PRABHUDEV & COMPANY Vs. VASUDEV

JUDGEMENT

(1.) This is an appeal under Section 37(1) of the Arbitration and Conciliation Act, 1996 (for short, 'the Act') impugning the judgment dated 21st February, 2017 in Arbitration Suit No.2/2015 on the file of Principal District Judge, Dharwad. Given a background of the events resulting in this appeal, it is as follows:

(2.) For convenience sake, the parties are referred with respect to their rank be fore the Arbitrator . The 1s t petitioner is a registered partnership firm (for short 'firm') with its partners being the 2nd petitioner, the respondent and some others who are not made parties in the arbitration dispute. In the bank account of the firm at Syndicate Bank, KRB Branch, Belagavi City, there was a deposit of Rs. 48 lakhs. The respondent approached the second petitioner for the first time and requested him to pay an amount of Rs. 13,64,520/- from the bank account of the firm as his cousin namely Suresh was due to pay a certain sum of money to KSFC which had initiated recovery proceedings. The respondent assured of repaying this amount to the firm. The 2nd petitioner issued a cheque dated 19.08.2006 of the firm directly to KSFC and cleared the dues of the respondent's cousin. Again, in the month of May 2007, the respondent sought financial assistance of Rs. 12,74,080/- for the sake of his cousin as he was due to repay that amount to Syndicate Bank, Kittur. The respondent assured of repayment of this amount also . Therefore the 2nd petitioner issued a cheque of the firm in the name of Hotel Ga jara j Palace belonging to respondent's cousin. Thus, from the firm's account totally an amount of Rs. 26,35,000/- was paid for discharging the liability of the respondent's cousin.

(3.) Then the respondent himself wanted an amount of Rs. 15,03,400/- to clear his liability at Syndicate Bank, Dharwad and requested petitioner No.2 to make payment of this amount from the firm's account. This amount was paid, but later on the 2nd petitioner came to know that the respondent, instead of clearing the bank dues, made use of the money for purchasing a car. In all the respondent was supposed to repay Rs. 46,32,170/- to the firm on account of two loans made by him on behalf of his cousin and the other for himself. As the respondent failed to repay the amount inspite of repeated requests and issuance of legal notices, pursuant Arbitration Clause in the partnership deed, the petitioners raised a dispute before the Arbitrator .