a partnership firm duly registered u/s 69 of the Partnership Act. In the objections filed by respondent No: I, it was

asserted inter alia that the firm is not a registered firm and as such the application was incompetent and not maintainable. During the pendency of

that application, the present application has been filed on 781980, praying therein that the petitioner be allowed to withdraw the arbitration

application and be also granted permission to file a fresh application on the same subject matter. It is stated in the said application that there is a

formal defect in the application in as much as when it was filed the firm was not registered but that it has now been registered on 1681979.

(2) The respondent has, of course, no objection to the withdrawal of the application but it is submitted that no permission can be granted to the

petitioner to bring a fresh case on the same subject matter.

(3) The application dated 781980 (C.M.P.) No 186 of 1980) does not show under which provision of law it has been made, but apparently it has

been made under Order 23 rule I C. P C. and with Sec. 41 of the Arbitration Act I, however, find that the permission which the petitioner seeks

for the Court to have the liberty to institute a fresh application in respect of the subject matter of the application, is not well founded There is no

dispute that order 23 rule 1 C. P. C. applies to arbitration proceedings also in view of the express phraseology of Section 41 of the Arbitration

Act. Does the case of the petitioner, then fall under Order 23 Rule 1 C, P. C. is a question to be determined ? Order 23 Rule 1 C. P. C. provides

as follows :

1 Withdrawl of suit or abandonment of part of claim(l) At any time after the institution of a suit the plaintiff may as against all or any of the

defendants, withdraw his suit or abandon part of his claim.

(2) Where the Court is satisfied

(a) that a suit must fail by reason of some formal defect, or

(b) that there are other sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject matter of a suit or part of a claim.

it may, on such terms as it thinks fit, grant the plaintiff permission to withdraw from such suit or abandon such part of a claim with liberty to institute

a fresh suit in respect of the subjectmatter of such suit or such part of a claim

(3) Where the plaintiff withdraws from a suit or abandons part of a claim, without the permission referred to in subrule (2), he shall be liable for

such costs as the Court may award and shall be precluded from instituting any fresh suit in respect of such subjectmatter or such part of the claim.

(4) A bare reading of these rules show that if the suit is liable to fail by reason of some formal defect or if there are other sufficient grounds for

allowing the plaintiff to institute a fresh suit on the subjectmatter of the suit, the court may, while allowing withdrawals grant liberty to the plaintiff to

bring a fresh suit on the same subjectmatter. The case of the petitioner is that the application filed by him suffered from a formal defect, inasmuch as

it was filed by an unregistered firm, he may be granted liberty to withdraw the suit and bring a fresh one on the same subjectmatter since the

petitionerfirm has now been duly registered.

(5) I am afraid the nonregistration of the firm, on the date when the application was instituted is not a formal defect. Under Sec. 69 of the

Partnership Act it is provided that no suit can be brought by a partnershipfirm 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 instant case admittedly on 20111978. when the application under Sec 20 was filed,

the petitionerfirm was not registered. The application filed by the petitionerfirm u/s 20 of the Arbitration Act, was therefore, wholly incompetent

and barred by Sec. 69 of the Partnership Act. This defect is not only in the form of the application but goes to the substance of the application and

its maintainability. Such a defect cannot be treated as a formal defect. The application of the petitioner was liable to be dismissed on that account,

not because of any defect in the form of its presentation but because of legal bar to its maintainability. The defect was material and went to the root

of the case.

(6) I, therefore, do not find any reason to grant liberty to the petitioner to bring a fresh application on the same subject matter though he is

permitted to withdraw the application. Consequently, arbitration application No. 105 of 1978 is dismissed as withdrawn.

(7) Mr. Malhotra, learned counsel for the petitioner submits that the documents filed by him with the petition be returned to him. He states that the

petitioner does not wish to file any appeal against the order passed today and therefore, the embargo placed by Order 13 Rule 9(1) (b) to the

return of documents after the expiry of the period of limitation prescribed for the filing of an appeal would not stand in his way. In view of the

statement of Mr. Malhotra that the petitioner does not wish to prefer an appeal against this order, it is directed that the document filed with the

petition be returned to the petitioner, without waiting for the expiry of the period of limitation for filing the appeal.