PERIN HOSHANG DAVIERWALLA Vs. KOBAD DORABJI DAVIERWALLA

JUDGEMENT

(1.) The appeal is from an order passed by the learned District Judge, Satara, on an application under Section 9 of the Arbitration and Conciliation Act, 1996 (the Act). By the impugned order, the learned trial Judge rejected the Appellants' application for appointment of Court Receiver of the business and assets of the partnership firm of the Appellants and Respondents.

(2.) The Appellants and Respondents were partners in a partnership firm. The firm carried on business of running of a boarding and lodging house known as IL Palazzo Hotel. The partnership was initially formed by three brothers Hoshang, Bomi and Dorabji in the year 1958. Appellant No.1 is the widow of Hoshang, whilst Appellant No. 2 is the widow of Bomi. Respondent Nos.1 to 3 are sons of Dorabji. By a Deed of Partnership dated 6 March 1992, the partnership firm "lL Palazzo Hotel" was reconstituted. The Appellants had 33.1/3% share each in the net profits and / or losses of the firm, whilst Respondent Nos.1, 2 and 3, respectively, had 11%, 11% and 11.1/3% shares. It is the case of the Appellants that from September 2012, Respondent No.1 has been attempting to utilise the partnership assets for his personal benefit at the cost of the partnership business. By notice dated 15 March 2013, the Appellants dissolved the partnership firm "IL Palazzo Hotel" with immediate effect. The Appellants also invoked the arbitration agreement forming part of the Deed of Partnership and suggested appointment of a sole arbitrator. Respondent Nos.1 and 2 disputed the dissolution notice claiming inter alia that the firm was not a partnership at will. Immediately on the date following the dissolution notice, i.e. on 16 March 2013, Respondent No.1 withdrew a sum of Rs.11 lacs from the partnership account in IDBI Bank and Bank of Maharashtra. As a result, disputes and differences arose between the parties and an arbitration application under Section 9 of the Act was filed by the Appellants. On 6 April 2013, an ad-interim injunction order was passed by the learned District Judge, Satara, against the Respondents restraining them from withdrawing any amount from the partnership account except under joint signatures of the Appellants. Ad-interim injunction was also granted in respect of creation of third party rights in the partnership business and assets. The ad-interim application for appointment of Court Receiver was, however, rejected by the learned District Judge. That rejection is challenged in the present appeal.

(3.) In the meanwhile, the Appellants also preferred an application under Section 11 of the Act for appointment of an Arbitral Tribunal. On this application, the Court was pleased to appoint an Arbitral Tribunal consisting of five arbitrators. Aggrieved by the constitution of the Arbitral Tribunal of five arbitrators, the Appellants have preferred an SLP, which is pending disposal before the Supreme Court.