THANGIRALA PREMAKUMAR Vs. R ANJANEYULU

JUDGEMENT

(1.) THIS appeal by the 3rd defendant in O. S. No. 155/79, on the file of the Principal Subordinate Judge, Guntur, is directed against the order dismissing I. A. No. 1017/79. That was a petition filed by the appellant herein under S. 34 of the Indian Arbitration Act to stay all further proceedings in O. S. No. 155/79 including the proceedings in all interlocutory applications pending disposal of that petition.

(2.) THE 1st respondent herein instituted the suit O. S. No. 155/79 for dissolution of the partnership firm and for rendition of accounts. THE appellant defendant No. 3 respondent No. 1 plaintiff, respondent No. 3 defendant No. 2,and the 4th defendant 4th respondent, are partners of the 2nd respondent 1st defendant firm. It is the case of the plaintiff that originally the 3rd defendant appellant established a propriety concern Messers. Srinivasa Agro Chemicals under the self employment scheme. After the construction of the building in part and erection of the machinery to some extent as he was not in a position to complete the same, he secured a loan from the Punjab National Bank, the 5th Respondent herein. But as he was not able to invest any further amounts the 3rd defendant wanted the plaintiff and the 4th defendant to invest further amounts. Accordingly, the plaintiff; 2nd defendant and 4th defendant were taken as partners and they constituted themselves into a partnership firm under the name and style of Srinivasa Agro Chemicals Limited. That firm was registered with the Registrar of Firms. A formal deed of partnership was executed on 1-4-1974. THE shares of the partners in the said firm were as follows: - Plaintiff - 40ps. 2nd defendant - 20ps. 3rd defendant - 20ps. 4th defendant - 20ps. THE 1st defendant firm was being managed by the 2nd defendant, who is the father of the 3rd defendant. It is the plaintiffs case that he invested Rupees 1,01,000 while the 4th defendant invested Rs. 87,500. THE 2nd defendant was appointed as a managing partner. It is alleged by the plaintiff that the 2nd and 3rd defendants having taken over complete control of the business have been appropriating huge amounts for them selves. On enquiry the plaintiff came to know that huge stocks of technical BHC, purchased for the purpose of converting them into dusting powers were sold away and the amounts were misappropriated by defendants 2 and 3 for their personal welfare. It is alleged that huge expenditure was booked by obtaining bogus vouchers. Defendants 2 and 3 are alleged to be guilty of misfeasance and malfeasance. In or about April, 1979, when en the plaintiff and the 4th defendant required them to show the account books they refused. THEy referred the matter to the mediators K. Venkateswara Rao, Maddala Rama Rao and others which resulted only in the production of some of the books of 1978 and 1979 and by the 2nd defendant. THE inspection of these account books confirmed their apprehension regarding falsification of accounts and mis appropriation of the amounts. When the 2nd defendant was required to explain the accounts he refused to comply. THE plaintiff informed the 5th respondent Bank not to honour the transactions of the 2nd defendant. THE 2nd defendant is also alleged to have secreted one of the cars of the firm and trying to remove all the moveables of the firm with a view to misappropriate the same. According to the plaintiff, if the accounts are properly taken, he would be found entitled to receive Rs. 2,00,000 towards his share of the profits. Hence the suit for dissolution of partnership and accounts was laid on 4-7-1979.

(3.) PLAINTIFF had also filed a separate application for the appointment of a receiver and yet another application for issuing an injunction restraining the defendants from disposing of the stocks. The Commissioner visited the factory and prepared inventory on 5-7-1979. At the time of the preparation of the inventory by the Commissioner, the 3rd defendant appellant was present. The Commissioner filed a report along with the inventory into Court on 9-7-1979. On the same day the 3rd defendant appellant filed I. A. No. 1017/79 requesting the Court to refer the matter to the Arbitrator and for stay of the suit and also stay of all further proceedings therein.