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2017 Supreme(Guj) 408

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Akil Abdul Hamid Kureshi, J.
Bhanubhai Ramanbhai Patel and Ors. - Appellants
Vs.
Nilesh Ramanbhai Patel and Ors. - Respondents
Petn. Under Arbitration Act No. 56 of 2016
Decided On : 17-02-2017

Advocates Appeared:
For the Appellants :Dhaval D. Vyas, Advocate.
For the Respondents:Harshadray A. Dave, Advocate.

Headnote:

Arbitration and Conciliation Act - Sections 8 and 11 - Petitioners seek appointment of an arbitrator to resolve disputes between petitioners and respondents arising out of a partnership agreement - Petitioners and respondents in defined shares joined together to form a partnership for business in name of Company - Main business of firm would be to process and sale processed tobacco and for dealing in tobacco on commission - It is not in dispute that agreement contained an arbitration - If in relation to work of partnership business or in relation to any other matter between partners any dispute arises same could be resolved through arbitration and not through Court process - Clients hereby call upon for settlement of accounts of said partnership firm and for that my client intends to appoint arbitrators to settle accounts of said partnership firm in full and final so that liabilities of firm are completely settled and that all partners get their respective share from said partnership firm from surplus if any after settling all liabilities –Held, Court was a clear attempt to thwart arbitral proceedings by instituting suit which would also involve question of accounts of present partnership firm - In present issue is clearly separable and can be segregated - There cannot be any prohibition nor any objection to an ordinary civil proceedings between aggrieved parties to proceed before Civil Court when an independent issue arises between partners of a firm which partnership agreement contains an arbitration clause contracting partners must respect such arbitration clause - If some of aggrieved partners raise an arbitration dispute unwilling partners cannot oppose arbitration proceedings on ground that they have already instituted a suit in which along with all grievances allegations and remedies disputes concerning present partnership firm is also been thrown in hotchpotch - Mechanism of resorting to arbitration instead of approaching Civil Court cannot be thwarted by instituting suit that too after receipt of notice for arbitration - Any attempt would frustrate provisions of as of Arbitration and Conciliation Act – Order Accordingly (Para 24)

JUDGMENT :

Akil Abdul Hamid Kureshi, J.

1. Petitioners seek appointment of an arbitrator to resolve the disputes between the petitioners and the respondents arising out of a partnership agreement dated 19.02.2010.

2. Brief facts are as under:

"Under the said partnership agreement, six partners i.e. the present petitioners and respondents in defined shares joined together to form a partnership for a partnership business in the name of M/s. Navdurga Tobaco Company. Main business of the firm would be to process and sale processed tobacco and for dealing in tobacco on commission. It is not in dispute that the agreement contained an arbitration clause which, when translated in English, would read as under:

"If in relation to the work of the partnership business or in relation to any other matter between the partners any dispute arises, the same could be resolved through arbitration and not through the Court process."

3. Since multiple disputes arose between the two sets of partners, the present petitioners issued a notice dated 12.05.2016. In such notice, they made multiple allegations of misfeasance and misapplication of partnership funds by the respondents. The petitioners, therefore, under the said notice conveyed to the respondents as under:

"13. It is submitted that Accounts of M/s. Navdurga Tobacco Co., a Partnership firm are not yet settled between the parties by duly inquiry and investigations, and that My clients want Dissolution of this Partnership firm as the duration of Partnership is at Will as per clause 5 of the Partnership Deed. My client is entitled to seek the Dissolution of Firm and also is entitled to seek details of proper accounts as per the provisions of Indian Partnership Act. It is submitted that the Deed of Partnership contains Arbitration Clause viz. Clause 16 which says that if there are any differences or disputes between the partners then the same are to be resolved by Arbitration.

14. My client hereby call upon you to dissolve the partnership firm viz. M/s. Navdurga Tobacco Company, which as per section 43(2) stands dissolved on the date of this notice or on the date of receipt of this notice by you. My clients hereby call upon for settlement of accounts of the said partnership firm and for that my client intends to appoint arbitrators to settle the accounts of the said partnership firm in full and final so that the liabilities of the firm are completely settled and that all the partners get their respective share from the said partnership firm from surplus if any after settling all liabilities. My clients herby also call upon you to bring back all the amounts that you No. 1 have withdrawn from the said partnership firm by making payments for your personal use without the knowledge of my clients.

15. Should you fail to comply then having no choice my client would initiate legal proceedings under Arbitration and Conciliation Act to refer to his grievance to an Arbitrator duly appointed for the purpose of resolving the dispute referred herein-above viz. Dissolution of M/s. Navdurga Tobacco Co. a partnership firm and settlement of accounts of said firm as on Dissolution. My client hereby brings to your notice that they wants to appoint any one of following person as Arbitrator from their side, for deciding the disputes between the partners in regard to dissolution of the said partnership firm and also in regard to settlement of accounts of the said firm till the date of dissolution. The names of the persons suggested by my clients are as under:

1. Mr. Kamleshbhai Manubhai Patel Village Khambholja Tal and District Anand

2. Mr. Lalitbhai R. Mehta Chartered Accountant 1st Floor, Prasanna House, Opp. Radha Krishna Park, Akota, Vadodara

3. Mr. Prakashbhai K. Gandhi B. Com. LL.B tax Advocate 207, Paradise Complex, Sayajigunj, Vadodara.

16. You are therefore called upon to either comply with this notice and or give your consent for the appointment of the any of one person from the above three persons as Sole Arbitrator for
























































































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