M/S Kolmet Enterprises v. Surjit Singh Kohli

1. Whether Reporters of local papels rnay be allowed to see the judgrnent ?

2. To be refened to the Reporter or not ? \ I vp s

3. Whether the juclgrnent should be reported in Digest ? I / ' I MANMOHAN SINGH. J

1. By this order I shall dispose of the main petition as well as -ij application filed by respondent No.l under section 151 of CPC seeking vacation of interirn order dated 18.01.2011.

2. The petitioners have filed the instant petition under section 9 of the Arbitration and Conciliation Act, 1996 read with section 151 of CPC. Brief facts of the case are that the petitioner Nos.[2] to 7 and the respondents had been canying on their business in parnrership under the nurme and style of M/s Kolmet Enterprises under the partnership deed OMP No. 41/2011 Page No.l of I 2011:DHC:1918[8] I[1] \-) dated 07.05.1991 having its head office at 1408, Chiranjeev Towers, Nehru Place, New delhi-110019. IWs Kolmet Enterprises (hereinafter refen'ed to as petitioner No.1) is a duly registered firm with the Registrar of Firms, Delhi and is engaged in the business of nruring a restaurant under the narne and style of "The Host" at F-8, Cannaught Place, New Delhi for the last more than 30 yea.rs.

3. It is averred in the petition, that Petitioner Nos. 2 to 7 and respondent No.2 collectively hold 86% share in the petitioner No.l finn whereas respondent No.l holds I4%o share in the petitioner No.l finn. The parlnership deed dated 07.05.1991 provides that petitioner Nos.[2] & 3 and are to act as Managing Parbrers of the petitioner No.l firrn, and thus the said petitioners have been rnanaging the affairs of the petitioner No.1 firm.

4. The gdevance of the petitioners is that recently respondent No.1 issued separate letters/notice of revocation dated 09.12.2010 to the petitioner No.5 and notice dated 19.12.2010 to the petitioner Nos.[2] & 3 asking them to withdraw fi'om the position of Managing Parhrers of the petitioner No.1 firm and revoking the powers of the said Managing Parbrers to operate the bank accounts of the petitioner No.l fum. Acting upon the said notices ofrespondent No.1, the respondent No.3 suspended the operations of bank account of petitioner No.1 firm on22.I[2].20I0, as J., OMP No. 4l/2011 Page No.2 of 8 ll. aresult of which the entire banking operation of the petitioner No.1 ftrn has been stopped thereby seriously affecting its business.

5. It is stated by the petitioners that due to such conduct of the respondent No.l, sedous differences have cropped up between the parties. Therefore, the petitioners have invoked the Arbit'ation Clause, as enshrined under clause 15 of the parhrership deed dated 07.05.1991. The clause 15 reads as follows: "Any dispute or dffirence which may arise a befiveen the partners or behveen partners and the legal heirs and succe,ssor,t of a deceased partner with regard to the construction, meanin.g or fficts of this Deed or any part thereof or respecting the accout'tls, profits or losses of the business of the rights and liabilities of the partners under a Deed of Dissolution or any matter relating to the firnr shall be referred to Arbitration and the provisions of the ArbitrationAct, 1940 shall apply thereto."

6. The petitioners have nominated their respective norninee arbitrator and have also called upon the respondent to do the same at earliest so as to avoid any delay in the adjudication of their disputes. J Petitioner No.2 has nominated Mr. Klishan Narang, Advocate as his norninee, petitioner Nos. 5, 6, and 7 have norninated Mr. P.L. Singla" Additional Distict Judge, Delhi (Retd) as theil nominee albitator and petitioner Nos. 3 & 4 have nominated M'. Rajeev Mago, Chafted Accountant as their nominee albit'ator. But, the respondents are yet to OMP No. 41/2011 Page No.3 of I t) take steps in this regald so that the arbitral tribunal can be cornplete, thus, the constitution of the Arbiual Tribunal is likely to take some time.

7. It is firrther stated in the petition" that due to the present disputes and the acts of respondents, the petitioner No.1 firmhas ah'eady suffered irnmense pecuniary loss as well as loss of goodwill and reputation. The petitioner No.l firm at present has about 100 employees who need to be paid, but, the petitioner No.l firm could not do so because of the suspension of its bank account. Therefore the petitioners J filed the instant petition on 13.01.2011.

8. On 18.01.2011 this court passed interim order allowing the existing arrangement of operation of accounts of the petitioner no.1 firrn with the respondent No.3 to continue till the next date of hearing but the said order continued'on account of adjournrnents. Therefore, the respondent No.l filed the instant application seeking vacation of stay of order dated 18.01.2011 mainly on the following reasons: a (a) That by the arrangelnent continued between the parties the respondent No.1 already suffered a loss of Rs. 1,58,33,610.691- and the petitioners still want to continue the arrangement without initiation of albitration. (b) No effective steps have been taken by the petitioner to convene the albitration proceedings, therefore, in failure to do so, the OMP No. 41/2011 Page No.4 of 8 lI interirn order passed on 18.0I.20I[1] be vacated in view of the settled law on this point.

9. In the reply to the petition, filed on behalf of the respondent No.l, it is stated that the petitioners a.re cornnitting various acts in violation of the partrership deed dated 07.05.lg9ir.In August 2010 the respondent No.l came to know that the petitioners have given loans to various companies without the knowledge of respondent No.1 and this is in violation of clause 10 of the partnership deed dated 07.05.1991.

10. Further, it is stated that the managing partners ih partrrership with the other parfiers ale running the business of Host Inn on the first floor above the Host restaurant and after the August 2010 the respondent No.1 carne to know that one of the employee of the said Host Inn narnely Orn Prakash had been receiving his salary from the account of the petitioner No.1 firrn and when he retired in Septernb er 2010, he was paid ' a s111n of Rs. 2 lac also frorn the account of petitioner No.1 firm Similarly j another ernployee of Host Inn narnely Prern Singh Bisht also has been paid fonn frorn the account of petitioner No.l and one iMr. S.P Kakkal working for R.S. Avtar' & Co. was also paid a sum of Rs. 2 lac on his retilement from petitioner No.1's account.

11. Further it is stated that the petitioners have acted in haste by appointing tlu'ee arbif,'ators when the present disputes should be OMP No. 41/2011 Page No.S of 8 \y adjudicated upon by only one r:etired Judge of this Court or the High Court ofPunjab & Haryana. During the course of hearing of the petition as well as the application filed by the respondent No.l for vacation of the order dated 18.01.2011, it is stated by the counsel that there is no delay on the part of the petitioners and in fact the order dated 18.01.2011 was passed with the consent of the parties. The learned counsel for the petitioners has specifically rnade a staternent that the petitioners have no objection if the sole arbin'ator is appointed by this Court to adjudicate the disputes between the parties as suggested by the respondent No.1. He further says that this court may fix the schedule for the said adjudication and the petitioners would not take adjournrnent in the rnatter and the said proceedings be decided within a period of 3-4 months fi'om filst date of sitting. Lastly he subrnits that the interim arrangement as agleed by the parties as rnentioned in the order dated 18.01.2011 be continued unless it is rnodified/vacated. 2 13. The learned counsel for the petitioners also denied thg allegations made by the respondent No.l in its pleadings by saying that the petitioners have no objection if the respondent No.l inspects the accounts of the finn at any point of tirne and the petitioners would provide the fulI assistance to access the sarne and after doing so he can raise his clairn before the sole Arbitrator. t[2]. { OMP No. 41/2011 Page No.6 of I f, \( L[4]. The learned counsel for the respondent No.1 is agreeable for all the suggestions given by the learned counsel for the petitioners provided the interim order passed on 18.01.2011is vacated. He has referecl the following decisions in support of his subrnissions: (a) Newuge Fincorp (Indiu) Ltd. v. Asia Corp. Securities Limited 2001 (1) RAJ 170 (Born); ' (b)National Building Construction Corpn. Ltd. (NBCC) v. IRCON fnternutional Ltd.2005 (1) RAJ 540 (Delhi);

15. After hearing the parties, this Court is not inclined to accept the praver rnade in the application for vacation of the order passed on 18.01.2011, raflrer to dispose of the rnain petition itself by appointing ilzh'. Ajay Venn[4] Adv. Phone No.23263307/95L20-251238112512390 as sole fubitrator to adjudicate the disputes between the parties. The learned sole Arbittator is requested to decide the disputes bet-w-een the parties within a period of 4-6 months fi'om the date of first rneeting. The interim anallgement ah'eady rnade between the parties shall continue till the tirne such order is rncdified/vacated bv the albinator. In cabe anv apptication is filed by the respondent No.l for vacating the said orders, the sarne be disposed of within foul weeks froln the date of filing as agreed by the petitione,r also. The same would be d{cided by the sole albih'ator as per its own merit and without any influence of order dated 18.01.201t. I t)MP No. 41/2011 Page No. / of E f[1] 1i