Allowed an arbitration request filed by an expelled partner. Held that expulsion does not bar invoking the arbitration clause under the partnership deed. Appointed a retired District Judge as sole arbitrator to resolve partnership disputes. Relied on Supreme Court decision.
Arbitration request allowed; Sri.N.Sukumaran appointed as sole Arbitrator.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT :
THE HONOURABLE MR. JUSTICE K.T.SANKARAN
TUESDAY, THE 8TH MARCH 2011 / 17TH PHALGUNA 1932
AR.No. 51 of 2010
PETITIONER
I.PATHROS, CHARTERED ENGINEER(CIVIL), S/O.YOHANNAN, PRAVATTY HOUSE, MEKKAD KARA, NEDUMBASSERY VILLAGE, ANGAMALY SOUTH-683 573.
BY ADV. SMT.RESHMI JACOB SRI.K.PRABHAKARAN
RESPONDENTS:
R1 BY ADV. SRI.S.VINOD BHAT
R2 BY ADV.SRI.V.GOPAKUMAR
THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 08/03/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
K.T.SANKARAN, J.
Arbitration Request NO. 51 OF 2010 -----------------------------------------------------Dated this the 8th day of March, 2011
O R D E R
The petitioner and respondents 1 and 2 along with K.P.Paul were conducting a partnership business under the name and style “Valluvanad Granites”. Sri.K.P.Paul retired from the partnership. On 2.11.2005, Annexure I partnership deed was executed among the partners. As per the partnership deed, the first respondent shall be the Managing Partner. Disputes and differences arose between the petitioner on the one hand and the respondents on the other. Notices were issued and correspondence took place between the parties. The petitioner wanted to appoint an Arbitrator invoking clause 22 of the partnership deed dated 2.11.2005. Since that request was not accepted by the respondents, the petitioner filed this Arbitration Request.
ARBITRATION REQUEST NO.51 OF 2010
:: 2 ::
Annexure R1(a) inserting clause 25 therein. Invoking that clause, the petitioner was expelled from the firm with effect from 30.1.2010. The factum of expulsion from the partnership was published in the newspapers. It is stated that the books of accounts of the firm are in the custody of the petitioner. The first respondent contended that the Arbitration Request is intended only for resolving the disputes and differences arising between the partners or their legal heirs. The petitioner having been expelled from the partnership, he cannot invoke the arbitration clause. Along with the additional objections, the first respondent has produced several documents which are mainly correspondence between the parties and copies of the statement of assessments.
ARBITRATION REQUEST NO.51 OF 2010
:: 3 ::
respondent, submitted with reference to paragraphs 36 and 38 of the decision of the Supreme Court in M/s.S.B.P. & Co. v. M/s.Patel Engineering Ltd. and another (AIR 2006 SC 450) that the Arbitration Request is not maintainable as the petitioner did not raise objections to the statement of accounts. Sri.Vinod Bhat referred to clause 13 of the partnership deed, which reads as follows:
“13. That proper books of account shall be kept by the firm and on the 31st day of March, 2006 for the first time and on every succeeding financial year ending on 31st March, a true, correct and full account of the assets and liabilities as also the profit and losses of the partnership firm, duly audited by a qualified auditor shall be taken from the books kept for the purpose. Each manifest error shall be discovered within THREE MONTHS, in which case, such error shall be rectified.”
ARBITRATION REQUEST NO.51 OF 2010
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shall be discovered within three months. That clause does not in any way affect the right of the petitioner to file the Arbitration Request, nor does it affect the jurisdiction of the court to appoint an Arbitrator. Likewise, the contention put forward by the first respondent that since the petitioner was expelled from the partnership, he cannot invoke the arbitration clause, is unsustainable. All the disputes and differences between the partners are arbitrable going by clause 22 of the partnership deed. It is not necessary that as on the date of filing of the Arbitration request, the petitioner should be a partner. Even an expelled partner is entitled to invoke the arbitration clause.
Accordingly, the Arbitration Request is allowed.
Sri.N.Sukumaran, Retired District Judge, is appointed as the sole
ARBITRATION REQUEST NO.51 OF 2010
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Arbitrator. The Arbitrator shall resolve the disputes between the petitioner and the respondents touching upon the partnership referred to above. The Arbitrator would be entitled to fix his fee. The parties are free to put forward their contentions before the Arbitrator and the maintainability or otherwise of the same shall be considered by the Arbitrator.
(K.T.SANKARAN) Judge
ahz/
2 issues framed by the court
Whether an applicant holding a partnership deed can file an arbitration request even after being expelled from the partnership firm.
Whether the court has jurisdiction to appoint an arbitrator when the applicant had objected to the statement of accounts.
Colour shows how this judgement treated each authority
M/s. S.B.P. & Co. v. M/s. Patel Engineering Ltd.Followed¶31
M/s.S.B.P. & Co. v. M/s.Patel Engineering Ltd. and another (AIR 2006 SC 450) · Who else cites this
I. PATHROS
SRI. BINIL K. JOHN
SRI. K.T. YOHANAN
K.T. SANKARAN
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
