Back
2008 Supreme(Bom) 1159
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.J. VAZIFDAR, Mr. Justice R.J. Kochar, JJ.
Mahendra N. Thakkar – Petitioner
Versus
Yogendra N. Thakkar & Ors. – Respondents
ARBITRATION PETITION NO.364 OF 2007
WITH
ARBITRATION PETITION NO.373 OF 2007
DECIDED ON : 14-08-2008.
Mr. Shailesh Shah i/b. M/s. Kumana & Co. for the Petitioner in Arb. Petn. 364/07 and for Respondent No.1 in Arb. Petn. No.373/07.
Mr. H. Toor with Mr. N.C. Parikh i/b. M/s. Mansukhlal Hiralal & Co. for thePetitioners in Arb. Petn. No.373/07.
Mr. N.C. Parekh i/b. M/s. Mansukhlal Hiralal & Co. for Respondent No.1.
Ms. Alpana Ghone with Mr. Simil Purohit, Mr. Parish Jaiswal, Mr. C.D. Patel i/b.
M/s. Kanga & Co. for Respondent Nos. 2 to 5 in both both the petitions.
The court affirmed the arbitrator's jurisdiction to consider disputes raised in the statement of claim, even if they related to events after the filing of the claim, and upheld the interpretation of the Partnership Deed and the Indian Partnership Act, 1932.
Headnote:
Arbitration - Partnership Dispute - Arbitration and Conciliation Act, 1996 - Section 11, Section 33 of the Indian Partnership Act, 1932 - Clause 2, 3, 10, 12, 18 of the Partnership Deed
Fact of the Case:
The petitioner and respondent no.1, who are brothers, were partners in a Chartered Accountants firm. Disputes arose regarding retirement, expulsion of partners, and management of the firm. The arbitrator made an award, which was challenged by the petitioners on the grounds that the arbitrator exceeded his jurisdiction by considering events after the filing of the statement of claim.
Finding of the Court:
The court found that the arbitrator had jurisdiction to consider the petitioner's retirement and the related disputes, as they were raised in the statement of claim and were not limited to events before the filing of the claim. The court also upheld the arbitrator's interpretation of the Partnership Deed and the Indian Partnership Act, 1932.
Issues: The issues revolved around the arbitrator's jurisdiction to consider events after the filing of the statement of claim and the interpretation of the Partnership Deed and the Indian Partnership Act, 1932.
Ratio Decidendi: The court held that the arbitrator had jurisdiction to consider disputes raised in the statement of claim, even if they related to events after the filing of the claim. The court also upheld the arbitrator's interpretation of the Partnership Deed and the Indian Partnership Act, 1932, regarding the power to expel a partner.
Final Decision: The arbitration petitions were dismissed, and there was no order as to costs.
The petitioner's in both the petitions seek to set aside the award made by the sole arbitrator dated 25.6.2007. The petitioner and respondent no.1 are brothers. The first respondent in the first petition is the petitioner in the second petition and the petitioner in the first petition is the first respondent in the second petition. Respondent nos. 2 to 6 in both the petitions are the same.
2. As both the petitions challenge the same award on virtually the same grounds, I will dispose of both the petitions by this common order and judgment. I will however for convenience refer to the parties as they are arrayed in Arbitration Petition No.364 of 2007. The Petitioner, Respondents and certain others carried on the profession of Chartered Accountants in partnership as per the terms and conditions contained in a Deed of Partnership dated 24th April, 2000. The Clauses in the Partnership Deed relevant for the present petition are as under :-
“2. Any partner shall be at liberty to retire from the partnership on giving atleast six calender months' notice in writing to the other partners and on the expiration of such period the partnership shall continue with the remaining partners on the terms decided mutually by the remaining partners.
3. Mr. Gandhi and Mr. Thakkar are and are referred to hereinafter as “the senior partners”,. Mr. Jayesh, Mr. Yogendra, Mr. Balse, Mr. Desai, Mr. Bhanu, Mr. Shivakumar and Mr. Shah are and are referred to hereinafter as “Partners”.
10. a) The business of the partnership shall be jointly managed by the senior partners Mr. Gandhi will have overall responsibility of the practice. Mr. Thakkar will manage all administrative, financial and employee matters. There will also be regular meetings of Partners for consideration of various matters concerning the conduct of the partnership business.
b) Mr. Bhanu shall be the partner in charge of the Bangalore Office and Mr. Shivakumar shall be the Partner in charge of the Delhi Office.
12. a) Any partner may retire on giving such notice as is referred to in Clause 2 hereof.
b). Every partner shall retire from the firm at the end of the firm's financial year in which he attains the age of 65.
18. All dispute and questions in connection with the Partnership or this Deed arising between partners or their representatives shall be referred to Mr. Arun Jaswantlal of Matubhai Jamietram, Attorneys, as sole Arbitrator and in case he is not available or declines to act or resigns, then to a single Arbitrator if the partners agree upon one otherwise to the Arbitrators to be appointed by each party to the difference in accordance with the provision of the Arbitration and Conciliation Act, 1996 or any statutory modification thereof.”
3. Respondent no. 1 by his letter dated 1.12.2004 addressed to the arbitrator named in clause 18 of the partnership deed invoked the arbitration agreement and referred the disputes which had arisen between the parties to him. He stated that the disputes mainly related to the execution of a fresh deed, powers of senior partners, violation of the terms of the deed, expulsion of four partners, etc. The arbitrator named in the arbitration clause however expressed his inability to take up the arbitration proceedings.
4. Respondent no. 2 filed Arbitration Application No. 69 of 2005 under section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator. By an order dated 10.10.2005 the learned Chief Justice appointed a retired judge of this court as the arbitrator.
5. On 12.3.2007 respondent no. 1 filed a statement of claim before the arbitrator. The prayers in the statement of claim read as under: -- "(a) the Opponent no 5 (i.e. the petitioner) herein be declared as Senior Partner of the firm and is entitled to manage all administrative and financial matters as set out in clause 10(a) of the said Partnership Deed.
(b) expel the Opponent Nos. 1 to 4 (i.e. Respondent nos. 2 to 5 herein) from the firm with effect from 22nd A
