Back
2017 Supreme(Mad) 2507
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. SUBRAMANIAN, J.
A. Jayakanthan & Ors. – Appellants
Vs.
M/s.J.R.S.Crusher & Ors. – Respondents
CMA.No.1575 of 2017 and CMP.Nos.8287 & 10156 of 2017
Decided On : 04-08-2017
For the Appellants : Mr.V.Srikanth
For the Respondents: Mr.T.V.Ramanujam, Senior Counsel, Ms.Kanimozhi Mathi.
Partnership agreements must be honored, and majority shareholders have rights to protect their interests.
Headnote:
Arbitration - Partnership Dispute - Arbitration and Conciliation Act 1996 - Section 17
Fact of the Case:
Partnership dispute arose between appellants and respondents over the operation of a stone crusher business. The respondents, majority shareholders, sought interim relief to continue the business, citing non-cooperation from the appellants. The Arbitrator granted the interim orders in favor of the respondents.
Finding of the Court:
The court found that the respondents had made out a prima facie case and the balance of convenience was in their favor. The court upheld the Arbitrator's decision, stating that the appellate court should not interfere with the discretion exercised by the trial court in granting interim orders.
Issues: Parties' non-cooperation, ownership rights, financial obligations, and statutory requirements were key issues.
Ratio Decidendi: The court upheld the Arbitrator's decision, emphasizing the importance of honoring partnership agreements and the majority shareholders' rights to protect their interests.
Final Decision: The Civil Miscellaneous Appeal was dismissed, and the appellants were ordered to pay costs to the respondents.
1. This appeal is directed against the interim order passed by the learned sole Arbitrator u/s.17 of the Arbitration and Conciliation Act 1996.
2. The brief facts, which are relevant to the dispute, are as follows:
The Appellants and the respondents 2 to 4 had entered into a partnership agreement on 27.07.2013 for carrying on business of crushing blue metal. The first appellant had also executed a lease deed, leasing out his land measuring about 3 acres 84 cents for the purpose of establishing the stone crusher by the partnership firm. The lease deed was also executed on 27.07.2013.
3. The partnership deed would show that the first appellant is 5% share holder and second appellant is 15% share holder. Both the appellants put together have 20% share, whereas the respondents 1 to 4 hold the remaining 80% share. The business ran into rough weather and there were complaints and counter complaints amongst the partners.
4. It is also claimed that the cousin brother of the first appellant one Anandan had entered into an agreement for supply of Boulders for the purpose of crushing. According to the respondents at the instance of the appellants, the said Anandan stopped supplying boulders, and the activity of the firm came to stand still in March 2015. Though this would be vehemently opposed by the appellant, he would contend that the boulders supply was stopped by the said Anandan because of non-payment of the agreed amount to him.
5. A legal notice was issued by the respondents 1 to 4 claiming that the appellant is not co-operating with the business and calling upon him to co-operate for continuation of the business. It appears that a complaint was given by the Manager of the firm against the 1st appellant and his son claiming that they had attempted to transport crushed blue metal during mid night. This resulted in arrest of the appellant and he came out on bail after being jailed for a day.
6. Since the partnership agreement had an Arbitration clause and the appellants did not co-operate for nomination of Arbitrator, an application was taken out by the respondents for appointment of Arbitrator in OP.No.347 of 2016, before the Hon'ble Chief Justice. By an order dated 15.07.2016 the fifth respondent herein was appointed as the sole Arbitrator by the Hon'ble Chief Justice.
7. Upon entering arbitration, the parties had filed their claims and objections. Pending the arbitration, the respondents 1 to 4 had filed an application in I.A.No.81 of 2016 before the Principal District Judge, Krishnagiri under Section 9 of the Arbitration and Conciliation Act. While that was pending, the respondent 1 to 4 filed the present application before the Arbitrator seeking the following reliefs:
“(a) Direct the Respondents not to interfere with the possession and peaceful enjoyment of the Claimants in Survey No.354/1 in Hosanapuram Village.
(b) Direct the Respondents to abide by the terms and conditions of the partnership Agreement and undertake all activities including obtaining license, raw materials, and all running licenses to ensure the operation of the crushing plant which is the sole purpose of the Partnership Agreement and thus render justice. “ I.A.No.81 of 2016 was dismissed as withdrawn.
8. In support of the above prayers, it was contended by the respondents 1 to 4 that since the land in which the crusher unit has been established belongs to the first appellant he has to apply for the necessary license as well as for the consent of Tamil Nadu Pollution Control Board. Unless the license is obtained, the business cannot be carried on. Therefore, they have sought for the above directions.
9. The appellants 1 and 2 filed counter to the main Arbitration which was also in fact a counter to the application filed by the respondents 1 to 4 seeking interim reliefs as stated supra. In the counter it was contended that the respondents 1 to 4 who were the claimants before the Arbitrator had not paid the lease amount as agreed by them for the land. They had n
