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2013 DIGILAW 192 (KAR)

HEMANTH G. K. v. LEGNO DOOR SYSTEMS REPRESENTED BY ITS PARTNERS

2013-02-15

A.S.BOPANNA

body2013
ORDER The petitioner is before this Court praying that an Arbitrator be appointed to resolve the dispute between the petitioner and the respondent. 2. Heard the learned counsel for the parties and perused the petition papers. 3. The case of the petitioner is that the petitioner and the respondent Nos.2 and 3 were the partners in respect of the partnership firm viz. M/s. Legno Door Systems. The partnership was commenced from 30.1.2008 under a partnership deed. In respect of the partnership said to have been carried out by the parties, it is contended that there are certain disputes relating to the same in as much as the petitioner has not recovered the investments made towards the partnership. It is in that context, contended that the partnership deed dated 30.1.2008 provides for arbitration in the event of their being any dispute between the parties. The petitioner, therefore, contends that having invoked the said clause, a notice dated 16.11.2010 was issued. Since the respondents have disputed the claim put forth by the petitioner and have not accepted the appointment of the Arbitrator, the petitioner is before this Court seeking appointment of the Arbitrator to resolve the disputes between the parties. 4. The respondents, on being served with the notice in this petition, have appeared and filed their objection statement. The case as put forth by the petitioner is disputed. Though the partnership entered into on 30.1.2008 is admitted, it is contended that the partnership has thereafter been re-constituted by the deed dated 18.6.2010. As per the re-constitution, the petitioner had received a sum of Rs.26,74,080/- and had retired from the partnership. Thereafter, the incoming partner and the earlier existing partner i.e. respondent Nos.2 and 3 herein have continued the partnership is their contention. It is the case of the respondents that, in such situation, the petitioner having suppressed the re-constitution, cannot invoke the arbitration clause existing in the partnership deed, which had subsequently been re-constituted. It is therefore contended that the petition is liable to be dismissed. 5. It is the case of the respondents that, in such situation, the petitioner having suppressed the re-constitution, cannot invoke the arbitration clause existing in the partnership deed, which had subsequently been re-constituted. It is therefore contended that the petition is liable to be dismissed. 5. Learned counsel for the petitioner, however, relying on the additional documents which had been filed before this Court, would contend that from the invoice dated 2.3.2008 and other documents, the nature of the investment by the petitioner is indicated and also by the subsequent minutes of the meeting which was held on 30.8.2009, the nature of the investments made by the petitioner, keeping in view the huge expenditure for putting up the construction, has been referred to and therefore the petitioner who has mobilized a sum of Rs.2.50 Crores, was entitled to reap the benefits of the same and the settlement as claimed at Rs.26,74,080/-cannot be considered as final for which the petitioner is said to have received the amount and retired from the partnership. The documents relied on are also to the effect that subsequently the property belonging to the wife of the petitioner has been leased to the firm and all these aspects would indicate that even if the respondents contend that there is a re-constitution deed, the same is not a valid one, being obtained by fraud and the said issue requires to be considered by an Arbitrator and the actual amount that should be received by the petitioner has to be adjudicated in the matter. The learned counsel would refer to the decision of the Hon’ble Supreme Court in the case of ‘ERACH F.D.MEHTA v. MINOO F.D.MEHTA’ reported in AIR 1971 SC 1653 to contend that, in the said case also when there was a similar contention with regard to the dissolution of the partnership, the Hon’ble Supreme Court was of the view that the said matter requires consideration by the Arbitrator. 6. Learned counsel for the respondents, on the other hand, has relied on the re-constitution deed to point out that first and foremost, the petitioner having relied on a partnership deed, without disclosing the re-constitution, is not entitled to any relief at the hands of this Court for having suppressed the material information while seeking appointment of Arbitrator. 6. Learned counsel for the respondents, on the other hand, has relied on the re-constitution deed to point out that first and foremost, the petitioner having relied on a partnership deed, without disclosing the re-constitution, is not entitled to any relief at the hands of this Court for having suppressed the material information while seeking appointment of Arbitrator. Even otherwise, when the petitioner has received the amounts under the re-constitution deed and has retired from the firm, he cannot thereafter take up a contention that further amounts are due to him. It is therefore the contention of the learned counsel that there is no live claim to constitute a dispute relating to the partnership which existed earlier, for the Arbitrator to consider and adjudicate upon and therefore, the prayer made in the petition is liable to be rejected. On the said proposition, the learned counsel has relied on the decisions of the Hon’ble Supreme Court in the case of S.B.P. AND CO. v. PATEL ENGINEERING LTD. & ANR. reported in AIR 2006 SC 450, in the case of ‘KRISHNA ASSOCIATES v. CENTRAL COALFIELD LTD. & ORS.’ reported in 2001(49) BLJR 1237 and also in the case of ‘UNION OF INDIA (UOI) & ORS. v. ONKAR NATH BHALLA & SONS’ reported in (2009)7 SCC 350 . 7. In the light of the rival contentions, it is necessary for this Court to consider as to whether the case put forth by the petitioner with regard to the existence of arbitration clause and a subsisting dispute remains for adjudication could be accepted and whether an Arbitrator requires to be appointed? 8. First and foremost what is required to be noticed is that the petitioner infact had relied upon a partnership deed dated 30.1.2008 while seeking appointment of an arbitrator. Since, subsequently, the re-constitution deed dated 18.6.2010 has been entered into, the prayer made by relying on earlier partition deed would not arise. But, it would still remain for consideration as to whether the arbitration clause existing in the re-constitution deed could be invoked by the petitioner for the purpose of reference to arbitration. It is no doubt true that there is a clause existing in the said reconstitution deed. However, what is to be noticed is that, by the said re-constitution deed, the petitioner has sought to retire from the partnership after receiving a sum of Rs.26,74,080/-in full and final settlement. It is no doubt true that there is a clause existing in the said reconstitution deed. However, what is to be noticed is that, by the said re-constitution deed, the petitioner has sought to retire from the partnership after receiving a sum of Rs.26,74,080/-in full and final settlement. Since the petitioner has retired from the firm, the remaining terms in the said partnership deed would bind the incoming partner and the continuing partner. Therefore, the arbitration clause, by itself cannot be invoked by the petitioner herein. 9. Further, though the learned counsel for the petitioner contends that the re-constitution deed itself has been obtained by undue influence and coercion and an affidavit is filed at the time of hearing before this Court, the affidavit, at the outset requires to be rejected herein in as much as, in the first instance, no such pleadings were made and furthermore, even if the pleadings were made, the same cannot be decided in the instant petition. But the petitioner would have to question the said document in a properly constituted suit. 10. Be that as it may, what is also necessarily to be noticed is that, in the circumstances, the decision relied on by the learned counsel for the petitioner would not come to his assistance in as much as the position of the said case was where there was dissolution of partnership and there were certain disputes with regard to settlement of accounts with regard to the dissolved firm which had not been finalised. It is in that circumstances, the Hon’ble Supreme Court was of the view that the same would have to be settled by the Arbitrator. However, in the instant case, until the petitioner succeeds in establishing that the re-constitution deed does not bind the petitioner as it was obtained by fraud or undue influence as contended by the petitioner, the fact that he has received certain amounts as full and final settlement would not stand erased. Therefore, in such circumstances, in respect of the partnership itself, the petitioner cannot contend the dispute subsists and the same has to be resolved through arbitration. 11. Therefore, in such circumstances, in respect of the partnership itself, the petitioner cannot contend the dispute subsists and the same has to be resolved through arbitration. 11. In that regard, in my opinion, the decisions relied on by the learned counsel for the respondents would be of assistance where the Hon’ble Supreme Court has categorically stated that while this Court, exercising the power under Section 11(6) of the Act, is required to consider as to whether there is a live dispute and thereafter, consider the appointment of Arbitrator. Furthermore, in similar set of circumstances, the Jharkhand High Court has also held that once there is settlement, it would not be open for seeking arbitration as the remedy of the person would lie in a Civil Court. 12. Therefore, for all the above said reasons, I am of the opinion that the prayer made in the instant petition cannot be granted. If at all the petitioner has any grievance with regard to the re-constitution deed and the amounts received thereunder, the same can only be agitated in an appropriate proceedings in a properly constituted suit in accordance with law. The petition therefore being de-void of merit, is dismissed. No costs.