Whether approved for reporting?

G.S. Sandhawalia, Chief Justice.

The petitioner has filed the instant petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator to adjudicate the disputes and differences which have arisen between the parties, as a consequence thereof, the petitioner was constrained to dissolve the partnership.

Relevant facts of the case leading to the filing of the present petition, may be noticed.

The petitioner and respondent are partners in the partnership firm namely “M/s Vidhyasha Pharmaceuticals” having its registered office at Mouja Johran Tehsil Nahan District Sirmaur and are engaged in the business of manufacturing pharmaceuticals products, medicines etc. The partnership firm was initially consisting of three partners, however, one of the partners, namely, Mr. Prakash Chand Bansal sought retirement on 06.01.2025. After the retirement of Mr. Prakash Chand Bansal, the petitioner was exclusively managing and operating the affairs of the Firm between the period 2015-2018, as the respondent was pursuing higher studies. The father of respondent i.e. Mr. Sushil Gupta (also known as Surender Kumar Gupta) was stated to be participating and assisting the petitioner in conducting the business of the Firm. However, the petitioner was responsible for handling and managing the day-to-day affairs of the Firm. It is stated that due to the hard work and efforts made by the petitioner, the Firm experienced a rise in its business during 2015-2018.

Since September 2024, the respondent had been conducting the business activities of the Firm in a manner severely detrimental to its financial and reputational standing with the sole intent of causing unjust enrichment to himself at the cost of the petitioner and the Firm. One of such instances of mismanagement on the part of the respondent was the act of selling the Firm's pharmaceutical products at prices lower than the cost of production, exclusively to entities personally known to him, thereby allowing these entities to earn margins at the expense of the Firm. The petitioner had genuine apprehension that the respondent has obtained a share for himself out of these margins from the entities to whom he had sold the products. These acts were carried out by the respondent in a clandestine manner with the sole intent of ensuring that his illegal acts do not come to light.

It is stated that in the month of September 2024, the petitioner while going through the accounts of the Firm for the past 6 months observed that the Firm, despite having substantial orders, was hardly managing to break even. The petitioner therefore had sought from the accountant of the Firm the details of the expenses incurred by the Firm. Such details revealed that the respondent had been selling products manufactured by the Firm to Akkodis at the same cost which the Firm had incurred in procuring the material for such products. On becoming aware of the same, the petitioner had immediately confronted the respondent and sought an explanation from him. However, when questioned, the respondent started threatening the petitioner with severe consequences.

In the month of January 2025, the respondent approached the petitioner to pay his share towards the expenses incurred by the Firm, including but not limited to salaries of employees, electricity charges for the unit of the Firm, etc. but petitioner is stated to have apprised the respondent that, since the Firm had been incurring expenses only for fulfilling the orders as received from entities known to the respondents therefore, the petitioner was not liable to bear any such expenses. It was further informed by the petitioner to the respondent that these expenses were the sole liability of the respondent only, and that he was required to arrange for funds on his own to clear the same.

The respondent being left with no other option had to pay these expenses from his own funds. Resultantly, certain payment