Calcutta High Court
Indira Prasad Gupta vs Indira Devi Jaiswal & Ors on 8 December, 2017
Equivalent citations: AIRONLINE 2018 CAL 730
Author: Ashis Kumar Chakraborty
Bench: Ashis Kumar Chakraborty
OD-23
AP 463 of 2017
With
AP 749 OF 2017
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
INDIRA PRASAD GUPTA
versus
INDIRA DEVI JAISWAL & ORS
And
INDIRA DEVI JAISWAL & ORS.
Versus
INDIRA PRASAD GUPTA
BEFORE:
The Hon'ble JUSTICE ASHIS KUMAR CHAKRABORTY
Date : 8th December, 2017.
Mr. Joy Saha, sr. advocate,
Mr. P. Garai, Mr. M. Mukherjee, Mr. A. Law...for petitioner.
Mr. J. Chowdhury, Mr. S. Sharma,Mr. R. Das, Ms. N. Basu...for respondents.
The Court : These two applications have been filed under section 9 of the Arbitration and Conciliation Act, 1996, as amended by Act 3, 2016 (in short "the Act of 1996").
The respondent no.1 in AP No.463 of 2017 (hereinafter referred to as "the first application") is the mother in law the respondents are her daughters-in-law. The petitioner no.1 in AP No. 749 of 2017 (hereinafter referred to as "the second application") is the mother-in-law and the petitioner nos.2 and 3 and respondent are her daughters-in-law. The disputes between the parties relate to the business of the partnership firm namely, Shree Jai Balaji Enterprises (hereinafter referred to as "the firm") of which the parties to this applications are the partners. 2
Since the parties to the applications are same and the disputes between them relate to the same partnership agreement, both these applications are disposed off by this common order.
The brief facts relevant for the decision in these applications are that on July 9, 2005, the parties entered into a deed of partnership for running the partnership business, under the aforementioned name and style for manufacturing engineering goods, general casting and fan parts. Clause 14 of the partnership deed mentions that the partnership is at will. Clause 15 of the partnership deed provides that on the death or retirement of any partner, the firm may not be dissolved and her heirs may join the partnership in his place. As per Clause 17, all disputes or questions in connection with the partnership or the said deed of partnership shall be referred to arbitration under the Indian Arbitration Act. According to the petitioner in the first application, the respondents therein have committed various illegalities in the running of the business of the firm by not disclosing any profit from the manufacturing activities of the firm in its books. It is further alleged that the petitioner has been sidelined and excluded from the business operation and affairs of the partnership firm and as such, on June 13, 2017 she issued a notice to the respondents thereby dissolving the firm which is a partnership at will. By the said notice dated June 13, 2017 the petitioner in the first petition called upon the respondents to treat the partnership as terminated and to forthwith commence the process of dissolution of the business of the firm. By a further letter dated June 13, 2017, the petitioner in the first application invoked the arbitration agreement, nominated an arbitrator and requested the respondents to the appointment of the said arbitrator. On June 26, 2017, the petitioner issued a letter to the banker of the firm, namely, Union Bank, Camac Street Branch alleging that the business of the firm should dissolved with effect from June 13, 2017.
In response to the said notice dated June 13, 2017, the respondents in the first application by their letter dated June 25, 2017 denied all the allegations made by the petitioner. In the said letter the respondents alleged that the firm is not a partnership at will and by the said 3 notice dated June 13, 2017, the petitioner has evinced her intention to withdraw herself from the partnership and as such, her demand to treat the partnership dissolved and terminated cannot be accepted. The respondents alleged that the said notice dated June 13, 2017 was an invalid notice and not under Section 43 of the Act of 1932. In the first application the petitioner has prayed for, inter alia, orders of injunction restraining the respondents from selling or alienating or dealing with or disposing of or encumbering the immovable assets and properties of the partnership firm, as well as restraining them from carrying on the business of the partnership firm. The petitioner has also prayed for appointment of a Receiver over the assets, properties and books of the firm, as also to take control of the business and all assets and properties of the firm. In the first application, on June 28, 2017 a learned Single Judge of this Court passed an order referring the parties to a retired Judge of this Court for mediation of their disputes. By the said order dated June 28, 2017, the respondents were directed to allow the petitioner access to the partnership business. The petitioner was, however, directed to remain a silent observer and not to interfere in the running of the business of the firm. A member of the Bar was also appointed as a Special Officer to ensure that the petitioner is allowed to enter the business premises of the firm peaceably, she remains there peaceably and departs from the place in the same manner. However, the mediation proceeding failed. On or about September 5, 2017 the respondents in the first application, as the partners of the firm filed an application, being AP No.749 of 2017 (hereinafter referred to as "the second application"). In the second application the firm is impleaded as the respondent no. 1 and the petitioner of the first application has been impleaded as the respondent no. 2. The petitioners in the second application have prayed for an order, inter alia, of mandatory injunction directing the respondent no. 1 to take steps to withdraw the letter dated June 26, 2017, as also an order of injunction restraining the said respondent from interfering with the operation of the bank account of the respondent no. 1, firm. 4
Both the applications were taken up for hearing after completion of the pleadings by the respective parties.
Mr. Joy Saha, learned senior advocate appearing for the petitioner in the first application (the respondent no. 2 in the second application) strongly contended that clause 14 of the partnership deed in clear terms mentions the partnership is at will and, as such, with the issuance of the said notice dated June 13, 2017 by the petitioner under Section 43 of the Act of 1932, the partnership stood dissolved and none of the partners of the firm has any right to carry on any business activity of the firm. He contended that in the present case, inasmuch as the partnership of the parties was a partnership at will, as per Section 47 of the Act of 1932 the authority of the partners of the dissolved firm to carry on any business of the firm stands ceased, except to wind up the affairs of the firm and to complete the transaction which began, but remained unfinished at the time of dissolution. In this regard, he relied on the decision of the Supreme Court in the case of Saligram Ruplal Khanna & Anr. - vs - Kanwar Rajnath reported in (1974) 2 SCC 642. It was argued for the petitioner in the first application that in this case nothing could be shown from the side of the firm or any of its partners that there has been any transaction which remained unfinished as on the date of issuance of the notice dated June 13, 2017 and, therefore, the petitioner's prayer in the first application should be allowed by this Court.
On the other hand, Mr. Jishnu Chowdhury,learned advocate appearing for the respondents in the first application (the petitioners in the second application), strenuously contended that it is settled law that mere mentioning of a term in a partnership deed that the partnership is at will is not conclusive. According to him, as per Section 7 of the Partnership Act of 1932, there are two exceptions where a partnership can be considered to be a partnership at will; the first one being where there is a provision in the contract for duration of partnership and the second exception is where there is a provision for the determination of the partnership. Relying on the decisions of the Supreme Court in the cases of Karumuthu Thiagarajan Cheltiar 5 & Anr. Vs. E.M. Muthappa Cheltiar, reported in 1961 SC 1225 and M.O.H. Uduman & Ors. vs. M.O.H. Aslum reported in (1991) 1 SCC 412 and a Single Bench decision of the Madhya Pradesh High Court in the case of Ramesh Kumar -versus- Smt. Lata Devi & Ors reported in AIR 2007 MP 153, it was submitted that it is well settled law that construction of a contract of partnership must be read as a whole and the intention of the parties must be gathered from the language used in the contract by adopting harmonious construction of all the clauses contained therein and mere mentioning, in the partnership deed that the partnership to be a partnership at will is not conclusive. According to Mr. Chowdhury, in the present case when clause 15 of the partnership deed expressly mentions that on death or retirement of any partner, firm may not be dissolved and her heirs may join the partnership in her place and other clauses of the said deed read together demonstrates that the partnership is not at will. He, therefore, argued by the said notice dated June 13, 2017, the petitioner has only expressed her intention to relinquish herself from the business of the partnership. Since the said notice dated June 13, 2017 is not a notice of dissolution of the firm, the business of the firm continues and the petitioner has filed the first application, with the sole object to wrongfully and illegally close the business of the firm. It was argued that whether the partnership is a partnership at will and whether the said notice dated June 13, 2017 issued by the petitioner in the first application is a valid notice or not are all the disputes between the parties, which are to be finally adjudicated in the arbitral proceeding before the arbitrator and not in these applications.
It was strenuously urged that by the letter issued to the Union Bank, the petitioner in the first application has wrongfully and illegally contended that the partnership stands dissolved, resulting in utter disruption of the business activities of the firm. According to the petitioner in the second application, so far as the balance of convenience and inconvenience is concerned, until the disputes between the parties with regard to the dissolution of the firm is not decided in the arbitral proceeding, the petitioner in the first application is not entitled to obtain any order as 6 she has prayed for. It was, however, submitted that if the operation of the bank account of the firm is not restored as prayed for in the second application, the business of the firm will stop and subsequently in the arbitral proceeding even it is held that the partnership is not a partnership at will and the said notice dated June 13, 2017 is not a valid notice for dissolution of the firm, by that time there will be an irreversible situation as the business of the firm would stand automatically closed in the meantime. On these grounds Mr.Chowdhury submitted that this Court would not pass any order in favour of the petitioner of the first application and allow the second application by directing the respondent no.2 (the petitioner in the first petition) to withdraw the letter dated June 26, 2017 addressed to the bank.
In his reply, Mr. Saha placed reliance on the decisions of the Supreme Court in the cases of United India Insurance Co. Ltd. versus Harchand Rai Chandan Lal reported in (2004) 8 Supreme Court Cases 644, Export Credit Guarantee Corporation of India Ltd. versus Garg Sons International reported in (2014) 1 Supreme Court Cases 686 and Rajasthan State Industrial Development and Investment Corporation & Another versus Diamond & Gem Development Corporation Ltd. & Another reported in (2013) 5 Supreme Court Cases 470 and strenuously contended that it is settled law that while interpreting a contract it is a duty of the Court to interpret the words in which the contract is expressed by the parties and the Court should not make a new contract by interpreting the terms thereof differently. Therefore, according to him, when Clause 15 of the said partnership deed expressly mentions that the partnership is at will, the contention raised on behalf the respondents in the first application, the petitioners in the second application, that in the present case the partnership is not a partnership at will is devoid of any merit. He submitted that this Court would allow the first petition and dismiss the second petition.
I have considered the materials-on-record, as well as arguments advanced by the learned counsel appearing for the respective parties. Both these applications have been filed by the 7 respective parties to the partnership deed dated July 9, 2005 under Section 9 of the Act of 1996. The main disputes between the parties, with regard to the validity of the said notice dated June 13, 2017 issued by the petitioner in the first application treating the partnership to be a partnership at will, is to be adjudicated upon by the arbitral tribunal in the arbitral proceeding. The petitioner in the first application has not disclosed any document to substantiate that before issuance of the notice dated June 13, 2017 she was either participating in the business of the firm or that she was prevented by the remaining partners to participate in the business of the firm. The firm is continuing to carry on its business and, as such, I do not find any reason to pass any order which would result in closure of the business of the partnership firm pending adjudication of the disputes with regard to the validity of the said notice dated June 13, 2017 by the arbitral tribunal. Therefore, the petitioner in the first petition cannot be allowed to commit any act which would in result in the closure of the business of the firm. Therefore, the petitioner in the first application, being AP No.463 of 2017 is directed to forthwith recall its letter dated June 26, 2017 addressed to the Union Bank, Camac Street, Branch. At the same time, the respondents in the first application should be not allowed to prevent the petitioner to have access to the partnership premises as directed by the order dated June 28, 2017 passed in the first application.
Accordingly, the order dated June 28, 2017 passed in AP No.463 of 2017 is confirmed and the same shall remain in force till the conclusion of the arbitral proceedings between the parties. Further, the respondents in the first application, being AP No.463 of 2017 shall prepare and furnish the accounts of the partnership firm from the month of July, 2017 till the month of November, 2017 to the petitioner within December 31, 2017. The said respondents shall also continue to prepare fortnightly accounts of the income and expenses of the firm and shall forward the same, within seven days of each of the close of such fortnightly periods, to the advocate for the petitioner in the first application.
8
Further, all expenses to be incurred by the firm should be by way of cheques. Only in unavoidable circumstances cash payment should be made and the quantum of such cash payment, in any fortnight, should not exceed Rs.10,000/-. The aforementioned arrangement shall continue till the disposal of the arbitral proceeding between the parties.
The Special Officer shall be entitled to a monthly remuneration of 1000 GMs, to be equally shared, by the partners of the firm.
With the above directions, AP No.463 of 2017 and AP No. 749 of 2017 stand disposed of.
Urgent certified website copies of this order, if applied for, be supplied to the petitioner upon compliance with all requisite formalities.
(ASHIS KUMAR CHAKRABORTY, J.) pkd/A.Goswami/ /G.S.Das/S.Chandra/SP2/dg2/ B.Pal