1 2025:CGHC:27165-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR FAM No. 4 of 2025 1 - Charanjeet Chhabra S/o Late Jagatram Chhabra Aged About 83 Years R/o Telipara Bilaspur, District- Bilaspur (Cg) (Defendant No. 3) ... Petitioner(s) versus 1 - Ramesh Kumar Chhabra S/o Shri Omprakash Chhabra Aged About 67 Years R/o Telephone Exchange Road, Behind Geeta Lodge Bilaspur, District- Bilaspur (C.G.) (Plaintiffs And Other Defendants) 2 - Rajesh Kumar Chhabra S/o Shri Omprakash Chhabra Aged About 65 Years R/o Telephone Exchange Road, Behind Geeta Lodge Bilaspur, District- Bilaspur (C.G.) 3 - Baldev Krishna S/o Shri Malikram Aged About 70 Years R/o Street Beside Laxmi Sports, Jagat Niwas, Gondpara, Bilaspur, Tehsil And District- Bilaspur C.G. 4 - Meena Chhabra Wd/o Late Subhash Chhabra Aged About 60 Years R/o Street Beside Laxmi Sports, Jagat Niwas, Gondpara, Bilaspur, Tehsil And District- Bilaspur C.G. 5 - Vijay Chhabra S/o Late Subhash Chhabra Aged About 42 Years R/o Street Beside Laxmi Sports, Jagat Niwas, Gondpara, Bilaspur, Tehsil And District- Bilaspur C.G. 6 - Nishant Chhabra S/o Late Subhash Chhabra Aged About 36 Years R/o Street Beside Laxmi Sports, Jagat Niwas, Gondpara, Bilaspur, Tehsil And District- Bilaspur C.G. 7 - Niharika Chhabra D/o Late Subhash Chhabra Aged About 33 Years R/o Street Beside Laxmi Sports, Jagat Niwas, Gondpara, Bilaspur, Tehsil And District- Bilaspur C.G. ... Respondent(s) (Cause-title is taken from Case Information System) For Appellant : Mr. Shobhit Koshta, Advocate For Respondents : Mr. K. R. Nair, Advocate along with Dr. Veena Nair, Advocate (Division Bench) (Hon’ble Smt. Justice Rajani Dubey Hon'ble Shri Justice Amitendra Kishore Prasad) Digitally signed by SHAYNA KADRI 2 Order on Board Per; Amitendra Kishore Prasad, Judge 24/06/2025 1. Being aggrieved by the impugned judgment and decree dated 20.12.2024, passed by the learned 2nd Additional District Judge (Commercial Court), District Judge Level, Bilaspur, District Bilaspur, Chhattisgarh, in Civil Suit No. 209A/2007, whereby the learned trial court allowed the suit filed by the plaintiffs, a decision which is illegal, perverse, and contrary to the provisions of law. 2. The brief facts leading to the present appeal are that the plaintiffs / respondents No. 1 and 2 herein filed the suit seeking a declaration of their rights as partners, recovery of profits along with interest, and injunction against the defendants. It was averred in the plaint that a partnership firm, registered under the name “Jagat Dal Mill,” was formed between the plaintiffs and defendants for the purpose of carrying on dal milling business. The partnership shares were fixed as Baldev Krishna 24%, Subhash Chand 24%, Ramesh Kumar 24%, Rajesh Kumar 24%, and Charanjeet 4%, together constituting the entire partnership. However, without legally dissolving or terminating the original partnership, defendant Nos. 1 and 2 purportedly formed a new partnership firm named “Shanti Dal Mill,” unlawfully utilizing the assets, resources, and inventory of the initial partnership firm to run their own business. By doing so, they effectively excluded the plaintiffs from participation in the new business and denied them their rightful share of profits, thus illegally removing the plaintiffs from the original partnership. In response, defendant Nos. 1 and 2 filed their written 3 statement denying all allegations, asserting that the new partnership firm “Shanti Dal Mill,” registered on 10/11/1983, did not include the plaintiffs or defendant No. 3 as partners and was exclusively operated by them. They further contended that plaintiffs and defendant No. 3 had no entitlement or claim over the profits, movable, or immovable property of “Shanti Dal Mill” and prayed for dismissal of the suit. Pursuant to an application by the plaintiffs, vide order dated 12/05/2011, the learned trial court referred the dispute for settlement through arbitration before a sole arbitrator. The sole arbitrator, vide award dated 12/07/2012, declared that the partnership in “Jagat Dal Mill” with the plaintiffs and defendants as partners was still subsisting and directed defendant Nos. 1 and 2 to pay jointly and severally a sum of Rs. 7,70,782.62/- along with interest at 6% per annum from 01/04/1985 till 11/05/2011. The appellants, aggrieved by the award, filed objections and an appeal challenging the same, which was rejected by the District Judge for being time-barred vide order dated 11/09/2014. Against this rejection, the appellants preferred Arbitration Appeal No. 39/2014 before this Hon’ble Court. On 01/02/2024, this Hon’ble Court allowed the appeal, set aside the impugned order, and remitted the matter to the District Judge, Bilaspur for fresh consideration of the objections filed by the appellants under the Arbitration Act, 1940. Following the direction of this Hon’ble Court, the learned court below decided the appellants’ objections and dismissed them vide order dated 17/12/2024, which has been challenged before this Hon’ble Court by way of the present arbitration appeal. Meanwhile, the original suit, which was referred to arbitration, came up for hearing before the learned trial Court and vide judgment and decree dated 4 20/12/2024, the Court confirmed the award of the sole arbitrator and passed the decree in accordance therewith. It is submitted that the learned court below committed a grave error by failing to consider the pleadings, oral and documentary evidence on record in their true perspective, resulting in the passing of the erroneous impugned order. Accordingly, the appellants have preferred the present appeal. 3. Learned counsel for the appellant submits that the learned Court below failed to appreciate the settled legal position under the Arbitration Act, 1940, whereby once a matter is referred to arbitration in its entirety and all parties are referred to arbitration, the competent judicial authority or Civil Court ceases to have jurisdiction to entertain or adjudicate upon the same subject matter. Consequently, there was no occasion for the learned trial Court to pass a separate judgment and decree in the suit subsequent to the arbitration proceedings. The judgment and decree passed by the learned trial court are erroneous, without jurisdiction, and legally unsustainable, as the sole arbitrator, pursuant to the reference made by the Court, adjudicated upon the entire subject matter of the suit. Hence, the Civil Court, upon such reference, lacked jurisdiction to decide the suit on merits. The impugned judgment and decree have created an anomalous and untenable situation wherein two executable orders now stand in existence in favour of the plaintiffs, the arbitration award and the Civil Court decree, which is impermissible in law. The learned Court below was unjustified in imposing joint and several liability upon the appellant, despite the sole arbitrator recording categorical findings that the appellant was removed from the original partnership firm along with the plaintiffs, and that the new firm “Shanti Dal Mill” was being run exclusively by defendant Nos. 1 and 2. This 5 position was also admitted by defendant Nos. 1 and 2 in their written statement. Consequently, the period for which recovery of amounts has been awarded corresponds to the time when the appellant and the plaintiffs had ceased to be members of the partnership, thereby disentitling the appellant from any liability with respect to the partnership business during that period. The learned Court below further failed to appreciate that the appellant held only a 4% share in the partnership firm and, even assuming without conceding any liability, such liability could only be proportional to the share of appellant. No joint and several liability can be imposed upon the appellant in the facts and circumstances of the case. The learned Court below committed a grave error by applying the provisions of the Arbitration and Conciliation Act, 1996, whereas the reference in this case was made under the Arbitration Act, 1940. Therefore, the applicable legal provisions are those under the Arbitration Act, 1940, and the entire proceedings and judgment rendered by the Court below are without jurisdiction and liable to be set aside on this ground alone. This Hon’ble Court, while deciding Arbitration Appeal No. 39/2014, had expressly directed the Court below to apply the provisions of the Arbitration Act, 1940, but the Court below has disregarded the said direction and again committed the same error of law and jurisdiction by applying the Arbitration and Conciliation Act, 1996 instead of the Arbitration Act, 1940. Having regard to the facts and circumstances of the case and upon a thorough appreciation of the oral and documentary evidence available on record, the findings recorded by the Court below are perverse, contrary to law, and not sustainable in the eyes of law. For the reasons aforesaid, the impugned findings, being illegal and bad in 6 law, deserve to be set aside and quashed. It is prayed that this Hon’ble Court may be pleased to allow the present appeal and set aside the judgment and decree dated 20/12/2024 passed by the learned trial Court and dismiss the plaintiffs’ suit in its entirety, in the interest of justice and equity. 4. Learned counsel for the respondents submits that the present First Appeal under Section 96 of the Civil Procedure Code has been preferred by the Appellant/Respondent against the arbitration award passed by the learned Sole Arbitrator on 12/07/2012, whereby the respondents were directed to pay the claimant/respondent a sum of Rs. 7,70,782.60 with 6% interest along with Rs. 65,000/- towards fees and expenses which the respondents had refused to pay but were paid by the claimant, plus costs of Rs. 10,000/-. The appeal has been preferred ignoring the express provisions of Section 39 of the Arbitration Act, 1940, which clearly prescribes the manner and forum for filing an appeal against an arbitration award. Accordingly, the present appeal as framed and preferred is not maintainable and deserves to be dismissed forthwith. It is further submitted that the right to appeal is purely statutory and not an inherent or natural right. The Arbitration Act, 1940, being a self-contained code, exhaustively deals with the rights and remedies of the parties including appeals, and the appellant is not entitled to seek remedy outside its provisions. Therefore, the appeal filed under Section 96 CPC is without jurisdiction and is liable to be dismissed. The appellant has already preferred Arbitration Appeal No. 21/2025 which is pending adjudication before this Hon’ble Court. This conduct of the appellant indicates a mala fide 7 intention to frustrate and delay the rightful enforcement of the award in favour of the respondents, which is unjust, unreasonable, and contrary to the spirit of arbitration as an alternative dispute resolution mechanism. Arbitration proceedings are designed to provide a speedy and efficacious remedy, and continuous appeals under different provisions and statutes to delay or defeat the award frustrate the very purpose of arbitration. Hence, the present appeal is liable to be dismissed on grounds of abuse of process. It is a settled proposition of law that where a statute prescribes a particular manner of doing a thing, it must be done strictly in that manner or not at all, as held by the Hon’ble Supreme Court in the matter of Babu Varghese vs. Bar Council of Kerala, reported in (1999) 3 SCC 422 and Brajendra Singh Yembem vs. Union of India, reported in (2016) 9 SCC 20. Section 39 of the Arbitration Act, 1940, explicitly enumerates the orders which are appealable, and no appeal lies against any other orders. The appellant has not complied with these statutory provisions and has travelled beyond the scope of Section 39 in preferring the present appeal, which is therefore not maintainable. Section 17 of the Arbitration Act, 1940, mandates that where the Court sees no cause to remit the award for reconsideration or to set aside the award, it shall proceed to pronounce judgment in accordance with the award and pass a decree thereon. Such a decree is final and binding, and no appeal lies therefrom except on two limited grounds, namely that the decree is in excess of the award or not in accordance with the award. The appellant has not raised either of these grounds in the present appeal. The provisions of Section 17 prohibit any challenge to the judgment and decree passed in terms of the arbitration award because 8 the aggrieved party has been afforded an adequate opportunity to object to the award and seek its setting aside prior to the judgment and decree. The appellants availed of this opportunity by filing objections after the award was filed, which were duly considered and rejected. The appellant, Charanjeet Chhabra, filed objections under Section 34 of the Arbitration and Conciliation Act, 1996 (registered as MJC No.5/2013), while another respondent filed objections under the Arbitration Act, 1940. Notwithstanding that the learned Sole Arbitrator clearly stated the proceedings were governed by the 1940 Act, objections were still preferred under the 1996 Act with mala fide intention to delay the enforcement of the award. The objections were heard and rejected by the learned District Judge on grounds of limitation. Being aggrieved, the respondents preferred Arbitration Appeals Nos. 39/2014 and 43/2014 before this Hon’ble Court, which found merit in their submissions and remitted the objections to the District Judge for reconsideration under Section 30 of the 1940 Act. Pursuant to the Hon’ble Court’s directions, the learned District Judge considered the objections and rejected them by order dated 17/12/2024 (Annexure A-3). Subsequently, judgment and decree were passed on 20/12/2024 in accordance with the award as mandated under Section 17 of the 1940 Act. The present appeal challenges the said judgment and decree, which is not maintainable in law. There is no provision for filing a first appeal or second appeal against the decree passed in terms of an arbitration award under either the Arbitration Act, 1940 or the Arbitration and Conciliation Act, 1996. It is further submitted that when the Arbitration Act prescribes that an appeal shall lie under Section 39 alone, no appeal shall lie under any other statute 9 or rules framed thereunder. The present appeal preferred under Section 96 CPC is therefore in violation of settled legal principles and Supreme Court rulings. In view of the above foregoing submission and the law cited, the present appeal is not maintainable and is devoid of merit, and hence liable to be dismissed. 5. We have heard learned counsel for the parties and also perused the documents enclosed along with this petition. 6. It is a settled legal proposition that arbitration proceedings are governed by a self-contained and exhaustive code under the Arbitration Act, 1940, which stipulates the manner and forum for challenging an arbitration award. Section 39 of the Arbitration Act, 1940 explicitly provides the only mode and forum for appeal against arbitration awards and related orders. No appeal lies outside the scope of this provision. 7. The learned trial Court passed the judgment and decree in terms of the arbitration award as mandated by Section 17 of the Arbitration Act, 1940, which requires the Court to pronounce judgment and pass a decree in accordance with the award once it sees no cause to remit or set aside the award. Such a decree is final and binding. It is well established that no appeal lies against such decree under CPC unless it is shown that the decree is in excess of or not in accordance with the award, neither of which grounds have been raised by the appellant. The challenge of appellant through this appeal is under Section 96 CPC, therefore, does not lie in law and is clearly barred by the statutory scheme of the Arbitration Act, 1940. 10 8. Further, the appellant has already availed of the remedy under Section 39 by filing Arbitration Appeal No. 21/2025 which is pending before this Court. The present appeal is thus an attempt to circumvent statutory provisions and delay the enforcement of the award. The submissions regarding the jurisdiction of the Civil Court to pass the decree subsequent to arbitration, the imposition of joint and several liability, and the alleged erroneous application of the Arbitration and Conciliation Act, 1996 instead of the Arbitration Act, 1940, are matters which ought to have been and have been considered in the arbitration proceedings and the objections thereto. These do not confer jurisdiction on this Court to entertain the present appeal under Section 96 CPC. In light of the foregoing, the appeal is not maintainable and deserves to be dismissed. 9. Accordingly, the present appeal is hereby dismissed. Sd/- Sd/- (Rajni Dubey) (Amitendra Kishore Prasad) Judge Judge Shayna