PRITPAL SINGH BHATIA Vs. YOGESHWAR NATH

JUDGEMENT

(1.) This petition is under Section 8(a) of the Arbitration Act, 1940 (for short ' the Act'). The petitioner wants appointment of an arbitrator in the matter of rendition of accounts by the respondents, partners of M/s Consistent Clothing.

(2.) M/s Consistent Clothing was a partnership firm(hereinafter referred to as the 'firm') of which petitioner and the two respondents were partners. The petitioner was inducted as partner on 6/01/1993., and the partnership firm was reconstituted vide partnership deed of even date. This firm was trading in all kinds of textile manufacture and dealers in ready-made garments and importers and exporters. The share of the petitioner in profits and losses was 50 per cent and that of the respondents it was 25 per cent, each in the profits and losses of the firm. It is not necessary to state in detail the disputes which arose between the parties. Suffice is to state that the petitioner has levelled allegations against the respondents acting in a fraudulent manner because of which disputes arose between the parties. The allegations are in respect to collecting a sum of Rs.2.60 lacs on the excuse that it was to be deposited on account of the custom duty with custom authorities which was not deposited with custom authorities. Likewise, the respondent No.1 collected another sum of Rs. 8,809.15 paisa on account of sales tax which was not deposited with sales tax authorities. Money was, on the contrary, paid to M/s General Commerce Limited, a company held by the family of the respondents. As the respondent No.l failed to return the money, according the petitioner, dispute arose between the parties.

(3.) The partnership agreement contains an arbitration clause and in view thereof, the petitioner appointed Sh.P.S.Sharda as his arbitrator and called upon the respondents to nominate their arbitrator The respondents nominated Sh.Ravi Sahni as their arbitrator but he neglected and refused to participate in the arbitration proceedings. It is alleged in the petition that in these circumstances, Sh.P.S.Sharda, arbitrator appointed by the petitioner proceeded with the matter as per law. The respondents raised objections about the functioning of this arbitrator and filed petition under Section 33 of the Act being S.No.250/94 in the court of Addl.District & Session Judge, Delhi. In that case order dated 15/05/1995 was passed declaring that disputes referred to by the respondent No.1 vide notice dated 3/07/1994 were not covered by the arbitration agreement. It was further observed in that order that 'needless to mention that respondent No.1(who is the petitioner herein) or for that reason the firm constituted by the petitioners and the respondent No.l would be at liberty to seek their remedy as may be available to them in respect of the alleged dispute before appropriate forum'. The respondents 1 and 2 also filed another S.No.267/94 before the Addl.District & Sessions Judge, Delhi which was a petition under Section 11 of the Act for removal of Sh.P.S.Sharda. In this petition order dated 15/05/1995 was passed stating that in view of order passed in S.No.250/94 this petition had become infructuous.