MAHESH AGRAWAL Vs. VIKRAM AGRAWAL

JUDGEMENT

(1.) THE dispute over the management of a hotel is the bone of contention between the parties. THE appellant has challenged the Order dated 9. 3. 2006 passed by the District Judge, Jaipur whereby the learned Judge has appointed a receiver in an application filed under Section 9 of the Arbitration and Conciliation Act, 1996 (henceforth to be referred to as `the Act' for short) by the respondent.

(2.) THE brief facts of the case are that respondent before this Court, Vikram Agarwal filed an application under Section 9 of the Act, against the appellant, Mahesh Agrawal. According to the application, the appellant and the respondent are cousin brothers. On 27. 1. 1999, both of them formed a partnership for the purpose of running a business in the name and style of M/s. Surya Hotel at Jaipur. For this purpose a partnership deed was signed on 27. 1. 1999. THE respondent claimed that in order to pursue his studies, he was out of Jaipur from 1. 6. 2001 to 30. 4. 2003. THErefore, during this period he was unable to look after the said business. However, whenever he would come back to Jaipur, he would ask the appellant about the business and about its income and expenditure. However, the appellant would neither show him the accounts, nor tell him about the business. THE appellant would also not let him sit in the hotel. In fact, whatever the earning, the appellant would siphon it off. Since the respondent was not satisfied with the appellant's behaviour, he sent him a notice on 9. 11. 2004 for dissolving the partnership. THE respondent, thereafter, filed a civil suit before the District Court, Jaipur, which was subsequently transferred to the Additional District Judge, No. 3, Jaipur City, Jaipur. But, realizing the existence of an arbitration clause in the partnership deed, the respondent moved an application for withdrawing the said civil suit. Subsequently, he sent a notice to the appellant for appointing Mr. Pradeep Katariya as the sole arbitrator. However, the appellant did not reply to the said notice. Thus, the respondent submitted the application under Section 9 of the Act for appointment of a receiver as according to him, the arbitral proceedings have yet to commence, the proceeding might also take a long time before completion. Hence, in order to protect his interest, it is imperative that a receiver be appointed.

(3.) THE appointment of receiver on a running hotel has attracted the attention of the Courts for a long time. While appointing a receiver the Court should keep certain factors in mind. Firstly, the appointment should be "just and convenient" for the protection of the hotel. Secondly, running a hotel is a commercial activity. THErefore, any such steps should be taken which would protect and promote the commercial interest. Thirdly, the interest of both the parties should equally be protected. Fourthly, a mechanism should be created so as to protect the interest of both the parties. Unless a compelling reason exists, which would depend on the facts and circumstances of each case, a stranger should not be introduced so as to take over the business and run it. (Ref. to : Firm Ashok Traders & Ors. (supra), Kalpana Kothari (Smt.) (supra ).