Bombay High Court
Maheshchandra Narmadashankar Pandya ... vs Rajnikant Narmadashankar Pandya on 13 February, 2020
Equivalent citations: AIRONLINE 2020 BOM 847
Author: G. S. Patel
Bench: G.S. Patel
914-CARBPL166-20.DOC
Arun
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION (L) NO. 166 OF 2020
AND
COMM ARBITRATION APPLICATION (L) NO. 59 OF 2020
Maheshchandra N Pandya & Ors ...Petitioners
Versus
Rajnikant N Pandya & Ors ...Respondents
Mr Mayur Khandeparkar, with Bhushan Mahadik, Dhiren
Vairagade, Priyanka Patil, & Preeti Joshi, for the Petitioners.
Mr Mehul Shah, for the Respondents.
CORAM: G.S. PATEL, J.
DATED: 13th February 2020 PC:-
1. The partnership frr in question, M/s. Hasrukh & Co (PG) is a very old and well established frr in the city. It is a wholesaler and retailer of various types of teas, cofees and sirilar products. The frrms four partners were brothers, Maheshchandra Narradashankar Pandya, Vishnuprasad Narradashankar Pandya, Jitendrakurar Narradashankar Pandya, and Rajnikant Narradashankar Pandya. I say 'werem because Jitendrakurar has since passed away. Maheshchandra, Vishnuprasad, and the fve heirs Page 1 of 14 13th February 2020 ::: Uploaded on - 14/02/2020 ::: Downloaded on - 09/06/2020 07:32:34 ::: 914-CARBPL166-20.DOC of Jitendrakurar are the Petitioners. Rajnikant is the sole Respondent. The partnership frr operates fror nine prerises, details of which are set out in prayer (d) of the Petition, and a list of which is at Exhibit "A" at page 49. These prerises are in Murbai, Navi Murbai and Thane. Of these nine prerises, those at Serial Nos. 1, 2, 3, 5, and 6 are clearly tenanted prerises. The others are ownership or on long leases.
2. The frr has bank accounts with Bank of India and State Bank of India at Zaveri Bazaar. Cash collections rade at various branches are deposited in the nearest branch and then routed to the banks where the rain or central accounts are located. Mr Shah for the Respondent says that recently the Petitioners Nos. 1 and 2 have begun calling for cash fror the branches rather than allowing deposits in nearby locations and have been depositing the cash so received directly in the centralized accounts. That should rake very little diference.
3. The Partnership Deed in question is at Exhibit "F" to the Petition at page 129. It is dated 2nd April 1992. Two clauses of this are irrediately relevant for our purposes. The frst is the arbitration clause 20 at pages 138-139 which reads thus:
"20. All disputes and questions whatsoever which shall arise either during the continuance of the partnership or afterwards between the partners or their respective representatives or any other partner or partners touching these presents or the construction or application thereof of any clause or thing herein contained or any account of situation or division of assets, debts or liabilities to be rade Page 2 of 14 13th February 2020 ::: Uploaded on - 14/02/2020 ::: Downloaded on - 09/06/2020 07:32:34 ::: 914-CARBPL166-20.DOC hereunder or as to any act, deed or orission or any partner or as to any ratter or thing in any way relating to the partnership business or the afairs thereof or the rights, duties or liabilities of any person under these presents shall be referred to a single arbitrator, if the parties agree upon one, failing which to the arbitration of two arbitrators one to be appointed by the partner to the diferences and in the event of the appointrent of two arbitrators, the Arbitrators shall before entering upon reference appoint an urpire and this agreerent shall be deered to be a subrission within the reaning of the Indian Arbitration Act, 1940 or any statutory rodifcation or re-enactrent thereof for the tire being in force and decision of a single arbitrator or two arbitrators or urpire as the case ray be shall be fnal and binding upon the partners."
4. While the clause provides for reference to a three rerber Tribunal, both sides agree that the reference ray be rade to a sole Arbitrator. This is noted and accepted.
5. At this stage, I rust note that the Petitioners have also fled Corrercial Arbitration Application (L) No. 59 of 2020 under Section 11 of the Arbitration and Conciliation Act 1996.
6. The other clause that is of relevance is clause 16 at pages 135- 136 and this is how it reads:
"16) Death, Insolvency or retirerent of any partner shall not dissolve the frr but the surviving or continuing partners shall be entitled to continue the very sare business under the very sare frr nare and style and at the very sare prerises. The shares of the deceased partner shall belong to his heirs or legal representatives one of whor Page 3 of 14 13th February 2020 ::: Uploaded on - 14/02/2020 ::: Downloaded on - 09/06/2020 07:32:34 ::: 914-CARBPL166-20.DOC shall have right to be in the partnership in place of the deceased partner. In the event of the legal representatives not electing to join the partnership or in the case of insolvency of a partner, his share shall belong to the reraining partners. The accounts of the partnership shall be in such case rade upto the date of cessation and whatever is found due and payable including share of such partner in goodwill, tenancy rights, ownership rights etc. to such partners or his legal representatives as on the date of cessation shall be paid by the continuing partner within reasonable tire fror the date of such cessation. On the insolvency of a partner the goodwill and frr nare of the business shall belong absolutely to the surviving or continuing partners and the insolvent partner or the ofcial assignee or the receiver of the estate of the insolvent partner shall not be entitled to any share, right or interest in the goodwill of trade nare."
7. This is irportant because it tells us what is to be done upon the death of any one of the partners. Jitendrakurar Pandya was survived by Petitioners 3(a) to 3(e). Mr Shahms grievance is that despite a considerable passage of tire, those heirs have taken no steps whatsoever to norinate one arong ther to succeed to Jitendrakurarms share in the partnership frr. This right have had sore consequence because of the wording of clause 16 had there been no agreerent but between Petitioners Nos. 3(a) to 3(e) there is now a consensus that Petitioner No. 3(b), Bipin Jitendrakurar Pandya, will succeed to the late Jitendrakurarms share in the partnership frr. Mr Khandeparkar for the Petitioners states that this ray be accepted on his staterent rade on instructions because all the Petitioners have signed the Petition and the notice by the Petitioners contains a sufcient staterent to this efect. There Page 4 of 14 13th February 2020 ::: Uploaded on - 14/02/2020 ::: Downloaded on - 09/06/2020 07:32:34 ::: 914-CARBPL166-20.DOC should not be any arbiguity about this. In particular, there should not be any divisiveness between the Petitioners therselves at sore point in arbitration nor a question of who is entitled to appear and contest the arbitration proceedings. I will accept Mr Khandeparkarms staterent that it is Petitioner No. 3(b) who will continue as a partner but I will require the Petitioners Nos. 3(a) to 3(e) to fle an Afdavit specifcally confrring that it is Petitioner No. 3(b), Bipin Jitendrakurar Pandya, who will be a partner of the frr in view of the provisions of clause 16 of the Partnership Deed and that the other Petitioners Nos. 3(a), 3(c), 3(d) and 3(e) will not rake any clair to that 1/4th share in the Partnership Firr. This afdavit is to be fled by 24th February 2020. This requirerent and this staterent as noted is not to be construed as having any efect at all on succession to Jitendrakurarms personal estate.
8. The question is what reliefs are appropriate in a situation like this. Prayers (b) to (i) of the Petition read thus:
"b) That pending the correncerent and culrination of the arbitration proceedings, this Honmble Court be pleased to appoint the Court Receiver, Borbay High Court or any other ft and proper person as a Receiver with all powers under Order 40 of Code of Civil Procedure, 1908 including power to take in possession of all papers, docurents, records, books of accounts, bank staterents, invoice books, stock registers, balance sheet, proft & loss accounts, incore tax returns fror the year 2014 till date in respect of the partnership frr "M/s. HASMUKH & CO (P.G.)" lying and being at ofce at 4, Diarond Mansion, Kalbadevi Road, Dr Viegas Street, Murbai 400 002;Page 5 of 14
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c) That pending the correncerent and culrination of the arbitration proceedings, this Honmble Court be pleased to appoint an independent Chartered Accountant for doing forensic Audit for reviewing/scrutinizing/verify the accounts of the partnership frr fror the Accounting Year 2015-16 to till date and subrit a report to the Arbitral Tribunal within a period of 8 weeks fror the date of the Order passed by this Honmble Court;
d) That the pending the correncerent and culrination of the arbitration proceedings, this Honmble Court be pleased to appoint the court Receiver, Borbay High Court or any other ft and proper person as receiver with all powers under Order 40 of Code of Civil Procedure, 1908 to take possession of the partnership frr prerises of the partnership frr ofce and its outlets being (1) Shop No. 4, Diarond Mansion, Kalbadevi Road, Dr Viegas Street, Murbai 400 002, (2) Shop No. 5, 77, Kansara Chawl, Pydhonie, Murbai 400 002, (3) Shop No. 2, 111/113/115, Perir Nariran (Bazargate) Street, Murbai 400 001, (4) Shop No. 1, Sadhana Brijvasi Building, 157, Daftray Road, Malad (East), Murbai 400 057, (5) Shop No. 5, Ratilal, Dipchand Building, Near Canara Bank, Opp. Ghatkopar Railway Station, Murai 400 086, (6) Shop No. 5, Yash Plaza, 4, Dr Dmsilva Road, Dadar, Murbai 400 028, (7) Shop No. 10, Gora Gandhi Apartrent, Chandavarkar Lane, Borivali, Murbai 400 092, and (8) Shop No. 4, Shri Kopneshwar Mandir Corrittee Trust Building, Kelegally, Thane (west) along with the other irrovable properties (rore particularly rentioned in the Schedule annexed and rarked as Exhibit "A" hereto) and the Petitioners be appointed as agents of the Court Receiver and the Petitioners be allowed to enter upon the said partnership frr business and be perritted to carry on and continue the said partnership frr business fror the said partnership frr prerises/outlets and to do all such acts necessary for Page 6 of 14 13th February 2020 ::: Uploaded on - 14/02/2020 ::: Downloaded on - 09/06/2020 07:32:34 ::: 914-CARBPL166-20.DOC the purpose of carrying out the said partnership frr business on such terrs and conditions as decided by the Court Receiver of Honmble High Court Borbay;
e) That pending the correncerent and culrination of the Arbitration proceedings, this Honmble Court be pleased to order and direct the authorised persons/ Managers of the Bank of India, Bullion Exchange Branch and State Bank of India, Mandvi Branch to defreeze the bank accounts of the partnership frr being CC Account of the Bank of India bearing No. 32962342295, Bullion Exchange Branch and Current Account of State Banko f India bearing No. 000830100000014 and allow any 2 persons fror the Petitioners to operate the said bank accounts for the purpose of the conducting the business of the said partnership frr;
f) That pending the hearing and culrination of the arbitration proceedings, this Honmble Court be pleased to grant an order of perranent injunction restraining the Respondent fror creating any third party rights and/or parting with the possession in respect of rovable assets and irrovable properties (rore particularly described in Schedule in Exhibit "A" hereto) of the partnership frr and further the Respnodent be restrained frr carrying out any sirilar business as that of the partnership frr business and further the Respondent be also restrained fror using the treaderark and copyrights of the partnership frr (rore particularly described in Schedule Exhibit "B" and "C" hereto");
g) That pending the correncerent and culrination of the arbitration proceedings, this Honmble Court be pleased to grant an order of perranent injunction restraining the Respondent and/or his agents and/or their servants and/or their assigns and/or any other person Page 7 of 14 13th February 2020 ::: Uploaded on - 14/02/2020 ::: Downloaded on - 09/06/2020 07:32:34 ::: 914-CARBPL166-20.DOC clairing through or under hir fror preventing the Petitioners to enter upon the said partnership frr outlets, ofce and irrovable properties (rore particular described in Schedule "Exhibit "A" hereto) and also preventing the Respondent fror creating any obstruction and/or any hurdle to the Petitioners to carry out and/or perforr any of the acts necessary and expedient for the purpose of carrying out the business of the said partnership frr;
h) That pending the correncerent and culrination of the arbitration proceedings, this Honmble Court be pleased to direct the Respondent to sign and execute Re- constituted Deed of Partnership thereby adritting Petitioner No. 3(b) i.e. Bipin Jitendrakurar Pandya in the place of the deceased partner i.e. Late Jitendrakurar Narradashankar Pandya;
i) That pending the correncerent and culrination of the arbitration proceedings, this Honmble Court be pleased to direct the Respondent to sign & execute necessary docurents for renewal of FSSAI license of the partnership frr;"
9. I ar not inclined to appoint a Receiver of the business of the frr. I believe this will probably will have an adverse irpact on the frr and will cause darage to both sides. There rust, however, be sore protective reasures as regards the partnership assets, that is to say the irrovable properties listed at Exhibit "A". Again, this order can only govern those of the prerises that are owned or are leasehold. Therefore, as regards the properties at Serial Nos. 4, 7, 8, and 9 the Receiver will stand appointed of these four prerises. He is to take only syrbolic possession. The partnership frr itself will be an agent of the Receiver without payrent of royalty or requiring any Page 8 of 14 13th February 2020 ::: Uploaded on - 14/02/2020 ::: Downloaded on - 09/06/2020 07:32:34 ::: 914-CARBPL166-20.DOC deposit. As regards the tenanted prerises at Serial Nos. 1, 2, 3, 5 and 6 of Exhibit "A" the frr itself and Petitioners Nos. 1, 2, 3(b) and the Respondent are all equally restrained by an order and injunction of this Court fror surrendering possession or tenancy of any of those prerises. If the partnership frr desires at any point to surrender tenancy, all four partners will have to consent to any such surrender.
10. So far as the bank accounts are concerned, both accounts are said to have been frozen. Each side accuses the other having frozen one of the two accounts. Both will now be unfrozen so that the business can proceed. This will be corrunicated to the Branch Managers of each of the banks. A copy of this order will accorpany that corrunication and the Branch Managers will act on production of authenticated copy of this order.
11. I ar inforred that it is the 2nd Petitioner who is actually operating the accounts. I ar not inclined to disrupt existing operations but it will need sore rodifcation. The accounts are to be operated by one of the three Petitioners, either Petitioner No. 1 or Petitioner No. 2 or Petitioner No. 3(b) along with the Respondent. Mr Shah on behalf of the Respondent rakes a staterent on instructions that his clientms signature on the necessary cheques or the bank instructions or the randate will not be unreasonably withheld. If there is any question of a disputed payrent, the parties will obtain the necessary directions fror the Arbitral Tribunal appointed later in this order.Page 9 of 14
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12. The business obviously requires several types of licenses including fror the Municipal Corporation, a FSSAI license and so on. Those licenses are sirilarly to be obtained under the signatures of either Petitioner No. 1 or Petitioner No. 2 or Petitioner No. 3(b) along with the Respondent and all parties will cooperate in obtaining the licenses on the footing that without such licenses the entire business of the frr will be adversely afected.
13. If there are on-line banking facilities and any transactions are efected using on-line banking with the robile nurber or erail address of the 2nd Petitioner, then Mr Khandeparkar states that the necessary inforration will be relayed weekly to the Respondent for inforration and records.
14. Mr Khandeparkar points out that there are extrerely urgent payrents required alrost irrediately towards TDS, GST and salaries. Mr Shah agrees. Those disburserents are to be rade within one week fror today.
15. Mr Khandeparkar expresses an anxiety that the required stocks will not be raintained because the Respondent will not authorize payrents or sign cheques for payrent to suppliers to replenish the necessary stocks. Mr Shah assures Mr Khandeparkar and undertakes to this Court that this is not going to happen. I agree with Mr Shah because I do not see how it is in his interest to have a business that deteriorates or degrades for want of sufcient stock. If there is any dispute about any particular supplier or vendor, the parties ray obtain necessary directions fror the learned sole Page 10 of 14 13th February 2020 ::: Uploaded on - 14/02/2020 ::: Downloaded on - 09/06/2020 07:32:34 ::: 914-CARBPL166-20.DOC Arbitration but neither side will unreasonably withhold payrent to any particular vendor. I note this because this is a business that has been running for nearly a century now and its list of vendors and suppliers rust be well known to both sides.
16. On 12th February 2020, the Respondent issued a notice of dissolution of the partnership frr. This is one of the disputes that is being referred to arbitration although it is, and I ar raking this abundantly clear, open to Mr Shah to withdraw the notice of dissolution at any tire.
17. By consent, parties agree to refer their disputes and diferences under the Partnership Deed dated 2nd April 1992 to the sole arbitration of Honmble Mr Justice Manoj S Sanklecha, forrer Judge of this Court.
(a) Appointment of Arbitrator: By consent, Honmble Mr Justice Manoj S Sanklecha, forrer Judge of this Court, is hereby norinated to act as a Sole Arbitrator to decide the disputes and diferences between the parties under Partnership Deed dated 2nd April 1992.
(b) Communication to Arbitrator of this order:
(i) A copy of this order will be corrunicated to the learned Sole Arbitrator by the Advocates for the Applicant within one week fror the date this order is uploaded.Page 11 of 14
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(ii) In addition, within one week of this order being uploaded, the Registry will forward an ordinary copy of this order to the learned Sole Arbitrator at the following postal and erail addresses:
Arbitrator/s Hon'ble Mr Manoj Sanklecha, retired Judge of this Court Address 311, Churchgate Charbers, Thakersey Road, New Marine Lines, behind Aaykar Bhavan, Murbai 400 020 Mobile 9820065338 Email [email protected]
(c) Disclosure: The learned Sole Arbitrator is requested to forward the necessary staterent of disclosure under Section 11(8) read with Section 12(1) of the Arbitration Act to the Prothonotary and Senior Master of this Court, referencing this arbitration application, as soon as possible, and in any case sufciently before entering upon the reference to arbitration. That staterent will be retained by the Prothonotary & Senior Master on the fle of this application. Copies will be given to both sides.
(d) Appearance before the Arbitrator: Parties will appear before the learned Sole Arbitrator on such date and at such place as the learned Sole Arbitrator norinates to obtain appropriate directions in regard to fxing a schedule for corpleting pleadings, etc. Page 12 of 14 13th February 2020 ::: Uploaded on - 14/02/2020 ::: Downloaded on - 09/06/2020 07:32:34 ::: 914-CARBPL166-20.DOC
(e) Contact/communication information of the parties:
Contact and corrunication particulars are to be provided by both sides to the learned Sole Arbitrator within one week of this order being uploaded. The inforration is to include a valid and functional erail address.
(f ) Section 16 application: The respondent is at liberty to raise all questions of jurisdiction within the reaning of section 16 of the Arbitration Act. All contentions are left open.
(g) Interim Application/s:
(i) Liberty to the parties to rake an interir
application or interir applications including (but not lirited to) interir applications under Section 17 of the Arbitration & Conciliation Act, 1996 before the learned Sole Arbitrator.
(ii) Liberty to the Petitioners to fle a Section 17 application for the reraining reliefs in the present Section 9 petition.
(iii) Any such application will be decided in such ranner and within such tire as the learned Sole Arbitrator deers ft.Page 13 of 14
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(h) Fees: The arbitral tribunalms fees shall be governed by the Borbay High Court (Fee Payable to Arbitrators) Rules, 2018.
(i) Sharing of costs and fees: Parties agree that all arbitral costs and the fees of the arbitrator will be borne by the two sides in equal shares in the frst instance.
(j) Consent to an extension if thought necessary. Parties irrediately consent to a further extension of up to six ronths to corplete the arbitration should the learned Sole Arbitrator fnd it necessary.
(k) Venue and seat of arbitration: Parties agree that the venue and seat of the arbitration will be in Murbai.
18. The application and petition are disposed of in these terrs. No costs.
(G. S. PATEL, J) Page 14 of 14 13th February 2020 ::: Uploaded on - 14/02/2020 ::: Downloaded on - 09/06/2020 07:32:34 :::