High Court Of Himachal Pradesh
V.M.JAIN
JASVINDER SINGH - Appellant
Versus
JAI INDER PAL SINGH - Respondent
Arb. Case No. 27of 2005
Decided On : 07/01/2005
Arbitration and Conciliation Act - Partnership Dispute - Indian Partnership Act, 1932 - Section 9, Section 53 - The court discussed the provisions of the Indian Partnership Act, 1932, particularly Section 53, which authorizes partners to restrain any other partner from carrying on a similar business in the firm's name or from utilizing the assets of the firm for his own benefit until the affairs of the firm have been completely wound up. The court also considered the maintainability of the petition under Section 9 of the Arbitration and Conciliation Act, 1996, for interim measures before the arbitration proceedings take place.
Fact of the Case:
Partnership dispute between the petitioner and respondent regarding the running and dissolution of the partnership firm M/S Sanjeevan Hospital. The petitioner sought ad interim relief to restrain the respondent from carrying on the business of the hospital or using its name, goodwill, or assets until the firm's affairs were completely wound up.
Finding of the Court:
The court found that closing down the hospital until the firm's affairs were completely wound up would cause loss to the public and employees. Instead, the court directed the respondent to pay a monthly sum to the petitioner as an interim measure for utilizing the firm's name and assets for his own benefit.
Issues: The main issue was whether the respondent should be restrained from running the hospital and utilizing the firm's assets, considering the dissolution of the partnership firm and the absence of appointed arbitrators.
Ratio Decidendi: The court decided that closing down the hospital would cause loss to the public and employees, and therefore, an alternative solution was needed. It directed the respondent to pay a monthly sum to the petitioner as an interim measure for utilizing the firm's name and assets for his own benefit.
Final Decision: The court disposed of the petition with a direction for the respondent to pay a monthly sum to the petitioner and to keep accounts faithfully, subject to the final decision of the arbitrators and in accordance with the terms and conditions of the Partnership Deed(s).
V.M. Jain, J.—The petitioner filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996, against the respondent for the grant of ad interim relief by restraining the respondent from carrying the business of M/S Sanjeevan Hospital Mandi, exclusively or from using the name, goodwill or assets/property of the erstwhile partnership from M/S Sanjeevan Hospital until the affairs of the firm has been completely wound up in accordance with the provisions of the Indian Partnership Act, 1932 and further restraining the respondent from selling, transferring or changing the nature of the property or assets of the erstwhile firm M/S Sanjeevan Hospital.
2. As per the allegations in the petition, both the parties were partners of the partnership firm under the name and style of M/S Sanjeevan Hospital, which came into existence on 1.12.1992, which was followed by a supplementary agreement dated 14.12.1992 and thereafter, a fresh partnership deed was executed on 23.8.1993? Subsequently, two new partners were added on 1.4.1994 and subsequently, one of those partners retired from the firm on 1.9.199 and subsequently on 10.7.2003 the other partner also retired from the partnership and thereafter, only the petitioner and respondent remained the partners of the said firm. It was alleged that the share of the respondent was 75%, while that of the petitioner was 25% in the said partnership. It was alleged that doubts and differences started between the two partners, as a result of which, various correspondences was exchanged between the parties and ultimately on 27.12.2004, the respondent served a notice upon the petitioner dissolving the partnership firm with effect from 1.4.2005 and the petitioner had sent replies to the said notice, whereupon the respondent sent a reply. It was alleged that the respondent also issued a public notice in newspaper with regard to the dissolution of the partnership firm. It was further alleged that as per Clause xvi of the partnership deed dated 10.7.2003, in respect of the reconstituted firm, all the disputes relating to the partnership business between the parties etc. were to be referred to the arbitrations of two independent persons to be appointed by consensus. It was alleged that in pursuance thereof, the petitioner had served a notice upon the respondent on 10.5.2005 calling upon to him to give consent for appointment of Arbitrators to adjudicate the dispute between the parties and that so far, the respondent had not given his consent for appointment of the Arbitrators. The petitioner filed the copies of the balance sheet of the firm from 1992 onwards uptil 31.3.2004 alongwith the petition. It was further alleged that the firm was paying rent in respect of the premises in which the said hospital was being run by the partnership firm. It was alleged that various equipment etc. installed in the said hospital was the property of the firm. It was alleged that after the dissolution of the firm, the respondent was illegally and without the consent of the petitioner running the business of dissolved firm under the same name and style and was utilizing the aforesaid property and equipment of the firm including the goodwill of the firm. It was alleged that under the law till the entire affairs of the firm were completely wound up in accordance with the provisions of Indian Partnership Act, the respondent was not entitled to use the goodwill/ name, property, assets etc. of the firm exclusively for his benefit and was not entitled to claim himself to be the sole proprietor of the said firm after its dissolution. It was further alleged that on the facts and circumstances of the present case, the respondent was liable to be restrained by way of interim injunction order from doing so till the time affairs of the firm were wound up. It was accordingly, prayed that the respondent be restrained from utilising the name or assets, goodwill and property of the firm exclusively for himself to t
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