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Smt. Manju Sharma v. Kanan Sharma - FIRST APPEAL FROM ORDER No. 314 of 2007  RD-AH 2180 (9 February 2007)
Court No. 24
First Appeal From Orders No. 314 of 2007
Smt. Manju Sharma..................................................................Defendant-appellant
Smt. Kanan Sharma................................................................Plaintiffs-Respondent
HON'BLE UMESHWAR PANDEY, J.
Heard Sri Rahul Sripat, learned counsel appearing for the appellant and Sri Praveen Kumar, learned counsel appearing for the sole respondent.
The learned counsel for the parties agree that this appeal may be finally heard and disposed of at the stage of admission itself.
By the impugned order dated 10.1.2007, the District Judge has granted the prayer made before the Court under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter called as 'the Act') and has directed the parties to maintain status quo regarding the firm M/S Model Service Station, Mirzapur Road, Naini till the dispute is finally settled by the Arbitral Tribunal as contemplated in Clause 17 of the partnership deed.
A partnership firm was created and an agreement to that effect was entered into between the parties giving the firm a name and style of M/S Model Service Station. Besides several clauses, an arbitration clause (Para-17) was also added to the agreement which says that 'in case of any dispute and/or difference arising out of these presents and/or relating to the partnership business including goodwill, shall be referred to the arbitration of two arbitrators, each appointed by the parties here to'. The appellant as a partner of the firm claims to have given a notice in Annexure-4 to the respondent dissolving the firm aforesaid with effect from 1.11.2005. It was further stated in the notice that this being a formal notice under Section 43 of the Partnership Act for firm's dissolution the business of the firm having been wound up with immediate effect the accounts be settled as provided in Section 46 of the Partnership Act. In addition to this individual notice, the appellant also intimated that the public notice was given separately notifying the dissolution of the firm. The notice has been duly replied vide Annexure-5 by the respondent stating that the partnership is not at will and that the dissolution of the partnership can be done only within the statutory provisions of the Partnership Act. It was also intimated that in exercise of her option, the respondent had taken over the firm in her individual capacity and formalities in that regard would be made at her expenses. The notice also stipulates that the intimation by way of notice by the appellant was only to the effect of his retirement from the partnership. Subsequent to this reply notice, another letter in Annexure-11 was sent by the respondent to the appellant stating that dispute has arisen between the parties regarding the dissolution of the firm and that after appellant's retirement, the respondent was entitled to carry on the business of the firm in her individual capacity and in order to resolve the dispute between the parties, a proposal was made therein appointing Sri Ajit Dhawan, Advocate, as one of the two arbitrators. A request was also made calling upon the appellant to agree to the name of Sri Dhawan for this purpose. While placing her prayer under Section 9 of the Act before the Court below, it was further stated in the accompanying affidavit that the appellant opposite-party was illegally threatening the surrender of the land of petrol pump belonging to the firm to M/S Sri Baidyanath Ayurved Bhawan Ltd., the owner and landlord of the said land and, thus, to cause damage to the property of petrol pump and not to let the applicant carry on the business. Thus, in the background of the aforesaid facts, the respondent-applicant claims to have made out a case before the District Judge for interference under Section 9 of the Act so that the property at the petrol pump be preserved and the respondent may not be put to irreparable loss.
The District Judge having assessed the entire material placed before the Court, found that so long as the whole dispute between the parties was not resolved before the Arbitral Tribunal it would be just and proper that the interest of the respondent-applicant should be protected and the property of the firm which is in the shape of petrol pump should be preserved. Accordingly, the impugned order has been passed.
Sri Rahul Sripat, the learned counsel for the appellant has in the first place made much stress upon the fact that there was absolutely no cause of action for moving the present petition before the District Judge under Section 9 of the Act and that the firm being a partnership firm at will having already been dissolved, the only thing which remains for settlement between the parties is the settlement of account etc. and that this question as to whether the firm has actually been dissolved or not is not a subject matter for any decision before the Arbitral Tribunal. It is further submitted by Sri Rahul Sripat that in case where there are only two partners and a notice for dissolution has been given by one partner to the other, there remains no occasion for the firm to remain alive and it stands immediately dissolved on the receipt of tHon'ble Umeshwar Pandey, J.
In reply arguments Sri Praveen Kumar, learned counsel appearing for the respondent submits that a positive dispute between the parties has arisen with regard to the fact as to whether this partnership has been dissolved or not and this question is also a subject matter for decision before the Arbitral Tribunal under clause 17 of the partnership agreement governing the parties. The aforesaid clause 17 includes every dispute, whatsoever, arising between the parties out of that agreement. Since this dispute regarding the dissolution of the firm has also arisen out of the said agreement itself, it is a subject matter for decision by the Arbitral Tribunal. It is also submitted by the learned counsel Sri Praveen Kumar that the whole procedure of dissolution of the firm has been started with ulterior motive of surrendering the entire property of petrol pump to the landlord by the appellant, thus creating a cause of action in favour of the respondent for moving the court under Section 9 of the Act. In reply argument it has also come that the matters which have been specifically referred to in the partnership agreement shall not be dealt with under the provisions of the Indian Partnership Act as is specifically provided in paragraph 18 of the agreement of parties itself. Therefore, even if the notice of dissolution of the firm is treated as a notice of appellant's retirement that aspect has also to be viewed in accordance with the provisions of agreement and not in accordance with the provisions of the Partnership Act.
From the aforesaid facts it is evident that the parties admit regarding the creation of the partnership firm M/S Model Service Station for which they agreed in terms of the agreement (Annexure-2). It is also an admitted fact that a notice of dissolution was given to the respondent in Annexure-4 under Section 43 of the Partnership Act dissolving the aforesaid firm with effect from 1.11.2005. That notice was replied from the side of the respondent in Annexure-5 disputing the right of the appellant for giving such notice regarding dissolution of the firm. It is, however, disputed that the partnership was a partnership at will and it could not be dissolved in the manner by giving such notice. It is of course an admitted fact to the appellant that a letter was sent by the respondent to her proposing the name of Mr. Ajit Dhawan Advocate to agree to the same for his appointment as one of the two arbitrators in the matter for resolving the disputes which have arisen between the parties. This letter is in Annexure 11 to the appellant's affidavit. In reply to this letter of the respondent (Annexure-11) the appellant admits to have sent Annexure-12 stating that there was no dispute between the parties and the matter with regard to the distribution of assets and liabilities of the firm only can be resolved by the parties sitting across the table and still if the respondent wanted the matter to be adjudicated by some arbitration, the appellant showed her willingness in such appointment of arbitrator in near future. From the aforesaid communications between the parties and from the facts and circumstances as appearing in the document filed with the paper-book of this appeal it becomes more than obvious that there is definite dispute between the parties to which the appellant may not be categorical. The first and foremost dispute is with regard to the alleged dissolution of the firm by giving the notice to the respondent in Annexure-4. If such dispute has arisen its resolution as per the paragraphs 17 and 18 of the agreement (Annexure-2) is possible only before the Arbitral Tribunal and nowhere else. The mere fact that the appellant claims the partnership firm as fully dissolved and this contention as to its dissolution is disputed by the respondent, it does give rise to a dispute within the agreement which says that in case of any dispute or difference arising out of these presents (agreements), it shall have to be referred to the arbitration of the two arbitrators. Therefore, the argument of Sri Rahul Sripat, the learned counsel for the appellant that there was absolutely no cause of action available to the respondent for moving her petition under Section 9 of the Act before the District Judge, has absolutely no legs to stand. There is definite cause of action which gave rise to the moving that petition and it has been rightly entertained by the District Judge.
Besides the above, sufficient cause of action in the matter was shown in the accompanying affidavit (Annexure-9) given by the appellant before the District Judge which states that the appellant was threatening with the surrender of the land of the petrol pump to its landlord M/S Baidyanath Ahyurved Bhawan Ltd., for the possession of which property the firm holds an irrevocable licence. Thus, the opposite-party/appellant was threatening to cause damage to the property of petrol pump and to create hindrance in carrying out the business of the said firm. It is in the background of these facts that the petition under Section 9 of the Act has been moved and it would be wholly futile to say that the respondent-petitioner did not have a cause of action for placing such prayer before the District Judge for interim protection.
The argument of Sri Sripat that the question as to whether the firm has actually been dissolved or not is not a matter for any decision by the Arbitral Tribunal also appears to be wholly baseless in the face of paragraph 17 of the admitted agreement between the parties. It refers to all sorts of disputes and differences arising between the parties within that agreement. The creation or dissolution of the firm is definitely a subject matter to which the agreement touches and any dispute in that regard between the parties has to be referred to the arbitration and its resolution in any other manner is not possible. The last argument of Sri Sripat also does not stand to reason because the dispute as to whether the firm has been dissolved or not has to be referred for a decision before the Arbitral Tribunal where alone it is also to be decided if one of the two partners of the firm gives a notice for firm's dissolution to the other the firm automatically stands dissolved or not. Therefore, since occasion for reference to the Arbitral Tribunal has already arisen and on such facts and circumstances if the District Judge has entertained the petition under Section 9 of the Act and has passed an order giving certain protection as provided in that provision, the said order cannot be said to have been passed without jurisdiction or for no cause of action.
Since a positive assertion from the respondent's side has come that a design has been chalked out between the appellant and the landlord of the property over which the petrol pump is located for its surrender, obviously it would be a matter of great concern to the respondent and would cause irreparable injury to her if the designer's succeed. The property is in possession of the respondent and presently the petrol pump and its other properties and fixtures are there in the land. It is a sufficient primafacie case in favour of the respondent for obtaining the protection of the court as provided under Section 9 of the Act. The balance of convenience is also available there in favour of the respondent and in such circumstances if the property of the petrol pump has been protected by the impugned order, the directions so given cannot be said to be erroneous in any respect.
This appeal, thus, appears to have absolutely no merits and is hereby dismissed at the admission stage itself.
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