The court affirmed that disputes related to financial misconduct among partners are arbitrable, necessitating referral to arbitration for resolution.

ORDER :

1. Heard Ms. B. Nishitha, learned counsel for the Applicant and Mr. A. Tulsi Raj Gokul, learned counsel appearing for Respondent Nos.1 and 2.

2. The Respondent No. 1 firm, named M/s. Brightway Communications, was established through a Partnership Deed dated 01-02-2012, executed between Mr. Kaveti Manohar Kumar and Mrs. Motadu Padmalatha. This partnership is registered under the provisions of the Partnership Act, 1932, with registration No. 2577/2014, allocated a 50% share in profits and losses to each partner. The original partners are no longer part of the firm. The business was founded to operate a cable network by laying cables and providing cable and internet connections to subscribers, either directly or through franchise cable operators. The firm was also set up to engage in the business of importing, exporting, trading, dealing, and acting as agents for various products, including comics, film books, calendars, greeting cards, posters, sticker toys, stationery, computer peripherals, cable TV material, television electronics, and television set-top boxes, as outlined in Clause 3 of the Partnership Deed. The partnership was empowered to undertake any other business with mutual consent of the partners.

3. A Reconstitution of Partnership Deed, dated 09-05-2015, introduced Respondent Nos. 2 and 4 as new partners. The profit and loss distribution was revised as follows: (1) Kaveti Manohar Kumar - 5%; (2) MotaduPadmalatha - 50%; (3) Respondent No. 2 - 20% and (4) Respondent No. 4 - 25%. Shortly thereafter, an “Admission-cum- Retirement Deed” dated 02-07-2015 was executed, leading to the retirement of Mrs. Motadu Padmalatha from the partnership. Simultaneously, the Applicant, along with Respondent Nos. 3, 5, 6, and 7, were inducted as partners. This Deed revised the distribution of profits and losses accordingly.

4. Respondent No. 2 presently serves as the Managing Partner of the firm. The Applicant and other partners resolved that the partnership firm’s books of accounts should be audited by a certified Chartered Accountant, including all ledger documents from the firm’s inception. However, despite the passage of sufficient time, Respondent No. 2 failed to present the books of accounts to the partners. The accounts have not been audited by a certified Chartered Accountant, nor has any information regarding the finalization of the accounts been communicated to the partners. Consequently, the partnership firm is effectively being operated as a sole proprietary concern by Respondent No. 2. Moreover, Respondent No. 2 is engaging in activities detrimental to the interests of the other partners. There is misappropriation of funds of Respondent No.1 firm and participating in activities, causing financial and business losses, as well as mental distress to the Applicant.

5. It was submitted that Respondent No. 2 has misappropriated amounts of Rs. 2,50,00,000/- (Rupees Two Crore Fifty Lakhs) and Rs.4,00,00,000/- (Rupees Four Crores) for personal use. Consequently, the Applicant and other partners have repeatedly requested Respondent No. 2 to disclose the financial transactions of the partnership firm. However, Respondent No. 2 has consistently failed to respond. Furthermore, Respondent No. 2 is engaging in illegal activities, misusing partnership funds, and misappropriating prepaid amounts paid by members of the firm.

6. It was further contended that Respondent No. 2 is attempting to alienate the business of the Partnership Firm by presenting it as his sole proprietary concern. To counteract this, a public notice was