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Allahabad High Court · body

2001 DIGILAW 263 (ALL)

ANAND AGARWAL v. BALRAM DAS

2001-03-17

MARKANDEY KATJU, O.BHATT

body2001
ONKARESHWAR BHATT, J. ( 1 ) INSTANT First Appeal From Order has been filed under Section 37 (1) (a) of Arbitration and conciliation Act. 1996. [hereinafter referred to as the 1996 Act ). It is directed against judgment and order dated 19. 2. 2001 passed in Arbitration Case No. 3 of 2001 filed under Section 9 of the 1996 Act. By the impugned order, the District Judge, Varanasi has allowed the application and has restrained the appellants from carrying on business of dissolved firm in the name and style m/s. Kanhaiya Swaran Kala Kendra with its assets and using goodwill. By the impugned order, the Arbitrator appointed by the parties was also appointed Receiver to prepare inventory of the assets and stocks of the aforesaid firm. The Receiver was also directed to take the account books of the firm in his custody and to transact further business of the firm only if it is necessary for the winding up of the affairs of the firm. It was also ordered that Arbitrator will decide the dispute regarding damages, etc. which have been claimed when he decides the disputes and gives his award. ( 2 ) SRI T. P. Singh, learned counsel of the appellants and Dr. R. G. Padia, learned counsel for the respondent have been heard. ( 3 ) M/s. Kanhaiya Swam Kala Kendra is a registered partnership firm. The four appellants and the respondents are partners therein. A deed of partnership was executed on 7. 11. 1983 Incorporating the terms and conditions of the partnership. The partnership deed provides that in case any dispute arises amongst the partners, the same shall be referred to sole Arbitrator. According to the plaintiff-respondent, the entire amount of profit which came to his share was not paid to him, that the firm took loans at higher rate of interest, that the appellant has manipulated the account books of the firm and that the appellants withdrew the money from the firm which was in excess in proportion to the amount paid to the plaintiff-respondent. The plaintiff-respondent, therefore. dissolved the firm with effect from 1. 8. 2000 by sending notice to the appellants on 20. 7. 2000. ( 4 ) TWO points arise for consideration in this appeal : (i) Whether the plaintiff-respondent has right to dissolve the firm? The plaintiff-respondent, therefore. dissolved the firm with effect from 1. 8. 2000 by sending notice to the appellants on 20. 7. 2000. ( 4 ) TWO points arise for consideration in this appeal : (i) Whether the plaintiff-respondent has right to dissolve the firm? (ii) Whether the Court has jurisdiction to pass interim order under Section 9 of the 1996 Act? ( 5 ) CLAUSE 4 of the deed of partnership provides as follows : "partnership business has been started with effect from 4th day of November. 1983 and shall be at will. ( 6 ) APART from the above recital in the deed. Clause 7 of the registration certificate. Annexure-C. A. 5, mentions the duration of the firm at will. Section 7 of the Indian Partnership act. 1932, (hereinafter referred to as the Act] defines partnership at will as follows : "where no provision is made by contract between the partners for the duration of their partnership, or for the determination of their partnership, the partnership is "partnership at will". ( 7 ) SECTION 43 of the Act gives statutory right to a partner to dissolve that partnership at will, which provides as follows : "dissolution by notice of partnership at will.--Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his Intention to dissolve the firm. " (2) The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice. ( 8 ) A perusal of Section 7 of the Act makes it clear that if the contract between the partners does not provide for duration and determination of their partnership, the partnership is "partnership at will. " In the case of Ram Singh v. Ram Chand, AIR 1924 PC 2, the Privy Council has laid down that in a "partnership at will a partner is, as a matter of legal right, entitled to dissolution and relief cannot be refused even though he might have been guilty of misconduct. The appellants have relied upon the case of M. O. H. Uduman and others v. M. O. H. Aslum. The appellants have relied upon the case of M. O. H. Uduman and others v. M. O. H. Aslum. AIR 1991 SC 1020 and it has been contended that the contract of partnership must be read as a whole and the intention of the parties must be gathered from the language used in the contract by adopting harmonious construction of all the clauses contained therein. The Court found that duration of partnership has been expressly provided in the deed, namely, that partnership will continue till there are two partners. In that context, it was held that it was not partnership at will. In the present case, however, there is no such clause in the partnership deed. Therefore, the ratio of the case of M. O. H. Uduman (supra) does not apply to the facts of this case. ( 9 ) THE appellants have next contended that it was a partnership business which was at will and not partnership. On this ground, the finding of the court below is being assailed. It has been mentioned above that in the registration certificate duration of partnership is mentioned at will. It has also been noticed that clause 4 of the partnership deed clearly indicates that partnership shall be at will. The above material shows that partnership is at will and not partnership business. If partnership was at will as found by the court below, the plaintiff-respondent was well within his right to dissolve the firm by giving notice. In case of partnership at will, a simple notice is enough to dissolve the firm. ( 10 ) SO far as the second point is concerned, Section 9 of the 1996 Act provides that : "interim measures, etc. by Court.--A party may. before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to a Court : (i ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (ii) for an interim measure of protection in respect of any of the following matters. namely : (a ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (ii) for an interim measure of protection in respect of any of the following matters. namely : (a ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) interim Injunction or the appointment of a receiver ; (e ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it. " Section 17 of the Act states about interim measures which can be ordered by arbitral Tribunal. ( 11 ) IT is contended that arbitral Tribunal itself could have passed orders regarding interim measures. It is true that under Section 17 of the 1996 Act, arbitral Tribunal can pass orders of interim measures, but the same cannot be enforced as orders of a Court. Under Section 9 of the act, the Court is empowered to pass orders of interim measures before or during arbitral proceedings or at any time after the making of arbitral award. The use of the word, before clearly gives jurisdiction to the Court to pass orders regarding interim measures. ( 12 ) THEREFORE, the application of the plaintiff-respondent under Section 9 of the Act was competent and the Court was equally empowered to pass orders thereon. It has been held in the case of Sundaram Finance Ltd. v. N. E. P. C. India Ltd. , (1999) 2 SCC 479 . ( 12 ) THEREFORE, the application of the plaintiff-respondent under Section 9 of the Act was competent and the Court was equally empowered to pass orders thereon. It has been held in the case of Sundaram Finance Ltd. v. N. E. P. C. India Ltd. , (1999) 2 SCC 479 . that interim order can be sought from the Court even before commencement of arbitration proceedings. Moreover, section 17 of the Act of 1996 will not come into play since the Arbitrator has not yet entered upon his office. A. W. C. 75 ( 13 ) PLACING reliance on the case of (Smt.) Kusum Gupta b. (Smt. , Sarla Devi. 1988 (14) ALR 93, it has been contended by the appellants that the court below has not examined the principles which govern the grant of temporary injunction. The facts of the case of (Smt.) Kusum Gupta (supra) were quite different wherein the firm was reconstituted and the suit was got filed on the behest of Mohan Chand Gupta through his minor son having 5% share in his name in the erstwhile firm. In the present case, the facts totally differ. In the present case the firm was dissolved on 1. 8. 2000. The application under Section 9 of the Act of 1996 was filed thereafter. In the present case, no reconstitution of the firm has taken place and no business is being carried on by any reconstituted firm. The Court below has taken into consideration the three elements for grant of temporary injunction as contemplated in the case of (Smt.) Kusum Gupta (supra) and has recorded findings in favour of the plaintiff respondent. The court below has also taken into consideration all the relevant matters and has exercised its discretion. a court of appeal would not interfere with the exercise of discretion by the court below, if the discretion has been exercised in good faith, after giving due weight to relevant matters and without being swayed by irrelevant matters. If two views are possible on the question, then also the court of appeal would not interfere, even though it may exercise discretion differently, were the case to come initially before it. The exercise of discretion should manifestly be wrong. This has been held in the case of Babu Ram Ashok Kumar and another v. Antarim Zila Parishad, AIR 1964 All 534 . The exercise of discretion should manifestly be wrong. This has been held in the case of Babu Ram Ashok Kumar and another v. Antarim Zila Parishad, AIR 1964 All 534 . ( 14 ) THE court below has also noticed that after dissolution of the firm, the partnership subsists merely for the purpose of completing pending transaction, winding up the business, and adjusting the rights of the partners and for these purposes, and these only, the authority, rights and obligation of the partners continue, as has been held in the case of Saligram Rooplal Khanna and another v. Kunwar Rajnath, AIR 1974 SC 1094 . ( 15 ) IN view of the above discussion, no merit is found in this appeal and it is accordingly dismissed. Costs on parties. Interim order is vacated.