Prima Facie Proof Needed To Interpret S. 8 Invocation, M.P High Court Applies Prima Facie Approach, Dismisses Revision Based On Lack Of Proof

Brief Facts:

Mr J.K. Sthapak (“Petitioner”) entered into a partnership deed with Mr Satish Kumar Saxena and Mr Manish Saxena (“Respondents”). Clause 22 of the partnership deed had an arbitration clause concerning disputes arising between the parties, touching the firm's business or interpretation of any subsequent provisions relating to the firm and its business. The Petitioner contended that the Respondents had given 3 cheques to him totalling Rs. 22 Lakh concerning the business of the firm and under Clause 9 of the partnership deed. Allegedly, this amount was transferred to the Petitioner for his share in part of the capital invested in the partnership firm.

When a dispute arose regarding this transfer, the Petitioner approached a Civil Court in Bhopal invoking Section 8 of the Arbitration and Conciliation Act (“Arbitration Act”). His application was dismissed. He filed an appeal in the District Court. However, the appeal was again dismissed. Feeling aggrieved, he filed a revision petition in the High Court of Madhya Pradesh (“High Court”) under Section 115 of the CPC.

The Respondents contended that there was no evidence on record indicating that the transaction of Rs. 22 Lakh was related to the business of the partnership. According to them, there was no prima facie evidence establishing that the amount was given in connection with any business of the firm.

Observations by the Court:

The High Court observed that two cheques out of three were issued from the firm's account and one cheque was issued from the Respondent's account. The High Court further noted that even prima facie, there was no evidence to demonstrate that Rs. 22 Lakh was given to the Plaintiff from the firm's account. Consequently, there was no record suggesting that the mentioned amount was provided to the Petitioner concerning the partnership's business. As a result, the High Court concluded that Clause 22 of the partnership deed, which pertained to arbitration in business-related disputes, would not be applicable in this case.

The High Court also examined the order passed by the Appellate Court and found that it took into consideration the petitioner's submissions and the available documents on record. The Appellate Court concluded that there were no grounds to interfere with the impugned order passed by the trial court. The High Court acknowledged that the Appellate Court's order was well-reasoned and considered all the facts and documents available on record.

Conclusively, the High Court, after reviewing the observations and decisions of the lower courts, determined that there was no illegality or perversity committed by them. Therefore, the Plaintiff's revision petition, seeking to invoke Section 8 of the Arbitration Act was dismissed.

Case Title: J.K. Sthapak vs Satish Kumar Saxena and Anr.

Case No.: Civil Revision No. 571 of 2022

Advocate for the Applicant: K.S. Wadhwa

Advocate for the Respondents: Shri Mukesh Agrawal

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