2026 Supreme(Online)(Del) 94
IN THE HIGH COURT OF DELHI AT NEW DELHI
Avneesh Jhingan, J
Mahaveer Singh Rajawat – Appellant
Versus
Radha Sarweshwar Marble And Granite – Respondent
O.M.P. (COMM) 551/2025|I.A.32322/2025|I.A.32323/2025
Advocates:
For the Appellants/Petitioners: Vivek Malik
The scope of interference with an arbitral award under the specialized legislation is strictly limited to the grounds enumerated therein; courts cannot sit in appeal, reappreciate evidence, or set aside an award merely because another view of the facts is possible.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Indian Partnership Act, 1932 - Section 16 - Challenging arbitral award - Scope of judicial review - Proceedings under this section are not in the nature of an appeal - Court cannot sit in appeal over the arbitral award nor can it reappreciate evidence - Interference is permissible only on limited grounds such as perversity, patent illegality, or conflict with public policy - Mere errors of law or reassessment of evidence do not justify setting aside an award. (Paras 11, 13, 14)
(B) Partnership - Rendition of accounts - Alleged financial irregularities and siphoning of funds - Burden of proof lies on the claimant - Where a party is an active participant in business activities, they are presumed to have had access to records - Failure to prove specific irregularities despite opportunity results in the rejection of claims - Interference with factual findings held to be reasonable is beyond the court's jurisdiction in summary proceedings. (Paras 5, 8, 9, 10)
Facts of the case:
A partner filed an application challenging an arbitral award that denied their claims for the rendition of accounts and a declaration of their share in the partnership assets. The claimant alleged financial irregularities and the siphoning of funds by fellow partners. The arbitrator framed multiple issues regarding entitlement to recoveries, interests, and the rendition of accounts. The arbitrator concluded that the claimant failed to substantiate the allegations of financial irregularities and that the claimant had been actively involved in the business, having had access to the firm's records.
Findings of Court:
The court observed that the arbitrator’s findings were based on a thorough examination of the evidence and represented a possible view. Since the petitioner failed to demonstrate any perversity or patent illegality, and because the court cannot function as an appellate body under the scope of the Act, there was no ground to interfere with the award.
Issues: The main issues were whether the arbitrator erred in rejecting the request for the rendition of accounts and whether the court should reappreciate the evidence regarding the alleged financial irregularities.
Ratio Decidendi: A challenge to an arbitral award is subjected to a narrow lens of supervision. The court cannot substitute its own opinion for that of the arbitrator, especially when the findings are supported by evidence and do not shock the conscience of the court or violate fundamental principles of law.
Result: Petition dismissed.
Judgement Key Points
- The petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the award dated 16.08.2025 passed by the learned sole arbitrator (!) .
- The petitioner is a partner in M/S Radha Sarweshwar Marble & Granite, a registered partnership firm set up on 06.06.2012, and the dispute arose between the petitioner and the other partners (!) .
- A legal notice dated 05.06.2018 was served to provide books of account, and a notice dated 14.07.2018 was issued for dissolution of the firm (!) .
- Arbitration proceedings were sought via a notice dated 15.09.2018 under Section 21 of the Act (!) .
- The petitioner prayed for a declaration of being a 1/3rd partner, entitlement to 1/3rd share in assets, and directions to render true accounts including bank statements, ITRs, and balance sheets from 2012 onwards (!) .
- The arbitrator framed issues regarding recovery of sums, interest, rendition of accounts for FY 2017-18 and 2018-19, control of books of accounts, and siphoning of funds (!) .
- The claim of the petitioner to be a 1/3rd partner was admitted by the partners, so no declaration was called for (!) .
- The dispute regarding financial irregularities and non-production of books was rejected due to the petitioner's failure to prove alleged irregularities (!) .
- The arbitrator concluded that all partners contributed to the final accounts and the petitioner had access to accounts from 2012 to 2018 (!) .
- The petitioner argued that partners claimed books were with them initially but later produced balance sheets, creating contradictions (!) .
- The petitioner alleged siphoning of funds to new entities violating Section 16 of the Indian Partnership Act, 1932, citing discrepancies where partners withdrew large sums via banking channels while payments to the petitioner were in cash without corresponding cash book entries (!) .
- The petitioner contended that the arbitrator failed to consolidate all assets and liabilities for dissolution to determine the petitioner's share (!) .
- The petitioner was admitted to have had no access to books of account to determine irregularities, though the arbitrator held the petitioner had access (!) .
- The petitioner was only dealing with material purchases and had no concern with sales, a claim rejected upon cross-examination (!) .
- The petitioner's prayer for books of account from 2012 onwards was barred by limitation as the notice was for FY 2017-18 and 2018-19 (!) .
- The petitioner's involvement in sales was rejected, and accounts cannot be prepared without partners rendering their respective accounts (!) .
- The petitioner failed to prove financial irregularities with specific elaboration, making the claim a bald statement (!) .
- The contradiction in partners' conduct regarding location of account books does not enhance the petitioner's case (!) .
- The petitioner failed to prove financial discrepancies despite the production of financial statements by a chartered accountant (!) .
- The contention regarding the opening of new partnership firms was not pressed before the arbitrator and remained a suspicion (!) .
- The attempt to trace the source of funds for payments to the petitioner was deemed a far-fetched attempt in Section 34 proceedings (!) .
- There was no claim raised by the petitioner for dissolution of the firm, making the grievance ill-founded (!) .
- The Supreme Court has held that challenges to arbitral awards under Section 34 are limited to specific grounds and do not allow reappreciation of evidence (!) .
- The court cannot act as an appellate court; interference is permitted only if the award is contrary to public policy, fundamental policy of Indian law, or involves patent illegality (!) .
- In Ramesh Kumar Jain vs. Bharat Aluminium Company Limited, it was held that Section 34 mandates a narrow lens of supervisory jurisdiction and courts do not sit in appeal (!) .
- In Consolidated Construction Consortium Limited Vs. Software Technology Parks of India, it was held that Section 34 is not an appellate provision and the court cannot reappraise evidence if two views are possible (!) .
- In PSA Sical Terminals Pvt Ltd vs. The Board of Trustees of V.O. Chidambranar Port Trust, it was held that interference is limited to situations where findings are arbitrary, capricious, perverse, or shock the conscience of the court (!) .
- After the 2015 Amendment, contravention of Indian public policy includes fraud, corruption, violation of Sections 75/81, fundamental policy of Indian law, and conflict with basic notions of justice or morality (!) .
- Sub-section (2-A) of Section 34 provides that in domestic arbitrations, violation of Indian public policy also includes patent illegality appearing on the face of the award (!) .
- An award shall not be set aside merely on the ground of an erroneous application of law or by reappreciation of evidence (!) .
- The view taken by the arbitrator is a possible one and is not vitiated by patent illegality, perversity, or conflict in public policy (!) .
- The petition is dismissed and all pending applications are dismissed (!) .
| Table of Content |
|---|
| 1. factual background and initiation of arbitration regarding partnership accounts. (Para 1 , 2 , 3 , 4 , 5) |
| 2. petitioner's grievances regarding siphoning of funds and lack of access to accounts. (Para 6 , 7) |
| 3. arbitrator's assessment of evidence, limitations, and findings on financial irregularities. (Para 8 , 9 , 10) |
| 4. limited scope of judicial interference in arbitral awards under section 34 of the act. (Para 11 , 12 , 13 , 14) |
| 5. dismissal of the petition and connected applications. (Para 15) |
AVNEESH JHINGAN, J. (ORAL)
1. This petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) challenging the award dated 16.08.2025 passed by the learned sole arbitrator.
2. The facts in brief are that the petitioner is a partner in M/S Radha Sarweshwar Marble & Granite (hereinafter ‘firm’), a registered partnership firm set up on 06.06.2012. The firm constitutes of three partners having equal shares. There was a dispute between the petitioner and the other partners (hereinafter ‘partners’). A legal notice dated 05.06.2018 was served upon the partners to provide complete books of account. The notice dated 14.07.2018 was issued for dissolution of the firm. The arbitration proceedings were sought by issuance of the notice dated 15.09.2018 under Section 21 of the Act culminated in the impugned award.
3. The petitioner prayed declaration of being 1/3rd partner in the firm and entitled to 1/3rd share in all assets of the firm. Directions were sought to the partners of the firm to render true and correct accounts of the partnership firm along with the books of account. Prayer was for seeking directions to the partners to file bank statements, ITRs, balance sheets and other information of financial assets from 2012 onwards to assess the funds siphoned off from the firm. Lastly to direct the partners to divide the profits and losses after rendition of accounts of the firm as well as personal accounts of the partners.
4. The arbitrator framed the following issues:
i. Whether the Claimant is entitled to recoveries of any sums from the respondents towards his 1/3rd share in the partnership business carried on under the name and style of Radha Sarweshwar Marble & Granite? OPC
ii. Whether the Claimant is entitled to interest @ 18 % per annum of any other interest from the Respondents on the claim of 1/3rd share in the partnership business carried on under the name and style of Radha Sarweshwar Marble & Granite? OPC
iii. Whether the Claimant is entitled to relief of rendition of accounts against the Respondents to render the true and correct accounts of the partnership firm for the financial year 2017-18 and 2018-19, till date? OPC
iv. Which of the parties are in control of the Books of Accounts, Financial and Statutory records of the Partnership Firm Radha Sarweshwar Marble & Granite? OPParties
v. Whether there is any siphoning of business and funds from the business of the Partnership Firm Radha Sarweshwar Marble & Granite to any of the entities owned and controlled by the partners and or their representatives? OPC
5. The issues being interrelated were dealt with together. The claim of the petitioner to be declared as 1/3rd partner in the firm and entitled to 1/3rd share in the firm was admitted by the partners and no declaration was called for. The dispute regarding financial irregularities/siphoning off funds by the partners and non production of books of account despite requests was rejected on failure of the petitioner to prove the alleged irregularities. The arbitrator concluded that all the partners had contributed in preparation of the final accounts of the firm and the petitioner had access to the accounts of the firm from 2012 to 2018.
6. Learned counsel for the petitioner argued that in reply to the first legal notice the partners stated that the books of account were with the petitioner but later balance sheets were filed but the arbitrator failed to note the contradictions. Th
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