Shivcharandas And Sons, Through Partner Sidharth Jain S/o. Late Mukesh Kumar Jain v. Shalu Jain, D/o. Late Rakesh Kumar Jain
2024-07-15
MUNNURI LAXMAN, PUSHPENDRA SINGH BHATI
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JUDGMENT : Pushpendra Singh Bhati, J. 1. This Civil Miscellaneous Appeal has been preferred under Section 37 of the Arbitration & Conciliation Act, 1996 read with Section 13 of the Commercial Courts Act, 2015 claiming the following reliefs : “It is, therefore, prayed that this appeal of the appellants may kindly be allowed with costs and the impugned order dated 2.5.2023 may kindly be set aside and further the application of the appellant under Section 9 of the Arbitration & Conciliation Act, 1996 may kindly be rejected and/or in the alternate, the respondent may kindly be directed not to raise any hurdle or obstacle in running peacefully the business of partnership firm Any other order or directions, which this Hon’ble Court deem just and proper.” 2. Briefs facts of the case, as presented before this Court by the learned counsel for the appellants, are that a partnership deed was executed by one Shri Rakesh Jain (since deceased), Shri Mukesh Kumar (since deceased) Jain and Smt. Mishri Devi in the year 1995 to start a business (Firm) in the name and style “M/s. Shivcharandas and Sons”, and in the partnership deed itself, it was decided that in the event of demise of any of the partners, the said Firm can be run by the legal heirs of that partner(s). 2.1. Subsequently, after the death of Smt. Mishri Devi, a new partnership deed was executed on 13.04.2015, and thereafter, on the death of Shri Mukesh Kumar Jain on 08.08.2020, another partnership deed was executed between Shri Sidharth Jain (the legal heir of deceased Mukesh Kumar) and Shri Rakesh Jain on 09.08.2020, whereafter in the year 2021, upon the demise of Shri Rakesh Jain the present respondent Shalu Jain (legal heir of Late Shri Rakesh Kumar) requested for execution of a new partnership deed from Shri Sidhartha Jain and sent an intimation for the same on 19.05.2021. 2.2. The respondent, on 28.09.2022, a legal notice was sent to appoint Mr. C.S. Kotwani as an Arbitrator to the appellant, as per the terms and conditions of the partnership, to settle the dispute, if any arises, through Arbitration.
2.2. The respondent, on 28.09.2022, a legal notice was sent to appoint Mr. C.S. Kotwani as an Arbitrator to the appellant, as per the terms and conditions of the partnership, to settle the dispute, if any arises, through Arbitration. Thereafter, since the appellants had refused to the above proposition of the respondent, subsequently, an application under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as “Act of 1996”) was filed by the respondent and the same was objected by filing a preliminary objection by the appellants before the learned Commercial Court No. 1, Jodhpur Metropolitan with the contention that as per the Partnership Act, 1932 the partnership deed between the present appellant no.1 and Late Shri Rakesh Jain stood terminated and the partnership dissolved upon death of Shri Rakesh Jain and the respondent, being a third party, had no right whatsoever. 2.3. However, the learned Commercial Court allowed the application under Section 9 of the Act of 1996, vide the order dated 02.05.2023 with a direction not to make any disbursement, change the nature or sale of properties of partnership Firm. Thus, being aggrieved of the impugned order, the present appeal has been preferred. 3. Learned counsel for the appellants submitted that the learned Commercial Court erred in not taking into consideration the fact that the respondent is not a party to the arbitration agreement/partnership deed, that is being relied upon, and thus, there exists no dispute between the appellants and the respondent. 3.1. It was further submitted that the agreement relied upon by the respondent is one that has been executed between Late Shri Rakesh Kumar Jain, Late Shri Mukesh Kumar Jain and Smt. Mishri Devi, whereafter a new partnership deed was entered into between the appellants and Late Shri Rakesh Jain on 02.09.2020, thus as the respondent was not a party to the agreement hence she could not have sought the relief of application under Section 9 of the Act of 1996. 3.2. Learned counsel further placed reliance on Clause 14 of the Partnership Deed dated 09.08.2020 wherein prefixes such as “shall”, “will” or “must” have not been used, thus clearly indicating that the parties to the agreement were not bound to opt for arbitration. 3.3. Learned counsel also placed reliance upon Section 42 of the Partnership Act, 1932, which is reproduced as hereunder : “42.
3.3. Learned counsel also placed reliance upon Section 42 of the Partnership Act, 1932, which is reproduced as hereunder : “42. Dissolution on the happening of certain contingencies- Subject to contract between the partners a firm is dissolved - (a) If constituted for a fixed term, by the expiry of that term (b) If constituted to carry out one or more adventures or undertakings by the completion thereof. (c) by the death of a partner. (d) by the adjudication of a partner as an insolvent. Thus, since on the death of one of the two partners i.e. Rakesh Kumar on 08.04.2021, the partnership deed stood terminated and the partnership Firm came to be dissolved, thereby the partnership deed became ineffective. It was also submitted that since there existed no agreement between the appellants and the respondent, the question of referring the dispute for arbitration or appointment of an arbitrator does not arise; in furtherance, the GSTTIN is also cancelled and the partnership is no longer in existence. 3.4. It was further submitted that the respondent had failed to showcase whether she was actually the daughter of the deceased partner Shri Rakesh Kumar Jain, and thus, under such circumstances, could not assert her right over the income of the business. 3.5. In order to fortify his submissions, learned counsel placed reliance upon the following judgments : (a) Indian Farmer Fertilizer Cooperative limited Vs. Bhadara Products (2018) 2 SCC 534 (b) Mohd. Laiquidding & Anr. Vs. Kamala Devi Misra (Dead) by Lrs & Ors. (2010) 2 SCC 407 (c) Magic Eye Developers Pvt. Ltd. Vs. M/s. Green Edge Infrastructure Pvt. Ltd. & Ors. etc. (Civil Appeal No. 3634-3637 of 2023) decided on 12.05.2023 by the Hon’ble Apex Court. (d) Union of India & Ors. Vs. A.B.P. Pvt. Ltd. & Anr. (Civil Appeal No. 986 of 2011) decided on 12.05.2023 by the Hon’ble Apex Court. (e) Andhra Pradesh Tourism Development Corporation & Anr. Vs. M/s. Pampa Hotels Ltd. (Civil Appeal No. 3272 of 2007) dated 20.04.2010 by the Hon’ble Apex Court. (f) Yeshwant Boolani (dead) through LRs. Vs. Sunil Dhameja & Anr. (Arbitration Case No. 19 of 2024) decided on 31.05.2024 by the Hon’ble High Court of Madhya Pradesh. 4.
(e) Andhra Pradesh Tourism Development Corporation & Anr. Vs. M/s. Pampa Hotels Ltd. (Civil Appeal No. 3272 of 2007) dated 20.04.2010 by the Hon’ble Apex Court. (f) Yeshwant Boolani (dead) through LRs. Vs. Sunil Dhameja & Anr. (Arbitration Case No. 19 of 2024) decided on 31.05.2024 by the Hon’ble High Court of Madhya Pradesh. 4. On the other hand, learned counsel for the respondent, while opposing the submissions made on behalf of the appellants, submitted that the respondent’s father (now deceased) i.e. Late Shri Rakesh Kumar Jain had entered into a partnership with two other persons in the year 1995 and established the business run in the name and style “M/s. Shivcharan Das & Sons”, whereafter a new partnership deed had been entered into by the respondent’s father and the appellants, and in the financial year 2019-2020 as per the profit and loss account and the balance sheet of the Firm, the expenditure of the respondent’s father was shown to be around Rs.17,49,044/-. 4.1. It was further submitted that the respondent is the legal heir of Late Shri Rakesh Kumar Jain and had thus asked for the accounts of the above-said business from the appellants many times and also asked for the dividend share of her Late father, yet no attempt was made towards the same nor was she provided the ledgers of the business, instead the appellants threatened the respondent never to come to the office of the business. 4.2. It was also submitted that one of the conditions included in the partnership agreement was to refer to arbitration, any dispute(s), if any arises, with regard to workings of the business, and thus, a legal notice was also issued to the appellants to that effect. 4.3. In furtherance, it was submitted that the application under Section 9 of the Act of 1996 was filed by the respondent in order to ensure that the assets of the business does not get alienated at the instance of the appellants, thereby causing irreparable loss to the respondent, and thus, the learned Commercial Court had rightly passed the impugned order in favour of the respondent. 4.4. Learned counsel placed reliance on the following judgments : (a) Ravi Prakash Goel Vs. Chandra Prakash Goel & Anr. (Appeal (Civil) 1526 of 2007) decided on 21.03.2007 by the Hon’ble Apex Court. (b) Jyoti Gupta Vs. Kewalsons & Ors. (Arb.
4.4. Learned counsel placed reliance on the following judgments : (a) Ravi Prakash Goel Vs. Chandra Prakash Goel & Anr. (Appeal (Civil) 1526 of 2007) decided on 21.03.2007 by the Hon’ble Apex Court. (b) Jyoti Gupta Vs. Kewalsons & Ors. (Arb. P. 599/2017 & I.A. 1357/2018) decided on 19.03.2018 by the Hon’ble High Court of Delhi. (c) M.E. Narasimhan Vs. Messrs. Sri Balaji Chit & Anr. (S.A. No. 1783 of 2001) decided on 22.10.2018 by the Hon’ble High Court of Madras. 5. Heard learned counsel for the parties as well as perused the record of the case alongwith the judgments cited at the Bar. 6. This Court observes that the a partnership deed was entered into by three persons in the year 1995 with the clause that the aforementioned business could be continued by the legal heirs of the partner(s) on death of any one of them, whereafter in the year 2020 a new partnership deed was executed between Late Shri Rakesh Kumar Jain and Shri Sidhartha Jain (legal heir of Late Shri Mukesh Kumar Jain), and on death of Shri Rakesh Kumar Jain, his daughter Ms. Shalu Jain (respondent herein) sent an intimation to Shri Sidhartha Jain to be made partner to the said business, and thereafter, sent a legal notice, on not receiving a reply to the earlier intimation proposing to settle the dispute through arbitration; the said notice was answered while denying the averments thereof as fabricated. 6.1. Thereafter, an application under Section 9 of the Act of 1996 was filed before the learned Commercial Court and the same was allowed by the learned Commercial Court vide impugned order dated 02.05.2023. 7. This Court further observes that since the present controversy is with regard to allowing of the application under Section 9 of Act of 1996 thus this Court is inclined to adjudicate only upon the matter of interim relief/injunction as had been given in the impugned order. 8. This Court also observes that it is a settled position of law that while dealing with the law of injunction, three aspects need to be seen – 1) prima facie case, 2) irreparable loss, and 3) balance of convenience. 9.
8. This Court also observes that it is a settled position of law that while dealing with the law of injunction, three aspects need to be seen – 1) prima facie case, 2) irreparable loss, and 3) balance of convenience. 9. This Court further observes that it is an admitted fact by both the appellants as well as the respondent that there was existence of above-mentioned partnership Firm and, the new partnership being entered into by Late Shri Rakesh Kumar Jain and the appellants in the year 2020; referring of the dispute for arbitration, in case any dispute(s) arises, as well as, the respondent coming forward demanding her share in the business as a legal heir of deceased Shri Rakesh Kumar Jain and requesting the appointment of an arbitrator, thus given the facts and circumstances surrounding the case and the respondent only asking for interim relief to protect the property of the business from being alienated, a prima facie case is made out in favour of the respondent, as has also been rightly observed by the learned Commercial Court in the impugned order. 10. This Court also observes that in case the assets belonging to the business that was run by Late Shri Rakesh Kumar Jain and Shri Sidhartha Jain are transferred or alienated, then the same would not only cause multiplicity of litigation, but also irreparable damage to the respondent by the time the matter is finally decided on merits even in her favour, therefore given such circumstances as mentioned above even the scale of balance of convenience is found to be tilted towards the present respondent. 11. This Court further observes that the learned Commercial Court after taking into consideration all the three parameters of the law of interim injunction, passed the impugned order and thus this Court finds no reason to interfere with the impugned order dated 02.05.2023. 12. In light of the aforesaid observations and the given factual matrix, this Court does not find it a fit case for interference in the present matter and the impugned order passed by the learned Commercial Court is accordingly upheld. 13. Consequently, the present appeal is dismissed. All pending applications stand disposed of.