Jagdish C. Malukanim & Ors. v. Smt.Bhagwanti D. Aswani

V/s. Smt. Bhagwanti D. Aswani ....Appellants ....Respondent Mr.Ashok Saraogi with Ms.Poonam Mital i/b Ms.Poonam Mital & Mr.Kunal Vepa for the Appellants/applicants. Ms.Shilpa Kapil for the Respondent. CORAM : S.J. VAZIFDAR, J. DATE : 6TH SEPTEMBER, 2011. P.C. :-

The appeal is filed against the order of the arbitral tribunal comprising of three learned arbitrators under section 17 of the Arbitration and Conciliation Act, 1996 appointing the Court Receiver in respect of the properties of the firm in respect of which dissolution and accounts have been sought by the respondent. The respondent admittedly has in any event a 30% share in the firm. There were various other firms also.

Mr.Saraogi, the learned counsel appearing on behalf of the appellants did not contend that the arbitration tribunal has no power to 2 car23-11 appoint the Court Receiver. He however, relied upon an M.O.U. dated

28.1.2009 entered into inter-alia between the parties. According to him, under the M.O.U., the respondent had agreed to retire from the firm upon the payment of Rs.75.00 lacs. He stated that the appellants are ready and willing to pay the amount of Rs.75.00 lacs to the respondent without prejudice to the rights and contentions of the respondent. He stated that the appellants are further willing to submit to an injunction in respect of the property. He submitted therefore, that the rights of the respondent would be completely safeguarded pending the arbitration.

As far as the M.O.U. is concerned, prima-facie at least there does not appear to have been a stand alone agreement qua only one or more items dealt with therein. According to the respondent, a total consideration of Rs.8.00 crores was payable under the M.O.U. which also dealt with other issues between the parties. This is a matter which certainly requires consideration but at the final hearing of the arbitral proceedings.

In the meantime, the arbitral tribunal has prima-facie at least rightly proceeded on the basis that the respondent being a partner in the firm, was entitled to dissolve the same, as the partnership is at Will. Added to this is the manner in which rights have been sought to be created in favour of the respondent’s associated entities in respect of a part of a very valuable property. In that event, the arbitral tribunal was justified in following the normal rule of appointment of a 3 car23-11 Court Receiver in such an action.

Mr.Saraogi stated that no business was presently being carried out from the premises. In that event, it would not enure to the benefit of any of the parties to keep the property unutilized. It would on the other hand be to the benefit of all the parties if the property is used, pending the arbitral proceedings, to generate income.

The Court Receiver shall appoint any third party as his agent in respect of the ground and first floor of the building on the usual terms and conditions. The parties are also at liberty to bid for the agency of the Court Receiver. In the event of either of the parties being appointed as the agent, the Court Receiver shall insist only on royalty but not on security. The rest of the impugned order of the arbitral tribunal shall remain unaffected.

The Civil Application is accordingly disposed of without affecting the rest of the order of the arbitral tribunal. The appeal shall come up for admission in normal course.