Karnataka High Court
Mr. N Kishore Kumar Reddy vs Mr. G Srinivas on 27 September, 2023
Author: B M Shyam Prasad
Bench: B M Shyam Prasad
-1-
NC: 2023:KHC:35285
CMP No. 890 of 2022
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF SEPTEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE B M SHYAM PRASAD
CIVIL MISC. PETITION NO.890 OF 2022
BETWEEN:
MR. N KISHORE KUMAR REDDY
S/O N V SESHU REDDY,
AGED ABOUT 56 YEARS,
RESIDING AT NO.566,
NEAR ISRO COMPOUND, 3RD BLOCK,
RMV II STAGE,
BANGALORE - 560 094
...PETITIONER
(BY SRI. UNNIKRISHNAN M, ADVOCATE)
AND:
1. MR. G SRINIVAS
AGED ABOUT 54 YEARS,
S/O T GOVINDAIAH,
Digitally
signed by RESIDING AT NO.16, RAJA BHOOMI,
NARASIMHA 2ND MAIN, 3RD CROSS,
MURTHY
VANAMALA KIRLOSKAR COLONY 1ST STAGE,
Location: BASAVESHWARANAGAR,
HIGH
COURT OF BENGALURU - 560 079
KARNATAKA
2. MRS SHOBHA SRINIVAS
W/O G SRINIVAS,
AGED ABOUT 48 YEARS,
RESIDING AT NO.16, RAJA BHOOMI,
2ND MAIN , 3RD CROSS,
KIRLOSKAR COLONY, 1ST STAGE,
BASAVESHWARANAGAR,
BANGALORE - 560 079
-2-
NC: 2023:KHC:35285
CMP No. 890 of 2022
3. MRS. SUREKHA N
W/O MR N KISHORE KUMAR REDDY,
AGED ABOUT 46 YEARS,
RESIDING AT NO.566,
NEAR ISRO COMPOUND, 3RD BLOCK,
RMV II STAGE,
BANGALORE - 560 094
...RESPONDENTS
(BY SRI. MANJUNATH B K, ADVOCATE FOR R1 AND R2;
MS. LAKSHMI T, ADVOCATE FOR R3)
THIS CIVIL MISC. PETITION IS FILED UNDER
SECTION 11 (6) OF THE ARBITRATION AND
CONCILIATION ACT 1996, PRAYING TO APPOINT AN
ARBITRATOR HON'BLE MR. JUSTICE ASHOK .B.
HINCHIGERI, TO ADJUDICATE THE DISPUTE ARISING
OUT BETWEEN THE PETITIONER AND RESPONDENT AS
PER CLAUSE 19 FOUND AT DEED OF RECONSTITUTION
DATED 09.12.2010 PRODUCED AT ANNEXURE-E AND
ETC.,
THIS PETITION, COMING ON FOR ADMISSION,
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
This petition is filed under Section 11(5) of the Arbitration and Conciliation Act, 1996 [for short 'the Arbitration Act']. According to the petitioner, with the execution of the Deed of Reconstitution dated 09.12.2010, he is inducted as one of the partners -3- NC: 2023:KHC:35285 CMP No. 890 of 2022 with the respondents, and this partnership Firm being "at Will" is dissolved, and the first and second respondents, who are managing the firm, have not rendered the accounts. The third respondent, who is the petitioner's wife, is also one of the partners.
2. It is undisputed that the petitioner has commenced proceedings under Section 11 of the Arbitration Act before this Court in CMP.No.642/2022 invoking the arbitration agreement1 in the Partnership Deed dated 01.04.2010 and the Reconstitution Deed dated 09.12.2010. This petition is disposed of on 16.09.2022 reserving liberty to the petitioner to file a fresh petition as required under the provisions of Section 11(5) of the Arbitration Act. 1 The Agreement for Arbitration reads:
"All disputes which may arise between the partners with regard to the Partnership business or in the interpretation of these or in any matter relating or connected with the firm shall be referred and settled through arbitration. The arbitration proceedings shall be in accordance with the provisions of the Arbitration Act, 1940 or such other related Act/s which are in force from time to time."-4-
NC: 2023:KHC:35285 CMP No. 890 of 2022
3. The petitioner has caused the legal notice dated 20.09.2022 invoking the arbitration clause, and the respondent, who has received such legal notice, has not caused any reply. In the meanwhile, the petitioner has commenced the suit in Com.O.S.No.326/2020 on the file of LXXXIX Addl. City Civil and Sessions [and Commercial designated Court in Bengaluru], and the Commercial Court by its order dated 11.02.2022 has disposed of the suit reserving liberty to the petitioner to commence arbitration proceedings.
4. Sri. Manjunath B.K, the learned counsel for first and second respondent, submits that there is serious dispute about custody of the original Reconstitution Deed dated 09.12.2010. However, when queried, he submits that though there is dispute about the custody of the original deed with the parties contending that they do not have the original, this Court could consider the petition for -5- NC: 2023:KHC:35285 CMP No. 890 of 2022 appointment of an arbitrator because the Deed of Reconstitution dated 09.12.2010 is not disputed.
5. Sri. Manjunath B.K next canvasses that this petition must be rejected on the following grounds:
[a] The firm is not dissolved and if the firm is not dissolved, there cannot be any dispute about rendering the accounts. The learned counsel proposes to rely upon a decision to buttress his case in this regard.
[b] The petitioner has not approached the Court with the clean hands inasmuch as he has filed an incomplete reconstitution deed, and it is deliberate because clause (8) of the deed would demonstrate that the petitioner's account has been settled.
[c] There is no cause of action and if there is no cause of action, there is no arbitral dispute. The petitioner himself is managing the affair of the firm and if any accounts is to be rendered, it is only -6- NC: 2023:KHC:35285 CMP No. 890 of 2022 by the petitioner himself and this Court must therefore opine even at this stage as there is no cause of action for the dispute.
6. Sri. Unnikrishnan M., the learned counsel for the petitioner, on the other hand, submits that the petitioner is categorical that the firm is dissolved with issuance of notice dated 22.11.2018, and he proposes to rely upon submissions made in this regard in the earlier petition before this Court under Section 11 of the Arbitration Act in CMP No.642/2022. Sri. Unnikrishnan M, relying upon the submissions made in the application under Section 9 of the Arbitration Act, also contends that the petitioner's consistent case has been that the first respondent is looking after the affair of the firm's accounts from the very inception, and he has ensured that the petitioner never got involved in the important affairs of the firm. As regards the settlement of accounts as contained in the Deed of -7- NC: 2023:KHC:35285 CMP No. 890 of 2022 Reconstitution dated 09.12.2010, Sri. Unnikrishnan M. submits that the settlement of accounts as mentioned in such clause would only refer to settlement of accounts of the petitioner's HUF, and cannot be construed, especially without evidence, as settlement of his accounts.
7. The contesting respondents do not dispute the execution of the Deed of Reconstitution dated 09.12.2010 or that there is an agreement for arbitration. As regards the alleged lack of cause of action, and therefore, the lack of arbitrability of the dispute raised, it must necessarily be considered at this stage, in the light of the rival case that if petitioner asserts dissolution of the firm w.e.f. November 2018, the contesting respondents assert that the firm subsists. Similarly, if the petitioner contends that first respondent is managing the affairs of the firm, the contesting respondents contend that the petitioner manages the affairs of the firm. These -8- NC: 2023:KHC:35285 CMP No. 890 of 2022 are disputed facts and must be adjudicated after evidence, and at the threshold where this Court must apply ex facie test, it cannot be opined that there is no dispute or that there is no cause of action.
8. As regards the other objections that the petitioner's account is settled, the clause (8) of the Deed of Reconstitution reads as under:
"The Incoming Partners have settled the dues of the Retiring Partners as per the books of account as on 1st April 2010 and the Retiring Partners have acknowledged for the same. Any outstanding shall be transferred to the Retiring Partners loan account and simple interest @ 18% shall be paid on the outstanding balance of the said loan amount."
This has obvious reference to the Account of the outgoing partner. It would suffice for this Court to observe that if the petitioner is inducted as incoming partner in this firm, the outgoing partner is his HUF and he has also signed the deed it as the kartha. In -9- NC: 2023:KHC:35285 CMP No. 890 of 2022 the light of the afore, this Court is of the considered view that a former Judge of this Court must be appointed as the sole Arbitrator to enter reference of the dispute between the parties leaving open all questions to be decided in the arbitral proceedings. Hence, the following:
ORDER [a] The petition is allowed, and Hon'ble Shri. Justice A.V. Chandrashekar, a former Judge, High Court of Karnataka, is appointed as the sole Arbitrator to enter reference of the dispute between the petitioner and the respondent and conduct the proceeding at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru according to the Rules for the Centre.
[b] The Registry is directed to communicate this order [by email] to the
- 10 -
NC: 2023:KHC:35285 CMP No. 890 of 2022 Arbitration and Conciliation Centre (Domestic and International), Bengaluru, and Hon'ble Shri. Justice A. V. Chandrashekar, a former Judge, High Court of Karnataka, Address: No.406, 3rd Floor, Ramashridhar Apartment, 2nd Cross, 9th Main, BTM Layout, 2nd Stage, Bengaluru-560 076. [E-
mail:[email protected]] as required under the Appointment of Arbitrators by the Chief Justice of Karnataka High Court Scheme, 1996.
Sd/-
JUDGE RR