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2023 Supreme(Bom) 36

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
MANISH PITALE, J
Zenobia Poonawala (nee Jinwalla) – Appellant
Versus
Rustom Ginwalla and others - Respondents
Commercial Arbitration Petition No. 81 of 2020, Interim Application No. 1010, 1339 of 2020, Arbitration Petition (Lodging) No. 15 of 2020
Decided on : 25-01-2023

Advocates:
Advocate Appeared:
Mr. Aseem Naphade a/w. Mr. Premlal Krishnan, Mr. Rehmat Lokhandwala, Mr. Prashant Bothre, i/by. Pan India Legal Services, Mr. Sameer Pandit and Ms. Sarrah Khambati, i/by. Wadia Ghandy & Co

Headnote:

Arbitration and Conciliation Act, 1996 - Section 11, 48, 34, 26, 31-A, 18, 34(2)(a)(iii), 31(3) - Amendment Act, 2015 - Section 28(3) - Partnership Act, 1932 - Section 48 - Mental Health Act, 1987 - Offence of prohibition clauses - Claiming public policy of India – Enforcement of certain foreign awards – Conditions for enforcement of foreign awards – Application for setting aside arbitral award – Expert appointed by arbitral tribunal – Equal treatment of parties - Mode of settlement of accounts between two parties - Petitioner has filed these two petitions, challenging awards passed by a sole arbitrator, concerning disputes in two partnership firms, petitioner and respondents were partners - Parties are family members and disputes arose between them, leading to issuance of notices for dissolution of firms – Held, Court is of opinion that peculiar facts of present case need to be appreciated - It was case of respondents that petitioner had unlawfully withdrawn funds from firm and she had placed same in her personal accounts - In fact, petitioner admitted such withdrawal, but claimed that she had kept amount for safe-keeping - In such a situation, when learned arbitrator directed petitioner to bring back amount, it could not be said that direction was issued for her to contribute to losses of firm - Thus, there is no substance in said ground - Even otherwise, the proviso to Section 34(2-A) of the said Act specifically states that an arbitral award shall not be set aside, merely on ground of an erroneous application of law - Therefore, Court finds no substance in contention raised on behalf of petitioner, in that regard - Accordingly dismissed.

JUDGMENT :

The petitioner has filed these two petitions, challenging awards passed by a sole arbitrator, concerning disputes in two partnership firms, wherein the petitioner and the respondents were partners. The parties are family members and disputes arose between them, leading to issuance of notices for dissolution of the firms. The parties are members of the Ginwalla family, wherein the father Farhad Ginwalla, along with his son and daughters, were running the business of the two partnership firms, M/s. Shroff & Co, Colaba (hereinafter referred to as the Colaba firm) and M/s. Shroff & Co, Grant Road (hereinafter referred to as the Grant Road firm). The Grant Road firm was in the business of wholesale distribution of wines and spirits, since 1908 and the Colaba firm was in the retail business of wines and spirits.

2. On 14th March 1995, Farhad Ginwalla i.e. the father of the parties herein and Cherie Ginwalla, both original claimants, executed partnership deed, introducing the petitioner Zenobia Poonawalla as a partner in the Colaba firm for profits only. The share of partnership was, Farhad Ginwalla 40%, Cherie Ginwalla 40% and the petitioner Zenobia 20%. On 29th November 1996, the said parties executed an indenture, whereby the petitioner Zenobia was made a partner with share in profits and losses.

3. On 17th May 2012, the partners in the Grant Road firm executed partnership deed, introducing petitioner Zenobia as a partner of the firm. The partnership share was Farhad Ginwalla 33%, Rustom Ginwalla 19%, Rashna Ginwalla 19% and Zenobia (petitioner) 29%. Between 2012 and 2014, petitioner Zenobia and her father Farhad Ginwalla were involved in the day-to-day management of both the firms. In January 2014, the relationship between petitioner Zenobia and other family members, who were partners in the two firms, broke down and according to the partners, other than petitioner Zenobia, a decision was taken by them to wind up the business of the two firms.

4. On 25th/27th October 2014, petitioner Zenobia transferred 70 lakhs ? from the account of the Colaba firm to the account of the Grant Road firm. Thereafter, she transferred 79 lakhs from the account of the Grant Road ? firm into her personal account. It was alleged that both the transfers were made without the knowledge or consent of the other partners.

5. On 30th May 2016, Farhad Ginwalla, Rustom and Rashna, being the partners of the Grant Road firm and together holding 71% shares, issued notice of dissolution of the said firm. Similarly, on 7th June 2016, Farhad Ginwalla and Cherie, being partners of the Colaba firm holding 80% share, issued notice for dissolution of the said firm. Disputes arose between petitioner Zenobia on the one hand and the other family members and partners in the two firms on the other hand. In this backdrop, on 28th July 2016, a petition came to be filed, under section 11 of the Arbitration and Conciliation Act, 1996, for constitution of an arbitral tribunal. Mr. Pradeep Sancheti, Senior Advocate, was appointed as the sole arbitrator, with the consent of the parties, by an order of this Court, for resolving the disputes that arose between the parties, in the context of the two firms.

6. The learned arbitrator entered upon the reference and the proceedings stood initiated. Considering the fact that the accounts of the two firms had to be settled, the learned arbitrator appointed M/s Dhanboora & Co., Chartered Accountants, as the auditor for accounts of both the firms. It is the case of the Respondents in these two petitions that the said auditor came to be appointed with the consent of all the parties, including petitioner Zenobia. It appears that during the course of proceedings before the learned arbitrator, the parties were granted liberty to communicate with the auditor as regards any information or documents, which they desired to show to the auditor. While undertaking the exercise, as directed, the auditor sought direction from the learned arbitrator,

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