JUDGMENT : SACHIN SHANKAR MAGADUM, J. 1. The captioned appeal is by the defendant assailing the judgment and decree rendered in O.S.139/2009 wherein the trial Court on assessing the oral and documentary evidence has decreed the suit directing the defendants to furnish accounts for a sum of Rs.1,04,20,000/- and further to pay a sum of Rs.30 Lakhs to plaintiffs with interest at the rate of 12% p.a. 2. For the sake of convenience, the parties are referred to as per their rank before the trial Court. 3. The facts leading to the case are as under: The present suit is instituted by the plaintiffs seeking settlement of accounts and for a direction to the defendants to pay a sum of Rs.30,00,000/- along with interest at the rate of 12% per annum. The plaintiffs and defendants Nos.2 and 3 are partners of defendant No.1 – a registered partnership firm. The plaintiffs assert that the said firm was constituted under a deed of partnership dated 06.05.2000, and was duly registered with the Registrar of Firms, Belagavi on 07.07.2000. 4. It is alleged that disputes arose between the partners even before the business operations of the firm could properly commence. Defendant No.3 is alleged to be the working partner, operating under the control and supervision of defendant No.2. The plaintiffs contend that the business affairs and books of accounts of the firm were solely in the control and possession of defendants 2 and 3. Reference is made to the earlier proceedings initiated in O.S.No.150/2003 and to the invocation of the arbitration clause in accordance with Sections 5 and 9 of the Arbitration and Conciliation Act, 1996 . 5. The plaintiffs further aver that in accordance with the arbitration clause, a sole arbitrator was appointed by this Court, who subsequently passed an order dissolving the partnership firm, subject to the condition that the accounts between the parties be settled before a competent civil court. 6. The plaintiffs submit that as per the partnership arrangement and subsequent Memorandum of Understanding, defendants 2 and 3 were required to bring in capital contribution of Rs.30,00,000/- each, while the plaintiffs agreed to provide land measuring 3315.70 sq. meters carved out of Survey No.673. 6. The plaintiffs submit that as per the partnership arrangement and subsequent Memorandum of Understanding, defendants 2 and 3 were required to bring in capital contribution of Rs.30,00,000/- each, while the plaintiffs agreed to provide land measuring 3315.70 sq. meters carved out of Survey No.673. This land was leased to the firm for a period of 29 years, under the agreement that the plaintiffs would receive a monthly rent of Rs.5,000/-, which was later enhanced to Rs.20,000/- pursuant to a Memorandum of Understanding dated 19.05.2001. 7. The principal grievance of the plaintiffs is that defendants 2 and 3, upon securing a loan of Rs.1,20,00,000/- from KSFC for implementation of the project, fraudulently diverted a sum of Rs.60,00,000/- to their personal accounts. Upon discovering such irregularities, the plaintiffs engaged a reputed firm of Chartered Accountants to audit the firm’s accounts. The audit report dated 13.07.2004 revealed that defendants 2 and 3 manipulated the financial statements by falsely reflecting a capital contribution of Rs.60,00,000/-, which was in fact siphoned from the loan amount, and not from their personal resources as required under the partnership agreement. 8. The plaintiffs have also alleged that defendants 2 and 3 collected non-refundable membership fees aggregating to Rs.39,77,000/- from various individuals without maintaining proper accounts or furnishing transparency regarding the said collection. Based on these allegations, the plaintiffs have tentatively claimed a sum of Rs.30,00,000/- as having been wrongfully diverted by defendants 2 and 3. In paragraph 17 of the plaint, the plaintiffs have further claimed various amounts under different heads, and have accordingly prayed for a decree against defendants 2 and 3 for recovery of Rs.30,00,000/- and for a direction to settle the accounts of the partnership firm. 9. Upon service of summons, the defendants entered appearance and filed their written statement, wherein they have categorically denied the material allegations made in the plaint. While admitting the constitution of the partnership firm and the sanction of a loan of Rs.1,20,00,000/- from KSFC for execution of the project, the defendants have stoutly denied the allegations pertaining to misappropriation, manipulation of accounts, and diversion of funds. They have taken the stand that the loan was utilized strictly for the purposes of the partnership firm in accordance with the terms of the agreement. 10. Upon service of summons, the defendants entered appearance and filed their written statement, wherein they have categorically denied the material allegations made in the plaint. They have taken the stand that the loan was utilized strictly for the purposes of the partnership firm in accordance with the terms of the agreement. 10. Upon service of summons, the defendants entered appearance and filed their written statement, wherein they have categorically denied the material allegations made in the plaint. While the defendants have admitted certain averments pertaining to the constitution of the partnership firm and the sanction of a loan of Rs.1,20,00,000/- by KSFC for implementation of the project, they have specifically and emphatically denied the allegations regarding manipulation of accounts and fraudulent diversion of loan funds. The defendants have contended that all financial transactions were conducted transparently and strictly for the purposes of the partnership business. 11. On the basis of the pleadings, the trial Court framed the issues. 12. In support of their case, the plaintiffs adduced both oral and documentary evidence. The defendants, however, did not choose to lead any rebuttal evidence, except for examining defendant No.3, who was examined as D.W.1. 13. Upon appreciation of the oral and documentary evidence on record, the Trial Court answered Issue Nos.1 to 4 in the affirmative. The Court recorded a finding that the plaintiffs had successfully established that defendants 2 and 3 failed to properly maintain the books of accounts of defendant No.1/partnership firm and had unlawfully withdrawn substantial sums from the loan sanctioned by KSFC, diverting the same to their personal accounts. Consequently, the suit was partly decreed. The Trial Court directed the defendants to render accounts to the extent of Rs.1,04,20,000/- and further ordered defendants 2 and 3 to pay a sum of Rs.30,00,000/- to the plaintiffs, together with interest at the rate of 12% per annum. 14. Feeling aggrieved by the judgment and decree of the trial Court, the defendants are before this Court. 15. We have heard the learned counsel appearing for defendants and plaintiffs. We have independently examined the pleadings and oral and documentary evidence let in by the plaintiffs. 16. The following points would arise for consideration: "(1) Whether the Trial Court erred in directing defendants Nos.2 and 3 to pay a sum of Rs.30,00,000/- to the plaintiffs, despite the arbitral award merely providing for settlement of accounts, thereby rendering the plaintiffs' fresh claim based on the arbitral award untenable in law? 16. The following points would arise for consideration: "(1) Whether the Trial Court erred in directing defendants Nos.2 and 3 to pay a sum of Rs.30,00,000/- to the plaintiffs, despite the arbitral award merely providing for settlement of accounts, thereby rendering the plaintiffs' fresh claim based on the arbitral award untenable in law? (2) Whether the defendants’ challenge to the decree for settlement of accounts is maintainable in light of the arbitral award passed by the sole arbitrator, which has attained finality and binding effect between the parties?” FINDING ON POINT No.1: 17. The partnership deed, which is marked as Ex.P1, contains a specific arbitration clause to address disputes arising between the partners. Clause 15 of the said deed explicitly provides for resolution of disputes through arbitration. Therefore, in the event of any disagreement among the partners concerning the affairs of the firm, the parties were contractually bound to refer such disputes to arbitration. 18. In this context, it becomes imperative to examine whether the present suit, particularly the plaintiffs’ claim for recovery of Rs.30,00,000/-, is maintainable in light of the earlier arbitral proceedings and the award passed therein. The key question is whether the subject matter of the present suit was, or could have been, raised and decided in the arbitration proceedings, and whether the arbitral award precludes a subsequent independent claim before the civil court. 19. Although the plaintiffs have not produced or marked the statement of claim submitted before the learned Arbitrator, the nature of the dispute raised before the arbitrator can be reasonably inferred from the issues framed by the learned Arbitrator during the arbitral proceedings. These issues are crucial in determining the scope of the arbitration and whether the present claim was either already adjudicated or ought to have been raised in that forum. The issues framed by the learned Arbitrator are extracted and reproduced hereinbelow for reference: "1. Are the claimants entitled to relief of dissolution of the partnership firm M/s Panchamukhi Club and Resorts under Section 44 of the Indian Partnership Act ? 2. Do the respondents establish that the partnership is not to be dissolved in the absence of compliance with the terms of the partnership deed? 3. Do the claimants establish that they have a right to make a claim under the lease deed dated 13.2.2000 in these proceedings? 4. 2. Do the respondents establish that the partnership is not to be dissolved in the absence of compliance with the terms of the partnership deed? 3. Do the claimants establish that they have a right to make a claim under the lease deed dated 13.2.2000 in these proceedings? 4. Are the claimants entitled to their claim of Rs.24,44,161-00 under the head "Arrears of Rent" and whether the same can be resolved in these proceedings ? 5. Are the claimants entitled to their claim of Rs.6,31,053-00 under the head "Water charges, electricity charges, repair charges, pending rent, pending security deposit ? 6. Are the claimants entitled to their claim of Rs.37,98,398-00 under the head "Room Occupancy Charges"? 7. Whether the claimants prove that they are entitled to Rs.5,20,000-00 under the head "Legal Expenses"? 8. Whether the claimants prove that they are entitled to Rs.24,80,000-00 under the head "Damages for KSFC loan sanction and other matter? 9. Whether the claimants prove that they are entitled to Rs.22,40,000-00 under the head "Damages for filing false criminal cases"? 10. Whether the claimants prove that they are entitled to Rs.4,96,000-00 under the head "Charges for changing entries in Records of Right"? 11. Whether the claimants prove that they are entitled to Rs.1,39,600-00 under the head A/c Inspection charges and Boundary Wall constructions? 12. Do the claimants prove that the respondents have violated the terms and conditions of the partnership deed and the memorandum of understanding in respect of the loan sanctioned by the K.S.F.C. and utilization of the same for various purposes other than the purposes for which partnership is constituted? 13. Do the claimants prove that the respondents utilized the loan released by the K.S.F.C. for their personal business by divulging the same from the account of the firm to their personal accounts? 14. Do the respondents prove that for diversion of funds from the account of the firm to another account of the firm in Tukaram Co-operative Bank and Bank of Andhra Pradesh are authorized by the claimants? 15. Whether the respondents 2 and 3 prove that respondent No.1 cannot be dissolved in these proceedings? 16. Whether the respondents 2 and 3 prove that they are entitled to Rs.63,00,000-00 under the head "Civil Works Cost Escalation"? 17. Whether the respondents 2 and 3 prove that they are entitled to Rs.21,50,000-00 under the head "Loss due to non-collection of estimated membership subscription"? 18. 16. Whether the respondents 2 and 3 prove that they are entitled to Rs.63,00,000-00 under the head "Civil Works Cost Escalation"? 17. Whether the respondents 2 and 3 prove that they are entitled to Rs.21,50,000-00 under the head "Loss due to non-collection of estimated membership subscription"? 18. Whether the respondents 2 and 3 prove that they are entitled to Rs.68,78,153-00 under the head "KSFC Interest"? 19. Whether the respondents 2 and 3 prove that they are entitled to Rs.7,50,650-00 under the head "Estimated losses of subscription and usage charges"? 20. Whether the respondents 2 and 3 prove that they are entitled to Rs.20,28,622-00 under the head "Estimated losses from Lodging Revenue"? 21. Whether the respondents 2 and 3 prove that they are entitled to Rs.50,00,000-00 under the head "Losses to other business and Good-will"? 22. Whether the respondents 2 and 3 prove that they are entitled to Rs.3,00,000-00 under the head "Legal Expenses"? 23. Whether the respondents 2 and 3 prove that they are entitled to Rs. 1,75,000-00 under the head "Expenses towards finding alternate partners/Finance"? 24. Whether the respondents 2 and 3 prove that they are entitled to Rs. 1,17,88,398-00 under the head "Capital and Interest thereon"? 25. Whether the respondents 2 and 3 prove that they are entitled to Rs.50,00,000-00 under the head "Losses due to effect on health"? 26. What Award?" 20. The award passed by the arbitrator is reproduced, which reads as under: "a) The firm 'M/s Panchamukhi Club & Resort' the first respondent is hereby dissolved with effect from today i.e. the date of this Award subject to the accounting between the claimants and respondents 2 and 3. But, this Arbitration Tribunal cannot take accounts as the KSFC and M/s Kshema Inns Private Ltd., are not parties to this proceedings. b) The KSFC and M/s Kshema Inns Private Ltd., have been in-charge of the firm ever since 17.11.2003, they are necessary parties to take accounts of the firm and it is open to the parties to take such steps as may be necessary to take accounts of the firm. c) The claim of the claimants for arrears of rents, water and electricity charges and security deposit by virtue of Ex. C-5 is hereby rejected for want of jurisdiction leaving liberty to the claimants to pursue such remedies as available to them in the civil proceedings pending before the competent courts. c) The claim of the claimants for arrears of rents, water and electricity charges and security deposit by virtue of Ex. C-5 is hereby rejected for want of jurisdiction leaving liberty to the claimants to pursue such remedies as available to them in the civil proceedings pending before the competent courts. d) It is declared that the claim and counter-claim of the respective parties under the heads 'Room Occupancy Charges', 'estimated losses from lodging revenue' and 'capital and interest thereon' is subject to the accounts of the firm to be taken. e) The rest of the claim of the claimants and the counter-claim of the respondents are hereby rejected. f) In view of the peculiar circumstances of the case, there will be no order as to costs of these proceedings. g) Appropriate stamp duty on this Award be paid by the claimants and 50% of the costs may be recovered from the opposite party in case one of them pays the full stamp value or the same shall be counted at the time of taking the accounts of the firm and shall be reimbursed to the party appropriately as above." 21. The prayer sought in the present suit is also relevant and the same is extracted, which reads as under: "a) The decree be passed directing the defendants to settle the accounts of plaintiffs. b) The defendants No. 2 and 3 be directed to pay an amount of Rs. 30,00,000=00 to the plaintiffs with the interest at the rate of 16% per annum. c) If the court come to the conclusion that the plaintiffs a entitled get more than Rs. 30,00,000=00 under such circumstances the decree be passed directing the defendants to pay such amount to the plaintiffs. d) The cost of the suit be awarded in favor of the plaintiffs." 22. A careful perusal of the arbitral award makes it abundantly clear that the claim for recovery of Rs.30,00,000/- with interest at the rate of 12% per annum, as sought by the plaintiffs in the present suit, was neither raised nor adjudicated upon in the arbitration proceedings. d) The cost of the suit be awarded in favor of the plaintiffs." 22. A careful perusal of the arbitral award makes it abundantly clear that the claim for recovery of Rs.30,00,000/- with interest at the rate of 12% per annum, as sought by the plaintiffs in the present suit, was neither raised nor adjudicated upon in the arbitration proceedings. The learned Arbitrator, in categorical terms, has confined the scope of relief to the dissolution of the partnership firm, i.e., M/s Panchamukhi Club and Resorts, and has expressly held that while the firm stands dissolved, the actual process of accounting between the parties must be undertaken before a competent civil court, particularly in light of the fact that KSFC and M/s Kshema Inns Pvt. Ltd. entities who are crucial to the accounting process were not parties to the arbitral proceedings. 23. The award further clarifies that the claims made by the plaintiffs under various heads, including arrears of rent, utility charges, and security deposit, were specifically rejected for want of jurisdiction, albeit with liberty reserved to the plaintiffs to seek appropriate relief before the competent civil court. However, there is no mention whatsoever of a specific claim of Rs.30,00,000/- allegedly representing diversion of KSFC loan funds, nor does the award reserve liberty to independently pursue such a money claim dehors the accounting process. 24. The award in fact stipulates that both the claims and counter-claims relating to room occupancy charges, lodging revenue, capital contribution, and interest are all subject to the process of taking accounts. It follows, therefore, that any determination of monetary liability whether in favour of the plaintiffs or the defendants must necessarily be made upon a full and final settlement of accounts in accordance with the directions contained in the arbitral award. 25. In the backdrop of the arbitral award which expressly dissolved the partnership and relegated the parties to a competent civil forum for rendition and settlement of accounts, the direction issued by the Trial Court mandating defendants Nos.2 and 3 to pay a sum of Rs.30,00,000/- with interest at 12% per annum to the plaintiffs is patently unsustainable in law. The Trial Court, while granting this relief, has failed to assign cogent reasons or engage in any meaningful analysis of either the arbitral award or the legal pre-requisites for imposing such personal liability. The Trial Court, while granting this relief, has failed to assign cogent reasons or engage in any meaningful analysis of either the arbitral award or the legal pre-requisites for imposing such personal liability. Crucially, there is no adjudication of the accounts of the firm, which is a necessary precursor before fixing any monetary liability between the partners. 26. The award passed by the learned Arbitrator neither quantified any such sum payable to the plaintiffs nor permitted the assertion of independent monetary claims without a comprehensive accounting. On the contrary, the award expressly recorded that the claims of both parties under various head including those relating to the KSFC loan and alleged misappropriation, were subject to a proper accounting exercise, which could not be undertaken in arbitration due to the non-joinder of necessary parties such as KSFC and M/s Kshema Inns Private Limited. It follows, therefore, that any claim for recovery including one based on the alleged diversion or misuse of loan funds must necessarily be adjudicated in the course of the account settlement proceedings before a civil court, and cannot be granted in isolation or by way of a summary decree. 27. While it is open to the plaintiffs to raise the issue of diversion or mis-utilization of the KSFC loan during the settlement of accounts, any determination of liability must be preceded by a detailed examination of books of account, transactional records, and financial statements. The Trial Court has proceeded to award a substantial money decree without undertaking this foundational exercise, thereby rendering its finding not only premature but also legally untenable. The impugned direction to pay Rs.30,00,000/- is therefore contrary to the terms of the arbitral award, unsupported by evidence, and in derogation of the principle that liability among partners can only be determined upon a full and fair settlement of mutual accounts. 28. In this background, the direction of the Trial Court in the impugned judgment and decree, whereby defendants Nos.2 and 3 have been ordered to pay a sum of Rs.30,00,000/- with interest at 12% per annum to the plaintiffs, is wholly unsustainable. The Trial Court has not assigned any cogent reasons, nor has it demonstrated any application of mind to the express terms of the arbitral award or to the foundational requirement of account settlement before quantification of liability. The Trial Court has not assigned any cogent reasons, nor has it demonstrated any application of mind to the express terms of the arbitral award or to the foundational requirement of account settlement before quantification of liability. The decree for payment of Rs.30,00,000/- thus travels beyond the scope of the arbitral award and amounts to entertaining a fresh and independent claim that is not only unsubstantiated by evidence, but also impermissible in law in view of the binding effect of the award. 29. Accordingly, the finding recorded by the Trial Court in this regard is held to be perverse, legally untenable, and contrary to the express terms of the arbitral award. The learned Trial Judge erred in granting a money decree without any adjudication on accounts or a reasoned determination of the alleged diversion of funds. The plaintiffs, in light of the arbitral award, are entitled only to seek settlement of accounts and not to assert fresh monetary claims dehors such settlement. Therefore, Point No.1 is answered in the affirmative. FINDINGS ON POINT No. 2: 30. Although the defendants are well within their rights to question that portion of the decree which directs payment of Rs.30,00,000/- to the plaintiffs especially in light of the arbitral award that makes no provision for such monetary relief, their challenge to the decree insofar as it directs settlement of accounts is wholly untenable and without merit. It is to be noted that the learned Arbitrator, while dissolving the partnership firm M/s Panchamukhi Club and Resorts, has categorically held that the process of rendering and settling accounts between the partners must be carried out before a competent civil Court. This directive is clear from the arbitral award, which acknowledges the involvement of third parties such as KSFC and M/s Kshema Inns Private Limited, and therefore, specifically excludes the arbitrator from undertaking the accounting exercise himself. 31. In this context, it is important to underscore that the defendants did not prefer any challenge to the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 . As such, the arbitral award has attained finality and binds the parties. The finding therein, dissolving the partnership and permitting settlement of accounts through civil proceedings forms the basis for the plaintiffs’ entitlement to approach the civil Court for rendition of accounts. As such, the arbitral award has attained finality and binds the parties. The finding therein, dissolving the partnership and permitting settlement of accounts through civil proceedings forms the basis for the plaintiffs’ entitlement to approach the civil Court for rendition of accounts. Consequently, having accepted the award, or at least not having questioned it in appropriate proceedings, the defendants are now precluded from challenging the very relief that flows directly and logically from it. They cannot, at this belated stage, be permitted to approbate and reprobate by accepting the dissolution while simultaneously opposing the settlement of accounts, which is an integral consequence of dissolution. 32. Further, the record reveals that the defendants, despite entering appearance and filing their written statement, have failed to lead any substantial rebuttal evidence in the proceedings before the Trial Court, except examining defendant No.3 as D.W.1. There is a total absence of cogent and convincing material brought on record to dispute the plaintiffs’ entitlement to a decree for settlement of accounts. This failure to contest the core relief of rendition of accounts, either on factual or legal grounds, reinforces the correctness of the Trial Court's finding on this issue. 33. Thus, both on the principle of finality attaching to arbitral awards and on the independent assessment of the pleadings and evidence (or lack thereof) before the Trial Court, the decree directing settlement of accounts stands on firm legal footing. This Court finds no infirmity, jurisdictional error, or perversity warranting interference in respect of that part of the decree. Accordingly, Point No.2 is answered in the negative 34. Conclusions: a. Upon a comprehensive evaluation of the arbitral proceedings, the award rendered therein, and the pleadings and findings in the present suit, this Court is of the considered opinion that the Trial Court has erred in law and on facts in directing defendants Nos.2 and 3 to pay a sum of Rs.30,00,000/- with interest to the plaintiffs. The said decree not only travels beyond the scope of the arbitral award but also militates against the fundamental principle that inter se liability between partners can only be ascertained after full and proper settlement of accounts. b. The partnership deed at Clause 15 clearly provided for arbitration in the event of disputes between the partners. The said decree not only travels beyond the scope of the arbitral award but also militates against the fundamental principle that inter se liability between partners can only be ascertained after full and proper settlement of accounts. b. The partnership deed at Clause 15 clearly provided for arbitration in the event of disputes between the partners. The arbitral award conclusively dissolved the firm and relegated the parties to seek rendition of accounts before the appropriate civil court, observing that key financial stakeholders such as KSFC and M/s Kshema Inns Private Ltd. were not parties to the arbitration and, therefore, a complete adjudication of the accounts could not be undertaken in that forum. Significantly, the award neither quantified any monetary liability on the part of defendants Nos.2 and 3 nor conferred any right on the plaintiffs to pursue fresh monetary claims outside the accounting process. c. While it is true that plaintiffs have alleged diversion of loan amounts sanctioned by KSFC, such allegations must be subjected to scrutiny through a detailed process of accounting and examination of books and financial records. It is only upon the conclusion of such settlement that any actionable liability can be fixed. The Trial Court, however, without undertaking such a foundational inquiry and without recording any substantive reasoning or findings, has hastily proceeded to grant a money decree for Rs.30 lakhs, which amounts to adjudicating a claim that was neither established by evidence nor maintainable in law in the teeth of the arbitral award. d. Such a decree undermines the finality and binding nature of the arbitral award and violates the doctrine of res judicata insofar as the scope of claims in relation to partnership disputes has already been addressed therein. Moreover, permitting recovery without settlement of accounts would amount to rewriting the terms of the arbitral award and confer an undue advantage upon one party, contrary to the statutory scheme governing partnerships under the Indian Partnership Act , 1932. e. Accordingly, this Court holds that the Trial Court’s direction to defendants Nos.2 and 3 to pay Rs.30,00,000/- with interest to the plaintiffs is patently illegal, perverse, and contrary to settled principles of law governing partnership disputes. The said direction, being unsustainable in law, is liable to be set aside. The claim of Rs.30 lakhs can be looked into by the FDP court while settling accounts. The said direction, being unsustainable in law, is liable to be set aside. The claim of Rs.30 lakhs can be looked into by the FDP court while settling accounts. It is clarified that the question of any diversion or misuse of KSFC loan funds may still be examined during the process of rendition of accounts as contemplated under the arbitral award. 35. For the foregoing reasons, we proceed to pass the following: ORDER (i) The appeal is allowed in part. (ii) The judgment and decree dated 31.10.2017 passed in O.S.No.139/2009 is hereby modified. The decree granted by the trial Court insofar as directing defendants 2 and 3 to pay an amount of Rs.30 lakhs with interest at 12% to the plaintiffs is hereby set aside. The rest of the decree is affirmed by this Court. (iii) Office to draw the decree accordingly.