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2019 Supreme(Guj) 1046
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
HARSHA DEVANI, VIRESHKUMAR B. MAYANI, JJ.
Kirtikumar Futarmal Jain - Appellant
Versus
Valencia Corporation - Respondent
Special Civil Application No. 15145 of 2019
Decided On : 13-09-2019
Advocate Appeared:
For the Appellant :Mr. Anshin Desai, Senior Advocate With Mr.Aditya J Pandya(6991)
For the Respondent:Mr. DC Dave, Senior Advocate With Mr. Udit N Vyas(9255)
Point of Law
Section 11 of the Commercial Courts Act which provides for bar of jurisdiction of a Commercial Court where the jurisdiction of the civil court is either expressly or impliedly barred under any other law for the time being in force, there is no inconsistency between the provisions of the two Acts inasmuch as section 37 of the Arbitration Act read with section 2(e) thereof clearly excludes the jurisdiction of courts other than the Principal Civil Court of original jurisdiction in the district.
Headnote:
Constitution of India , Article 227 – Arbitration and Conciliation Act, 1996 – Section 17 – Petitioner has challenged the judgment and order passed by the learned Principal District Judge, whereby the appeal preferred by the respondents against the order passed by the Arbitral Tribunal on the application made by the applicant under section 17 of Act, 1996 has been rejected and the application made by the respondents under section 37(2) thereof has been allowed – Challenged – Held, Respondents have raised a preliminary contention with regard to the maintainability of the application under section 17 of the Arbitration Act to the extent that the petitioner had claimed similar relief as claimed before the High Court in view of the order made by the High Court on the application under section 9 of the Arbitration Act. However, the arbitral Tribunal has not entered into the merits of the contention by stating that it does not wish to enter into wider issues at this stage. In the opinion of this court, the preliminary issue as to whether or not the application under section 17 of the Arbitration Act was maintainable was required to be decided first before considering the application on merits, and no relief could have been granted without deciding such preliminary issue – Petition dismissed. (Para 29 and 30)
Facts of the Case:
Petitioner has challenged the judgment and order passed by the learned Principal District Judge, whereby the appeal preferred by the respondents against the order passed by the Arbitral Tribunal on the application made by the applicant under section 17 of Act, 1996 has been rejected and the application made by the respondents under section 37(2) thereof has been allowed – Challenged.
Finding of the Court:
Respondents have raised a preliminary contention with regard to the maintainability of the application under section 17 of the Arbitration Act to the extent that the petitioner had claimed similar relief as claimed before the High Court in view of the order made by the High Court on the application under section 9 of the Arbitration Act. However, the arbitral Tribunal has not entered into the merits of the contention by stating that it does not wish to enter into wider issues at this stage. In the opinion of this court, the preliminary issue as to whether or not the application under section 17 of the Arbitration Act was maintainable was required to be decided first before considering the application on merits, and no relief could have been granted without deciding such preliminary issue.
Result: Petition dismissed
JUDGMENT :
HARSHA DEVANI, J.
1. By this petition under article 227 of the Constitution of India the petitioner has challenged the judgment and order dated 26.8.2019 passed by the learned Principal District Judge, Surat in Commercial Appeal No.1 of 2019 whereby the appeal preferred by the respondents against the order dated 31.10.2018 passed by the Arbitral Tribunal on the application made by the applicant under section 17 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Arbitration Act') has been rejected and the application made by the respondents under section 37(2) thereof has been allowed.
2. Shortly stated, the facts of the case are that the petitioner is a partner in the respondent No.1 Valencia Corporation, a partnership firm and has 50% share in the partnership firm. The petitioner came to be admitted into the partnership vide a retirement-cum-admission deed executed between the petitioner, the respondents No.2 to 7, and the erstwhile partners, on 18.2.2015 at Surat. Clause (11) of the deed provides thus:
“11. General : That for the purpose of signing legal documents in relation to the business i.e. purchase and sale of land/building/units & signing documents in relation to various government offices, sub-registrar office, administration of day to day activities, procuring loan from banks or financial institutions all the partners have authorize Mr. Kumaresh Kishorbhai Agarbattiwala and Mr. Kiritkumar Futarmal Jain. Their acts and deed will bind on all other partners”.
It is the case of the petitioner that all the day to day transactions of the firm were required to be done jointly by the petitioner and the second respondent and that in furtherance of clause (11) of the agreement, initially the business of the firm was conducted with the signatures of both the parties and various agreements in favour of the buyers also came to be executed with the signatures of both the parties.
3. According to the petitioner, the respondents No.2 to 7 started taking advantage of their numerical majority and started conducting the affairs of the firm in a manner that was prejudicial to the interest of the petitioner as well as the first respondent firm. The petitioner also learnt that the respondents No.2 to 7 have accepted various payments in cash which were not accounted for in the accounts of the firm. He, therefore, demanded true and correct accounts of the firm which were not provided to him despite making various requests. The petitioner has alleged that the respondents No.2 to 7 have avoided providing fair accounts to the petitioner and that they have also pocketed various cash consideration. The petitioner has further alleged that to avoid giving actual and true accounts and to deprive the petitioner from the legitimate proceeds of the firm, the respondents No.2 to 7 have started executing documents unilaterally and the petitioner has been kept out of all the dealings of the firm.
4. It is further the case of the petitioner that the second respondent had executed five sale deeds/agreements to sell in favour of various buyers and that the petitioner was not given any details about the transactions that the firm was undertaking. The petitioner has alleged that the respondents No.2 to 7 have resorted to such steps since they wanted to gain undue advantage by accepting unaccounted cash from the buyers and not showing the same in the books of the firm, thereby causing loss to the firm as well as the petitioner. The petitioner has also alleged that the sale consideration received from the buyers was also directly transferred to the accounts of third parties thereby not showing the true and correct financial picture and that the respondents No.2 to 7 had interpolated the accounts of the first respondent firm solely with a view to gain financial advantage and deprive the petitioner from the legitimate proceeds that he is entitled out of the business of the first respondent firm. According to the petitioner, the
