IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF OCTOBER 2019 BEFORE THE HON'BLE Mr. JUSTICE B.VEERAPPA CIVIL MISCELLANEOUS PETITION No.239/2018 BETWEEN:
MR. PRITAM KUMAR, AGED 37 YEARS, S/O BHANWARLAL, RESIDING AT #15, FLAT NO.204, 2ND FLOOR, MOHAN KHEDA APARTMENT, BINNY MILL ROAD, BENGALURU – 560 053. PETITIONER (BY Ms. ANUSHA DEVI H, ADVOCATE FOR SRI K.J. KAMATH, ADVOCATE) AND:
MRS. VARSHA K. JAIN, AGED 40 YEARS, PARTNER OF M/S. PUSHPAK CERAMICS, W/O KULDEEP JAIN, #85/9, 80 FEET ROAD, OPPOSITE – VIBGYOR SCHOOL, JAKKUR, YELHANKA HOBLI, BENGALURU-560 064. RESPONDENT (BY SRI RAVINDRANATH, ADVOCATE) THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER SECTION 11(5) OF THE ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO APPOINT AN ARBITRATOR AS PER THE PROVISIONS OF THE ARBITRATION AND CONCILIATION ACT, 1996, TO ADJUDICATE THE DISPUTES THAT HAVE ARISEN BETWEEN THE PETITIONER AND THE RESPONDENT IN RESPECT OF THE PARTNERSHIP DEED DATED 17.11.2012 IN THE INTEREST OF EQUITY AND JUSTICE, AS PER ANNEXURE ‘A’ TO THE PETITION.
THIS CIVIL MISCELLANEOUS PETITION COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R The petitioner filed the present Civil Miscellaneous Petition under the provisions of Section 11(5) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as ‘the Act’, for brevity) for appointment of sole Arbitrator to adjudicate the dispute in terms of clause No.14 of the partnership deed dated 17.11.2012 entered into between the parties.
2. It is the case of the petitioner that the petitioner entered into a partnership deed with the respondent under the name and style of ‘M/s. Pushpak Ceramics’ (partnership firm) dated 17.11.2012 at Bengaluru, as per the terms and conditions of the partnership deed for trading in ceramics and sanitary ware and other acts. As per the terms of the partnership deed, the business of the partnership commenced from 17.11.2012. The partnership deed contains important clauses which govern the rights and liabilities of both the parties. Clause No.6 of the said partnership deed explicitly states that the profit and loss ratio will be shared by the petitioner in the ratio of 50%. Besides this, the accounts of the partnership firm have to be prepared and adjusted annually on the 31st day of March and for the first year the accounts shall be closed on 31st March of every year as per clause No.4 of the partnership deed. On 26.02.2015, the partnership Firm was duly registered before the concerned Registrar of Firms. The petitioner and the respondent mutually decided that the respondent’s husband Mr. Kuldeep Jain would be appointed as the manager of the partnership Firm. Thereafter, the respondent’s husband was looking after the business, which included all types of purchases (intra and inter-state) sales (intra and inter-state) banking transactions.
3. It is further contended that the petitioner’s father made huge investments over and above Rs.2,00,00,000/- in the partnership firm for the growth of the Firm. The petitioner with his sheer hard work and constant extra efforts improved the business transactions. During the month of November 2015, the respondent informed the petitioner that she did not wish to continue the partnership in future with him and she insisted the petitioner to resign immediately and sign a release deed. The petitioner being scared of the respondent and the manager’s threats, stopped attending the business activities with effect from 01.12.2015. The petitioner finally on 12.12.2015, offered his resignation and informed the respondent that he was no longer willing to continue as a partner and in fact, wanted to wind up the business and settle his accounts by way of a dissolution deed. On 31.01.2016, a joint meeting was held amongst the petitioner, Mr. Kuldeep and two others and in the said meeting, the petitioner agreed for the final settlement of Rs.98,80,745/-, which was to be paid by the respondent and her manager towards petitioner’s share in the partnership Firm. The petitioner on 26.09.2016 lodged a police complaint against the respondent stating that the respondent and the Manager colluded and siphoned off the petitioner’s funds and also fraudulently opened another bank account in the name of M/s. Pushpak Ceramics. The First Information Report came to be registered on 02.01.2017. Subsequently, the petitioner issued legal notice dated 24.07.2018 invoking arbitration clause No. 14 of the partnership deed. The same was duly served on the respondent. The respondent failed to reply, however, reply was filed only after the present civil miscellaneous petition was filed before this Court. Therefore, the petitioner is before this Court for the relief sought for.
4. The respondent has not filed objections.
5. I have heard the learned counsel for the parties to the lis.
6. Ms. Anusha Devi H., learned counsel for the petitioner, reiterating the averments made in the Civil Miscellaneous Petition contended that there is no dispute with regard to the existence of the partnership deed dated 17.11.2012 between the parties and there exists arbitration clause i.e., clause No.14 in the said partnership deed for resolution of the dispute between the parties by arbitration. She would further contend that the petitioner has complied with the provisions of Section 11(5) of the Act by issuing legal notice dated 24.07.2018 to the respondent. She sought to allow the Civil Miscellaneous Petition.
7. Per contra, Sri Ravindranath, learned counsel for the respondent, contended that the respondent has not siphoned off the amount of the partnership firm as alleged by the petitioner and it is the petitioner, who violated the terms and conditions of the partnership deed and sought to dismiss the Civil Miscellaneous Petition.
8. Having heard the learned counsel for the parties, it is an undisputed fact that the petitioner entered into partnership with the respondent on 17.11.2012. There is no dispute between the parties regarding existence of arbitration clause No.14 in the partnership deed, which reads as under:
“If at any time any dispute, doubt or question shall arise among the partners or their legal representatives, or executor administrators on the construction of these presents or respecting accounts transactions profits, or losses of the business or otherwise in relation to the partnership then every such dispute doubt of question shall be settled amicably amongst the parties concerns failing which the same shall be referred to arbitration of each person or each partner having the right to nominee to one arbitrator and the partners agree to be bound by the decision of the majority of the arbitrators concerned.”
9. It is not in dispute that the petitioner has complied with the provisions of Section 11(5) of the Act by issuing legal notice dated 24.07.2018 to the respondent. The respondent had not replied to the said notice prior to filing of the present Civil Miscellaneous Petition. However, subsequent to filing of the present Civil Miscellaneous Petition, the respondent has filed her reply denying the averments made in the Civil Miscellaneous Petition.
10. In view of the fact that existence of the partnership deed dated 17.11.2012 between the parties is not in dispute and presence of an arbitration clause i.e., clause No.14 in the partition deed is also not in dispute, there is no impediment for this Court to appoint sole Arbitrator to adjudicate the dispute between the parties in terms of clause No.14 of the partnership deed.
11. In view of the above, the Civil Miscellaneous Petition is allowed. Hon’ble Dr. Justice Jawad Rahim, former Judge of this Court, is appointed as sole arbitrator to adjudicate the dispute in terms of clause No.14 of the partnership deed dated 17.11.2012 entered into between the parties.
12. Registry is directed to send a copy of this order to Hon’ble Dr. Justice Jawad Rahim, former Judge of this Court, and Arbitration Centre, Bengaluru, for reference forthwith.
Sd/- JUDGE sma