T. BABURAJ Vs. K. FAIZAL

JUDGEMENT

(1.) Can the arbitration request for appointment of an arbitrator to resolve the dispute and differences between the partners be declined when there are serious allegations of fraud and misappropriation in the conduct of the partnership business The petitioners as well as the respondent were the partners of a registered partnership firm by name M/s. Blue Chip Mines and Industries engaged in the business of granite, broken stones and other allied activities. The partnership was one at will and the deed of partnership permitted the respondent to draw a monthly remuneration of Rs. 8,000/- and also to share 15% of the profit or loss of the firm. The petitioners allege that the respondent did not offer any service to efficient operation of the partnership business and that he is also liable to contribute Rs. 901882.87 towards his share of the loss. It is the case that all other partners unanimously decided to expel the respondent from the partnership and that the partnership business is being continued by the petitioners alone. The petitioners also accuse the respondent for having preferred false complaints to the banks, income tax authorities, sales tax authorities, police etc. regarding the conduct of the partnership business.

(2.) The dispute essentially stems from the attempt of the petitioners to recover the proportionate share of the loss of the partnership firm from the respondent and the unwillingness of the respondent to accede to the claim. The petitioners did issue a registered notice to the respondent demanding arbitration for the resolution of the dispute which however was replied to hurling counter allegations. The respondent asserts that the petitioners committed fraud and misrepresentation in the conduct of the partnership business and that the same was against public policy. The respondent maintains that the petitioners had siphoned off a sum of Rs. 14.65 crores from the Union Bank of India, Aluva alone contrary to the authority given under the partnership deed to operate the accounts. The respondent in short denies his liability to share the alleged loss of the partnership firm and points out that the remedy of arbitration cannot at all be called in aid.

(3.) I heard Mr. N.K. Dileepan, Advocate on behalf of the petitioners and the respondent appearing in person who claims to be a law student at Bengaluru.