Kajaria Traders (India) Ltd. v. Messrs Foreign Import And Export Association

Mudholkar, J.:— [His Lordship after stating the facts, proceeded.] We have heard the counsel at great length and we are both agreed that in the circumstances of the present case an application under s. 8 can lie to the Court and that the Court has power to make an order under sub-s. (2) of s. 8 provided, of course, that there are no other impediments to doing so.

2. At this stage I think it will be desirable to reproduce the terms of the partnership agreement, which are set out in the petition itself. Those terms are set out in the letter dated July 30, 1955, addressed by the petitioners to the respondents and are as follows:—

“1, That you are equal partner in the abovesaid joint venture. The profit and loss therein to be shared between you and us equally i.e Annas -/8/- in a rupee to your A/c and Annas -/8/- in a rupee to our A/c on execution of the contract in full as per terms with the overseas buyers.

2. That both of us can make purchases of the goods for supply against the above said contract at the market ruling price but the party while closing the deal finally with the local seller, should have the prior consent of the other party in writing. In case of difference of opinion in regard to price and a quantity to be purchased, the party who desires to purchase such quantity at such price can do purchase and such purchased goods will be adjusted against his share of 5,000 tons.

3. That both of us agree to invest equally. Advances, if necessary, are to be made equally to local sellers against the purchases.

4. That we both agree to abide by the terms that are set out in the contract with the overseas buyers.

That in case of dispute, the matter will be referred for arbitration in accordance with the Indian Arbitration Act.”

3. It will be clear from these terms that the aforesaid agreement does not specifically provide for the mode of appointing an Arbitrator nor does it say whether the matter in dispute will be decided by a sole Arbitrator or by more than one Arbitrator. Section 3 of the Arbitration Act, however, provides that:—

“An arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference.”

4. Entry No. 1 in the aforesaid Schedule runs thus:—

“Unless otherwise expressly provided, the reference shall be to a sole-arbitrator.”

5. Now, here there is no express provision regarding the appointment of an Arbitrator in the agreement between the parties. Therefore, it would follow that the parties will be deemed to have agreed that the reference shall be to a sole arbitrator. It has, however, been held in two decisions of this Court that under s. 8, the Court has power to appoint an arbitrator or arbitrators only where the agreement for arbitration expressly provides that the appointment of an arbitrator shall he by consent of parties. The first of these decisions is that of Mr. Justice Tendolkar in Jamnadas Nagindas Salarka v. Mandas Limited . 1952 O.C.J, Suit No. 708 of 1952, decided by Tendolkar on August 8, 1952 Unrep.. upon a notice of motion for stay of proceedings in a suit for dissolution of partnership and partnership accounts on the ground that there was a valid agreement for reference to arbitration. The stay was opposed on behalf of the plaintiff. Clause (9) of the agreement in that case provided—

“9. That neither party shall be at liberty to go to a Court of law in regard to any disputes, but shall in the first instance have a recourse to arbitration as provided in the Indian Arbitration Act.”

6. Mr. Justice Tendolkar observed:—

“The question that has arisen is whether this is an agreement of reference which is capable of being worked out or enforced…”

7. There the learned Judge accepted the position that reading clause (9) of the agreement along with s. 3 of the Act and the definition of the expression “Arbitration agreement” contained in s. 2, cl. (a), of that Act, all the parties shall be deemed to have agreed to make a reference to a sole arbitrator. He then pointed out that no mode had been provided in the implied term for the appointment of a sole arbitrator. According to him, s. 8 can come into operation only if two conditions are fulfilled, the first being that the agreement must provide that the arbitrator or arbitrators are to be appointed by consent of the parties and the second, that the parties did not agree to the appointment. He then referred to s. 5, cl. (a), of the English Arbitration Act, 1889, and pointed out that this section does not require that there should be an agreement that the sole arbitrator has to be appointed by consent of the parties, whereas, according to him, sub-s. (1) of s. 8 does so require. It will be useful to reproduce the provisions of this section and also of the English Arbitration Act to which Mr. Justice Tendolkar had made a reference. Section 8(1) of the Indian Arbitration Act runs thus:—

“8. Power of Court to appoint arbitrator or umpire—(1) In any of the following cases—

(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen concur in the appointment or appointments; or

(b) if any appointed arbitrator or umpire neglects or refuses to act or is incapable of action, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy; or

(c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him;

any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.”

8. Section 5, cl. (a) of the English Arbitration Act, 1889, reads thus:—

“(a) Where a submission provides that the reference shall be to a single arbitrator, and all the parties do not after differences have arisen concur in the appointment of the arbitrator;”

9. He pointed out that there is no reference in the latter provision to the appointment by consent, whereas in cl. (a) of sub-s. (1) of s. 8 of the Indian Arbitration Act, there is a clear and unambiguous reference to such an appointment by consent. We may point that in the Bill which was introduced in the Central Legislative Assembly, the words “to be appointed by consent of the parties” did not occur, but they were introduced by the Select Committee to which the Bill was sent for consideration. In their report regarding cl. 8 of the Bill, which, eventually, was enacted as s. 8, the Select Committee had observed:—

“Clause 8—We have removed an obscurity from clause 8(1)(a) where it was not clear whether failure to concur in any one of the appointments or failure to concur in all the appointments was contemplated.”

10. It will thus be clear that the object which the Committee had in view was to remove an obscurity, that is to say, to clarify the position and not to add any new condition. In our opinion, the words, “to be appointed by consent of parties” in effect mean “who are to be appointed by consent of parties”. The question of appointment of arbitrators does not arise until there is dispute or differences. It is at that stage that the consent of the parties becomes material. The section, as we read it, does not require that the agreement must expressly refer to the appointment of a sole arbitrator by consent, because the very appointment of a sole arbitrator necessarily implies that the parties must concur in his appointment. We are, therefore, of the opinion, that such a condition must be implied in entry. (1) of Schedule I. If we do not do so then the result would be that it will be almost impossible to give effect to this term which the Legislature wants to imply in all agreements to which the provisions of s. 3 of the Arbitration Act apply.

11. The decision of Mr. Justice Tendolkar was followed by Mr. Justice Coyajee in Art. Centre v. Hindustan Picture.2 Before him the decision in I.H Works v. B.W Mills Ltd. . [1953] A.I.R Cal. 488. was cited. But he distinguished it on the ground that there the question was raised under s. 20 of the Indian Arbitration Act whereas before him it was raised under s. 34 of that Act. Chakravarti C.J, who delivered the judgment in the Calcutta case, pointed out that the consent of parties is the very essence of arbitration, and that where the agreement provides for more than one arbitrator and they are not each to be appointed by all the parties, it is necessary to provide expressly which of them will be appointed by all parties, it is necessary to provide expressly which of them will be appointed by whom, as in the case of the agreements contemplated by ss. 9 and 10. But where different arbitrators are to be appointed by different parties and the intention is that all of them must concur in the appointment of the sole arbitrator or each of the arbitrators, where there are more than one, it is not necessary to make any express provision in the agreement that the appointment or appointments are to be made “by consent of the parties”. Therefore, according to the learned Chief Justice an agreement which merely provides for reference to arbitration is not invalid or ineffective for the reason that it does not expressly provide for the appointment of the arbitrator or arbitrators to be made by consent of the parties. We think that the view taken by the Calcutta High Court is the correct one and, with respect, we agree with it.

12. For these reasons we hold that the application made by the petitioners was maintainable. Though this is our view, I am of the opinion, that the petition-must fail because of the operation of the bar of s. 69, sub-s. (3), of the Partnership Act.

13. Now, in order to appreciate the point it is necessary to reproduce the provisions of s. 69 of the Act in their entirety:—

“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 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.

(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 place of business in the said territories are situated in areas to which, by notification under 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 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.”

14. Sub-section (1) bars (a) a suit; (b)(i) to enforce a right arising from a contract, or (b)(ii) to enforce a right conferred by the Partnership Act; (c) instituted in a Court; (d) by or on behalf of any person suing as a partner of the firm against (e)(i) the firm (ii) or any person alleged to be a partner in the firm.

15. Sub-section (2) bars (a) a suit, (b) to enforce a right arising from a contract, (c) instituted in any Court by or on behalf of the firm, (d) against the third party.

16. It will thus be seen that both these sub-sections deal with suits. Again, whereas sub-s. (1) deals with suits between the partners inter se, sub-s. (2) deals with suits between the firm and third parties.

17. Then we have sub-s. (3) which, as would appear from the language, extends to some extent the provisions of sub-ss. (1) and (2) and in some other respects it restricts them. As already observed the proceedings of both the sub-sections relate to suits, whereas sub-s. (3) applies also to a claim of set-off or other proceeding to enforce a right arising from a contract. Then the sub-section excepts from the bar of s. 69 proceedings where the enforcement of any right (a) to sue for the dissolution of a firm; or (b) for accounts of a firm; or (c) any right or power to realise the property of the dissolved firm. It further excepts from the operation of the bar the powers of the 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.

18. Finally, sub-s. (4) takes out from the operation of s. 69, firms whose places of business are outside India or in areas exempted from the operation of Chapter VII. It also exempts from the operation of this section suits or claims of set-off, proceedings in execution or other suits not extending to Rs. 100 in respect of matters triable by various Small Causes Courts.

19. The question is whether the words, “other proceeding” occurring in sub-s. (3) of s. 69 would include an application under the Arbitration Act for enforcing the arbitration clause contained in the agreement between the parties. Reliance was placed before us by Mr. Nariman on behalf of the petitioners on a number of decisions of the High Court in India in support of his contention that the words “other proceeding” have to be given a very narrow and restricted meaning and that, consequently, suits like the present one would not fall within its ambit. He first referred to a decision in Jamal v. Firm Umar Haji Karim . [1943] Nag. 540. where a Division Bench of that Court held that sub-s. (3) of s. 69 of the Partnership Act has no application to the execution of decrees, whether consent decrees or decrees after contest. Grille C.J, who delivered the judgment of the Court, observed (p. 543):—

“In our opinion the words

‘other proceeding to enforce a right arising from a contract’ (occurring in sub-section 3 of section 69)

are to be taken as sui generis of a claim of set-off; that is to say, when sub-sections (1) and (2) relate to the right of bringing a suit the opening words sub-section (3) relate to the right of setting up a defence and have no relation to the entirely different question of a claim to enforce execution of a decree.”

20. Mr. Nariman accordingly contends that sub-s. (3) was intended to provide to cover the case of a defendant just as sub-ss. (1) and (2) are intended to cover the case of a plaintiff and that the words “other proceeding” have consequently to be given a restricted meaning. Therefore, according to him, a proceeding like the one, which is before us, is outside the ambit of the clause. This decision has been followed in the next case on which reliance was placed by Mr. Nariman, i.e R.L Harnam Doss v. Bal Krishen.5 In that case a single Judge of the Punjab High Court held that the words “other proceeding” occurring in s. 69(3) relate to proceedings of the nature of a set-off and nothing else. He also held that s. 69(3) does not relate to other proceedings as distinguished from a suit. I think it desirable to deal with these two cases first because no other Court has gone as far as these two Courts in limiting the meaning to be accorded to the words “other proceeding”.

21. It seems to me that the rule of ejusdem generis was applied by the learned Judges in these cases even though the conditions for the applicability of this rule were not present in them. In this connection I would refer to a decision in Allen v. Emerson,6 in which Asquith J., who delivered the judgment of the Court, pointed out that the modern tendency of law is to attenuate the application of the rule of ejusdem generis. In that case the Court had to consider whether the words “or other places of public entertainments” occurring after the word “theatre” in a certain English statute were to be construed ejusdem generis with the word “theatre” and would thus exclude “fun fair” from the ambit of the words “other places of public entertainment”. The learned Judges held that the words “fun fair” would be included within the ambit of the wrords “other places of public entertainment”, because no genus could be deduced from the mere word theatre which precedes the words “other places of public entertainment”. That being so, Asquith J. observed (p. 367):—

“…Words excepting a species from a genus are meaningless unless the species in question prima facie falls within the genus. ‘All hats other than top hats’ makes sense. ‘All top hats other than bowler hats’ does not: nor does ‘all hats and other articles except gloves’ if ‘other articles’ is to be construed ejusdem generis with ‘hats’. Now, the places covered by s. 164 of the Act of 1868—the places ‘excepted’—do not fall within the assumed genus ‘theatres and other similar places of public entertainments’ although there may be an overlap between the two. No case was cited to us in which a genus has been held to be constituted, not by the enumeration of a number of classes followed by the words, ‘and other’, but by the mention of a single class (in this case theatres) followed by those words. The tendency of the more modern authorities is to attentuate the application of the ejusdem generis rule.”

22. Thus, from this decision it would follow that the scope of general words used by the Legislature cannot be limited merely by reason of the fact that a single class has been enumerated along with general words. Before limiting the operation of the general words, it is necessary that these should be preceded by an enumeration of a number of classes and it is not sufficient if they are preceded or followed by a single class.

23. While dealing with this topic it is stated in Craies on Statute Law at p. 170:—

“There must be a category. The ejusdem generis rule is one to be applied with caution and not pushed too far, as in the case of many decisions, which treat it as automatically applicable, and not as being, what it is, a mere presumption, in the absence of other indications of the intention of the Legislature. The modern tendency of the law, it was said, is ‘to attenuate the application of the rule of ejusdem generic. To invoke the application of the ejusdem generis rule there must be a distinct genus or category. The specific words which apply not to different objects of a widely differing character but to something which can be called a class or kind of objects. Where this is lacking, the rule cannot apply. ‘Unless you can find a category,’ said Farwell, L.J (in Tilmans & Co. v. S.S Knutsford, [1908] A.C 207) ‘there is no room for the application of the ejusdem generis doctrine,’ and where the words are clearly wide in their meaning they ought not to be qualified on the ground of their association with other words. For instance, where local Act required that ‘theatres and other places of public entertainment’ should be licensed, the question arose whether a ‘fun-fair’ for which no fee was charged for admission was within the Act. It was held to be so, and that the ejusdem, generis rule did not apply to confine the words ‘other places’ to places of the same kind as theatres. So the insertion of such words as ‘or things of whatever description’ would exclude the rule.”

24. In support of the aforesaid statement reliance is placed by the learned author not only on the decision in Allen v. Emerson but on a number of other decisions including some from the House of Lords.

25. There is also a decision of the Supreme Court on the point which will be worth referring to, i.e, The State Of Bombay v. Ali Gulshan . [1955] 2 S.C.R 867.. In that case also their Lordships were concerned with the applicability of the rule of ejusdem generis. Chandrasekhara Aiyar J., who delivered the judgment of the Court, observed that (p. 870):—

“With great respect, we are constrained to say that the ejusdem generis rule of construction, which found favour in the court below for reaching the result that the words ‘any other public purpose’ are restricted to a public purpose which is also a purpose of the State, has scarcely any application. Apart from the fact that the rule must be confined within narrow limits, and general or comprehensive words should receive their full and natural meaning unless they are clearly restrictive in their intendment, it is requisite that there must be a distinct genus, which must comprise more than one species, before the rule can be applied. If the words ‘any other public purpose’ in the Statute in question have been used only to mean a State purpose, they would become mere surplusage; Courts should lean against such a construction as far as possible.”

26. In view of this pronouncement of their Lordships and also because of the opinion expressed by Asquith J. in Allen v. Emerson, I am constrained to say that the view taken in the Nagpur and the Punjab cases to the effect that by reason of the application of the rule of ejusdem generis, the words “other proceedings” must be of the same kind as set-off cannot be accepted as correct. If so restricted a meaning were to be given to the words “other proceedings” then they would be, as pointed out by Chandrasekhara Aiyar J., rendered as a mere surplusage and that the Courts should lean against interpreting statutes in such a way as to render any words used therein as surplusage. Another decision on which reliance was placed by Mr. Nariman is Mahendra v. Gurdeyal.8 In that case a Division Bench held that s. 60 of the Partnership Act, 1932, does not debar a partner of an unregistered partnership business from applying to the Court under s. 8 of the Act for referring the dispute between the partners to arbitration as provided in the conditions of their agreement. It may be pointed out that the observations of the learned Judges in this connection were merely obiter. In the course of that judgment they quoted the following observations from Shibba Mal v. Gulab Bai . [1940] All. 26 F.B (p. 30):—

“In our judgment the intention of the legislature is plain. It intended that the rights of the partners of an unregistered firm in regard to dissolution of the partnership and accounting were to remain unaffected by the provisions of sub-sections (1) and (2) of section 69 of the Partnership Act.”

27. Then the learned Judges proceeded to observe as follows (p. 113):—

“It is, therefore, clear on the authority of this Full Bench judgment that even a suit for dissolution of partnership and accounting is not barred under the provisions of section 69 of the Partnership Act. The present case, however, stands on a better footing inasmuch as no suit had been filed in this case but an application was made to the court below under the provisions of section 8 of the Arbitration Act. In my opinion, therefore, section 69 of the Act was no bar to the application for sending the matter in dispute to arbitration.”

28. It is sufficient to point out that under cl. (a) of sub-s. (3) of s. 69 a suit for dissolution of an unregistered partnership and for accounts is expressly excepted from the operation of the bar created by s. 69. That being so, the learned Judges felt that a reference to arbitration for securing the same purpose must also be deemed to have been excepted from the bar. Whether that is correct or not, it is not necessary to consider. All that I need point out is that the learned Judges there did not consider the scope and the meaning of the words “other proceedings” occurring in sub-s. (3) of s. 69.

29. The next case relied upon is Hafiz Qamar Din v. Nur Din.10 In that case the question which arose for consideration was whether an application of an unregistered firm under para. (20) of the Sch. II to the Civil Procedure Code (since repealed) is not excluded from the bar created by s. 69 of the Act. It was contended before the learned Judge that such an application would fall within sub-s. (1) of s. 69 because it is registered as a suit. This contention was rejected by the learned Judge who pointed out that the mere fact that such an application was registered as a suit would not clothe it with the character of a suit as understood in forensic language. The question whether such a proceeding would fall within the ambit of the words “other proceedings” was not raised before him. In these circumstances I do not think that neither of these two authorities affords support to the petitioner.

30. Finally reliance was placed on behalf of the petitioners on the decision in Sreemannarayanamurthy v. Arjandu.11 In that case the plaintiff, an unregistered firm, who was a creditor of an insolvent, had filed a petition for declaring the debtor insolvent. This petition was resisted on the ground that the firm being unregistered-could not be allowed to enforce a right against its debtor. The learned Judges held, and in my opinion quite rightly, that in filing the petition what the firm purported to do was to enforce a statutory right and not a right arising out of a contract between them and a debtor. That case is, therefore, distinguishable.

31. On behalf of the respondents reliance was placed on Abdul Jabbar v. Audhesh Singh . [1955] A.I.R Cal. 224. and Ajit Kumar v. Nareudra Nath.13 In the former case the learned Judges observed that (p. 311):—

“…It is obvious that the claim by the appellants in these Encumbered Estates Act proceedings for determination of the liability of the landlord to them and for passing a decree in respect of the amount found due is a proceeding to enforce a right arising from the contract and is fully covered by the language used in sub-section (1) of section 69.”

32. Though this decision supports the contention of the respondents, I must point out that no reasons have been given by the learned Judges in arriving at the particular conclusion. It affords, therefore, very slight assistance to the petitioners. The other decision is Ajit Kumar v. Narendra Nath. In that case a Division Bench of the Calcutta High Court held that—

“The bar under Sub-ss. (1) and (2) of S. 69 which is extended by sub-s. (3) of the same section ‘to a claim of set-off or other proceeding to enforce a right arising from a contract’ does not apply to defence taken in the written statement that the properties to which the plaintiff claims an exclusive right is the joint property of the plaintiff and the defendants on the plea that they are all partners of the property belonging to the firm.”

33. While dealing with the arguments raised before them they had to consider the Nagpur decision upon which reliance was placed before us by Mr. Nariman. They disapproved of the Nagpur decision because, in their opinion, a person, who is trying to defeat the claim of the plaintiff by setting up a plea on the basis of a partnership, cannot be said to be seeking ‘to enforce a right arising from a contract’. According to the learned Judges a party can be said to be seeking to ‘enforce a right’ only if he is seeking some relief from the Court-Where no relief is being sought from the Court it cannot be said that he is seeking to enforce a right. This decision helps the respondent only to this extent that it does not accept the basis of the Nagpur decision. But here also the learned Judges have not considered the scope of the words “other proceedings”.

34. In my opinion, if the rule of ejusdem generis is not applicable in this case then it is incumbent on the Court to give the fullest meaning to the words “other proceeding” which occur in sub-s. (3) of s. 69. Sub-section (3) extends the provisions of sub-ss. (1) and (2) and one of the requirements of these sub-sections is that the proceedings must be to enforce a right under the contract. That being so, such proceedings cannot be in the nature of a defence but they must necessarily be in the nature of a suit. The only exception to this is a set-off because to a certain extent it is a defence inasmuch as the object of the defendant is to diminish his liability to the plaintiff's claim to the extent of a certain amount. Of course, there may be a case where a defendant claims an equitable set-off or seeks a decree in his favour for the excess over the amount which is due to the plaintiff and to that extent he would be deemed to be “enforcing a right”. Though such a case may be covered by the expression “other proceeding”, it is doubtful whether, in the absence of the words “set-off”, all cases of a set-off would be covered by the words “other proceeding”. It appears to me, therefore, that to make the position clear beyond doubt that the Legislature has specifically mentioned the word “set-off” along with the words “other proceeding” in this provision.

35. It is, however, argued before us that if the object of the Legislature was to bar proceedings other than a suit then the Legislature would have used the words “other proceeding” in sub-ss. (1) and (2). In my opinion, that may have been one way of doing it but perhaps that way was not resorted to by the Legislature, in order to avoid the use of the words “other proceeding” at two different places, i.e, in sub-s. (1) as well as in sub-s. (2). Apart from that it seems to me that the Legislature may have thought it more appropriate to use the words “other proceeding” in sub-s. (3) because it was in that part of the section that it was seeking to extend the scope of the provisions of sub-ss. (1) and (2).

36. It was then urged with considerable force by Mr. Nariman that in the present application the petitioners are not seeking to enforce a right arising from the partnership because all that they are asking the Court to do is to refer a dispute between the parties to arbitration and that their claim before the arbitrators was in respect of damages for breach of the contract committed by the respondents. I have already set out the terms of the partnership agreement and one of the terms of the agreement is that in case of differences or disputes between the parties the provisions of the arbitration act will have to apply. Now, here, according to the petitioners, the matter can be referred to a sole arbitrator while, according to the respondents, it cannot be referred to arbitration at all because the contract is vague. There is thus a difference between them regarding the interpretation of a term which is implied in the contract. Where such is the position. I fail to see how it can at all be contended that the dispute does not arise out of the partnership agreement. Not only that the dispute arises in respect of a term of the agreement but that it arises between the petitioners on the one hand and the respondents on the other as partners of an unregistered firm.

37. Mr. Nariman then contended that the real dispute between the parties is regarding the damages claimed by the petitioners from the respondents by reason of the breach of the contract committed by the latter and, therefore, that is not a claim which arises out of the contract of partnership. He relied upon two decisions of the Nagpur High Court in support of his contention that in such a case the bar of s. 69 of the Partnership Act does not operate. The Nagpur decisions relied on are, Hari Shankar v. Firm Bai Bahadur Bansilal Abirchand . [1946] Nag. 301. and Shriram v. Laxmibai.15

38. In the first mentioned case it was held that where a partner has a dual capacity viz., that of a partner and that of a creditor there is nothing in law to prevent him as creditor from suing some of the partners for recovery of what is due from them without asking for the relief of dissolution of the partnership. In the case before us there is no such dual capacity. The petitioners and the respondents were concerned with one transaction and that transaction was the joint venture to export 10,000 tons of manganese ore. There was no question of either of the parties being entitled under the agreement to act in a different capacity, viz., in a capacity other than that of a partner. In the Nagpur case the partnership agreement had provided that one of the partners was to be a banker of the partnership and the question was whether the partnership being unregistered, the banker-partner could sue for his dues. It was held that though the plaintiff was a partner he had also the capacity of a banker in respect of the amount that was due to him and that in that capacity the banker-partner was entitled to sue the other partners without the dissolution of the firm. That was entirely a different kind of case from the present one. Here the foundation of the petitioners' claim is that they were the partners of the respondents; they had purchased 2500 tons of manganese ore for carrying out the obligation of the partnership with Phillips (India) Ltd., though under an agreement inter se it was the duty of the respondents to purchase the ore, that they had incurred a loss in doing so and consequently the respondents were liable to bear that loss. It is clear that in purchasing the aforesaid ore the petitioners merely carried out an obligation of the partnership and in doing so they must be deemed to have acted as agents of the partnership. Therefore, their claim to have the dispute referred to an arbitrator is ascribable to their capacity as partners. Apart from that I would like to point out that in so far as the Court is concerned it is unnecessary to consider as to what would be the nature of the claim before the arbitrator. The question before the Court is a simple one and that is whether an arbitrator or arbitrators are to be appointed or not. According to the respondents, the Court has no jurisdiction in the matter because the agreement between the parties does not provide for the mode of appointment of an arbitrator or arbitrators, as the partnership agreement, is vague and uncertain. This contention may or may not be sound but the contention is there. According to the petitioners the Court has jurisdiction because such a mode must be deemed to be implied in the contract between the parties. There is, thus, a dispute between the parties regarding one of the terms of the partnership agreement. That being the position, what the petitioners are trying to do must be held to be nothing eke than the enforcement of a right arising out of the contract of partnership, and they will be deemed to be doing so in their capacity as partners.

39. For these reasons the bar of s. 69 must be held to operate against them.

40. In the other Nagpur case it was held that the provisions of s. 69(1) of the Indian Partnership Act must be construed strictly so as not to carry the bar of the section further than what the words of the section necessitate. It is also held in that case that when there is an agreement between the partners of an unregistered partnership by which some right is created which is capable of enforcement independently and without resort to general accounts of the unregistered partnership, it furnishes entirely a different cause of action and the plaintiff suing on the basis of such cause of action cannot be described as suing as a partner. The principle laid down in that case is unexceptionable but it is difficult to appreciate how this decision assists the petitioners. The petitioners, as already stated, are in fact trying to enforce one of the terms of the partnership agreement which pertains to the reference of a dispute between them to arbitration. This right arises in their favour only under the partnership ageement and is not independent either of that agreement or of their relationship with the respondents as partners.

41. Reading all the terms of the agreement together there can be little doubt that the only object with which the fourth term therein was incorporated appears to have been to enable such disputes as arose between the parties to arbitration and for no other purpose. If, therefore, the dispute in question cannot be regarded as one between the partners then clearly the fourth term contemplating reference to arbitration cannot at all be availed of by the petitioners. In the Nagpur case there was no question of any reference being made to an arbitrator; therefore, that case is distinguishable.

42. The petitioners are either seeking to enforce the partnership agreement or they are not. If they seek to enforce that agreement as partners against the respondents as partners, then only they are entitled to have the benefit of the fourth term in the agreement. Now, that the petitioners are seeking to enforce that fourth term in the agreement they must be regarded as enforcing a right arising under the agreement. For that reason the bar created by s. 69 will operate inasmuch as the partnership is not registered. If, on the other hand, the petitioners are seeking to enforce an independent contract then their only remedy is by way of a suit and they are not entitled to resort to the fourth term of the partnership agreement. Therefore, looking at the matter either way the petition must fail.

43. For these reasons I have no hesitation in holding that the petitioners' application to the Court below under s. 8 of the Act is not maintainable. I would, therefore, dismiss it with costs.

44. Naik J.:— I agree with my learned brother so far as the first point relating to the enforceability of the arbitration clause is concerned. I, however, differ from my learned brother on the question as to whether the proceedings that have been instituted by the petitioners for enforcing the arbitration clause is barred under s. 69 of the Indian Partnership Act. I would, therefore, set out the reasons of my dissent as briefly as possible.

45. Section 69 falls into four parts. Sub-section (1) in effect provides:—

“(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…”

46. Sub-section (2) provides:—

“(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…”

47. Sub-section (3) provides:—

(3) The provisions of sub-sections (1) and (2) 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.”

48. Sub-section (4) need not be cited at the moment. I will refer to that sub-section at a later stage of the discussion.

49. It is clear that sub-ss. (1) and (2) in terms apply to a suit. Sub-section (1) applies to a suit filed by one partner against another or against the firm, whereas sub-s. (2) applies to a suit filed on behalf of the firm against a third party. The relevant provisions for our consideration are those contained in sub-ss. (1) to (3). The other provisions may be considered incidentally in so far as they throw light upon the scheme of s. 69 of the Act.

50. It is clear that two conditions must be fulfilled before the case can fall within the mischief of sub-s. (1) of s. 69. Those two conditions are: (1) an action to enforce a right arising from a contract has been instituted; and (2) it has been instituted by a person suing as a partner. It is evident that both these conditions must also be fulfilled before the provisions of sub-s. (3) are sought to be applied to a proceeding other than a suit. The proceeding instituted in the instant case is obviously not a suit.

51. There are two ways of approaching the question for the purpose of finding out whether or not either or both the conditions laid down in sub-s. (1) of s. 69 have been fulfilled. The first line of approach is to see whether the claim that would ultimately be referred to arbitration can fall within the purview of the expression “to enforce a right arising from a contract by a person suing as a partner.” The second is whether a proceeding for the enforcement of an arbitration clause can at all be considered as a proceeding to enforce a right arising from a contract.

52. So far as the first line of approach is concerned it is necessary to remember a few facts. Before the partnership came into being, the petitioners had entered into an agreement with Messrs Phillips Bros. (India) Ltd. for supplying 10,000 tons of manganese ore within a specified period, 5,000 tons to be supplied between January to March 1956 and the remaining 5,000 tons to be supplied from March to June 30, 1956. The partnership between the petitioners and the respondents came into being on July 30, 1955, and it was agreed between the two that the said contract should be considered as a joint venture in which the parties shall bear the profits and the loss in equal proportion. Thereafter the agreement sets out the conditions which must be fulfilled by either party to the contract, and in effect it lays down that the respondents should contribute 2,500 tons towards their share for the first period and 2,500 tons for the second period. It is common ground that the respondents did not supply their share for the first period. The petitioners supplied the entire quantity of 5,000 tons to the buyers. It is also common ground that the delivery for the second period was not made by the petitioner. The grievance of the petitioners is that they have sustained a loss by purchasing 2,500 tons of manganese ore in the market which should really have been contributed by the respondents. The petitioners contend that the respondents have failed to fulfil their part of the contract and, therefore, there has been a breach of the contract. The claim made on behalf of the petitioners is in effect a claim for damages for breach of the contract. As a matter of fact the joint venture or the partnership, by whatever name we choose to call it, did not start functioning at all. It is clear from the terms of the agreement that this was a partnership for a particular venture. The case, therefore, would fall within the purview of s. 8 of the Indian Partnership Act. Admittedly there is nothing more to be done, about the venture and the venture in a way has fallen through. It is also clear that the period during which the venture was to be completed is over. In any view of the case, it is obvious that the partnership stands dissolved.

53. Can we, therefore, say in the context of the above facts that the claim which the petitioners are trying to enforce before the arbitrators is a claim for the enforcement of a right arising from a contract? Can we further say that the petitioners are trying to enforce that claim in their capacity as partners? It is possible to say that the claim for damages in the present case arises out of the breach of the contract of the partnership. It is equally conceivable that the claim for damages may arise out of a breach of the terms of any ordinary contract between vendor and purchaser. What is necessary to be considered is whether the claim for damages is based on a cause of action which is independent of the agreement of partnership or on a claim which forms an integral part of the partnership agreement? In this connection I may usefully refer to the decision of the Nagpur High Court in Shriram v. Laxmibai. It is unnecessary to set out the facts of the case in detail. It will be sufficient, to point out that the accounts between the partners were made up and one of the partners gave a promise to pay the amount that, was found due at the foot of the accounts settled. It is clear that the claim arose out of the partnership contract between the two partners. At the same time it was held that the promise to pay moneys amounted to an independent cause of action. It was also held that it would not be possible to say that in such a case the suit was filed by the plaintiff in his capacity as a partner. After referring to the observations in the unreported decision of Bose C.J and Mangalmurti J. in Pusan Kuar v. Jaswantsingh Hidayatullah J., who delivered the judgment of the Bench, observed (p. 525):—

“…In our opinion these observations apply to the present case also. It is true that the observations of the learned Judges regarding undissolved partnerships were obiter but the reason given holds good in those cases also. We respectfully agree that the words ‘suing as a partner’ must be given their due meaning. When there is an agreement between the partners by which some right is created which is capable of enforcement independently and without resort to general accounts of the unregistered partnership, it furnishes an entirely different cause of action and the plaintiffs cannot be described as ‘suing as a partner.’ It is not every suit that is barred but only a suit brought ‘as a partner’.”

54. I may also refer to an earlier decision of the Nagpur High Court in Hari Shankar v. Firm Rai Bahadur Bansilal Abirchand. In that case the partner had a dual capacity, viz., that of a partner and that of a creditor and it was held that there was nothing in law to prevent him as creditor from suing some of the partners for recovery of what is due from them without asking for the relief of dissolution of the partnership. In my view, the claim that has been made by the petitioners in the instant case is a claim which can be gone into without considering the question of dissolution of partnership or without settling the accounts of the dissolved partnership. This is a claim which arises out of a breach of a simple agreement of supplying a specified quantum of manganese ore.

55. In the above context I may observe that s. 6.9 of the Indian Partnership Act must be construed strictly so as not to carry the bar of the section further than the words of the section import. That was also the view taken by the Nagpur High Court case in Shriram's case referred to above and I respectfully agree with the same.

56. The Hon'ble Mr. Justice S.T Desai in his commentary on Indian Partnership Act has also made similar observations. He says at page 244 that:

“An enactment which imposes forms and solemnities on pain of dismissal of any suit or proceeding would on general principles of construction be interpreted strictly.”

57. On the other aspect of the matter, viz., as to whether a proceeding instituted for enforcing an arbitration agreement can at all be considered as a proceeding to enforce a right arising from a contract, it is necessary to remember that the arbitration agreement is only incidental to the main terms of the contract. It is true that without the arbitration clause it would not have been competent to the petitioners to file the present proceedings under s. 8 of the Indian Arbitration Act. In that sense it can be maintained that this is a proceeding for enforcing a right arising from the contract of partnership. The right to approach a domestic tribunal in preference to the ordinary Court of law is, of course, a valuable right and that right flows from the terms of the contract. At the same time it must be remembered that the right the petitioners are trying to enforce is a right conferred on them by the Arbitration Act so that full effect should be given to the arbitration clause.

58. In this connection I may, with advantage, refer to a decision of the Madras High Court in Sreemannarayanamvrthy v. Arjandn. In that case a petition for the adjudication of a debtor as an insolvent was instituted by an unregistered firm. It was contended that such a proceeding was barred under s. 69 of the Partnership Act. That contention was negatived and it was observed (p. 145):—

“…The right which the creditor who files the insolvency petition against his debtor is seeking to exercise is the right of a creditor who finds his debtor in insolvent circumstances to have the assets of the debtor administered in insolvency and distributed for the benefit of the creditors as a body. This is a right which is conferred upon the creditors by statute and is not a right arising out of a particular contract of loan between a petitioning creditor and a debtor. The learned counsel for the respondent has sought to support the order of the learned District Judge by contending that the debt due to the petitioning creditors in this case should be considered to be not legally recoverable. He refers to Halsbury's Laws of England, Vol. 2, page 59, where it is laid down that a debt which can support an insolvency petition must be a legally recoverable debt and that debts which are time-barred cannot be the foundation of an insolvency petition. We do not think that there is any real analogy between these two cases. The debt due from the respondent to the petitioners in this case is legally recoverable. In the language of Sec. 9, Provincial Insolvency Act, it is a debt owing to the petitioners and it exceeds Rs. 500. The mere fact that the petitioners constitute a firm and this debt is due to the firm in which the petitioners are partners and they cannot file a suit to recover the amount due to them unless the firm is registered does not deprive the petitioners of their right to file a petition in insolvency.”

59. It is necessary to remember that the petitioners in the above case would not have succeeded in getting the debtor adjudged insolvent without proving their debt. Even so it was held that inasmuch as the statute gave the right to proceed against an insolvent in an insolvency proceeding, that right was not a right to enforce a contract but a right conferred by a statute.

60. That takes me to a consideration of the provisions of sub-s. (3). The main part of sub-s. (3) reads, “the provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract.” The use of the word of “also” makes it clear that the object of the Legislature was to extend the provisions of sub-ss. (1) and (2) to certain categories of proceedings covered by the expression “a claim of set-off or other proceeding to enforce a right arising from a contract.” It was contended by Mr. Bhagwati that the expression “other proceeding” must be given the widest meaning so as to cover every proceeding other than a suit. If that were the intention of the Legislature, then I am unable to understand why the Legislature did not use the words “other proceeding” after the word “suit” in both the sub-ss. (1) and (2). The only answer which Mr. Bhagwati could give was that the Legislature probably wanted to avoid the repetition of the words in both the sub-sections. I am unable to accept this line of argument. No argument which is based on the supposed parsimoniousness of the Legislature in the use of words can carry any conviction. Analysing further, I find that the words “other proceeding” have been used not only in juxtaposition to the word “set-oft” but also after the word “set-off.” The claim to a set-off can obviously be made by the defendant, in a suit. It is noteworthy that the Legislature has not used the words “any” before the words “other proceeding.” Instead of using the words “any other proceedings”, the Legislature has used the words “other proceeding” after the word “set-off”. In so far as the word “proceeding” is qualified by the word “other”, it is clear that the Legislature wanted to draw a distinction between a “set-off” on one hand and “other proceeding” on the other. This itself suggests that, according to the Legislature, a claim to set-off is itself a proceeding, and the proceeding for a claim of a set-off is sought to be contra-distinguished from “other proceeding”. We have, therefore, a common genus in “proceeding” which is implicit in the expression “claim of set-off.” The distinction is between the proceeding for a claim of set-off and other proceeding. I am alive to the consideration that before applying the principle of ejusdem construction an attempt must be made to find out whether there is any genus of which there are a number of species. In this connection strong reliance was placed by Mr. Bhagwati on the observations contained in the well-known book “Craies on Statute Law” at page 170. The learned author observes as follows:—

“The ejusdem generis rule is one to be applied with caution and not pushed too far, as in the case of many decisions, which treat it as automatically applicable, and not as being, what it is, a mere presumption, in the absence of other indications of the intention of the Legislature. The modern tendency of the law, it was said is ‘to attenuate the application of the rule of ejusdem generis.’”

61. The learned author is right in deprecating the noticeable tendency on the part of the Judges to apply the rule of ejusdem generis in an automatic way. What the learned author wanted to point out was that after all the rule of ejusdem generis lays down a presumption. In all cases, the real question is what w-as the intention of the Legislature and the rules of construction are merely a guide for finding out the real intention of the Legislature. As pointed out above the fact that the words “other proceeding” are used after the word “set-off” suggests that the proceeding must be at least of an analogous or of a similar character. It would have been sufficient if the Legislature had framed sub-s. (3) in the following way, if their real object was to enlarge the scope of sub-s. (3) so as to embrace any conceivable proceeding within the purview of sub-s. (3) of s. 69.—

“The provisions of sub-sections (1) and (2) shall also apply to all proceedings for enforcement of a right arising from a contract including a set-off.”

62. In that case, it would not have been necessary at all to use the word “set-off” because “all other proceedings” would be wide enough to cover every conceivable proceeding. Therefore, the words “other proceeding to enforce a right arising from a contract” must be treated as proceedings which partake of the same character as set-off.

63. Mr. Bhagwati contended that he could not imagine any proceeding which can be considered to be analogous to a set-off except a counter-claim. I am not prepared to accept this contention because it is possible to imagine cases wherein defendant has raised pleas which can be considered to be of the same character as a set-off. For instance, plaintiff files a suit for money in his capacity as creditor against his co-partner and the defendant asks for accounts of the firm. Again, the plaintiff riles a suit for dissolution and accounts, and the defendant sets up a plea that the suit is barred on account of an arbitration clause in the partnership agreement.

64. Assuming, however, that Mr. Bhagwati is correct in his argument, and further assuming that the words “other proceeding” are not necessarily of analogous character as set-off still I think that, in any case, the words “other proceeding” must be interpreted to mean “proceedings in a suit.” If we examine the scheme of s. 60, we will notice that in all the sub-sections reference is made to “suit”. Sub-sections (1) and (2) in terms relate to “suit”. Sub-section (3) also refers to “suit” at least in cl. (a). Sub-section (4), to which I will come at a later stage, also speaks of “suit”. That being the case it is difficult to hold that the expression “other proceeding” in sub-s. (3) was intended to mean a proceeding outside a suit or other than a suit. This interpretation alone will harmonise all the sub-sections of s. 69. The rival interpretation, viz., that the words “other proceeding” embrace any proceeding of an original character, enlarges the scope of s. 69 beyond recognition. Had that been the intention, as pointed above, the Legislature could easily have put the words “any other proceedings” after the word “set-off” in sub-s. (1). Had the words “any other proceedings” been employed in place of the words “other proceeding” after the word “set-off” it could be urged with considerable force that between the two, the entire universe of discourse (as the logicians would call it) is exhausted. In my opinion, the omission of the word “any” makes a significant difference in the interpretation of sub-s. (3) of s. 69.

65. Reliance was placed upon the decision in Allen v. Emmerson. The words which came up for consideration in that case were “No theatre or other place of public entertainment” (other than such places of entertainment as are not subject to the provisions of section 164 of…). The argument that the words “other places of public entertainment” should be considered ejusdem generis with the preceding word, viz., “theatre”, was repelled and the main ground set out in support of the view was the use of the words “other than such places of entertainment as are not subject to the provisions of Section 164”. Further emphasis was laid upon the words “public entertainment”, and the “funfair” obviously fell within the ambit of that word.

66. In my opinion, the matter does not rest there. We have further to consider cl. (a) of sub-s. (3) which incorporates an exception to the rule laid down therein which reads:—

“The provisions of sub-sections (1) and (2)…shall not affect 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.”

67. It is true that the claim that has been set out in the petition cannot be regarded as a claim for the dissolution of the partnership. It is, however, conceivable that the claim that may be ultimately urged before the arbitrator may partake of the character of a claim for accounts of a dissolved firm. Even assuming that the petitioners restricted their claim to damages for the breach of the contract, it will be open to the respondent to claim accounts of the firm. It is also possible that the petitioners in lodging their claim before the arbitrator may themselves ask for accounts. We are called upon to decide this preliminary objection on a speculative consideration. It will be difficult to hold at this stage that the suit will not fall within the purview of cl. (a) of sub-s. (3) merely on the basis of the averment contained in the petition.

68. The second aspect of the same matter is whether the claim made by the petitioner falls within the ambit of the words “any right or power to realise the property of a dissolved firm.” As stated above, the partnership or the venture must be considered to have been dissolved both because its purpose is served and also because its period is over. It has been held by Mr. Justice Chagla, as he then was, in Bhagwanji Morarji v. Alembic Chemical Works that:—

“A suit by the partners of a dissolved firm to recover unliquidated damages for breach of contract is a suit to realise the property of the dissolved firm. Damages for breach of contracts are assets of the firm and as such they can be realised by the partners of the dissolved firm although the firm has not been registered. The partners are not debarred from maintaining a suit under S. 69 of the Act.”

69. The suit in the above case was filed by the partners against a third party. It has been held by the Allahabad High Court in Sheo Butt v. Pushi Earn that the words “any right or power to realise the property of a dissolved firm” in s. 69(3)(a) include the right, to recover the property from a third party or from a partner from whom the property may be recoverable and the word “property” must be interpreted to include a claim for money. Mr. Justice S.T Desai in his Commentary has also endorsed the above view. At page 243 he observed:—

“A suit by the partners of a dissolved firm is a suit to realise the property of a dissolved firm. Damages for breach of a contract are assets of the firm and as such they can be realised by the partners of the dissolved firm although the firm was not registered. It is submitted that the expression ‘property of a dissolved firm’ as used here should receive liberal interpretation. It may also be observed that though ordinarily a suit of this nature would be against a third party the exemption also applies to a claim of this nature made against a partner. In Sheo Dutt v. Pushi Ram, the Allahabad High Court expressed the view that the words, ‘any right or power to realise the property of a dissolved firm’ in sub-section (3), clause (a) are wide enough to include not only the right to recover any such property of the firm from a third party but also the right to recover any such property from another partner.”

70. In that view of the case we would be taking a leap in the dark if we hold, a priori, that the claim which is to be instituted by the petitioners, before the arbitrators is barred under s. 69(3) of the Indian Partnership Act. All that was necessary for the petitioners to state in the application was that a dispute has arisen between the parties which requires intervention by arbitration. It was not necessary for the petitioners to set out the reliefs which they would eventually claim nor make any elaborate averments about the claim to be made by them before the arbitrator.

71. Turning to sub-s. (4), the material part runs thus:—

“This section shall not apply—

(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,…or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.”

72. Mr. Bhagwati contended that proceedings in execution are excluded on the language of sub-ss. (1) to (3) because a proceeding in execution cannot be considered to be a proceeding to enforce a right, arising from a contract. I am unable to understand how this argument helps Mr. Bhagwati on the point which he is pressing before us. Even as it is, I find that it was necessary for the Legislature to include the words “proceeding in execution” because in cl. (b) of sub-s. (4) the words “to enforce a right arising from a contract” have not been used after the words “any suit or claim of set-off.” That seems to be the only reason why the Legislature mentioned “proceeding in execution” specifically in cl. (b). The closing words of cl. (b) “other proceeding incidental to or arising from any suit or claim of set-off” are significant. It has been made clear that the proceeding must be incidental to or arising from any suit or claim. There is no reason why the same meaning should not be attached to the words “proceeding” in sub-s. (3).

73. I will now deal briefly with the cases that were cited at the bar. Mr. Nariman relied upon a decision of the Nagpur High Court in Jamal v. Finn Umar Haji Karim. In that case, proceedings for execution were started on the basis of a consent decree and it was contended that the consent decree partakes of the character of a contract with the sanction of the Court superadded to it and, therefore, a proceeding in execution of a consent decree is a proceeding for enforcing a right under a contract. It was in this contest that the question of the application of sub-s. (3) of s. 69 arose in that case. Sir Frederick Grille, C.J, who delivered the judgment of the Bench, observed (p. 543):—

“…In our opinion the words

‘other proceeding to enforce a right arising from a contract’

are to be taken as sui generis of a claim of set-off; that is to say, when sub-section (3) relate to the right of setting up a defence and have no relation to the entirely different question of a claim to enforce the execution of a decree. Not only may a claim for set-off be a partial defence to a suit but a claim arising out of a contract may be set up in defence to negative the right of suit altogether, and it is these claims in defence, which, in our opinion, are placed under the same disabilities as the right to bring a suit at all in so far as unregistered firms are concerned. We do not conceive that there could be any intention on the part of the Legislature in drafting sub-section (3) in the manner it has, to deal with two such entirely different matters as a claim of set-off without reference to any other defence and execution proceedings in respect of a particular type of decree.”

74. With respect, I agree with the observations in the above decision in the interpretation of sub-s. (3) of s. 69.

75. The next case relied upon by Mr. Nariman was R.L Harnam Dass v. Bal Krishen. In that case a displaced creditor-firm started proceedings under the Displaced Persons (Debts Adjustment) Act, 1951, against the debtor-firm for the recovery of the debt. The petitioning firm was an unregistered firm. It was contended on behalf of the opponent that the proceeding started was barred under sub-s. (3) of s. 69. This argument was not accepted and Bishan Narain J. gave the following reasons in support of this view (p. 160):—

“…Obviously sub-ss. (1) and (2) to S. 69 bar a suit and the language ‘no suit to enforce a right arising from a contract shall be instituted in any Court’ suggests that the institution of a plaint was being prohibited as a suit is instituted by filing of a plaint. Sub-section (3) proceeds to extend the prohibition to ‘a claim of set-off or other proceedings.’ Now, a claim of set-off can be made only in defence, i.e, only in a written statement.

“…The difficulty arises by the use of words ‘or other proceeding’ after ‘set-off’. It appears to me that these words which are of a very wide import should be limited in this context to any proceedings in the nature of a claim of set-off, for example, a claim which defeats the suit entirely or a counter claim seeking a decree against the plaintiff. These claims are to be made in a written statement. Therefore, ‘other proceeding’ should be read to mean ‘other proceedings in the suit’. This is also consonant with the exceptions laid down in sub-s. (3) which refers to suits.

“…It is well established that when general words follow particular and specific words then the general words are to be ordinarily construed to include only those things of the same class as specifically mentioned. Obviously if in the present case the Legislature intended to use ‘other proceeding’ in a general sense as including all kinds of judicial proceedings, then the ‘claim of set-off’ would not have been mentioned. I am, therefore, of the opinion that the words ‘or other proceeding’ in S. 69(3) relate to the proceedings of the nature of set-off and nothing else.”

76. Reliance was also placed on Mahendra v. Gurdeyal. In that case the petitioner got the partnership between him and the opponent dissolved by sending a notice. Later on he filed a suit in the civil Court. The opposite party filed an application before the learned Subordinate Judge for referring the matter in dispute to arbitration under the provision of s. 8 of the Arbitration Act. It was contended that the application put in on behalf of the opponent under s. 8 fell within the ambit of the word “other proceeding” in sub-s. (3) of s. 69. In the first instance their Lordships of the Patna High Court’ pointed that the suit that was filed by the petitioner was in respect of accounts of a dissolved firm. Therefore, there should be no bar to the defendant's written statement asking to send the same matter to arbitration in pursuance to the arbitration clause. At the same time they proceeded to consider the effect of s. 69(3) and arrived at the same conclusion as was arrived at by the Nagpur High Court in the decision referred to above. They further pointed out that, the case, under their consideration stood on a better footing inasmuch as no suit had been filed in that case (by the opposite party) but an application was made to the Court below under the provisions of the arbitration act. A similar view was taken by the Lahore High Court in Hafiz Qamar Din v. Nur Din. In that case an award was already made by an arbitrator and an application was made for filing the award and drawing up a decree in terms of the same. It was contended that such an application fell within the ambit of the words ‘other proceeding’ and therefore, barred. That contention did not find favour with the Lahore High Court.

77. On the other hand Mr. Bhagwati relied upon two decisions one of the Allahabad High Court and the other of the Calcutta High Court: Abdul Jabbar v. Audhesh Singh and Ajit Kumar v. Narcndra Nath. In Abdul Jabbar v. Audhesh Singh the proceedings were initiated under s. 4 of the Encumbered Estates Act. In the written-statement filed by the opponent who were an unregistered firm, a claim was made in respect of certain debts payable by the petitioner. It was held that the claim was barred under sub-ss. (1) and (2) of s. 69 of the Indian Partnership Act. This case was considered in R.L Harnam Dass v. Bal Kruhen at page 160 and it was pointed out firstly, that there was no discussion in the judgment and secondly, the provision of the U.P Act were not brought to the notice of the Judge of the Punjab High Court. Bishen Narain J. observed:—

“… It may be that under that Act the proceedings are deemed to be a suit and this may be borne out by the fact that the learned Judges had applied S. 69(1) to the case and not S. 69(3).”

78. Mr. Bhagwati lays strong reliance on certain observations of the Calcutta High Court in Ajit Kumar v. Narcndra Nath. In that case it was held that, the bar under sub-ss. (1) and (2) of s. 69 which is extended by sub-s. (3) of the same section to ‘a claim of set-off or other proceeding to enforce a right arising from a contract’ does not apply to a defence taken in the written statement that the properties to which the plaintiff claims an exclusive right is the joint property of the plaintiff and the defendants. In the course of the discussion the learned Judge observed (p. 224):—

“…Can it be reasonably said that when a defendant tries to defeat the claim of the plaintiff by setting up a right on the basis of partnership, that is ‘a proceeding’ ‘to enforce a right on the basis of partnership’. In my judgment, the written statement as such is in the first place not a proceeding contemplated in sub-s. (3). In the second place, it cannot, in my judgment, be properly said that by setting up a plea to defeat the plaintiff's claim a defendant can he said to be seeking ‘to enforce a right arising from a contract’. A party can be said to be seeking ‘to enforce a right’ only if he is seeking some relief from the Court.”

79. It is significant to note that their Lordships emphasised that the bar was not applicable to the written-statement as such. This implies that if the written statement goes beyond making defences to the plaintiff's claim, then, that may attract the bar. It is thus clear that the preponderence of authority is in favour of the view I am inclined to take. I would, therefore, hold that the application should proceed. If this view ultimately prevails the costs would abide the result of the proceeding.

80. Per Curiam: Though we agree on the main question we have differed on the preliminary objection. In view of this difference the following question may be referred to a third Judge under cl. 36 of the Letters Patent:—

“Whether in view of the provisions contained in Section 69 of the Indian Partnership Act, 1932, the present petition is maintainable and what provision should be made for the costs of the parties to the petition?”

81. The papers may be placed before the learned Chief Justice for referring the aforesaid question to a third Judge.

82. The matter came up before K.T Desai J. under cl. 36 of the Letters Patent.

83. F.S Nariman, with Sir Jamshedji Kanga, for the petitioners.

84. P.N Bhagwati, with A.N Mody, for the respondents.

85. K.T Desai J.:— This matter has come up before me under cl. 36 of the Letters Patent for the determination of the questions following:

“Whether in view of the provisions contained in s. 69 of the Indian Partnership Act, 1932, the present petition is maintainable and what provision should be made for the costs of the parties to the petition.”

86. There has been a difference of opinion between Mr. Justice Mudholkar and Mr. Justice Naik as regards the answers to be given to the aforesaid questions.

87. I shall briefly state the facts giving rise to the aforesaid questions. The petitioners are a company registered under the Indian Companies Act, VII of 1913. The petitioners carry on business as dealers in manganese ore. In or about July 1955, the petitioners agreed to sell to Messrs Phillip Brothers India. Ltd., an American Company, 10,000 tons of manganese ore of 16/48 grade for shipment abroad during the period January to June, 1956. The terms of shipment provided that 5,000 tons of manganese ore was to be shipped between January to March, 1956 and the balance of 5,000 tons of manganese ore was to be shipped before June 30, 1956. In connection with the supply of these goods a contract was entered into between the petitioners and one Jagdish Chandra Gupta, who carried on business in the firm name and style of Messrs Foreign Import and Export Association, the respondents before me. The terms of the agreement between them have been reduced to writing. The said writing is annexed as exh. A to the petition. Clauses 1, 2, 3 and 4 of the said agreement provide as under:—

“(1) That you (the respondent) are an equal partner in above said joint venture. The profit and loss therein to be shared between you and us (the petitioners) equally i.e Annas -/8/- in a rupee to your A/c and Annas -/8/- in a rupee to our A/c on execution of the contract in full as per terms with the overseas buyers.

(2) That both of us can make purchases of the goods for supply against the above-said contract at the market ruling price but the party while closing the deal finally with the local seller, should have the prior consent of the other party in writing. In case of difference of opinion in regard to price and a quantity to be purchased, the party who desires to purchase such quantity at such price can so purchase and such purchased goods will be adjusted against his share of 5,000 tons.

(3) That both of us agree to invest equally. Advances, if necessary, are to be made-equally to local sellers against the purchasers.

(4) That we both agree to abide by the terms that are set out in the contract with the overseas buyers.

That in case of dispute, the matter will be referred for arbitration in accordance with the Indian Arbitration Act.”

88. In connection with the shipment of 5,000 tons of manganese ore which was required to be made between January to March, 1956, the petitioners called upon the respondents to supply 2,500 tons of manganese ore. The respondents did not comply with that request. Under the circumstances, the petitioners themselves had to supply the full quantity of 5,000 tons of manganese ore to the American purchasers. The petitioners served a notice on the respondents alleging that the respondents had committed a breach of the contract between the petitioners and the-respondents and that the petitioners were entitled to claim damages from the respondents for their failure to supply 2,500 tons of manganese ore for shipment between January to March, 1956. The petitioners claimed a sum of Rs. 1,50,000 from the respondents as and by way of damages. The petitioners further stated that the contract between the petitioners and the respondents provided that in case of dispute the matter would be referred to arbitration in accordance with the Indian Arbitration Act. It was further stated that as it was incumbent upon the petitioners to proceed to enforce their claim against the respondents without further delay, they appointed Mr. R.J Kolah, Advocate (O.S) as an arbitrator on their behalf and trusted that the respondents would agree that he should be the sole arbitrator in the matter. The respondents were requested to appoint another arbitrator on their own behalf if the respondents did not agree to the appointment of Mr. Kolah as the sole arbitrator. It was finally stated that if the respondents failed to appoint an arbitrator on their behalf within 15 clear days after the service of that notice upon them, the petitioner would appoint Mr. R.J Kolah as the sole arbitrator in the reference and proceed accordingly. The respondents declined to comply with the demands made in the aforesaid notice contending that the arbitration clause contained in the contract was vague, uncertain and unenforceable. The respondents stated that they did not agree to the appointment of Mr. R.J Kolah as the sole arbitrator. The petitioners thereupon filed the present petition praying that Mr. R.J Kolah or some other fit and proper person be appointed to act as sole arbitrator for the purpose of the arbitration between the petitioners and the respondents, with like power to act in the reference and to make an award as if he had been appointed by consent of all the parties.

89. The partnership between the petitioners and the respondents has not been registered under the provisions contained in the Indian Partnership Act, 1932. It is contended on behalf of the respondents that having regard to the provisions contained in s. 69 of the aforesaid Act, as the partnership between the petitioners and the respondents is not registered, the present petition is not maintainable. It is urged, on the other hand, on behalf of the petitioners that this section has no application at all to the present petition as it is a petition filed under the provisions contained in s. 8 of the Indian Arbitration Act, 1940. Both Mr. Justice Mudholkar and Mr. Justice Naik, who heard the matter, agreed that in the circumstances of the present case an application under s. 8 of the Indian Arbitration Act, 1940, can lie to the Court and that the Court had power to make an order under sub-s. (2) of s. 8 provided there was no other impediment in doing so. Mr. Justice Mudholkar considered that s. 69 of the Indian Partnership Act, 1932, constituted such an impediment. Mr. Justice Naik was of the contrary opinion. Sub-sections (1) and (3) of s. 69 of the Indian Partnership Act, 1932, provide as follows:—

“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.

(3) The provisions of sub-sections (1) …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.”

90. It is not disputed that the present petition is not a suit within the meaning of s. 69(1) of the Act. It is urged that it is a proceeding to enforce a right arising from a contract within the meaning of s. 69(3) of the Act.

91. Two questions arise for determination: (1) whether the petition is one to enforce a right arising from a contract, and (2) if so, whether the petition is a proceeding referred to in s. 69(3).

92. The contract between the parties provides that in case of dispute “the matter will be referred for arbitration in accordance with the Indian Arbitration Act”. Having regard to the provisions contained in s. 3 of the Arbitration Act, the arbitration agreement must be deemed to include the provisions set out in the First Schedule, in so far as they are applicable to the reference. Under the provisions of cl. 1 of the First Schedule, the reference shall be to a sole arbitrator. A provision in an arbitration agreement that the reference shall be to a sole arbitrator without any qualifying words must mean a reference to a sole arbitrator to be appointed by consent of the parties. Having regard to the provisions contained in s. 3 of the Arbitration Act, the arbitration agreement in the case before me must be deemed to provide that the disputes between the parties have been agreed to be referred to a sole arbitrator to be appointed by the parties. Mr. Justice Mudholkar in the course of his judgment states that both he and Mr. Justice Naik were agreed that “in the circumstances of the present case an application under s. 8 can lie to the Court” provided there are no other impediments to doing so. In the circumstances of the present case, an application under s. 8 can only lie if the arbitration agreement provides that the reference shall be to an arbitrator appointed by consent of the parties. In a case where the agreement provides that the reference shall be to an arbitrator to be appointed by consent of the parties, in the absence of any other provision of law, if the matter was merely left in the realm of contract, until the agreed arbitrator is appointed, there would be no agreement enforceable at law. It would be, in substance, an agreement to agree upon an arbitrator. The Legislature has intervened and has by s. 8 provided that in cases where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent, of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments, any party may serve the other parties with a written notice to concur in the appointment or appointments, and 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, who 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. The right conferred upon a party giving such notice to apply to the Court and to get an arbitrator or arbitrators appointed who would be clothed with the like power to act in the reference and to make an award as if he had been appointed by consent of all parties is a statutory right. It is a right conferred in connection with a contract, but it is not a right which arises from the contract. The right arises from the statute. It is the imposition of the will of the Legislature upon the will of the parties. In the exercise of the power conferred by s. 8, the Court may appoint any person as an arbitrator against the will of any one or more or of all the parties and the person so appointed would have power to act in the reference and make an award as if he had been appointed by consent of all the parties. In my view, the right to make an application under s. 8 of the Arbitration Act is not a right arising from a contract within the meaning of s. 69 of the Indian Partnership Act, 1932.

93. The next point to be considered is whether an application under s. 8 is covered by the words “other proceeding” appearing in s. 69(3) of the Partnership Act, 1932. The matter has been argued at considerable length before me and before Mr. Justice Mudholkar and Mr. Justice Naik.

94. It is urged by Mr. Nariman, the learned counsel for the petitioners, that the words “other proceeding” appearing in s. 69(3) have been preceded by the words “a claim of set-off” and that the words that precede have a demonstrative or limiting effect upon the words that follow. He urges that the words used are not “any other proceeding”, but “other proceeding” and that they cannot be interpreted to refer to every proceeding that may be instituted for the enforcement of a right arising from a contract. In my view, there is considerable force in the argument advanced by Mr. Nariman. The words “or other proceeding” immediately follow the words “a claim of set-off”. When words are used in such juxtaposition; the earlier words have a demonstrative or limiting effect. The earlier words are illustrative or demonstrative of the intention of the Legislature.

95. In this connection, reference may be made to a judgment of the House of Lords reported in Stag Line. Ld. v. Foscolo. Mango & Co. In that case the House of Lords had to consider the words following appearing in certain Bills of Lading:—

“Liberty…to call at any ports in any order, for bunkering or other purposes,….part of the contract voyage.”

96. A cargo of coal was loaded on the appellant's steamship Ixia at Swansea for carriage to Constantinople under Bills of Lading which gave the shipowners liberty in the terms set out above. The steamship having deviated from its usual route in order to land two engineers who were on board the ship for the purpose of observing whether a superheater fitted in the interest of the shipowners was working efficiently, a question arose whether the act of deviation could be regarded as a permitted deviation within the meaning of the words “other purposes” appearing in the bills of lading. In the course of his speech. Lord Buckmaster observes as follows (p. 334):—

“…With regard to the clause of the charterparty, the contention is that to land the two engineers at St. Ives was an ‘other purpose’ within the meaning of clause 6 and consequently permitted by the charterparty itself. This argument depends upon the view that it is impossible to get a specified category in which the words ‘other purposes’ may be confined when the illustrative word at the beginning of the sentence consists only of one description. I find it difficult, and I think it is undesirable, to attempt to specify in exact language what are the limitations imposed by the use of such a word prefacing others of general import. To my mind it is impossible to frame a rule applicable to all the various documents in which such phrases are to be found…. The word ‘bunkering’ must have some demonstrative and limiting effect, and the phrase ‘or other purposes’ following it cannot be so construed as to disregard the effect of the first example and assume that any purpose is thereby permitted. If that were so, the word ‘bunkering’ might be left out. Nor am I prepared to define what are the limitations within which the phrase ‘other purposes’ must be confined, but I can find nothing kindred to bunkering or associated with the operation that is involved in landing two men at a port that is not on any part of the specified route.”

97. Some of the words in the speech of Lord Buckmaster may very aptly be used in construing the provisions of s. 69(3) of the Partnership Act, 1932. Using the language of Lord Buckmaster I find it difficult, and I think it is undesirable, to attempt to specify in exact language what are the limitations imposed by the use of the words “a claim of set-off” prefacing the words “or other proceeding” which are words of general import. The words “a claim of set-off” must have some demonstrative and limiting effect, and the phrase “or other proceeding” following it cannot be so construed as to disregard the effect of the first example and assume that any proceeding is thereby covered.

98. Lord Russell or Killowen in his speech in the same case observes as under (p. 345):—

“While I appreciate the difficulty of applying what is called the ejusdem generis rule where only one species is available out of which to construct the genus, nevertheless it seems clear that some limitation must be placed upon the words ‘other purposes’. If they are to be read as free from any limitation, then it was unnecessary to specify the bunkering purpose. Some restriction must, therefore, exist; and for myself I am in agreement with the view that the ??? call at St. Ives, not being a call for the purposes of the contract venture, was not a call for ‘other purposes’ within the meaning of the liberty.”

99. Lord Macmillan in the course of his speech observes as under (p. 348):—

“…the liberty to call at any ports ‘for bunkering or other purposes’ cannot be read as meaning that the ship was to be at liberty to call at any ports for bunkering purposes or any purposes other than bunkering, for that would be tantamount to saying that she might call at any port for any purpose. I read the words as meaning ‘for the purpose of bunkering or for any similar purpose’. What purposes are similar to the purpose of bunkering I shall not attempt to define…”

100. All the Law Lords in their speeches have taken the view that some limitation has to be placed having regard to the context in which the words have been used.

101. The ratio of this decision is that the words which precede must have a limiting effect upon the words of general import, which follow. There is hardly anything common between a claim of set-off and an application under s. 8 of the Indian Arbitration Act, 1940. In my view, an application under s. 8 of the Indian Arbitration Act, 1940, is not a proceeding covered by the words “other proceeding” appearing in s. 69(3) of the Indian Partnership Act, 1932.

102. My attention was called to a decision of the Full Bench of this Court, reported in Ramrao Bhagwantrao v. Babu Appanna In that case, the Full Bench had to consider the language used in O. XXIII, r. 1, of the Code of Civil Procedure, 1908. The words therein used are the following:—

“… (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 subject-matter of such suit or such part of a claim….”

103. The question in that case was whether the words “by reason of some formal defect” had any limiting effect upon the words “other sufficient grounds” following. After referring to the decision of Chief Justice Sir John Beaumont in the case of Bai Mahakor v. Bhikhabhai Sakalchand. Mr. Justice Lokur observes as follows (p. 160):—

“The learned Chief Justice, however, has added that ‘the two clauses must be read together’ and one has in cl. (a) an illustration of the sort of reason which the Legislature thought would be sufficient, and in that way cl. (a) may, to some extent, limit the generality of the words in cl. (b).

With great respect, we concur in this view, which is exactly what we mean by saying that cl. (a) is illustrative of the ‘grounds’ referred to in cl. (b) and although the ‘grounds’ need not be ejusdem generis with the ground mentioned in cl. (a); they must be ‘at least analogous’ to it. The ground in cl. (a) requires that the suit may fail by reason of some formal defect; whereas the grounds contemplated in cl. (b) need not necessarily be fatal to the suit, but must be analogous to a formal defect.”

104. Another decision to which my attention was called is the one reported in R.L Harnam Dass v. Bal Krishen. In that case, Mr. Justice Bishan Narain held that (p. 160):

“…when general words follow particular and specific words, then the general words are to be ordinarily construed to include only those things of the same class as specifically mentioned.”

105. In that case, the learned Judge had to consider whether the provisions contained in s. 69 of the Partnership Act, 1932, extended to an application under the Displaced Persons (Debts Adjustment) Act, 1951. He held that the words “or other proceeding” in s. 69(3) relate to the proceedings of the nature of set-off and nothing else. He further held that the words “or other proceeding” should be read to mean “other proceedings in the suit.”

106. It was urged by Mr. Bhagwati, the learned counsel for the respondents, that the words “a claim of set-off” are wide enough to cover a claim by way of set-off in any proceeding other than a suit. He says that a set-off can be claimed under the provisions of the Presidency-towns Insolvency Act, 1909, and the Provincial Insolvency Act, 1920. He argues that if the words “a claim of set-off” are held not to refer merely to a claim made in a suit, then there is no reason why a limited meaning should be given to the words “other proceeding” so as to exclude proceedings under s. 8 of the Indian Arbitration Act, 1940. Sections 69(1) and 69(2) deal with suits. When the Legislature extended the provisions contained in s. 69(1) and s. 69(2) to a claim of set-off, the Legislature, in my view, had in mind a claim of set-off that may he made in a suit. In my view, the Legislature by using the words “a claim of set-off” did not intend to refer to a claim of set-off in proceedings other than a suit. I am unable to accept any argument based on the assumption that the words “a claim of set-off” cover a claim made in proceedings other than a suit.

107. Some indication may he found of the intention of the Legislature, in using the words “other proceeding” in s. 69(3) from the use of the same words in s. 69(4)(b). By s. 69(4)(b) it is provided that s. 69 would not apply 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 s. 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.

108. No one has urged before me that the words “other proceeding” should be construed ejusdem generis and it is not necessary for me to deal with any argument based on such a contention.

109. In my view, reading the provisions of s. 69 as a whole, the words “other proceeding” used in s. 69(3) cannot be construed so as to embrace an application made under s. 8 of the Indian Arbitration Act, 1940.

110. In the result, the question whether in view of the provisions contained in s. 69 of the Indian Partnership Act, 1932, the present petition is maintainable, is answered in the affirmative.

111. As regards costs, there is no reason to depart from the usual rule that costs should follow the event.

112. In view of the fact that the matter was argued at considerable length and has occupied considerable time, both before Mr. Justice Mudholkar and Mr. Justice Naik and before me the fair order to make as regards costs up-to-date would be that the respondents should pay to the petitioners the costs of the petition, when taxed. The matter has been heard in Court and the costs should be taxed on the footing of a hearing in Court and I answer the question accordingly.

Solicitors for the petitioners: Payne & Co.

Solicitors for the respondents: Kanga & Co.