Research › Search › Judgment

Calcutta High Court · body

2024 DIGILAW 1154 (CAL)

Hamida Khatoon v. Meraj Yusha

2024-06-18

BISWAROOP CHOWDHURY, I.P.MUKERJI

body2024
JUDGMENT : I.P. MUKERJI, J. 1. All these appeals involve identical questions of fact and law and are being disposed of by this common judgment and order. 2. Each of the appeals arises out of a judgment and order dated 22nd December, 2023 made by a learned single judge of this court in an application under Section 9 of the Arbitration and Conciliation Act, 1996. By this judgment and order a show cause notice dated 20th October, 2023 issued by a partnership firm to one of its partners, Meraj Yusha asking him to show cause why he should not be expelled and the decision on it by the firm dated 15th November, 2023 expelling him from the partnership was stayed for a period of six weeks from the date of the order or until any contrary or further order was passed by the arbitral tribunal, to be constituted. The arbitral tribunal in terms of this order was to be constituted within four weeks of its pronouncement. It has been constituted. The learned arbitrator has entered upon the reference. 3. The dispute concerns a partnership firm M/s Serajuddin & Company. It has two offices, one registered, at P-16, 72, Bentinck Street, Kolkata- 700001 and the other described as the head office at 19/A Abdul Hamid Street, 1st Floor, Kolkata-700069. 4. Up to a point of time it had five partners Meraj Yusha, Sarosh Yazdani, Seraj Yusha, Mohammad Intekhab Alam and Hamida Khatoon. The firm was reconstituted from time to time, lastly on 18th July, 2019 with six partners Meraj Yusha, Hamida Khatoon, Mohammad Intekhab Alam, Sarosh Yazdani, Seraj Yusha and Mohammad Mofazzalur Rahman. 5. On 16th June, 2023 Mohammed Mofazzalur Rahman died, very prematurely. 6. The firm has a large business which started in or about 1957 of excavation and operation of mines of minerals and ores obtained on a lease from the government of the Balda Block Iron Ore mine in the district of Keonjhar, then Orissa and now Odisha. 7. Meraj Yusha, Sarosh Yazdani and Seraj Yusha are full blood brothers. They own shares in and are directors of Yazdani Steel and Power Limited (YSPL) Yazdani International Private Limited, Serajuddin & Co. Pvt. Ltd and F. Serajuddin Exports Pvt. Ltd. Each of the above three persons has 24.19% share holding in F. Serajuddin Exports Pvt. Ltd., 19.96% in Serajuddin & Co. They own shares in and are directors of Yazdani Steel and Power Limited (YSPL) Yazdani International Private Limited, Serajuddin & Co. Pvt. Ltd and F. Serajuddin Exports Pvt. Ltd. Each of the above three persons has 24.19% share holding in F. Serajuddin Exports Pvt. Ltd., 19.96% in Serajuddin & Co. Pvt. Ltd. and 32.81% in Yazdani International Private Limited. In YSPL, Sarosh Yazdani has 11.80% share, Seraj Yusha has 10.68% share and Meraj Yusha has 11.80% share. 8. After its reconstitution in 2019 the shares in the partnership were as follows: S. No. Partner Name Shares 01. Mohammad Mofazzalur Rahman 42.79/158 02. Hamida Khatoon 42.79/158 03. Mohammad Intekhab Alam 23.04/158 04. Sarosh Yazdani 16.46/158 05. Seraj Yusha 16.45/158 06. Meraj Yusha 16.46/158 9. Some clauses in the partnership deed are of vital importance. 10. Clause 14 stipulates that Mohammad Mofazzalur Rahman and Seraj Yusha would act as Joint Managing Partners of the firm with power to “negotiate and contract on behalf of the firm” with power under Clause 15 to delegate their functions to any other partner. Clause 18 authorizes the Joint Managing Partners to open and operate bank accounts in the name of the firm. Clause 20 deals with the power of the majority of the partners to expel a partner. Clause 21 authorizes the majority of the partners to take decisions. 11. There was unanimity and cooperation between the partners till the middle of 2023, when Mohammad Mofazzalur Rahman died. Clause 13 of the Partnership Deed provides that in case of death of a partner, his legal heirs would have the option of joining the partnership. According to Seraj and the other two partners Hamida and Intakaf Alam, (also referred to hereafter as the majority of the partners) reconstitution of the partnership was not an easy and quick process. It would take time. In that view of the matter, the Managing Committee was reconstituted by designating Seraj as its sole member. 12. On 22nd July, 2023 a resolution was taken which was accepted by Hamida, Intekhab and Seraj but not by Meraj and Sarosh that Seraj would have the sole authority to operate the bank account of the partnership. 13. In that view of the matter, the Managing Committee was reconstituted by designating Seraj as its sole member. 12. On 22nd July, 2023 a resolution was taken which was accepted by Hamida, Intekhab and Seraj but not by Meraj and Sarosh that Seraj would have the sole authority to operate the bank account of the partnership. 13. The tension which was brewing between the partners heightened when the majority of the partners constituting the majority started accusing Meraj and Sarosh of obstructing the mining business of the firm by instructing its finance department not to make payment to the labour and agencies which were operating the mine. Furthermore, they had without the previous permission of the majority of the partners inducted two corporate entities Progressive Logistics Pvt. Ltd. and Responsibility Logistics Pvt. Ltd. to do loading and uploading work in the mines discharging the duly engaged contractor Thriveni Earthmovers (P) Ltd. In this process, the business of the firm was sought to be disrupted. 14. Before proceeding further with this judgment two clauses in the partnership agreement and one provision in the Partnership Act, 1932 need to be looked into. Section 33 of the Indian Partnership Act, 1932 is set out below: “Section 33. Expulsion of a partner (1) A partner may not be expelled from a firm by any majority of the partners, save in the exercise in good faith of powers conferred by contract between the partners. (2) The provisions of sub-sections (2), (3) and (4) of section 32 shall apply to an expelled partner as if he were a retired partner.” 15. (2) The provisions of sub-sections (2), (3) and (4) of section 32 shall apply to an expelled partner as if he were a retired partner.” 15. Clauses 20 and 21 of the agreement between the parties are also set out below: “(20) That the parties hereto may decide to expel a partner on being satisfied that such delinquent partner is unjust and unfaithful to the other partners or acting in a manner detrimental to the interests of firm or prejudicial to any of the partners or has committed any fraud against the firm or any of its partners or has committed any criminal offence or suffered or has been guilty of any act deed or thing that would be grounds for dissolution of partnership and in such cases it shall be lawful for the other partners to issue a notice to the offending partner to show cause as to why the offending partner should not be expelled from the partnership and if he or she shall fail to show good cause to justify the acts complained of by the offending partner, then the partners by a majority may decide to expel the offending partner and on such expulsion the offending partner shall cease to be a partner of the firm with immediate effect and the continuing partners shall have the option to purchase the share of the offending partner in the partnership business and to pay the purchase price to the offending partner or his or her legal representative in accordance with clause 13 hereof. (21) That it is hereby agreed by all the partners that there shall be a meeting of the partners on every second week of every month to discuss or exchange views about the performance of business and to layout plans for future growth and to take decisions in the meeting to the mutual benefit and advantage of the firm and the partners and all decisions taken by a majority of the partners present at the meeting shall be binding upon all the partners.” SHOW CAUSE 16. In exercise of powers under clauses 20 and 21 of the partnership deed on 20th October, 2023 a show cause notice was issued in the letter head of the firm signed by Seraj Yusha, Hamida Khatoon and Mohammad Intekhab Alam to Meraj. 17. In exercise of powers under clauses 20 and 21 of the partnership deed on 20th October, 2023 a show cause notice was issued in the letter head of the firm signed by Seraj Yusha, Hamida Khatoon and Mohammad Intekhab Alam to Meraj. 17. Now, let us have a look at the charges levelled against Meraj in the show cause notice. Many serious allegations were levelled against him. It began with the allegation of fraud and of his acting in breach of faith, contrary to the terms and conditions of the partnership agreement and against its business interest. 18. Thereafter, the show cause notice ventured into some details. 19. It referred to three hypothecation cum guarantee agreements all dated 19th March, 2021 between Tata Motors Finance Ltd., and three companies, YSPL, Responsible Logistics Pvt. Ltd., and Progressive Logistics Pvt. Ltd. where guarantees where furnished by the firm through Meraj without the authority of the other partners. In YSPL the loan agreement had been signed by Meraj as Managing Director of the company. This was in violation of Clause 14 of the partnership deed under which only the managing partners had the power to enter into a contract with third parties. 20. Meraj was also accused of misguiding the employees of the firm by constantly criticizing the majority of the partners. 21. It was alleged that after the death of Md. Mofa Zalur Rahaman, Meraj started obstructing payment of salaries and wages to the workers and employees of the firm, tried to interfere with its banking transactions, preventing or interfering with the performance of the contract by the raising contractor Thriveni Earthmovers Pvt. Ltd. to whom the firm had legitimately granted a contract, encouraging one Ramakant Mishra, whom the other partners had dismissed from the firm to enter its premises at Balda mines by instructing the security guards to permit him to do so, encouraging wrongful and unlawful activities, interfering with the work of auditors, employees and workers, constantly criticizing the decision made by the majority of the partners and encouraging employees to do so. Meraj was also accused of inducting two business entities Progressive Logistics Pvt. Ltd. and Responsible Logistics Pvt. Ltd. to do the loading and unloading work in relation to the mines of the firm at Balda which resulted in consternation amongst local transporters. 22. Meraj was also accused of inducting two business entities Progressive Logistics Pvt. Ltd. and Responsible Logistics Pvt. Ltd. to do the loading and unloading work in relation to the mines of the firm at Balda which resulted in consternation amongst local transporters. 22. Miraj was given three days from the date of receipt of the notice to reply to the charges. He was told that if all the reasons advanced by him were not sufficient, he would be expelled from the partnership. This show cause notice was sent by speed post. 23. A sea of controversy has arisen with regard to its receipt. According to the majority of the partners, it was received by Meraj on 25th October, 2023 at Bhubaneswar. In connivance with the postal authorities, he did not accept the notice. It was returned to the firm by the postal authorities on 30th October 2023. The selfsame show cause notice was sent to Meraj by email on 6th November, 2023 asking him to reply to it by 9th November, 2023. Meraj requested for a fortnight’s time but the majority of the partners gave him time only till 13th November, 2023. They insisted that a meeting would be held on 13th November, 2023 at about 4.00 pm. 24. Meraj did not reply to the show cause notice on merits. He attacked its validity. He said that the majority of the partners had wrongfully refused to reconstitute the firm after the death of Mofazzalur Rahaman, which they were obliged to do. After reconstitution of the firm, a show cause notice could have been validly issued by all except the accused or the majority of the partners. Here, the show cause notice had been signed by Hamida, Intekhab and Seraj which according to Meraj was non-est or null and void. 25. He also did not participate in the personal hearing given to him on 13th November, 2023. 26. In adjudication of the show cause, Meraj was held guilty of “creating unnecessary hurdles in the operation, management and welfare of the firm”. He was also accused of indulging in “undesirable, unethical activities not at all in the interest of the firm and its partners.” 27. By a decision of the firm dated 15th November, 2023 signed by Mohammad Intekhab Alam, Hamida Khatoon, Seraj Yusha, i.e. the majority of the partners Meraj Yusha was expelled from the partnership. Section 9 application 28. He was also accused of indulging in “undesirable, unethical activities not at all in the interest of the firm and its partners.” 27. By a decision of the firm dated 15th November, 2023 signed by Mohammad Intekhab Alam, Hamida Khatoon, Seraj Yusha, i.e. the majority of the partners Meraj Yusha was expelled from the partnership. Section 9 application 28. On or about 22nd November, 2023 the application under Section 9 of the said Act was filed by Meraj Yusha. The reliefs sought were principally as follows: “(b) The show-cause notice dated 20th October 2023 received by the petitioner by a letter/email dated 6th November, 2023 being Annexure 'V' be quashed and/or cancelled and/or permanently set aside; (d) Injunction restraining the respondent No. 4 from representing and/or holding himself out to be the sole managing partner of the firm; (e) Injunction restraining the respondents and each of them and/or their men, servants and agents from unilaterally operating the main bank account of the said firm being account no. (A/c 556420110000849) maintained with the respondent No. 5 bank.” Observation of the learned Single Judge 29. The learned judge made the following conclusions in the impugned judgment and order. 30. The firm and the majority partners had been unable to show a single letter between March, 2021 and October, 2023 disapproving of or objecting to Meraj furnishing the three guarantees on behalf of the firm in favour of Tata Finance. 31. The facts “would show or raise the presumption” of the “complicity” of the firm and the majority partners in the furnishing of the guarantees. It would also “raise the presumption” that they might have been “beneficiaries of the transaction” and that is why they did not object to it. 32. It could not be established that the engagement of Progressive Logistics Pvt. Ltd. and Responsibility Logistics Pvt. Ltd. by Meraj in the mining operations of the firm caused any loss to it. 33. That Meraj created chaos and confusion in the working of the firm to the extent of threatening workers is not substantiated by any material particulars. 34. Meraj’s objection to Seraj’s operating the bank account of the firm and to his functioning as the managing partner did not go well with the latter. He instigated issuance of the show cause to Meraj and his subsequent expulsion. It was not in good faith. 34. Meraj’s objection to Seraj’s operating the bank account of the firm and to his functioning as the managing partner did not go well with the latter. He instigated issuance of the show cause to Meraj and his subsequent expulsion. It was not in good faith. The personal hearing on 13th November, 2023 was an “ineffective mechanism with a foregone conclusion for the purpose of condemning” Meraj. 35. The majority of the partners were in breach of the principles of natural justice in adjudicating the show cause as three days’ notice was too short for Meraj to answer the charges levelled against him. ARGUMENTS 36. On appeal Mr. S. N Mookherjee, learned senior counsel attacked each and every finding of the learned single judge on facts and in law. He made a very elaborate exposition of the facts. He tried to show that there was total absence of bad faith in the expulsion proceedings against Meraj. He started with the show cause notice. Since one of the partners of the firm was dead and reconstitution of the firm was time consuming, it was issued by the surviving members except Meraj, who was the accused and Sarosh who was siding with Meraj. An elaborate show cause notice, indicating the material charges in detail against Meraj was prepared by the majority of the partners. 37. Meraj at that time was staying in Bhubaneswar. The show cause notice dated 20th October, 2023 was issued and dispatched to Bhubaneswar by speed post. It duly reached its destination and was received at the office of the association of flat owners on 25th October, 2023 where Meraj was residing. Meraj did not want this. He connived with the employees of the flat owners’ association office, opened the envelope, read the show cause notice, put it back in the envelope, and sealed it. Taking the aid of postal employees, he caused the envelope to be returned by the postal authority to the sender with the remark that it could not be delivered. On 6th November, 2023 the show cause notice was sent again to Meraj by e-mail giving him three days’ time to reply to it. On 8th November, 2023 he asked for 15 days’ time. This time period was refused by the said firm. On 6th November, 2023 the show cause notice was sent again to Meraj by e-mail giving him three days’ time to reply to it. On 8th November, 2023 he asked for 15 days’ time. This time period was refused by the said firm. A meeting of the partners of the firm was held on 13th November, 2023 at 4 O’ clock in a hotel in Bhubaneswar. 38. Meraj did not file any written reply to the show cause notice. The deliberation at the meeting attended by Meraj Yusha was confined to the validity of the show cause notice and its service on him and the adequacy of the time period granted by it to him to reply. On the death of Mohammed Mofazzalur Rahman, the firm had to be reconstituted with his legal heirs. Meraj said that according to Clause 20 of the Partnership Deed, 2019 a show cause notice could only have been issued by all the other partners or a majority of them on reconstitution of the firm. It was actually issued by three partners wrongfully claiming to constitute majority. Hence it was null and void according to Meraj. 39. According to the majority of the partners, one partner had died and the firm could not be reconstituted as it takes time. Meraj and the other partner Sarosh Yazdani were co-accused. The show cause notice had been validly issued by the majority of the partners. 40. Mr. Mookherjee went on to submit that the strict principles relating to natural justice would not be applicable in the private law domain. He cited Ganesh Chandra Mukerji vs. Gopal Chandra Hazra, AIR 1976 Cal 459 where the principle was summarized thus: “The argument that the said resolution was not made in good faith and no opportunity of hearing was given to the plaintiff prior to the passing of the said resolution is wholly unsustainable as I have already stated that the notice to show cause was duly given to the plaintiff. The resolution was passed by the partners unanimously at a meeting. The said partners cannot be said to constitute a judicial or quasi-judicial tribunal and as such the question of observance of the rules of natural justice cannot and does not arise under any circumstance.” 41. Next learned counsel directed his argument on the mala fide manner in which Meraj had furnished the bank guarantees. 42. Mr. The said partners cannot be said to constitute a judicial or quasi-judicial tribunal and as such the question of observance of the rules of natural justice cannot and does not arise under any circumstance.” 41. Next learned counsel directed his argument on the mala fide manner in which Meraj had furnished the bank guarantees. 42. Mr. Mookherjee said that it did not matter whether the guarantees were invoked or whether it had or had not brought benefit to the firm. Binding the firm to the guaranteed amount which was a large sum of money without the concurrence of the other partners was enough misconduct on the part of Meraj to justify his expulsion. He had acted in utter breach of his obligation towards the firm. He was required to act in good faith which was not evident from this act. Learned counsel showed us the three loan cum hypothecation agreements executed on 19th March, 2021 where Tata Finance was the lender, the above corporate entities YSPL, Responsible and Progressive were borrowers and the partnership firm, the guarantor through Meraj. 43. Learned counsel argued that the show cause notice to Meraj was issued in good faith by the said majority partners duly exercising their powers under Clause 20 of the Partnership Deed read with Section 33 of the said Act. A proper procedure was followed by dispatching the show cause notice by speed post. When the physical notice was returned by the postal authority without being served on the noticee the show cause notice was sent by e-mail. Three days’ time, in the above circumstances to Meraj to answer the show cause was adequate. He did not answer the show cause and maintained his objection that it was invalid. In a properly constituted meeting of the majority partners on 13th November, 2023 where Meraj did not participate, he was expelled. 44. Mr. Mookherjee thereafter brought to our notice a resolution adopted by circulation on 22nd July, 2023. In this resolution the death of Mohammad Mofazzalur Rahman was recorded. It was said that due to his sudden and untimely death the banking operations of the firm which were jointly carried out by the managing partners had come to a halt causing loss to the firm. Reconstitution of the firm by induction of the legal heirs of the deceased partner would take time. It was said that due to his sudden and untimely death the banking operations of the firm which were jointly carried out by the managing partners had come to a halt causing loss to the firm. Reconstitution of the firm by induction of the legal heirs of the deceased partner would take time. In terms of Clause 21 of the Deed of Partnership dated 18thJuly, 2019 Seraj was being authorized to operate the banking account of the firm, by the majority of the partners of the firm, the other two Meraj and Sarosh not agreeing. 45. Our attention was also drawn to Clause 21 of the Partnership Deed it permitted decision of the firm by a majority of the partners. 46. Mr. Mookherjee’s contention was that one of the members of the managing committee died. Since reconstitution of the firm was not possible early, Seraj was justified in discharging the role of the managing committee himself. Furthermore, under Clause 21 of the Partnership Deed his action was supported by the majority of the partners. Moreover, the expulsion of Meraj, operation of bank account by Seraj running the day to day affairs of the firm was authorized by the majority of the partners. 47. Meraj and Sarosh tried to obstruct the proper functioning of the firm by trying to block payments and discharge of duties by the employees of the firm. They also prevented the contractor duly engaged by the firm from working and instead inducted their own designated corporate bodies Progressive, YSPL and Responsibility to operate the mines. This created a local disturbance. 48. They also dissuaded the employees of the firm from carrying out the directions of the majority partners. Hence taking all these factors into consideration, the expulsion of Meraj Yusha was justified. 49. Mr. Uptal Bose, learned Senior advocate and Mr. Ratnanko Banerjee, learned senior advocate appearing for some partners of the firm, adopted the submission of Mr. Mookherjee. Mr. Bose said that the above chain of events indicated that Meraj had not come to court with clean hands. 50. It was canvassed on behalf of Meraj by Mr. Joy Saha, learned senior counsel supported by Mr. Jishnu Saha, learned senior advocate appearing for Sarosh that Meraj had contributed several hundred crores to the capital of the firm. The guarantees provided by the firm brought benefit to it. 50. It was canvassed on behalf of Meraj by Mr. Joy Saha, learned senior counsel supported by Mr. Jishnu Saha, learned senior advocate appearing for Sarosh that Meraj had contributed several hundred crores to the capital of the firm. The guarantees provided by the firm brought benefit to it. A sizable loan had been taken from Tata Finance by three corporate entities Yazdani, Progressive and Responsibility to undertake mining work in the mine leased out to the partnership firm by the government. The partners of the firm had substantial interest in these companies. They were aware of the loan and acquiescenced to the firm providing the guarantees. Guaranteeing those loans by the firm resulted in positive benefit to the firm. They were not invoked. 51. To my mind the most compelling submission of Mr. Saha was that in its appellate jurisdiction the court should not interfere with the discretion exercised by the learned trial court in granting an order of injunction, unless the order was perverse or grossly erroneous or unreasonable, citing Wander Ltd. & Anr. vs. Antox India Pvt. Ltd. 1990 (Supp) SCC 727 and followed in Esha Ekta Appartments CHS Ltd. and Ors. vs. Municipal Corporation of Mumbai and Anr. (2012) 4 SCC 689 . DISCUSSION 52. I will start with the argument that a court of appeal should not interfere with the exercise of discretion made by the trial court in the grant of an interlocutory order. I will open with the case of Wander Ltd. & Anr. vs. Antox India Pvt. Ltd. 1990 (Supp) SCC 727. This case was dealing with intellectual property matters. 53. It is usual in this type of cases that the respective strength of the case of the parties is uncertain at the interim stage, as there has been only partial disclosure of evidence. The rights of the parties would only crystallize upon its complete disclosure. However, when a substantial question to be tried has been raised, the court treats it as a good prima facie case. On determining the balance of convenience and on evaluation of the comparative hardship of the parties, when the interim order is passed and when it is refused, the court tries to pronounce its interim decision. [See the leading case of American Cyanamid Co. vs. Ethicon Ltd. (1975) 1 All ER 504]. 54. On determining the balance of convenience and on evaluation of the comparative hardship of the parties, when the interim order is passed and when it is refused, the court tries to pronounce its interim decision. [See the leading case of American Cyanamid Co. vs. Ethicon Ltd. (1975) 1 All ER 504]. 54. In other cases which include this, the prima facie case has to be evaluated on the basis of the evidence disclosed. The court has to be decide prima facie whose case is stronger. Then comes the question of balance of convenience or comparative advantage and disadvantage gained by the parties by the interim order. 55. Unless the assessment of these factors by the court is found to be grossly erroneous, unreasonable or arbitrary, irrational or perverse the appellate court will not interfere with the exercise of this discretion, although the opinion or view of the appellate court is different or based on a better adjudication of the facts and would produce a fairer overall result. The appellate court is only to see that the discretion of the trial court has been used in a reasonable manner. 56. The Supreme Court in Wander said: “The Appellate Court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by the court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the Trial Court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion.” [See also Esha Ekta Apartments CHS Ltd. & Ors. vs. Municipal Corporation of Mumbai & Anr. If the discretion has been exercised by the Trial Court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion.” [See also Esha Ekta Apartments CHS Ltd. & Ors. vs. Municipal Corporation of Mumbai & Anr. (2012) 4 SCC 689 (Paragraph 19 and 20) following Wander cited by the respondents] 57. Now the question arises whether the exercise of discretion by the learned single judge in passing the interim order calls for interference by this court at this stage. 58. The reasons advanced by the learned judge in staying the show cause notice and the expulsion order are tenable and most plausible. I would say that there has been proper use of discretion by the learned judge. By no stretch of imagination can the conclusions reached by her be described as unreasonable or, grossly erroneous or perverse following the principle in Wander Ltd. and Anr. Vs. Antox India Pvt. Ltd. 1990 (Supp) SCC 727 and its subsequent approval by the Supreme Court in Esha Ekta Appartments CHS Ltd. and Ors. Vs. Municipal Corporation of Mumbai and Anr. (2012) 4 SCC 689 (paragraphs 14 and 15). 59. As I have noted earlier, the learned judge while disposing of the Section 9 application on 22nd December, 2023 by a detailed judgment and order stayed the show cause notice dated 20th December, 2023 and the expulsion order dated 15th November, 2023 for a period of six weeks or until “further orders were passed in the arbitration” whichever was earlier. 60. Now, it is to be noted that the learned single judge did not make this interim order operative till a final award was passed. This direction by itself shows that the court was expecting further consideration of the case at the interim stage of the arbitration, most likely under Section 17. This is more apparent from a further direction upon the petitioners in the Section 9 application, Meraj Yusha to “take steps to constitute an arbitral tribunal.......within a period of four weeks from the date of this judgment.” 61. The prima facie findings of the learned judge have been elaborated above. This is more apparent from a further direction upon the petitioners in the Section 9 application, Meraj Yusha to “take steps to constitute an arbitral tribunal.......within a period of four weeks from the date of this judgment.” 61. The prima facie findings of the learned judge have been elaborated above. The very nature of the observations and directions made by the learned judge suggests that “the legal right asserted by the plaintiff and its alleged violation are both contested and uncertain and remained uncertain till they are established at the trial on evidence” and the interim order passed was “intended to preserve.......the rights of parties which may appear on a prima facie case” following the principle laid down in Wander Ltd. and Anr. Vs. Antox India Pvt. Ltd. 1990 (Supp) SCC 727. 62. Undoubtedly, a substantial case had been found by the learned judge, deserving to be tried. In addition to that, the learned judge was able to evaluate on the basis of the available evidence the respective strength of the parties and come to the prima facie conclusion that the show cause notice and the expulsion order ought to be stayed for a limited period. 63. Now, the question arises as to what are the further facts which need to be established even at the prima facie stage in arbitration. 64. Three companies Yazdani Steel and Power Ltd. (YSPL), Progressive Logistics Pvt. Ltd. and Responsible Logistics Pvt. Ltd. took loan, of a substantial amount from Tata Finance, each by an agreement dated 19th March, 2021. Let us assume that the majority of the partners had shares or interest in each of these companies, which were debtors under the loan agreements. The liability of each under the loan would be limited to his or her shareholding, at the most. In executing guarantees on behalf of the firm, Meraj had bound all the partners to an unlimited liability on guarantee. 65. Whether the loan amount was claimed from the guarantor firm or not was not material but within the period of limitation, it was capable of being claimed from them. Whether this act of Meraj under Clause 20 of the Partnership Deed amounted to delinquency or unfaithfulness towards the other partners or acting in a manner prejudicial to the firm or the partners or fraudulent? Whether this act of Meraj under Clause 20 of the Partnership Deed amounted to delinquency or unfaithfulness towards the other partners or acting in a manner prejudicial to the firm or the partners or fraudulent? Of course, the express or implied consent or acquiescence of the other partners to furnishing of this guarantee or their quietness for one and a half years after knowledge of execution of the guarantees are most relevant facts which also need to be investigated. 66. Then comes the version of Seraj that reconstitution of the firm on the death of Mohammad Mofazzalur Rahaman by his legal heirs would take time and that in the intervening period there was a great necessity for functioning of the Managing Committee, including its operation of the bank account. That is why, by a resolution adopted by the majority, opposed by Meraj and Sarosh, Seraj was constituted as the sole member of the Managing Committee and authorized to operate the bank account. Whether this is to be believed or is correct? 67. Also deserving a further investigation is the alleged interference of Meraj with payment of salary to the employees of the firm divesting Thriveni Earthmovers Pvt. Ltd. of their contractual assignment made by the firm in the mines and entrusting it to entities controlled by Meraj and Sarosh thereby disrupting the business of the firm. 68. The provision regarding expulsion of a partner in Section 33 of the Indian Partnership Act, 1932 is most interesting. Ordinarily, a partner cannot be expelled from the firm. The agreement constituting the partnership must provide for expulsion of a partner by “any majority of them”. Secondly, even if the contract provides for expulsion of a partner, it should be exercised by the majority exercising good faith. 69. Now, let us have a look at the clause in the Partnership Deed of 2019 regarding expulsion of a partner. Clause 20 of the said deed is set out below: “20. Secondly, even if the contract provides for expulsion of a partner, it should be exercised by the majority exercising good faith. 69. Now, let us have a look at the clause in the Partnership Deed of 2019 regarding expulsion of a partner. Clause 20 of the said deed is set out below: “20. That the parties hereto may decide to expel a partner on being satisfied that such delinquent partner is unjust and unfaithful to the other partners or acting in a manner detrimental to the interest of firm or prejudicial to any of the partners or has committed any fraud against the firm or any of its partners or has committed any criminal offence or suffered or has been guilty of any act deed or thing that would be grounds for dissolution of partnership...........” 70. In order to invite expulsion a partner has to be delinquent. He has to be unjust and unfaithful to the other partners. He must be acting in a manner which is detrimental to the interests of the firm. He may be expelled if he has committed any criminal offence and so on. He is required to be show caused and answer it. He is required to show “good cause” to defend himself. 71. If the contract between the parties permits expulsion of a partner it has to be in good faith according to the contractual terms on the grounds for such expulsion in the contract and the procedure prescribed therein, following the requirements of Section 33 of the said Act. The rules of natural justice are to be followed to the extent provided in the terms expressly or impliedly. In this case Clause 20 of the agreement between the parties clearly provides that to be expelled a partner had to be delinquent, unjust and unfaithful. He had to act in a manner which was detrimental to the interests of the firm or prejudicial to the partners or had to be guilty of a criminal offence. In expelling a partner on one of the grounds in this clause under Section 33, the majority of the partners had to take a decision which should be in good faith. 72. In view of the final observations of the learned judge as discussed above, further and fuller investigation into the prima facie case is necessitated. 73. In expelling a partner on one of the grounds in this clause under Section 33, the majority of the partners had to take a decision which should be in good faith. 72. In view of the final observations of the learned judge as discussed above, further and fuller investigation into the prima facie case is necessitated. 73. In my opinion, the documents disclosed so far would not even help the arbitral tribunal to re-evaluate the prima facie case. We agree with the learned single judge that more opportunity should have been given to Meraj to answer the show cause notice. More time was required to be given to him. He was required to answer each and every allegation in detail with supporting evidence. A fuller hearing on merits was also required. Meraj’s stand that the show cause notice was non-est or illegal will not do. He is to answer the charges in the show cause notice. The adjudication has to be made by a properly reconstituted partnership firm in the shortest possible time. 74. The entire impugned decision to expel Meraj in the meeting on 15th November, 2023 has to be revisited and reviewed by a reasoned decision. Till such time as the firm is able to come to a fresh decision, the interim order granted by the learned single judge on 22nd December, 2023 shall continue. 75. We appoint Mr. R.N. Bandyopadhyay, Advocate and ex. Joint Secretary, Ministry of Law and Justice, Kolkata (m) 9883050197 and Mr. Koushik Chowdhury, Advocate, member, Bar Library Club (m) 9830262599 as Joint Special Officers at a remuneration of 5000 Gms. and 4000 Gms. respectively to be paid out of the funds of the firm to do the following: (i) To reconstitute the firm by inducting the legal heirs and representatives of Mohammad Mofazzalur Rahman as partners within two weeks of communication of this order. In case the firm cannot be reconstituted as above for unwillingness of the heirs to join the firm, the existing partners would, for the purposes of this order, constitute the firm. (ii) A meeting of the partners of the reconstituted firm shall be convened by the Joint Special Officers within a further period of two weeks with directions upon Meraj to file a reply to the subject show cause notice within that period. (ii) A meeting of the partners of the reconstituted firm shall be convened by the Joint Special Officers within a further period of two weeks with directions upon Meraj to file a reply to the subject show cause notice within that period. (iii) The Joint Special Officers shall watch and supervise the meeting of the partners, and make administrative supervision but shall not participate in it. (iv) Meraj would have a right of personal hearing. (v) The number of meetings or the duration of each meeting for consideration of the show cause is left to the partners of the reconstituted firm, subject to administrative control by the Joint Special Officers. (vi) If the Joint Special Officers are so requested by any partner including Meraj or Sarosh, they shall be seated at a place where they will be unable to watch or hear the deliberations of the meeting. (vii) The decision in the meeting shall have to be handed over to the Joint Special Officers by the firm latest by 31st August, 2024. (viii) The decision shall be circulated by the Joint Special Officers to all the partners, including Meraj. (ix) The impugned judgment and order dated 22nd December, 2023 will only continue till the above decision is made. In the event the firm decides to confirm or reaffirm its decision to expel Meraj, such decision shall not be given effect to, for a period of four weeks from the date of the decision and the interim order dated 22nd December, 2023 will also be extended for four weeks to enable the expelled partner to move the arbitral tribunal. 76. All the appeals and connected applications are disposed of by this order. 77. No order as to costs. I Agree - Biswaroop Chowdhury, J. APOT No. 10 of 2024 Later: Mr. Dhirendra Sharma, learned advocate for the appellants, prays for stay of operation of this judgment and order. Such stay would have the effect of allowing the appeal itself by vacation of the impugned judgment and order dated 22nd December, 2023, which we have extended for a limited period. Hence, such prayer for stay is considered and refused. I Agree - Biswaroop Chowdhury, J.