Madras High Court
To Appoint An Advocate Commissioner To ... vs Gurumukh Das Saluja And Others)
Author: G.Rajasuria
Bench: G.Rajasuria
A.No.3765 of 2009 and O.A.No.105 of 2010 G.RAJASURIA, J.
Broadly but briefly, narratively but precisely, the relevant facts absolutely necessary and germane for the disposal of these two applications would run thus:
(a) A.No.3765 of 2009 has been filed seeking the following relief:
- To appoint an Advocate Commissioner to visit the registered office off the 1st respondent firm at No.22, Old No.38, III East Street, Kamarajar Nagar, Thiruvanmiyur, Chennai 600 041, Factory premises at Manapet, Bahoor Commune, Pondicherry and Branch office at No.17, Shanmugam Road, Vilva Nagar, Manjakuppam, Cuddalore 1 and to take inventory of bill books, day books and ledgers of accounts, invoices and files, licence files relating to Pollution control, ESI, PF, Employees under factory ac and other labour laws, sales tax and income tax files, delivery registers, inward and outward gate pass registers, production charts, labour contract files, suppliers contract files, bank loan files and bank pas books with transaction details, stocks of finished goods, raw materials, goods in process and all other relevant details communications and records of the business and to submit a report to this Hon'ble Court so as to secure and protect the interest of the partners in general and the applicant as a partner in particular in the partnership business of the 1st respondent firm as an interim measure before arbitration proceedings as provided under section 9(ii) (a), 9(ii) (b), 9(ii) (c) of the Arbitration and Conciliation Act, 1996 pending disposal of arbitration proceedings. (extracted as such)
(b) O.A.No.105 of 2010 has been filed seeking the following relief:
- To pass an interim injunction by restraining the 1st and 2nd respondents from interfering with the banking operation of the applicant in its Cash Credit Account No.4757 held in Indian Overseas Bank, Indira Nagar Branch, Adyar, Chennai 600 020 by permitting the 1st applicant herein to sign the cheques and operate the account subject to such directions of this Hon'ble Court. (extracted as such)
(c) Counters have been filed by the respondents concerned in the respective applications, disputing and gainsaying, refuting and denying the averments in the affidavits accompanying the applications.
2. The points for consideration are as to:
1. Whether the applicant in A.No.3765 of 2009 is entitled to get a Commissioner appointed for the purpose which is found spelt out in the said application?
2. Whether the applicants in O.A.No.105 of 2010 are entitled to get an injunction as prayed for?
3. The gist and kernel, the pith and marrow of the relevant facts would run thus:
(a) There emerged a partnership among four persons, namely, Ramachandran, Valavan @ Thirumavalavan, Jayaraman and Ravi kumar, vide partnership deed dated 15.12.2004. The purpose of the partnership was to run a factory relating to manufacture of stone pipes. According to Ramachandran, the said partnership got dissolved under certain terms and conditions and it was reconstituted on 05.02.2009 having the following persons as partners:
1. S.Ramachandran
2. V.Banumathi, w/o erstwhile partner, namely Valavan
3. R.Nalini, W/o the said Ramachandran; and
4. S.Ravikumar, who happened to be the partner in the earlier partnership also.
(b) While so, according to Ramachandran, the said Valavan and his kith and kin indulged in activities which were detrimental to the smooth running of the newly constituted partnership. However, it is the contention on the side of Valavan and his kith and kin that the said Ramachandran siphoned off the funds of the partnership and he is having a separate proprietary concern called Keyem Engineering Enterprises and with that he siphoned off the funds of the partnership and thereby depriving the right of Valavan and his kith and kin.
4. Tersely and briefly, the arguments of Mr.R.Thiagarajan, the learned counsel for the applicants in O.A.No.105 of 2010 and for Respondents 1 and 2 in A.No.3765 of 2009 and would run thus:
(a) Section 9 of the Arbitration and Conciliation Act, (for short 'the Act') cannot be pressed into service at all by Valavan, for the reason that he ceased to be a partner and if at all he is having any right, he ought to have filed a civil suit seeking remedy. A partner who ceased to be a partner in a running partnership cannot invoke Section 9 and get any interim order.
(b) Valavan also cannot ask for rendition of accounts in his A.No.3765 of 2009 under Section 9 of the Act. Disputed questions of fact cannot be gone into by this Court while exercising its jurisdiction under Section 9 of the Act. The said Valavan cannot try to cull out evidence by invoking Section 9 of the Act. Section 37 of the Indian Partnership Act is explicitly clear that a partner of a dissolved firm could claim rights only under that Section and not under Section 9 of the Arbitration and Conciliation Act. Order 26 Rule 11 of CPC or any other provision relating to appointment of Commissioner cannot be invoked by Valavan. The said Valavan siphoned off the money of the partnership and in respect of it a complaint also was given by Ravichandran and it is pending.
(c) Valavan's wife, Banumathi has been graciously inducted into the reconstituted partnership only by way of giving succor to Valavan's family and such act of benevolence was misused by Valavan and he has gone to the extent of throttling the very business conducted by Ramachandran and his wife, who are 80% shareholders in the reconstituted partnership.
(d) Valavan and his kith and kin went to the extent of informing the Bank and other authorities as though Ramachandran and his kith and kin in the partnership are indulging in illegal activities and also producing substandard products etc., and unless they are injuncted from resorting to such measures, the factory would come to a stand still. The statutory obligations also have to be fulfilled by Ramachandran, as he happened to be the Managing Partner of the said reconstituted partnership firm. Because of the non co-operative attitude of Ravikumar, both could not sign the cheque and that alone actuated and accentuated, propelled and impelled him and others to file O.A.No.105 of 2010.
Accordingly, he prays for dismissing A.No.3765 of 2009 and for allowing O.A.No.105 of 2010.
5. Tour d'horizon of the learned counsel for the applicant Mr.N.S.Nandakumar in A.No.3765 of 2009 and also Ms.T.Girija, the learned counsel for R3 and R4 in A.No.3765 of 2009 and for R2 in O.A.No.105 of 2010 would run thus:
(a) Under misrepresentation, the alleged expulsion of Valavan took place and the alleged reconstituted deed dated 05.02.2009 emerged. At one point of time, a consensus has been arrived at and it was promised by Ramachandran and his kith and kin that accounts of the partnership would be taken and in that, the due share of Valavan would be given, but to Valavan's shock and surprise, no such accounting took place of the partnership which emerged under the partnership deed dated 15.12.2004. Whereupon only, Valavan has been constrained to treat the said expulsion as non est in the eye of law and to claim that he continues to be a partner and the so called reconstituted partnership is nothing but an eye wash. By way of camouflaging and concealing Ravichandran's malafide intention, such reconstitution deed dated 05.02.2009 emerged.
(b) In fact, it is Ramachandran who siphoned crores of amounts of the partnership with the help of his proprietary concern K.M.Engineering. An agreement no doubt emerged on 30.05.2009 among four persons, namely S.Ramachandran, S.Ravikumar, R.Nalini and V.Banumathi, and as per which Ramachandran and Ravikumar were authorised to sign jointly the cheques and operate the accounts of the partnership. But Ravichandran had a volte face and turned turtle and expelled Ravikumar from participating in the business. Ramachandran concentrated only in amassing wealth for himself to the detriment of others. In a partnership firm, one partner is an agent of another partner, and by no stretch of imagination, injunction as prayed for could be granted.
(c) As per Section 37 of the Indian Partnership Act, a partner is entitled to claim his due share in the existing partnership or in the reconstituted partnership and that is explicitly clear and in such a case, the prayer of Valavan in his A.No.3765 of 2009 to protect the accounts could never be stated to be beyond the scope of Section 9 of the Arbitration and Conciliation Act, 1996.
(d) In the earlier partnership deed dated 15.12.2004 and in the reconstituted deed dated 05.02.2009, the relevant arbitration clauses would contemplate all disputes, which term would connote and denote not only disputes emerging among partnership during the existence of a partnership, but even after dissolution and any of the aggrieved partner could get the dispute resolved by invoking the arbitration clause.
(e) Even for argument sake it is taken that the earlier partnership is no more in existence and in its place the reconstituted partnership is existing, still Valavan is having the right of seeking for accounts. On the one hand, Valavan invoked Section 9 of the Arbitration and Conciliation Act and on the other hand, Ramachandran and his kith and kin invoked Section 9 of the Act.
Accordingly, they pray for allowing his A.No.3765 of 2009 and for dismissal of O.A.No.105 of 2010.
POINT NO.1:
6. The learned counsel for Ramachandran and others cited the following decisions:
(i) 1952 PATNA 271 SASANKA SEKHAR PAL AND OTHERS V. DINANATH GORAIN AND OTHERS, certain excerpts from it would run thus:
"7. ....It is clear from the passage quoted above that the Judge has delegated a judicial function to the commissioner in that he has left it to the commissioner to determine the prevailing rate and decide whether the plaintiffs are entitled to claim commission at the reduced or increased rate. Such delegation is not permissible in law. Under Order 26, Rule 9, or under any other provision of the Code of Civil Procedure, a Court cannot appoint a commissioner to discharge a judicial function. In 'UGRA NARAIN CHOUDHARY V. HARIBANS CHOUDHARY', 11 Pat L T 456, Das, J., held that a judge cannot delegate any of his functions to a commissioner. The judicial Committee also in 'RAM KRISHNA V. RATAN CHAND', 58 Ind App 173 at p.181 (PC) observed that an order of the High Court appointing a commissioner to examine the books of business and to report whether it was of a gambling nature was not warranted by law and the question was one which could not safely be left to be determined by him. The order of the learned Subordinate Judge is, therefore, wrong. He must determine the liability of the defendants himself on such evidence as may be adduced in this connection. He may, however, for the sake of convenience appoint a commissioner to examine witnesses, hold local investigations or examine accounts and ask him to submit a report but the decision on the point must be given by him and not by the commissioner. The judgment of the learned Subordinate Judge on this point must, therefore, be set aside and the case must go back to the trial Court for a determination of the liability of the defendants in accordance with law."
(ii) AIR 1916 BOM 181 LAXMIBAI V. HUSAINBHAI AHMEDBHAI, an excerpt from it would run thus:
"4. The Commissioner, however, expressed the opinion that under the said reference he had power to go into the questions even though they involved questions of law or of mixed law and fact. Whereupon defendants 6and 7 moved before me for an order that directions should be given to the Commissioner that it was not open to him to determine the objections of the plaintiffs in the accounts brought in by the 6th and 7th defendants challenging the right of the original defendant to have credit in the account for ground-rent and insurance premia paid by him, and that the decretal order of reference did not give him any power authorising him to decide the said questions and, in the alternative, that, if in the opinion of the Court it was still open to the plaintiffs to raise the objections, the same should be tried by the Court."
(iii) (1977) 1 SCC 367 DALHOUSIE PROPERTIES LTD. V. SURAJMULL NAGARMULL, an excerpt from it would run thus:
"3. .......The suit was however decided on April 18, 1962 without disposing of the plaintiff's aforesaid application under Order XXVI, Rule 9 of CPC. It may be that the trial Court had in view Form 23 of Appendix D of the Code of Civil Procedure which shows [in paragraph (3)] that a trial Court may grant a decree to the effect that an inquiry be made as to the amount of mesne profits from the institution of the suit until delivery of possession to the decree-holder, but at the time of deciding the plaintiff's claim in the suit, the trial Court did not order any such inquiry as it took the view that the rate of interest permissible under the Rent Act should determine the future mesne profits also. It is therefore obvious that the trial Court went wrong in denying the plaintiff an opportunity to prove the amount of mesne profits from the date of the institution of the suit until delivery of possession. The High Court did not correct the error while examining the plaintiff's appeal and laboured under the mistaken impression that the plaintiff did not make any attempt to give evidence on the point during the course of the trial. That was obviously a mistake as the High Court failed to notice that the plaintiff had in fact been prevented from proving its claim for mesne profits at the "present rental value".
(iv) AIR 1963 BOM 59 BIHARILAL RAMCHARAN COTTON MILLS LTD. V. CHINA COTTON EXPORTERS, an excerpt from it would run thus:
"5. Now, Order 26, rule 11 of the Code of Civil Procedure provides for the issue of a commission to such person as the Court thinks fit directing him to examine or adjust accounts in any suit in which an examination or adjustment of accounts is necessary. My attention was not drawn to any rule made by the High Court on its Original Side which contemplates the issue of such commission or the appointment of a commissioner for examining or adjusting accounts in any suit. ...."
(v) AIR 1989 ORISSA 118 BASANTA KUMAR SWAIN V. BAIDYA KUMAR PARIDA AND OTHERS, an excerpt from it would run thus:
"2. There can be no doubt that O.26, R.9, C.P.C., empowers a Court to depute a civil court commissioner for local investigation in a suit if he deems it requisite or proper for the purpose of elucidating any matter in dispute. See (1987) 63 Cut LT 630: (AFIR 1988 Orissa 52) (Chaitan Das v. Smt. Purnabasi Pattnayak). Wide discretion is vested in the Court for the purpose as is clear from the plain language of the rule. Wider the power, greater should be the restraint. Therefore, the discretion is to be exercised judicially. Once it is a discretion of the Court, the facts and circumstances of the case should be carefully considered to examine if it is a just occasion for exercise of the discretion.
4. The object of O.26, R.9, CPC is not to assist a party to collect evidence where it can get the evidence itself. The object is for elucidating any matter in dispute by local investigation at the spot. Where on the evidence of experts on record, the Court is satisfied that for appreciating the opinion of the expert evidence, it should appoint an expert as commissioner, it can on the facts and circumstances of the case, appoint a commissioner...."
(vi) AIR 2004 ORISSA 86 MADHU SUDAN PRADHAN AND OTHERS v. SANTOSH KUMAR DAS, an excerpt from it would run thus:
"5. Learned counsel for the petitioners argues that unless a Survey Knowing Commissioner is deputed, the actual state of affair relating to the occupation and improvement cannot be ascertained by the Court on the basis of available evidence and, therefore, a Survey Knowing Commissioner be deputed. The aforesaid argument is heard to be rejected in as much as it has been rightly commented by the Court below that it would amount to collecting evidence on behalf of the petitioners. When the relevant issue is as to whether the agreement for sale is valid or sham and nominal, evidence in proof and against that issue can be tendered by the parties. Plaintiffs, if want to adduce evidence relating to the claim of delivery of possession of the suit land, what was its condition on the date of such delivery of possession whether there has been any improvement made of the suit house, who has made the same and, if so, what is the amount spent, what damage has been sustained etc., then he may place relevant evidence before the trial Court. Any of such matter, as it now appears, does not require local investigation by a Survey Knowing Commissioner. The evidence, which petitioners want to produce before the Commissioner for the purpose of that investigation, may be produced by them before the trial Court. A Survey Knowing Commissioner need not be deputed to ascertain and report as to who is in possession and whether he has effected improvement of that property."
(vii) (2004) 3 SCC 155 (Firm Ashok Traders and another) vs. Gurumukh Das Saluja and others), an excerpt from it would run thus:
13. ................................... "The qualification which the person invoking jurisdiction of the court under Section 9 must possess is of being a party to an arbitration agreement. A person not party to an arbitration agreement cannot enter the court for protection under Section 9. This has relevance only to his locus standi as an applicant. This has nothing to do with the relief which is sought for from the court or the right which is sought to be canvassed in support of the relief. The reliefs which the court may allow to a party under clauses (i) and (ii) of Section 9 flow from the power vesting in the court exercisable by reference to contemplated, pending or completed arbitral proceedings. The court is conferred with the same power for making the specified orders as it has for the purpose of and in relation to any proceedings before it though the venue of the proceedings in relation to which the power under Section 9 is sought to be exercised is the Arbitral Tribunal. Under the scheme of the A&C Act, the arbitration clause is separable from other clauses of the partnership deed. The arbitration clause constitutes an agreement by itself. In short, filing of an application by a party by virtue of its being a party to an arbitration agreement is for securing a relief which the court has power to grant before, during or after arbitral proceedings by virtue of Section 9 of the A&C Act. The relief sought for in an application under Section 9 of the A&C Act is neither in a suit nor a right arising from a contract. The right arising from the partnership deed or conferred by the Partnership Act is being enforced in the Arbitral Tribunal; the court under Section 9 is only formulating interim measures so as to protect the right under adjudication before the Arbitral Tribunal from being frustrated. Section 69 of the Partnership Act has no bearing on the right of a party to an arbitration clause to file an application under Section 9 of the A&C Act."
(viii) (2009) 1 SCC 475 (Speech and Software Technologies (India) Private Limited vs. Neos Interactive Limited), an excerpt from it would run thus:
"11. By now it is well settled that exercise of power under Section 11(6) of the Act is judicial power. After the decision of this Court in SBP and Co. v. Patel Engg.Ltd., the Designated Judge has to consider the claim of both the parties to the matter and pass a reasoned order. It is also well settled that existence of arbitration agreement is a condition precedent before exercise of powers under Section 11 (6) of the Act. The preliminary matters to be considered by the court are : (1) existence of arbitration agreement, (2) territorial jurisdiction, (3) whether there are live issues to be referred to the arbitrator and (4) whether application is filed within the period of limitation prescribed by the law. If the court finds that the arbitration agreement does not exist or is rescinded then the prayer for referring the dispute to the arbitrator will have to be rejected."
(ix) 2006 (3) R.A.J.171 (Ker) (Shoney Sanil vs. M/s.Coastal Foundations (P) Ltd., and others, an excerpt from it would run thus:
"6. ......For appreciating the scope of Section 9, the term 'party' has to be understood, following the definition of the said term in Section 2 (1) (h),which states that unless the context otherwise requires 'party' means a party to an arbitration agreement. ....................................
Therefore, only a party to the arbitration agreement can apply to a court invoking Section 9, which consists of two parts. Section 9(i) deals with appointment of a guardian for a minor or a person of unsound mind for the purpose of arbitrary proceedings. Section 9(ii) enumerates five types of interim measures of protection in respect of the matters enumerated in clauses (a) to (e) of Section 9(i). ......................................."
(x) 2007(2) R.A.J. 674 (Bom) (Masood Mohmmed Husain vs. Gulam Rasul Mohammed Ali Shaikh and others), an excerpt from it would run thus:
"13. ..................................................................... in our considered view the opinion that an application under Section 9 of the Arbitration and Conciliation Act, is neither in a suit nor a right arising from a contract is founded on a sound legal principle that a right arising from a partnership deed or conferred by the Partnership Act is enforced in a arbitral tribunal and the court under Section 9 is only formulating interim measure so as to protect the right before the arbitral tribunal from being frustrated. For consideration of the application under Section 9, we that the Court can use this decision as a precedent guiding the courts the course to be adopted confronted with a situation like an application under Section 9 of the Arbitration and Conciliation Act being moved by a partner of an unregistered firm".
(xi) 2008(1) R.A.J.474 (Cal) (Raj kumar Sharma vs. Prasanta Kumar Chandra and Others), an excerpt from it would run thus:
"5. An application under Section 9 of the said Act is not a suit, though such application results in initiation of civil proceedings. The right conferred by Section 9 is on a party to an arbitration agreement. The time or the stage for invoking the jurisdiction of court under Section 9 can be (i) before, or (ii) during arbitral proceedings, or (iii) at any time after making of the arbitral award but before it is enforced in accordance with Section 36. The relief sought for in an application under Section 9 is neither in a suit nor a right arising from a contract. The right arising from the partnership deed or conferred by the partnership Act is being enforced in the arbitral tribunal, the court under Section 9 is only formulating interim measures, so as to protect the right under adjudication before the arbitral tribunal from being frustrated. Section 69 of the Partnership Act has no bearing on the right of a party to an arbitration clause to file an application under Section 9 of the Arbitration and Conciliation Act, 1996 as was held in the case of Firm Ashok Traders."
7. I would like to observe that absolutely there could be no quarrel over such a proposition. This Court itself in a catena of decisions held that Commissioner cannot be used purely for the purpose of gathering evidence by one party as against another party. The decisions cited and more specifically the excerpts extracted supra would clearly highlight that under Section 9 of the Arbitration and Conciliation Act, the Court cannot order for accounts to be taken or for probing into the accounts. As such, I fully agree with the proposition as canvassed by the learned counsel for Ramachandran and others. But the core question arises here is as to whether in this case the prayer in A.No.3765 of 2009 filed by Valavan is for taking accounts. I would like to observe that a mere perusal of the affidavit as well as the prayer in the Judges summons coupled with the arguments as put forth by the learned counsel for Valavan in A.No.3765 of 2009 would clearly evince and evidence that what Valavan wants mainly is to see that the accounts books are kept in tact and they are not destroyed. Even the learned counsel for Ravichandran during arguments at one point of time pointed out that Ravichandran and his kith and kin are having no intention to destroy the accounts books or meddle with the accounts books and they are always ready to keep the accounts books in tact.
8. Section 9 of the Arbitration and Conciliation Act is extracted here under for ready reference:
"9. Interim measures, etc., by Court.- A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to a Court:-
(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the following matters, namely:-
(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it."
9. In clause 9(ii) (c) of Section 9 of the Act, protection in respect of any property or thing, is contemplated which include accounts books also. Here, to the risk of repetition and pleonasm, but without being tautologous, I would like to point out that the prayer itself is not for probing into the accounts, but to preserve the physical possession of the accounts books concerned and in such a case, I am of the considered view that there could be no objection at all for appointment of an Advocate Commissioner to visit the premises concerned and take inventory of the accounts books and make markings therein, so that at a latter date, there will not be any doubt about the identity of those books of which inventory is taken by the Commissioner. No doubt, in the Judge's summons in A.No.3765 of 2009, the applicant also prayed for taking stock of the goods available, which in my considered opinion is not necessary at this stage, and it is sufficient if the Advocate Commissioner is appointed only for the limited purpose of taking inventory of the accounts books, the connected files and other records as found set out in the Judge's summons in A.No.3765 of 2009 purely for the purpose of enabling the parties to adduce evidence before the arbitrator in arbitration proceedings.
10. The one and the same arbitration clause as contained in the partnership deed 15.12.2004 and the reconstituted deed dated 05.02.2009 would run thus:
"It is agreed that all disputes and differences relating to the partnership affairs shall be referred to arbitration under the provisions of the Indian Arbitration Act 1940 or any other enactment or modification thereof for the time being in force."
11. A mere perusal of the aforesaid arbitration clause in both the agreements would amply make the point clear, that 'all disputes' include the disputes arising out of retirement, dissolution and the allied matters and it is not necessary that only in an existing partnership if there is any dispute that alone is arbitrable as per the aforesaid clause.
12. The learned counsel for Ramachandran and his kith and kin would submit that Valavan has not filed any claim and he cannot try to cull out evidence for the purpose of making a claim.
13. I would like to refer to Section 9 of the Arbitration and Conciliation Act, which uses the words "A party may, before or during arbitration proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to a Court:"
A mere poring over and perusal of the said words would amply make the point clear that even before making a claim and for that matter even before commencing the arbitration proceedings within the meaning of Section 21 of the Act, a party to the arbitration agreement could invoke Section 9 of the Act.
Accordingly, point No.1 is decided.
POINT NO.2:
14. The learned counsel for the applicants in O.A.No.105 of 2010 cited the following decisions:
(i) (2004) 1 SCC 149 Dr.Renuka Datla (Mrs) v. Solvay Pharmaceuticals B.V. And others.
A mere perusal of this decision would reveal that this is relating to Company Law and it is not directly concerned with the points in issue.
(ii) (2007) 6 SCC 798 - Arvind Constructions Co.(P) Ltd., vs. Kalinga Mining Corporation and others, an excerpt from it would run thus:
"12. The argument that the power under Section 9 of the Act is independent of the Specific Relief Act or that the restrictions placed by the Specific Relief Act cannot control the exercise of power under Section 9 of the Act cannot prima facie be accepted. The reliance placed on Firm Ashok Traders v. Gurumukh Das Saluja1 in that behalf does not also help much, since this Court in that case did not answer that question finally but prima facie felt that the objection based on Section 69(3) of the Partnership Act may not stand in the way of a party to an arbitration agreement moving the court under Section 9 of the Act. The power under Section 9 is conferred on the District Court. No special procedure is prescribed by the Act in that behalf. It is also clarified that the court entertaining an application under Section 9 of the Act shall have the same power for making orders as it has for the purpose and in relation to any proceedings before it. Prima facie, it appears that the general rules that governed the court while considering the grant of an interim injunction at the threshold are attracted even while dealing with an application under Section 9 of the Act. There is also the principle that when a power is conferred under a special statute and it is conferred on an ordinary court of the land, without laying down any special condition for exercise of that power, the general rules of procedure of that court would apply. The Act does not prima facie purport to keep out the provisions of the Specific Relief Act from consideration. ....................................."
(iii) (2007) 7 SCC 125 - Adhunik Steels Ltd., vs. Orissa Manganese and Minerals (P) Ltd, an excerpt from it would run thus:
"16. Injunction is a form of specific relief. It is an order of a court requiring a party either to do a specific act or acts or to refrain from doing a specific act or acts either for a limited period or without limit of time. In relation to a breach of contract, the proper remedy against a defendant who acts in breach of his obligations under a contract, is either damages or specific relief. The two principal varieties of specific relief are, decree of specific performance and the injunction (See David Bean on Injunctions). The Specific Relief Act, 1963 was intended to be an Act to define and amend the law relating to certain kinds of specific reliefs. Specific relief is relief in specie. It is a remedy which aims at the exact fulfilment of an obligation. According to Dr. Banerjee in his Tagore Law Lectures on Specific Relief, the remedy for the non-performance of a duty are (1) compensatory, (2) specific. In the former, the court awards damages for breach of the obligation. In the latter, it directs the party in default to do or forbear from doing the very thing, which he is bound to do or forbear from doing. The law of specific relief is said to be, in its essence, a part of the law of procedure, for, specific relief is a form of judicial redress. Thus, the Specific Relief Act, 1963 purports to define and amend the law relating to certain kinds of specific reliefs obtainable in civil courts. It does not deal with the remedies connected with compensatory reliefs except as incidental and to a limited extent. The right to relief of injunctions is contained in Part III of the Specific Relief Act. Section 36 provides that preventive relief may be granted at the discretion of the court by injunction, temporary or perpetual. Section 38 indicates when perpetual injunctions are granted and Section 39 indicates when mandatory injunctions are granted. Section 40 provides that damages may be awarded either in lieu of or in addition to injunctions. Section 41 provides for contingencies when an injunction cannot be granted. Section 42 enables, notwithstanding anything contained in Section 41, particularly Clause (e) providing that no injunction can be granted to prevent the breach of a contract the performance of which would not be specifically enforced, the granting of an injunction to perform a negative covenant. Thus, the power to grant injunctions by way of specific relief is covered by the Specific Relief Act, 1963."
(iv) 2004 (3) RAJ 260 (All) - M/s.Modern Metal Industries and another vs. Smt.Shanti Parolia and others, an excerpt from it would run thus:
"49. In our opinion the view taken by the court below that "the mutual invisible adhesive bond of the trust, faith and confidence which created the partnership and the firm has evaporated" is wholly misconceived. Had the respondents truly and genuinely lost faith or confidence in appellant No.2, they would have dissolved the firm and wound up its business but they have neither done that nor even taken any step before any Court for the redressal of their so-called grievances. The court below has unduly got carried away even in the absence of any case on merits being put before it by the respondents.
74. We are of the opinion that the prima facie case and balance of convenience are in favour of the appellant No.2. Irreparable loss will be caused to the firm and appellant No.2 (for the reasons stated above), if temporary injunction pending arbitration is not granted."
(v) 2007 (1) RAJ 326 (Bom) - Prakash Boolu Kundar vs. Shankar Aithu Poojari, an excerpt from it would run thus:
"17. the other reason which has heavily weighed with the trial Court is that the appellant misconducted himself by surreptitiously withdrawing sum of Rs.50,000/- (Rupees fifty thousand) from the account of the firm. Insofar as this finding is concerned, according to the appellant, the lower court has not considered the stand taken by the appellant in its proper perspective, in that, the case of the appellant was that there was arrangement between the parties that the parties were entitled to withdraw amount from the firm account. As per that understanding, even the respondent has withdrawn sum of Rs.1,00,000/- (rupees one lakh) in the past. To support this submission, reliance is placed on the audited accounts of the firm, which discloses that respondent has also withdrawn sum of Rs.1,00,000/- (rupees one lakh) as is reflected in the accounts ended on 31st March 2004 when admittedly, the appellant was exclusively in the management of hotel business o the firm. The withdrawal of Rs.1,00,000/- (Rupees one lakh) made by the respondent, however, has been overlooked by the lower court on the reasoning that the relevant document was not produced. Be that as it may, the fact of withdrawal of amount by both the parties for the present, need not detain me to pass the order which I propose to pass here under."
However, the learned counsel for Valavan and others would submit that no injunction could be granted as against another partner under any circumstances. A mere perusal and poring over of the aforesaid judgments would clearly demonstrate and display that even as against a partner or partners injunction could be granted to the limited extent that they should not in any way hamper the running of the factory concerned. Here, indubitably and indisputably, admittedly and unarguably, the manufacturing process is going on and nothing should be done by any one of the partners for the purpose of bringing that manufacturing process into a grinding halt.
15. The learned counsel for the applicants in O.A.No.105 of 2010 would draw the attention of this Court to page 88 of the typed set of papers in O.A.No.105 of 2010, which is extracted hereunder for ready reference:
"In view of the two letters dated 11.12.09 received from Smt.T.Bhanumathi, partner M/s.Arr Vee Pipes to stop operation in the account, please note that we shall not be allowing any further debits in the cash credit account no.4757 as already informed on that date in person.
All the partners are jointly and severally liable for the credit facilities and hence when one partner gives instructions to stop operations in the account, we are bound by such instructions. This is for your king information.
This letter may be treated as reply to you letter dated 12.12.2009."
A mere look at it would clearly disclose and evince that Banumathi, W/o Valavan sent two letters dated 11.12.2009 to the Indian Overseas Bank in which the partnership account is being maintained, praying the said Bank to stop operations of the account as there is partnership dispute.
16. The affidavit of Ramachandran in that application would be to the effect that Valavan and his kith and kin are disseminating false information about the conduct of business by the partnership itself. However, the learned counsel for Valavan and his kith and kin would refute and deny such allegations emanating from Ramachandran. Be that as it may, it is crystal clear that rift crept in the relation between Ramachandran and his kith and kin on the one side and Valavan and his kith and kin on the other side and each group indulged in slinging words as against the other. From the arguments of both sides, what I could understand is that the said factory is virtually a goose laying golden egg and according to the learned Advocates, that factory is capable of fetching very good income, provided if the partners do not indulge in internecine war.
17. Ms.T.Girija, the learned counsel for Ravikumar/R4 in A.No.3765 of 2009 and R2 in O.A.No.105 of 2010, in addition to the arguments advanced by the learned counsel for the applicant in A.No.3765 of 2009, by placing reliance on the counter affidavit of Ramachandran would submit that the said Ramachandran making use of his proprietary firm Keyem Engineering Enterprises took illegally several metric tonnes of finished products viz., stone pipes of the said partnership firm between April 2009 and September 2009 and it is also found reflected in the minutes.
18. The learned counsel for Ravikumar would also submit that when Ramachandran had indulged in such sort of siphoning of finished products of the partnership firm, he should not be permitted to operate the accounts and he is also not entitled to get injunction.
19. I would like to observe that these are all factual matters, which should necessarily be gone into by the Arbitrator and only the Arbitrator can decide. While dealing with Section 9 application the allegations made on either side cannot be taken conclusively for gospel truth, but purely for the purpose of understanding that there existed a dispute, this court can read them and nothing more than that and it is open for Ravikumar to get aired his grievance before the arbitrator.
20. The minutes of the meeting held on 30.05.2009 would run thus:
"1. The current A/C No.4757 at INDIAN OVERSEAS BANK, INDIRA NAGAR BRANCH, ADAYAR, CHENNAI-20 and current A/c No.565 at INDIAN OVERSEAS BANK, MANJAKUPPAM BRANCH, CUDDALORE, will be operated jointly by Mr.S.Ramachandran and S.Ravikumar with immediate effect."
From the minutes of the meeting held on 03.06.2009, what the Court understands is that certain understanding emerged among the partners, namely S.Ramachandran, S.Ravikumar, R.Nalini and V.Bhanumathi, and they are extracted hereunder:
"1. The administration will be looked after jointly by S.Ramachandran and S.Ravikumar, with immediate effect.
2. Every month on 7th, all the previous month's transactions, pertaining to accounts, purchase, sales and any other matter relating to the Company will be discussed and finalized by way of minutes on that date, at Factory in Pondicherry.
3. The quotations will be given to the customers by concerned staff at Head Office, after taking consent from both S.Ramachandran and S.Ravikumar.
4. On receipt of order both S.Ramachandran and S.Ravikumar will sign the order acknowledgement to customers towards confirmation, on behalf of the Company.
5. It is decided to verify the old accounts, up to 31.03.2009, jointly by S.Ramachandran and S.Ravikumar, with their respective auditors along with the Company's Auditor at Pondicherry factory.
6. It is decided that all the payments received should be remitted at I.O.B., Indira Nagar Branch. All remittances to I.O.B., Manjakuppam Branch will be made from Indira Nagar Branch.
7. It is agreed by all the parties that all the dues to the Company or all the dues from the Company to partners and others are to be settled with in one month, after auditors of both the partners approves.
8. It is agreed that all the statutory matters pertaining the Company will be looked after jointly by S.Ramachandran and S.Ravikumar.
9. It is agreed by all the partners that S.Ramachandran and S.Ravikumar are authorized to finalize production and delivery schedule, pricing of the pending orders and all future orders.
10. Any of the points not specifically covered in this minutes will be dealt with in accordance with the relevant provisions in the Indian Partnership Act."
21. At one point of time, both sides also referred to some Panchayat which emerged subsequent to 03.06.2009. Be that as it may, as per the minutes dated 30.05.2009 and 03.06.2009, Ramachandran and Ravikumar agreed to operate the current Account No.4757 at Indian Overseas Bank, Indira Nagar Branch, Adayar, Chennai 20 and current Account No.565 at Indian Overseas Bank, Manjakuppam Branch, Cuddalore, but it appears according to Ravikumar, Valavan and his kith and kin that Ravikumar is prevented from signing cheques along with Ramachandran, except for five cheques earlier and that too at the time of reconstitution. However, the learned counsel for Ramachandran would submit that because of the non co-operative attitude of Valavan and his kith and kin and Ravikumar , the dispute erupted. As such there are allegations and counter allegations.
22. The learned counsel for Ramachandran and others would submit that the other side cannot approbate and reprobate. I recollect and call up the famous maxim:
Quod approbo non reprobo: That which is approved is not reproved.
so to say one cannot blow hot and cold; or hunt with the hunter and run with the heir.
23. The learned counsel for Valavan and others would submit that at no point of time Valavan aprobated and reprobated and he wants remedy either as a continuing partner or as an erstwhile partner and he cannot be made to receive the worst of both the worlds or made to fall between two stools.
24. Whereas the learned counsel for Ramachandran and others would submit that Valavan and his kith and kin are entitled to only 20% share and they cannot try to take for a ride 80% share holders, viz., Ramachandran and his kith and kin. These are all facts, which should be thoroughly gone into only by the Arbitrator.
25. I would like to observe that despite the pendency of these applications for a pretty long time, it appears that neither of them took any steps to get an arbitrator appointed and so it is open for them to take appropriate measures in this regard and also get suitable directions under Section 17 of the Act from the Arbitrator.
26. As of now, what I could hold is that no doubt one partner cannot be prevented in toto from participating in the business or visiting the business premises, but injunction could rightly be granted as already observed by me supra, based on the decisions cited above that the partners should not indulge in any act detrimental to the proper functioning of the partnership.
27. I hold that the partners in stricto sensu should adhere to the said minutes dated 03.05.2009 and 03.06.2009 and if they are not in a position to adhere to them in letter and spirit, then in that eventuality, Ramachandran, who is already happened to be the Managing Partner as could be understood from the records execute cheques to the limited extent of complying with the statutory obligations, such as payment to PF, ESI, sales tax, salary to the workmen and also electricity bill and maintain vouchers and in respect of other matters, if there is no consensus as per the said minutes emerged on 30.5.2009 and 03.06.2009, it is open for them to approach the Arbitrator and get suitable orders under Section 17 of the Arbitration and Conciliation Act.
28. Mr.J.Hari Krishnan, Advocate, 229, Additional New Law Chambers, High Court, Chennai 600 104, is appointed as Advocate Commissioner to visit the premises concerned and take inventory of bill books, day books and ledgers of accounts, invoices and files, licence files relating to Pollution control, ESI, PF, Employees under factory account and other labour laws, sales tax and income tax files, delivery registers, inward and outward gate pass registers, production charts, labour contract files, suppliers contract files, bank loan files and bank pass books with transaction details and all other relevant details communications and records of the business and make specific marks thereon for identity purpose and leave them there in that premises itself in the custody of Ramachandran. The initial remuneration of the Advocate Commissioner is fixed at Rs.15,000/- (Rupees fifteen thousand only) payable directly by the applicant in A.No.3765 of 2009 directly within a period of one month.
Accordingly, both the applications are disposed of.
08.03.2010
gms
Issue order copy on 11.03.2010
INDEX : YES
INTERNET: YES
G.RAJASURIA, J.
gms
A.No.3765 of 2009 and
O.A.No.105 of 2010
08.03.2010