Partners cannot unilaterally dissolve a firm and freeze the bank account, and the rights and procedures outlined in the partnership deed and codicil must be followed.

ORDER :- This application has been filed under Sec. 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') to permit the applicant to operate the bank account in Current A/c. No. 3052 held with the 2nd respondent/garnishee.

2. Original Application No. 845/2005 has been filed under Sec. 9 of the Act for an order of interim injunction restraining the 1st respondent from in any manner either by himself or through his agents, servants or any one claiming through him from interfering with the administration and management of the firm M/s. Best Enterprises, pending disposal of Application No. 3130/05.

3. The applicant is a partnership firm represented by its managing partner. The firm was constituted in pursuance of a partnership deed dated 7-11-1999 in which there are four partners. The firm is carrying on business of supplying of all kinds of bolts and nuts and railway track tools to various dealers. In the year 2005, a deed of codicil was executed, according to which, the Managing Partner has got 47% of share in the profit and loss and the 1st respondent has got 29% of share in the profit and loss. Due to misunderstanding and bad behaviour of 1st respondent a complaint was given against 1st respondent before the local police in May 2005. The 1st respondent on 30-5-2005 issued a notice through his counsel dissolving the firm and the 1st respondent has given a letter to the 2nd respondent to freeze the account of the firm. The 2nd respondent unilaterally on the request of the 1st respondent freezed the account and due to non-operation of bank account the firm's business has come to a standstill. Urgent steps have been taken to appoint an arbitrator and pending commencement of arbitration proceedings, the above application has been filed.

4. The 1st respondent filed a counter for which a reply affidavit has been filed by the applicant.

5. Learned counsel for the applicant argued that the 1st respondent can never dissolve the partnership firm as per clause 12 of the deed of partnership and he can only retire from the firm as per clause 11 that too after giving three months notice to the other partners. The 2nd respondent bank has been very hostile and unreasonable in freezing the account at the instance of the 1st respondent, who is holding only 29% of the share whereas the other three partners are holding 71% of the shares. That apart as per the codicil the accounts of the firm will be operated by any two of the partners. In such circumstances, the applicant firm should be allowed to operate the account pending disposal of the arbitral proceedings.

6. Per contra, learned counsel for the 1st respondent submitted that as per clause 7 of the deed of partnership the partnership is at will as there was mismanagement and hostile attitude towards 1st respondent by the other partners. He rightly dissolved the firm by issuing notice to other partners on and from 25-5-2005 itself. In such circumstances, until the accounts are scrutinised and settled, the firm which was dissolved should not be allowed to operate the bank account and as such there is no infirmity in the action of the bank in freezing the accounts of the partnership firm.

7. Heard the learned counsel for the applicant and the learned counsel for the 1st respondent. I have also perused the documents filed in support of their submissions.

8. It is admitted by both parties that the partnership firm was constituted as per the deed of partnership on 7-11-1999. It is also admitted that a codicil of partnership deed was also executed on 11-4-2005. As per clause 11 of the deed of partnership dated 7-11-1999, each partner shall have the right to retire from the partnership by giving three months notice to other partners. Clause 12 stipulates that upon the death or retirement of any partner the other partners may take additional partners to carry on the business of the firm and the death or retirement of any partner shall not dissolve the firm. It is true that i

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