IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF JULY, 2019 BEFORE THE HON'BLE MR. JUSTICE B. VEERAPPA WRIT PETITION NO.46364/2017 (GM – RES) And WRIT PETITION NOS.52166-67/2017 BETWEEN:
M/s. Sangam Bar and Restaurant A registered partnership firm Representation by its partners 1. T.R. Ashok Partner S/o Late T.M. Sannarudrappa Aged about 52 years R/o NMC, 2nd Cross Right side, Bhadravathi Pin code-577 301.
2. T.R. Basavaraj Partner S/o Late T.M. Sannarudrappa Aged about 50 years R/o NMC 2nd cross Right side, Bhadravathi Pin code- 577 301.
3. B.R Yashoda W/o Late T.R. Yelukoti Aged about 50 years R/o Siddaruda Nagara 1st Cross, New Bridge Road Bhadravathi-577 301.
(By Sri.R. Gopal, Advocate) ... Petitioners AND:
The District Registrar And Registrar of Firms Shimoga District, Shimoga Old Deputy Commissioner’s Building, 2nd Floor, B-Block-7 Balaraj Urs Road, Shimoga Pin code-577 201.
(By Sri. Y.D. Harsha, AGA) ... Respondent These Writ Petitions are filed under Articles 226 and 227 of the Constitution of India praying to quash the orders dated 27.06.2017 and 24.07.2017 in case No. GNOSHI/FIRM/04/2017-18 issued by respondent vide Annexure-A and B respectively and etc.
These Writ Petitions coming on for Orders, this day, the Court made the following:
O R D E R The petitioners - alleged partners of M/s. Sangam Bar and Restaurant are before this Court seeking a writ of certiorari to quash the orders dated 27.06.2017 and 24.07.2017 in Case No.GNOSHI/FIRM/04/2017-18 issued by the respondent as per Annexures – A & B respectively and to direct the respondent to register the Deed of Reconstitution of the firm dated 24.06.2017 as per Annexure – F and make necessary record and entry in the Register of Firms in accordance with Section 59 of the Indian Partnership Act, 1932.
2. It is the case of the petitioners that the petitioners – Firm was constituted at the inception under a registered partnership deed dated 10.02.1999 bearing registration No.34/1999 comprising of 4 partners namely, T. R. Yelukoti, T.R. Ashok, T. R. Basavaraj and T. R. Balakrishna, who are all the sons of one Late T.M. Sannarudrappa and were running a bar and restaurant in the name and style “Sangam Bar and Restaurant” under the license issued by the Deputy Commissioner and the same was renewed periodically from time to time.
3. It is further contended that as there was a dispute among the partners namely T.R. Yelukoti, T.R. Ashok and T. R. Basavarj on the one hand and T. R. Balakrishna on the other with regard to the affairs of the firm in the matter of expulsion of T. R. Balakrishna from the firm. As per the terms of the Deed of Partnership dated 10.02.1999, any dispute among the partners shall be decided by resorting to arbitration. Since there was a dispute among the partners inter se, the notices were issued for resolution of dispute by arbitration. Accordingly, one Sri. A. Gopalkrishna, Advocate, Shivamogga was named as an Arbitrator to resolve the dispute. A letter of reference of dispute by the aforesaid three partners was made to the Arbitrator on 24.09.2016 and on acceptance of the reference, the Arbitrator issued notices to the parties to appear and participate in the proceedings. The three partners of the petitioners – Firm filed claim statement to declare that the said T.R. Balakrishna has been duly expelled from the Firm and expulsion is valid and legal and the said T. R. Balakrishna has no locus-standi to interfere in the affairs of the petitioner – Firm. After complying with the requirements of the procedure under Arbitration Act, after affording reasonable opportunity to the parties, and after holding necessary enquire and recording evidence, the Arbitrator by a judgment and order dated 23.06.2017, allowed the claim of the said three partners/I party by declaring that the expulsion of said T.R. Balakrishna from the petitioners – Partnership Firm is valid and legal and the II party -
T.R. Balakrishna has no locus-standi to interfere in the affairs of petitioners - firm in any manner. The said order passed by the Arbitrator has reached finality.
4. In the meanwhile, T.R. Yelukoti - one of the partners died on 01.04.2017 and the remaining two partners resolved to take Smt.B.R. Yashodamma, the wife of deceased T. R. Yelukoti as a partner as she is the legal heir of deceased partner in terms of the aforesaid partnership deed dated 10.02.1999. Accordingly, the firm was sought to be reconstituted under a Deed of Reconstitution of Partnership, which is executed on 24.06.2017 with the said B. R. Yashodamma, T.R. Ashok and T. R. Basavaraj as partners in the reconstituted firm. Accordingly, the notice in Form No. V under Rule 4 of the Indian Partnership Act was given and signed by the partners of reconstituted firm along with the Deed of reconstitution of partnership executed on 24.06.2017 to the respondent herein who received the same under acknowledgment dated 24.06.2017. The respondent without considering the entire materials on record, has issued an endorsement dated 27.06.2017 stating that there are some defects in the registration number of the firm, which is not furnished. All the partners have not signed the said notice in Form No. V and there seems that the provisions of Sections 31, 32 and 33 of the Indian Partnership Act, 1932 is not complied. Hence, the petitioners are before this Court for the relief sought for.
5. I have heard the learned counsel for the parties to the lis.
6. Sri. R. Gopal, learned counsel for the petitioner contended that the impugned order passed by the respondent is erroneous and contrary to the materials on record and cannot be sustained. It is further contended that the respondent has issued the endorsement mainly on three grounds that the registration number is not forthcoming, all the partners have not duly signed the partnership deed and the provisions of Sections 31, 32 and 33 of the Indian Partnership Act, 1932 have not been followed. Further, it is contended that as could be seen from Annexure – E that registration number is forthcoming and as per Annexure – F, all the reconstituted partners have signed in the Partnership Deed. These two documents were produced before the respondent – Authority and the same were not been considered.
7. He further contended that in terms of Section 31 of the Act, all the partners must give their consent for introducing a new partner. Hence, the provisions of Section 32 of the Act, is not applicable. In view of Section 33 of the Act it is stated by him that in view of the dispute between the partners, the matter was referred to arbitration and the Arbitrator has already passed award as per Annexure – C, which has reached finality. Therefore, he submits that impugned endorsement issued by the respondent cannot be sustained. Therefore, sought to allow the writ petition.
8. Sri. Harsha, Y.D., learned AGA for the respondent sought to justify the impugned order and contended that the arbitral award is contrary to the provisions of Section 33 of the Act, and the petitioners - firm has not followed the procedure as contemplated. The endorsement issued is just and proper. Therefore, sought to dismiss the writ petition.
9. Having heard learned counsel for the parties, it is an undisputed fact that the petitioners – Firm was registered in the year 1999 bearing Registration No.34/1999. Subsequently on 24.06.2017, the petitioners submitted a notice in Form No. V along with Deed of Reconstitution of partnership firm, which is signed by all the partners of the reconstituted firm. The impugned endorsement clearly depicts that registration number is not forthcoming and all the partners have not signed and Sections 31, 32 and 33 of the Act have not been followed. The petitioners - firm has produced Annexure – E - Form – V. The firm registration number 34/1999, which clearly indicates that three name shown in Form – V and all the partners have singed. As per Annexure – F, the Deed of reconstitution of partnership firm came to be executed between the partners on 24.06.2017 and all the partners of the reconstitution deed, have also signed. Therefore, the endorsement issued stating that all the partners have not signed and Rules 31, 32 not followed, cannot be accepted.
10. It is also not in dispute that in view of the dispute between the partners, the matter was referred to the arbitrator, who had already passed an award. The aggrieved party has not challenged the award and therefore, the award was not opposed in terms of provisions of Section 33 of the Act as contended by the learned AGA cannot be accepted unless and until the award is challenged by aggrieved party. In view of the aforesaid reasons, the endorsement issued by the respondent cannot be sustained and matter requires for reconsideration.
11. In view of the above, writ petition is allowed and the impugned orders as per Annexures – E and F are hereby quashed. Liberty is reserved for the respondent to reconsider the matter and pass appropriate orders after providing an opportunity to the petitioner – firm after considering the objections to be filed by the petitioner and pass an order strictly in accordance with law.
All the contentions of both sides are kept open.
Sd/- JUDGE VBS