K NARAYANAN Vs. P TRIPATHI RAO

JUDGEMENT

(1.) THE Order of the Court was as follows : THE revision petitioner is aggrieved by the order dismissing his application under Section 8 of the Indian Arbitration and Conciliation Act, 1996. THE respondent and the petitioner entered into a partnership agreement on 27.6.1991. THE firm was called 'Everex Associates'. THEre was an arbitration clause which provide that any dispute among the partners shall be resolved by arbitration. THE respondent herein filed O.S. No. 5091 of 1999 for injunction against the petitioner and another from carrying on business as the proprietor under the name and style of 'Everex Associates' and the second defendant is the petitioner herein and the third defendant is the brother of the petitioner. According to the averments in the plaint the partnership was being carried on successfully when suddenly the petitioner herein without informing the respondent removed the plant and machinery from the business premises goods at 123, Vanniyar Street, Choolaimedu, Madras-24 and shifted the same in June, 1999 to 47, Sowrashtra Nagar, 7th Street, Choolaimedu and had entrusted the plant and machinery to his brother who is the third defendant in the suit. It is the allegation of the respondent that the third defendant had opened an account in the Indian Bank, Egmore, Madras-600 008 in the name of 'Everex Associates' and that the petitioner and his brother are diverting the funds from the partnership to the new account. According to the respondent, the partnership has not been resolved in a manner known to law and without dissolution and settlement of accounts, the petitioner cannot carry on a similar business which would only be detrimental to the interest of the respondent.

(2.) THEREFORE, the suit has been filed for injunction. Pending suit an application for interim injunctions was also filed. Thereupon, the petitioner filed IA No. 13285 of 1999 under Section 8 of the Arbitration and Conciliation Act. According to the petitioner herein, the partnership had been dissolved in the month of May, 1999 and by mutual agreement between the parties the assets and liabilities of the firm taken over by the petitioner and the respondent has recovered Rs. 2, 00, 000 as consideration thereof. According to the petitioner these facts have been suppressed by the respondent; all other averments in the plaint were denied. According to the petitioner since there is an arbitration clause whereunder the partners were directed to resolve their disputes by arbitration it was not open to the respondent to file a suit for a relief which can be obtained under the Arbitration Act. The Court below dismissed the application and hence the civil revision petition has been filed.Mr. Sai Chandravadhan, learned counsel for the petitioner submitted that though in the suit petitioner's brother has been added as the third defendant that is only camouflage. A perusal of the plaint would show that in essence it deals with disputes inter se the partners. The respondent reluctant to resort to the Arbitration Act has, in violation of the contract between the parties, filed a civil suit.

(3.) THE petitioner's case is that though the grievance of the respondent is mainly against the petitioner he has only introduced the petitioner's brother as a third defendant to give a colour to the action as if it goes beyond the scope of the Arbitrator before whom the disputes between the partners should be referred. THE plaint makes it clear that the main grievance of the respondent is the removal by the petitioner of the plant and machinery from the place of business. According to the respondent, the partnership has not been dissolved and according to the petitioner the partnership has been dissolved. Clause 13 of the plaint is particularly relevant. "(13) I further state that the actions of defendants 2 and 3 in doing parallel business when the original partnership is intact and when no dissolution has taken place, are neither just and proper and it would not only prejudice the interests of the first defendant firm but also would be prejudicial to the interests of the plaintiff (myself) who had invested more than Rs. 6.5 lakhs in the business over the years."