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HIGH COURT OF CALCUTTA
S. C. Lahiri, R. S. Bachawat
PANNALAL PAUL - Appellant
Versus
PADMABATI PAUL - Respondent
A. F. O. O. 12 Of 1959 And Award Case No. 266 Of 1955
Decided On : JUNE 15, 1960
ARBITRATION - AWARD - VALIDITY - ALLOTMENT OF ASSETS AND LIABILITIES - POWER OF ARBITRATOR - INDIAN PARTNERSHIP ACT, 1932, SECTIONS 46, 48.
Fact of the Case:
In a suit for dissolution of partnership, the disputes were referred to arbitration. The arbitrator awarded that the assets and liabilities of the dissolved firms be allotted to the appellants, who were some of the partners. The respondents, who were the other partners, challenged the award on various grounds, including that the arbitrator had no power to allot the assets and liabilities to the appellants without providing for payment of the liabilities out of the assets in the first instance, and that the award was in contravention of their rights under Sections 46 and 48 of the Indian Partnership Act, 1932.
Finding of the Court:
The court held that the arbitrator had the power to allot the assets and liabilities of the dissolved firms to the appellants, and that the award was not in contravention of the respondents' rights under Sections 46 and 48 of the Indian Partnership Act, 1932. The court also held that the arbitrator was not bound to make a separate and distinct finding on each issue, and that there was no evidence to show that the arbitrator had failed to value the assets and liabilities before making the award.
Issues: 1. Whether the arbitrator had the power to allot the assets and liabilities of the dissolved firms to the appellants without providing for payment of the liabilities out of the assets in the first instance? 2. Whether the award was in contravention of the respondents' rights under Sections 46 and 48 of the Indian Partnership Act, 1932? 3. Whether the arbitrator was bound to make a separate and distinct finding on each issue? 4. Whether there was evidence to show that the arbitrator had failed to value the assets and liabilities before making the award?
Ratio Decidendi: 1. The arbitrator has the power to allot the assets and liabilities of the dissolved firms to one or more of the partners at a valuation fixed by the arbitrator. 2. The award is not in contravention of the respondents' rights under Sections 46 and 48 of the Indian Partnership Act, 1932, as the appellants have obtained an advantage by it. 3. The arbitrator is not bound to make a separate and distinct finding on each issue. 4. There is no evidence to show that the arbitrator had failed to value the assets and liabilities before making the award.
Final Decision: The appeal was dismissed.
( 1 ) THIS is an appeal from an order refusing to set aside an award. The appellants and the respondents carried on business in co-partnership in Homoeopathic medicines under the name and style of Paul and Co. , at No. 82, Clive Street, and another business in paper under the name and style of Hari Narayan Paul and Co. , at No. 103. Old China Bazar street. The appellants Pannalal Paul, Chunilal Paul and Lakshman Chandra Paul are the sons of one Hari Narayan Paul, deceased, and each of them had one-fourth share in the profits and losses of the two partnership businesses. The respondent Padmabati is the widow and the respondents Satya Charan Paul and Amar Nath Paul are the minor sons of another son of Hari Narayan Paul and they jointly had one-fourth share in the profits and losses of the two businesses. The respondents instituted a suit in this Court for dissolution and accounts of the two partnerships and for the realisation and distribution of the partnership assets and properties. The respondents also applied for appointment of a receiver. By an order dated January 31, 1956 all disputes in respect of the two partnerships mentioned in the plaint and in the petition for appointment of receiver were referred to the sole arbitration of Mr. D. K. Ghose, Barrister-at-Law. The parties filed their respective statements before the arbitrator and adduced oral and documentary evidence. We are informed that the arbitrator held over one hundred sittings. Several issues were raised in the reference. Eventually, the arbitrator made his award on July 25, 1957. The appellants being dissatisfied with the award moved an application to set it aside. Mallick, J. , held that the appellants had made out no ground for setting aside the award and dismissed the application. The appellants have preferred this appeal from that order.
( 2 ) TO appreciate the arguments addressed before us it is necessary to refer to relevant portions of the impugned award. Clauses 1, 2, 3 and 4 of the award are as follows :1. "pannalal Paul, Chunilal Paul and Lakshman Chandra Paul are from this day entitled to) the right, title and interest in the business of Harinarayan Paul and Co. and Paul and Co. They will have all the assets of the said 2 businesses including 'good Will' and tenancy rights of the shop. They will be responsible for and bear all the debts and liabilities of the said businesses in respect of Income Tax, Sales Tax, chartered Bank of India Ltd. , Titagar Paper Mills Ltd. , Bhola Nath Paper House, arrears of rent and other small sundry debts";2. "s. Padmabati Paul, Satya Charan Paul and Amarnath Paul will from this day have no right title and interest in the said businesses nor will they have any liability or debt of the said 2 businesses. "3. "pannalal Paul, Chunilal Paul and Lakshman Chandra Paul will indemnify and reimburse Sm. Padmabati Paul, Satya Charan Paul and Amar Nath Paul in case the 3 latter suffer any loss on account of the aforesaid liabilities or debts of the said 2 businesses. "4. "pannalal Paul, Chunilal Paul and Lakshman Chandra Paul will forthwith pay Sm. Padmabati Paul, Satya Charan Paul and Amarnath Paul the sum of Rs. 1,2,255/- (Rupees Twelve thousand two hundred and fifty five) only. "
( 3 ) IN support of this appeal Mr. Sen contends that the award is bad, inasmuch as it purports to create a new partnership between the three appellants, Pannalal, Chunilal and Lakshman. He contends that on a true construction of the award the arbitrator has not dissolved the partnership, that in substance he has compelled some of the partners to retire, and has awarded that the remaining partners are to carry on the two businesses in future in co-partnership. I am unable to accept this contention. The whole argument is based upon fact that award does not explicitly award that the two firms have been dissolved. But it is to be seen that by Clause 1 of the award the two businesses with all their assets and liabilities have been allotted
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