Arbitration Petition No. 410 of 2015 and Arbitration Petition (L) No. 1435 of 2015. Case: Gulmali Amrullah Babul and Ors. Vs Shabbir Salebhai Mahimwala. High Court of Bombay (India)
| Case Number | Arbitration Petition No. 410 of 2015 and Arbitration Petition (L) No. 1435 of 2015 |
| Counsel | For Appellant: H. Toor and Nandu Pawar, Advs. and For Respondents: Ashish Kamat, Nidhi Singh and Aditi Maheshwari i/by Vidhi Partners |
| Judges | R. D. Dhanuka, J. |
| Issue | Arbitration and Conciliation Act, 1996 - Sections 11, 17, 28(1)(a), 36, 37, 37(1)(b), 39, 5, 9, 9(ii)(b), 9(ii)(e); Code of Civil Procedure, 1908 (CPC) - Order XXI Rule XXI; Order XXXIX Rule 1; Sections 2(16), 36, 37, 38, 51; Indian Evidence Act, 1872 - Section 3; Indian Partnership Act, 1932 - Section 48; Maharashtra Rent Control Act, 1999 - ... |
| Judgement Date | October 29, 2015 |
| Court | High Court of Bombay (India) |
Judgment:
R. D. Dhanuka, J.
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By Arbitration Petition No. 410 of 2015 filed under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act"), the petitioners (original respondents) have impugned the order dated 11th October 2014 passed by the learned arbitrator under Section 17 of the Arbitration Act passed in favour of the respondent to the said arbitration petition. By Arbitration Petition (L) No. 1435 of 2015 filed under Section 9 of the Arbitration Act, the petitioner/original claimant has prayed for an order and direction against the respondents to the said arbitration petition to forthwith hand over possession and management of the 'King of Iran Restaurant' as per and in implementation/compliance of the orders dated 10th March 2015 and 23rd March 2015 passed by the learned arbitrator under Section 17 of the Arbitration Act in favour of the petitioner to the said arbitration petition and for various other reliefs. By consent of the parties, both the arbitration petitions were heard together and are being disposed of by a common order.
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The petitioners in Arbitration Petition No. 410 of 2015 were the original respondents in the arbitral proceedings whereas the respondent to the said arbitration petition was the original claimant. For the sake of convenience, the parties are described in this order as they were described in the arbitral proceedings as "the claimant and the respondents," as the case may be. Some of the relevant facts for the purpose of deciding these petitions are as under:
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On 20th May 2001, a Partnership Deed was entered into between the respondents and one Sarguroh family in the name and style of M/s. King of Iran (for short "the firm") which held and conducted the restaurant business in the premises namely Shop Nos. 9 to 14, Yusuf Chambers, Byculla (E), Mumbai (for short "the said suit premises"). It was, however, the case of the respondents that the said suit premises did not belong to the firm.
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On 12th February 2002, the claimant and the respondents entered into a Memorandum of Understanding (MOU) under which the claimant agreed to be inducted as a partner in the said firm in lieu of the claimant getting finance to renovate the said suit premises which stood damaged in fire on 21st May 2001 and to restart the partnership business. It is the case of the claimant that the said MOU was wrongfully disputed by the respondents though the same was acted upon.
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On 15th February 2002, a Deed of Retirement was executed between the respondents as continuing partners and the Sarguroh family as the exiting partners who held 35% share in the said firm. The respondent No. 1 sought from the Sarguroh family release of their 35% share in the firm including the tenancy rights of the firm.
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On 1st April 2002, the claimant and the respondents executed a Partnership Deed. Under the said Partnership Deed, the claimant had 30% share in the said partnership. Clause 22 of the Partnership Deed provides for an arbitration agreement. From the year 2006 onwards, the claimant had been intermittently outside the country and the affairs of the firm were entrusted to the respondent No. 1. It is the case of the claimant that from April 2002 to May 2013, the claimant had been paid approximately Rs. 30,000/- per month towards his share in the firm which amounts were deposited in the accounts of the claimant by the respondents or his family members.
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Vide their letters dated 11th March 2013, 23rd March 2013 and 9th April 2013, the claimant requested the respondents to give accounts of the suit firm for the period from April 2002 to March 2013. It is the case of the respondents that on 16th April 2013, the respondents furnished the accounts of the suit firm to the claimant along with income tax returns of the suit firm from 1st April 2002 to 31st March 2012.
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It is the case of the claimant that the claimant sat in the hotel of the suit firm, M/s. King of Iran from April 2013 to 7th July 2013 and realized that the firm had a higher revenue than those disclosed in the accounts of the firm which were prepared and filed by the respondent No. 1.
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On 25th June 2013, the claimant through his advocate dissolved the said firm and invoked the agreement recorded in clause 22 of the Partnership Deed. In the said letter, the claimant alleged that accounts of the respondent No. 1 were totally fabricated, manipulated and wholly inaccurate. The respondents vide their advocate's letter dated 26th July 2013 denied the said allegation made by the claimant in his advocate letter dated 25th June 2013.
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The claimant also filed Arbitration Petition (L) No. 1514 of 2013 under Section 11 of the Arbitration Act for appointment of an arbitrator. The claimant also filed Arbitration Petition (L) No. 1370 of 2013 under Section 9 of the Arbitration Act for interim measures against the respondents.
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By an order dated 13th December 2013, the designate of the Chief Justice appointed a Counsel practicing in this Court as a sole arbitrator in the said Arbitration Petition (L) No. 1514 of 2013. On 7th January 2014, the claimant filed his statement of claim before the learned arbitrator. On 13th January 2014, the claimant filed an application under Section 17 of the Arbitration Act before the learned arbitrator inter alia praying for an order of allowing either of the parties to conduct the business of the dissolved firm by raising bids and for settling the terms and conditions for such bids for the said purposes. The claimant also sought an injunction restraining the respondents from running and/or conducting the business and operating and/or maintaining the bank accounts of the suit firm. On 14th April 2014, the claimant withdrew the Arbitration Petition (L) No. 1370 of 2013 which was filed by the claimant under Section 9 of the Arbitration Act as undertaken before the learned arbitrator.
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On 10th May 2014, the application under Section 17 of the Arbitration Act filed by the claimant was heard by the learned arbitrator. On 15th March 2014, the respondents filed statement of defence and counter claim before the learned arbitrator. On 26th June 2014, the claimant filed an application for amendment of statement of claim to plead that the said shop premises were the properties of the suit firm. Learned arbitrator passed an order on 11th October 2014 permitting both the parties to submit bids to the Commissioner Mr. Rajeev Bhatia and directed him to conduct the bidding process and to submit his report to the learned arbitrator.
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On 20th November 2014, the respondents filed the Arbitration Petition No. 410 of 2015 under Section 37 of the Arbitration Act and impugned the said order dated 11th October 2014. By an order dated 22nd November 2014, the learned arbitrator allowed the amendment application filed by the claimant and granted liberty to the respondents to file additional statement of defence.
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By an order dated 10th March 2015, the learned arbitrator accepted the bid of claimant and directed the respondents to hand over management of the business of the dissolved firm to the claimant. The respondents did not attend the said meeting before the learned arbitrator. On 23rd March 2015, the learned arbitrator once again directed the respondents to hand over management of the business of the dissolved firm to the claimant.
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It is the case of the claimant that the respondents have executed an impugned Partnership Deed on 11th March 2013 in the same name and style of M/s. King of Iran and have usurped the partnership business and assets pending the disposal of the arbitral disputes before the learned arbitrator. The claimant filed Arbitration Petition (L) No. 1435 of 2015 on 15th July 2015 for various interim measures.
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Mr. Toor learned counsel for the petitioner in Arbitration Petition No. 410 of 2015 and for the respondent in Arbitration Petition (Lodging) No. 1435 of 2015 who are the original respondents in the arbitral proceedings submits as under:--
(i) The claimant has already quantified the loss against the respondent in the statement of claim at Rs. 2,03,00,250/- with interest in prayer clause (c) of the statement of claim. In view of the money claim having been made by the claimant, no interim claim in the nature of the mandatory order and injunction and other reliefs as prayed by the claimant could be granted by the learned arbitrator. There was no irreparable loss or injury caused to the claimant which is pre-requisite or grant of interim mandatory order/injunction. In support of this submission, learned counsel placed reliance on judgment of Supreme Court in case of Hindustan Petroleum Corporation Limited v. Sriman Narayan (2002) 5 SCC 760 (paragraph 9 and 12) and the judgment of this Court in case of Oil & Natural Gas Commission Limited v. Jagson International Limited (2005) 3 R.A.J. 555 (Bombay) (paragraph 21).
(ii) There was gross delay of seven years on the part of the claimant to apply for interim measures. In spite of seven years delay, the learned arbitrator has over looked the said crucial fact and has granted interim mandatory injunction in favour of the claimant. The statement of claim clearly discloses that the claimant was out of India prior to his departing in 2006 and again in 2008 and had requested the respondent No. 1 to give the accounts of the suit firm. The claimant however, invoked arbitration agreement some time in the year 2013 and had purported to dissolve the firm on 25th June, 2013. The application under section 17 of the Arbitration & Conciliation Act, 1996 came to be filed by the claimant on 13th January, 2014. Learned counsel placed reliance on the judgment of the Supreme Court in case of Mandali Ranganna v. T. Ramchandra (2008) 11 SCC 1 (paragraphs 21 and 22).
(iii) Though the respondents had denied in the statement of defence that the claimant had received a sum of Rs. 30,000/- per month since April, 2002 till December, 2012 as his share of profit...
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