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2021 Supreme(Ori) 418

IN THE HIGH COURT OF ORISSA, CUTTACK
K.R. Mohapatra, J.
Sulochana Modi - Appellant
Versus
Pawan Kumar Modi - Respondent
Arb A (Arbitration Appeal) No. 15 of 2017
Decided On : 30-06-2021

Advocates Appeared:
Goutam Acharya, Advocate, Arun Kumar Budhia, Advocate, S.K. Behera, Advocate, D.K. Naik, Advocate, D.P. Mishra, Advocate, A. Panda, Advocate, Ashok Kumar Panigrahi, Advocate, Bhabani Sankar Das, Advocate

The Court does not sit in appeal over the findings and decision of the Tribunal unless the arbitrator construes the contract in such a way that no fair minded person could do.

Headnote:

Arbitration Act - Partnership Dispute - Dissolution of Partnership - [ARBITRATION] - [PARTNERSHIP DISPUTE] - [Section 37 of the Arbitration and Conciliation Act, 1996] - [Section 34 of the Arbitration Act] - [Annexure-9] - The Arbitration Tribunal framed five issues, and the majority view dissolved the partnership, awarded a sum to the claimant, and allowed the respondent to take over the firm's assets and liabilities. The minority view allowed a different sum to the claimant. The District Judge upheld the majority view. The Appellant appealed, arguing that the majority award was illegal and against public policy, and that interest and valuation of the land were not properly considered. The Court found no illegality or public policy violation, and dismissed the appeal.

Fact of the Case:

A partnership dispute arose between the Appellant and the Respondent, leading to the dissolution of the partnership and a claim for payment of legitimate dues. The Arbitration Tribunal framed five issues, and the majority view dissolved the partnership, awarded a sum to the claimant, and allowed the respondent to take over the firm's assets and liabilities. The minority view allowed a different sum to the claimant. The District Judge upheld the majority view. The Appellant appealed, arguing that the majority award was illegal and against public policy, and that interest and valuation of the land were not properly considered. The Court found no illegality or public policy violation, and dismissed the appeal.

Finding of the Court:

The Court found no illegality or public policy violation in the majority award, and dismissed the appeal.

Issues: The issues included the maintainability of the claim petition, access to the books of account, diversion of firm assets, overestimation of assets and undervaluation of liabilities, and the claimant's entitlement.

Ratio Decidendi: The majority Arbitrators did not discuss the issues independently, but they have discussed the materials on record and partly allowed the claim of the Appellant. The Court does not sit in appeal over the findings and decision of the Tribunal unless the arbitrator construes the contract in such a way that no fair minded person could do.

Final Decision: The appeal was dismissed, and there was no order as to costs.

JUDGMENT

K.R.Mohapatra, J. - This matter is taken up by video conferencing mode.

2. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, 'the Arbitration Act') has been filed assailing the judgment and order dated 25.09.2017 passed by learned District Judge, Cuttack in ARBP No.43 of 2015 filed by the Appellant under Section 34 of the Arbitration Act, whereby dismissing the Arbitration Petition, learned District Judge confirmed the award dated 14.12.2015 passed by the Arbitration Tribunal, Cuttack in Arbitration Case No.3 of 2013.

    2.1 Short narration of facts necessary for proper adjudication of this appeal are that a deed of Partnership at Will was executed between three partners, namely, the Appellant, Respondent and one Binod Kumar Tibrewal. The partnership had established a firm in the name and style of M/s. R. M. Mills over Plot Nos.113 and 114, New Industrial Estate, Phase-II, Jagatpur, Cuttack. The firm was manufacturing turmeric powder and spices etc. Subsequently, one of the partners, namely, Binod Kumar Tibrewal retired from the partnership. Thus, a fresh partnership deed was executed on 28.08.2004 between the Appellant and Respondent. The profit and loss sharing of the partners was at 50:50 ratio. Subsequently, the partnership deed was also modified in April, 2009. Initially, the partnership firm availed financial assistance from the State Bank of India, which was ultimately transferred to Axis Bank. The firm had loan liability of Rs.90.00 lakh with Axis Bank towards term loan and Rs.1.30 lakh towards cash credit. The Respondent, being nephew of the Appellant was the Managing Partner and was looking after the management of the firm. Subsequently, dispute arose between the partners, namely, the Appellant and the Respondent. As the partnership was at Will, the Appellant sent a notice to the Respondent expressing her intention to bring an end to the said partnership and for payment of her legitimate dues out of the firm's assets. As the dispute could not be resolved, a Tribunal was constituted on mutual consent of the parties as per the arbitration clause of partnership deed.

    2.2 Narrating the aforesaid facts, the Appellant filed her claim statement stating that the Respondent is none other than the son of elder brother of her husband. Thus, the Respondent was allowed to act as Managing Partner of the firm with a remuneration of Rs.1,500/- per month. But taking advantage of the situation, the Respondent started to act whimsically by prevailing over the Appellant. The Appellant was not allowed to enter into the firm premises and verify the books of account as well as other business transactions. The Appellant was kept in dark about business of the firm. On the other hand, the Respondent pretended that the firm is sustaining loss in the business. In continuation of his highhanded action, the Respondent also pursued the Appellant to dissolve the partnership to safeguard her investment and other entitlement from the firm's assets. In view of the above, the Appellant lost faith and trust on the Respondent and issued legal notice for dissolution of the partnership. The Respondent also sent his reply on 07.11.2013. Since the dispute could not be resolved, the Appellant invoked arbitration clause of the partnership deed. An Arbitral Tribunal was constituted on mutual consent of the parties. On the aforesaid assertions, the Appellant sought for dissolution of the partnership and payment of her legitimate dues after liquidation of the liabilities of the firm.

    2.3 The Respondent on his appearance filed statement of defence/counter claim denying the allegations made in the claim statement. He specifically denied the allegations and contended that he did nothing to affect the interest of the partnership firm. He has never mis-conducted himself, as alleged, in breach of terms of the deed of partnership. He has never done anything to achieve personal gain using firm's assets. The net worth of the firm was

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