A.M Farooq, J.:— This is an appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996, against the order dated 19.4.1997, in Miscellaneous Case No. 23/97 on the file of the learned District Judge, Dakshina Kannada at Mangalore.
2. The appellant herein filed an application before the Lower Court under Section 9 of the Arbitration, and Conciliation Act, 1996 (hereinafter referred to as ‘the Arbitration Act’) and sought for permanent injunction to restrain the respondent, his men or agents or any person claiming through him from tresspassing into or in any way interfering with the peaceful possession and enjoyment of A and B Schedule properties shown in the application.
3. Along with the said application, the appellant herein also filed I.A No. II under Section 9(d) of the Arbitration Act read with Order 39 Rules 1 and 2 and Section 151 CPC and sought for an ad-interim order of temporary injunction against the respondent and his men.
4. After entertaining the application, the Trial Court passed an exparte order of temporary injunction on 19.3.1997 After receipt of the Court Notice, the respondent herein appeared before the Lower Court and filed his objections to the application filed by the appellant. The Court below, after considering the materials produced by the parties, passed the impugned order rejecting the application filed by the appellant. It is this order which is challenged in this appeal.
5. The case put forth by the appellant before the Lower Court by filing the application under Section 9 of the Arbitration Act is that he had entered into a partnership with respondent in the year 1976. According to the appellant, he is a doctor and the respondent is also a doctor. The respondent was his teacher in the Medical College. The appellant's mother was also a doctor and she was running a clinic in the premises in question and after her death, the appellant came into possession of the said clinic and it is thereafter that he entered into a partnership with the respondent for running the clinic for a period of 20 years. Admittedly, the partnership deed was not registered. There are several conditions under the Partnership Deed and one of the conditions was that the appellant is to receive certain amount monthly from the respondent.
6. It was alleged by the appellant that after the expiry of the 20 years period as provided under the Partnership deed, he issued a notice to the respondent terminating the partnership and sent another notice directing the respondent to deliver back possession of the Schedule premises to the appellant. Both the notices were replied by the respondent. There is also a Clause in the Partnership deed for referring any dispute between the partners to arbitration. It is the case of the appellant that he has named an arbitrator but the respondent has not named any arbitrator inspite of his request to the respondent. It was submitted by the appellant that under the Partnership Deed he was entitled to be in possession exclusively after the period mentioned in the deed. In view of the provisions of Section 9 of the Arbitration Act, the appellant sought, for issue of perpetual injunction by way of application.
7. The respondent appeared and contended that the application filed under Section 9 of the Arbitration Act is not maintainable without there being any Arbitration proceedings pending. The respondents also denied the allegations made by the appellant in the application. The respondent has also replied to every allegation made by the appellant. The Court below, following the judgment of the Hon'ble Supreme Court in 1997 (1) SCC Page 147, held that the application filed before him under Section 9 of the Arbitration Act was not maintainable. It also observed that when the appellant has sought for possession from the respondent by issuing a notice, the appellant cannot ask for an order of injunction against the respondent.
8. In this appeal which has come for admission today, it is contended by Sri. Manian, the learned Counsel appearing for the appellant that the Trial Court was wrong in holding that the application filed by the appellant under Section 9 of the Arbitration Act is not maintainable. It is submitted by the Learned Counsel that under Section 53 of the partnership Act, when once the partnership is dissolved, neither of the partners can use the property of the firm for his own benefit. It is submitted by him that when there is a deed of partnership and when the partnership is dissolved, irrespective of the fact whether the appellant is in possession or not, he can pray for an order of injunction by virtue of Section 53 of the Partnership Act.
9. I am not inclined to accept any of the contentions raised by the Learned Counsel for the appellant. First of all, let me consider the provisions of Section 9 of the Arbitration Act, Section 9 of the Arbitration Act reads as follows:—
9. Power to party to appoint new arbitrators, or, in certain cases, a sole arbitrator:— Where an arbitration agreement provides that a reference shall be to two arbitrators, one to be appointed by each party, then, unless a different intention is expressed in the agreement:—
(a) if either of the appointed arbitrators neglects or refuses to act, or is incapable of acting, or dies, the party who appointed him may appoint a new arbitrator in his place;
(b) if one party fails to appoint an arbitrator, either originally or by way of substitution as aforesaid, for fifteen clear days after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an arbitrator may appoint that arbitrator to act as sole arbitrator in the reference, and his award shall be binding on both parties as if he had been appointed by consent:
Provided that the Court may set aside any appointment as sole arbitrator made under Clause (b) and either, on sufficient, cause being shown, allow further time to the defaulting party to appoint an arbitrator or pass such order as it thinks fit.
Under the above mentioned provisions, a party through an Arbitration proceeding, may seek the assistance of the Court:—
1. For the appointment of a Gaurdian for a minor or a person of unsound mind, for the purpose of Arbitral proceedings.
2. Their preservation, Interim custody or sale of any goods which are the subject matter of the Arbitration agreement.
3. Detention, preservation or inspection of any property or any jurisdiction subject matter of dispute in Arbitration.
4. Securing the amount in dispute in Arbitration.
5. Interim Injunction or appointment of Receiver and such other interim measure of protection as may appear to the Court to be just and convenient.
It is the contention of the Learned Counsel for the appellant that without there being any Arbitration proceedings, the appellant is entitled to file an application straightaway under Section 9 of the Act. According to the learned Counsel, Section 9 of the Arbitration Act clearly states that a party may, before or during Arbitral Proceedings or at any time after making of the Arbitral award can apply to the Court under Section 9 of the Arbitration Act. In other words, what is contended by the Learned Counsel is that the word ‘before’ used in the Section clearly indicates that such an application can be filed before any proceeding is initiated under the Act before the Arbitral Tribunal.
10. Section 8 of the Arbitration Act relates to the referring of the matters to Arbitration when there is an Arbitration Agreement. The Hon'ble Supreme Court in Sant Ram and Company v. State of Rajastan,1 after considering the provisions of Section 41 of the 1940 Arbitration Act, has held that the initiation or pendency of any proceedings in relation to the Arbitration therefore is a precondition for the exercise of power by the Civil Court under the Second Schedule of the old Act. In Sant Ram's case, the facts were that the party concerned straight away filed an application under Order 39 Rule 1 CPC read with Section 41(b) of the old Arbitration Act. The learned District Judge before whom the said application was filed, rejected the same on the ground that it was not maintainable when no arbitration proceeding was pending and the said order was confirmed in an appeal by the High Court. Therefore, the facts in the case are much similar to the facts in this case. But it is submitted by the Learned Counsel that the Provisions of the old Arbitration Act is quite different from Section 9 of the present Arbitration Act. Section 41(b) of the Arbitration Act, 1940 reads as follows:—
“The Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to, any proceedings before the Court:”
Second Schedule to the 1940 Act is the powers of the Court and Item No. 4 is “Interim injunction or the appointment of a receiver.” Therefore, there is no virtual difference between Section 41 read with Schedule 2 and present Section 9 of the Arbitration Act. Moreover if an interpretation such as the one contended by the Learned Counsel for the appellant is to be given to Section 9, the very object of the Act would be defeated. Any party, who has an agreement for Arbitration with another can rush to a Civil Court and straight away get an order under Section 9 and thereafter keep quiet without referring the matter to Arbitration. That will have a very serious consequence on the provisions of the Act. It could not have been the intention of the legislature in enacting the present Arbitration Act. Further, the very fact that Section 9 comes after Section 8 which deals with the reference of disputes to Arbitration, the only interpretation that could be given to Section 9 is that it could be availed of when an arbitration proceeding is pending before the Arbitral Tribunal or is at the reference stage before the Court or after the Arbitral award has been made.
11. The present Arbitration Act has dispensed with many of the provisions of the 1940 Act where the Court has power to deal with many of the matters. Section 9 and Section 17 of the 1996 Arbitration Act enables the Court to take interim measures. Similar power for taking interim measures is found in Section 17 where Arbitral Tribunal itself has got power to make any interim measure for protection of the subject matter of the dispute. Likewise, Section 31(6) gives power to the Arbitral Tribunal to pass a interim award and in matters with respect to which it may make a final arbitral award.
12. To make any interim measures, there must be proceeding seeking a permanent relief. It is only when arbitration proceeding is initiated or when the matter is before the Court under Section 8 of the Act, the Court is given power to refer parties to Arbitration when a party applies to it concerning the subject matter of the proceeding before the Court. In my view, Section 9 has to be interpreted to give effect to the object of the Act. Under Section 9, a party may before or during arbitral proceedings or at any time after making the arbitral award but before it is enforced can apply to the Court for an interim order of injunction. The party can apply only for an interim injunction and not for permanent injunction as it is now sought for by the appellant. Further the word ‘before’ used in the Section is to be taken as that when the parties are before the Court and before the Court refers the matter to arbitration under Section 8 of the Act on an application by a party or during the arbitral proceedings pending between the parties or after the arbitral award is passed but before it is enforced under Section 36. Hence the contention raised by the appellant that the appellant can file an application under Section 9 directly to the Court for perpetual injunction without any suit or arbitral proceedings pending before an Arbitral Tribunal cannot be accepted.
13. The other contention raised by the Learned Counsel appearing for the appellant is that under Section 53 of the partnership Act, no Partner can deprive the right of the other partner and no partner can use the property of the partnership firm for his own benefit. Further in view of the fact that the present partnership between the appellant and respondent has been dissolved by issue of a notice by the appellant, the appellant should be presumed to have assumed possession of the premises in question and therefore he has correctly sought for an order of temporary injunction. It is also submitted that even otherwise, the Court below ought to have put the parties to terms in view of the facts and circumstances of the case. It is contended by the Learned Counsel appearing for the appellant that since he being the partner of the firm, he should be deemed to be in possession throughout.
14. Even though it cannot be said that the appellant is not in joint possession with the respondent in the premises in question because of the Partnership deed, it cannot be said at this stage with the averments made by the appellant and the materials produced by him that the respondent is not in possession of the property. For grant of an order of temporary injunction against the respondent, it is necessary for the appellant to prove that the respondent is not in possession. The materials on record clearly show that the respondent has been in possession throughout the 20 years and even after the termination notice issued by the appellant. The appellant himself has asked the respondent to deliver possession to him and it is the case of the appellant himself that the respondent has refused to deliver possession of the premises in question. Therefore, the appellant has filed to show that he has got a prima facie case in his favour. The respondent has also produced materials to show that he has been in possession throughout and the premises in question is a clinic where he has been treating many patients and their are several medical equipments and he has got a staff to maintain the premises and if an order of temporary injunction is granted against him, he will be put to great hardship, irreparable loss and injury. On the other hand, the appellant has not produced any materials to show how the respondent will not be put to any loss or hardship or injury, if an order of temporary injunction is issued against him. It was submitted that since the respondent has got two other Nursing Homes in the same city, he will not be put to any hardship or loss. This submission is made for the first time before this Court and even if it is true, merely because the respondent has got other premises elsewhere in the same city, it can never be said that he will not be put to hardship, loss or injury if he has to be restrained from using the petition Schedule premises. Moreover the facts and circumstances of the case show that the respondent has been in exclusive possession and enjoyment of the property and the appellant was receiving monthly emoluments under the partnership deed.
15. It is contended by the Learned Counsel appearing for the appellant that the respondent being a partner, is not entitled to use the premises all alone for his own benefit in view of Section 53 of the Partnership Act. These are all matters to be considered at a final stage when the dispute between the parties are decided by a competent Court. It is not for this Court to say at this stage what rights the parties have got under the agreement of Partnership. The only question to be considered by the Court is whether the appellant has shown a prima facie case. When the petition itself is not maintainable, it has to be held that the appellant has failed to show the same. Moreover an application for permanent injunction cannot at all lie under Section 9 of the Arbitration Act. If at all any application lies, it is only an application for temporary injunction and that too if there is a pending proceeding.
For the above reasons, the impugned order passed by the Court below is in conformity with the provisions of Section 9 and the facts and circumstances of the case. No ground to admit this appeal and it is accordingly dismissed.