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2024 DIGILAW 1427 (CAL)

Pradip Kumar Ganeriwala v. Exchange

2024-08-09

KRISHNA RAO

body2024
JUDGMENT : Krishna Rao, J. 1. The instant application is filed by the defendant nos. 1 to 4 under Section 8 of the Arbitration and Conciliation Act, 1996, to refer the parties to arbitration for the purpose of adjudication of the pending disputes complained of, by the plaintiff. 2. The plaintiff has filed the suit against the defendants praying for the following reliefs : “(a) A decree for declaration declaring that the plaintiff is not a partner of the Defendant no.1 on and from 1st April, 2022; (b) Perpetual injunction restraining the Defendant Nos. 1 to 4 from in any way or manner dealing with and/or selling any petroleum and/or MS-HSD products in the name of the Defendant No.1 from 3, India Exchange Place, Kolkata 700001, within the jurisdiction aforesaid, till the time, the name of the Plaintiff is removed and/or deleted from the records of all Departments, Statutory Authority and/or Bodies and/or Institutions as a partner of the Defendant No. 1; (c) Perpetual injunction restraining the Defendant No. 5 from supplying for re-sale petroleum products and/or licensed essential commodities to the Defendant No.1 till the time the name of the Plaintiff is removed and/or deleted from each and every Department and/or authority and/or body and/or establishment where the name of the Plaintiff appears as the partner of the Defendant No.1; (d) Mandatory injunction directing the Defendant Nos. 1 to 4 or any of them to file and/or furnish documents and/or undertaking before this Hon'ble Court evidencing and/or declaring removal and/or deletion of the name of the Plaintiff as a partner of the Defendant No.1, from the records of all Departments, Statutory Authorities, Bodies and/or Institutions; (e) A decree for a sum of Rs.7,97,187.76 against the Defendant No.1 towards Plaintiffs capital balance in the Defendant No. 1; (f) A decree for interest 12% per annum for delay in return of Plaintiff's Capital in the Defendant No.1 from the date of Plaintiff's retirement till payment thereof, (g) A decree against the Defendant Nos.1 to 4, jointly and/or severally, for a sum of Rs. 1,00,00,000/-towards the Plaintiff's share as on the date of his retirement in the goodwill of the Defendant No.1; or in the alternative the plaintiff prays for an enquiry to ascertain the goodwill of the Defendant No.1 as on March 31, 2022 and a decree for such sum as may be found due upon enquiry in accordance with the profit sharing ratio of the Plaintiff in the Defendant No.1 as on such date; (h) Injunction; (i) Receiver; (j) Attachment; (k) Costs; (1) Such other or further order or orders, direction or directions as Your Lordships may deem fit and proper.” 3. On 23rd of August, 1994, the plaintiff and the defendant no.2 entered into a Partnership Deed for the business under the name and style of M/s. Exchange with effect from 4th August, 1994 having equal shares in the said business. The partnership business dealing with petroleum products as supplied by the defendant no. 5, namely, Bharat Petroleum Corporation Limited and the defendant no.1 is referred to as dealer/ retail outlet of the defendant no.5. 4. In the year 2017-2018, certain disputes arose between the plaintiff and the defendant no.2 with regard to working and functioning of the defendant no.1 firm. The defendant no.2 asked the plaintiff not to involve himself in the working and functioning of the defendant no.1 and assured the plaintiff that he will get his due share of profits out of the working of the defendant no.1 firm after conclusion of every financial year. 5. The plaintiff in bonafide and in good faith without asking any question to the defendant no.2 accepted whatever money was being paid by the defendant nos. 1 and 2 to the plaintiff as plaintiff’s share or entitlement from the profit of the defendant no.1 as one of the partner of the defendant no.1 firm. As per advice of defendant no.5 and as per the format provided by the defendant no. 5, the plaintiff and the defendant no.1, the defendant no.2 and the defendant no. 5 have entered into a fresh agreement in the year 2020. 6. In the year 2021, the plaintiff expressed his desire to sever all ties with the defendant no. 1 and decided to retire from the defendant no. 1 and also sought to return all his Capital in the defendant no. 1, his share in profit of the defendant no. 5 have entered into a fresh agreement in the year 2020. 6. In the year 2021, the plaintiff expressed his desire to sever all ties with the defendant no. 1 and decided to retire from the defendant no. 1 and also sought to return all his Capital in the defendant no. 1, his share in profit of the defendant no. 1 as on the date of his retirement and also his share in the Goodwill of the defendant no. 1. 7. The defendant no. 2 further conveyed such desire of the plaintiff to the defendant no.5 since the defendant no.1 was a retail outlet, it was governed by the Rules and Guidelines framed by the defendant no.5 time to time and it was duly accepted and acknowledged by the defendant no.5. Further a Deed of retirement was prepared in accordance with the format provided by the defendant no. 5 to which the plaintiff had singed without having much to say and the plaintiff retired from the defendant no.1 firm on or around March, 2022. 8. The defendant no.2 informed the plaintiff to cite the reasons for retirement from the partnership of the defendant no.1 firm as ill health and old age and the defendant no.2 also suggested the name of the defendant nos. 3 and 4 as new incoming partners of the defendant no.1. The defendant no.2 also assured the plaintiff that all the dues of the plaintiffs’ share in the defendant no. 1, shall be paid to plaintiff immediately after approval of sanction of reconstitution of the defendant no. 1 by the defendant no.5. 9. On and from 1st April, 2022, the constitution of the defendant no.1 stood changed and the plaintiff is no longer as partner to the defendant no.1 firm. The defendant nos. 3 and 4 have been inducted as partners of the defendant no.1 with the defendant no.2. 10. The plaintiff has filed the suit on the pretext that the plaintiff has retired as partner of the defendant no.1 but the defendants have not taken any steps for removal of the name of the plaintiff as partner of the defendant no.1 in the various records of the different authorities and the defendants has also not paid shares in the capital of the defendant no.1 to the plaintiff. 11. 11. The contention of the defendants that as per Clause 12 of the Partnership Deed dated 23rd August, 1994, the parties are required to be referred to arbitration. 12. The defendants say that the defendant nos. 2 to 4 have recorded the factum of retirement of the plaintiff from the defendant no.1 firm in the records of all government departments, authorities and concern bodies. They submit that the name of the plaintiff does not appear as partner of the defendant no.1 in the Register of Firms. 13. The defendants say that the claims made by the plaintiff in the present suit are within the compass of Clause 12 of the Partnership Deed dated 23rd August, 1994 entered between the plaintiff and the defendant no. 2. The defendants say that the plaintiff has inducted the defendant nos. 3 to 5 as defendants in the present suit only avoid the arbitration Clause as there is no cause of action arose against the defendant nos. 3 to 5 in the present suit. 14. In paragraph 29 of the plaint, the plaintiff has categorically made an averment that “the disputes complained of in the instant suit arises out of a Partnership Agreement”. In the Partnership Agreement, the defendant nos. 3 to 5 are not the parties. Clause 12 of the Partnership Deed reads as follows : “That in case of any dispute arising between the partners or their legal representatives, the same shall be referred for decision of Chief Divisional Manager of Bharat Petroleum Corporation Ltd., under whose jurisdiction the retail outlet is situated for Arbitration either by him or his nominee(s). The decision of the said arbitrator shall be conclusive and binding on all the partners.” 15. The plaintiff has mainly four grievances in the suit namely (i) declaring that the plaintiff is not the partner of the defendant no.1 since 1st April, 2022, (ii) restraining the defendants nos.1 to 4 from dealing or selling any petroleum products in the name of the defendant no.1, till the name of the plaintiff is removed or deleted from all the records of the departments, authorities and concerned bodies as partner of the defendant no.1, (iii) decree against the defendant no.1 for release of capital balance of Rs. 7,97,187.76/-in favour of the plaintiff and (iv) decree for Rs. 7,97,187.76/-in favour of the plaintiff and (iv) decree for Rs. 1,00,00,000/-against the defendant nos.1 to 4 being the plaintiff’s share as on the date of retirement in the goodwill of the defendant no.1. 16. As per the case made out by the plaintiff that even after the plaintiff is retired from the partnership of the defendant no.1 with the defendant no.2 and even after defendant nos. 3 and 4 are inducted as partners of the defendant no.1 with defendant no.2, the defendants have not taken any steps for deletion of the name of the plaintiff from records of various authorities and the defendants continues to operate and run its petroleum outlet which is in the name of the plaintiff which expired long back. 17. Section 8 of the Arbitration and Conciliation Act, 1996 deals with the power of the judicial authority to refer the parties to arbitration. The core of the provision is that if there is a valid arbitration agreement existing between the parties and a dispute arises which is a subject matter included in the said arbitration agreement, then the judicial authority before whom either of the parties has brought the case is obligated under Section 8 of the Arbitration and Conciliation Act, 1996 to direct the parties to resolve their dispute through arbitration. This Section minimises judicial intervention by making it mandatory for the Court to direct the parties to go for arbitration if they have included an arbitration clause in their agreement. To further increase the scope of arbitration, the 2015 Amendment to Section 8 of the said Act made it compulsory for the judicial authority to refer the parties to arbitration irrespective of any decree or court order or judgement of any court. The Section 8 of the Arbitration and Conciliation Act, 1996, reads as follows : “8. Power to refer parties to arbitration where there is an arbitration agreement. (1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. [Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.] (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.” 18. Upon combine reading of the whole plaint, it reveals that the plaintiff has categorically made claim against the defendant nos. 3, 4 and 5 also. After induction of the defendant nos. 3 and 4 as partners of the defendant no.1 with the defendant no.2, even after the defendants are using the name of the plaintiff and to that effect, this Court by an order dated 18th September 2023, 4th October 2023 and 4th December 2023 has passed several directions for removal of the name of the plaintiff from license. 19. This Court finds that the plaintiff has made the defendant nos. 3 to 5 as party to the suit and specific case has been made out against the defendant nos. 3 to 5 that they have not taken any steps for removal of the name of the plaintiff from the record of the defendant no. 1 and also not paid the amount to the plaintiff which, the plaintiff is entitled to get the same after retirement as partners of the defendant no. 1 and admittedly, the defendant nos. 3 to 5 are not the parties to the Partnership Deed entered between the plaintiff and the defendant no. 2 and thus Clause 12 of the Partnership Deed is not applicable against the defendant nos. 3 to 5. 20. The case made out by the defendants that the plaintiff has set up illusory cause of action against the defendant nos. 3 to 5 is not sustainable. 21. 2 and thus Clause 12 of the Partnership Deed is not applicable against the defendant nos. 3 to 5. 20. The case made out by the defendants that the plaintiff has set up illusory cause of action against the defendant nos. 3 to 5 is not sustainable. 21. Considering the above, this Court finds that the defendant nos. 3 to 5 are not the parties to the Partnership Deed entered between the plaintiff and the defendant no.2 and the plaintiff has made out specific case against the defendant nos. 3 to 5 in the plaint and thus the parties cannot be referred to arbitration as per Clause 12 of the partnership deed dated 23rd August, 1994. 22. In view of the above, G.A. (Com) No. 4 of 2024 is dismissed.