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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
N.V. Anjaria, Samir J. Dave, JJ.
Vijay Arvind Jariwala – Petitioner
Versus
Umang Jatin Gandhi – Respondent
R/Special Civil Application No. 16131 of 2021
Decided On : 06-05-2022
Arbitration Act - Application under Section 9 - Summary of Acts and Sections: Arbitration and Conciliation Act, 1996, Section 9 - The court discussed the provisions of the Arbitration Act, 1996, particularly Section 9, and emphasized that the proceedings under the Act are confined between the parties to the arbitration agreement. The court highlighted the definition of 'party' under Section 2(h) and various judicial precedents to establish that a third party who is not a party to the arbitration agreement cannot be impleaded in the proceedings under Section 9 for interim measures.
Fact of the Case:
The case involved a dispute between partners of a partnership firm regarding the construction of a project and the alleged fraudulent conduct of one partner. The petitioner sought to join two third parties as respondents in the Section 9 proceedings, claiming that they were proper and necessary parties due to financial dealings with the partnership firm.
Finding of the Court:
The court found that the third parties were not proper and necessary parties in the Section 9 proceedings under the Arbitration Act, as the proceedings are confined between the parties to the arbitration agreement. The court emphasized that the provisions for interim measures operate only between the parties to the arbitration agreement and do not extend to third parties.
Issues: The main issue was whether the third parties could be joined as respondents in the Section 9 proceedings under the Arbitration Act, 1996.
Ratio Decidendi: The court's decision was based on the interpretation of the provisions of the Arbitration Act, particularly Section 9, and the definition of 'party' under Section 2(h). The court also relied on judicial precedents to establish that the proceedings under the Act are confined between the parties to the arbitration agreement.
Final Decision: The Special Civil Application was dismissed, and the challenge to the impugned order failed. The court upheld the Commercial Court's decision to dismiss the petition to join the third parties in the Section 9 proceedings.
JUDGMENT :
N.V.ANJARIA, J.
Civil Miscellaneous Application No.20 of 2021, was an application filed under Section 9 of the Arbitration and Conciliation Act, 1996. The same was filed by Umang Jatin Gandhi against the petitioner Vijay Arvind Jariwala, who were the two partners of the partnership firm - Blue Feathers Infracon. In the said proceedings, the petitioner herein filed application Exhibit 49 seeking to implead one Falguni Sandip Naik and Sandip Balwantrai Naik persons as parties.
2. The said application Exhibit 49 came to be dismissed by the Commercial Court – learned 9th Additional District Judge, Surat, Bardoli by his order dated 29.9.2021. It is this order which is sought to be challenged by the petitioner by filing the Special Civil Application.
3. The relevant facts are that the partnership firm in the name and style of Blue Feathers Infracon created by deed dated 23.2.2012 which then was consisted of partners named Sandip Balwantrai Naik, Umang Jatin Gandhi- respondents herein, Vijay Arvindlal Jariwala and Sandip Balwantrai Naik in capacity of partner of another firm named called Blue Feathers Incorporation. In the year 2014, two partners Sandip Naik in individual capacity and Sandip Naik in capacity of partner Blue Feather Incorporation separated from the firm. The retirement deed was executed on 17.7.2014. The petitioner and the respondent herein remained two partners of the firm with profit sharing ratio 50% each. The rest of the conditions of original partnership deed remained unchanged.
3.1 It appears that the partnership firm- Blue Feathers purchased land property bearing Final Plot No.136 Paiki admeasuring 4146.25 sq.meters from one Mohammad Yakub for consideration of Rs.2,51,27,500/-. Agreement dated 23.5.2017 and subsequently registered sale deed dated 3.6.2017 were executed between the existing partners of the firm and the vendor. On the land purchased by the firm as above the scheme known as ‘Lotus’ for construction of residential flats was floated. The construction of the scheme was earlier stopped which was restarted by the existing partners after obtaining necessary permission from the authorities. The existing partners- the petitioner respondent herein- obtained loan of two crores for the project by mortgaging the said land, it was stated.
3.2 The construction of the said project faced rough weather. It was not completed. The existing partners made allegations against each other about irregularities committed in the conduct of the project. The petitioner herein alleged that the respondent- Umang Gandhi acted fraudulently and allotted several flats/units in the name of ‘Mann Developers’ which was a sham firm created by him. The investors who invested their money in the scheme registered complaints and also filed court cases.
3.3 Respondent Umang Gandhi, in view of the Arbitration Clause in the condition No.20 of the partnership deed, filed on 2.3.2021 application seeking interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Arbitration Act’). Therein he alleged that the other partner- petitioner herein was non co-operative in the project Lotus, that he was not giving signatures, was not allowing the execution of signatures of agreement to sale etc. and that construction was required to be discontinued since November, 2020 because of the conduct of the petitioner. It was alleged that the payment of materials on the site, the payment to the contractor and payment to the labourers were not made and even the time period for cash credit facility obtained from the Bank had got over. It was stated that the prestige of the firm had thereby suffered.
3.4 The interim prayers were sought for asking direction against the petitioner partner to co-operate in the completion of the project Lotus and in conducting all affairs relating thereto, in the alternative, it was prayed to allow the applicant to take all the steps to complete the same. Prayer was also made to pe
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