RAJU.P.P v. SHIBU.M.G

K.T.SANKARAN, J.------------------------------------------------------Arb. Reguest NO. 7 OF 2010 ------------------------------------------------------ Dated this the 26th day of May, 2010

O R D E RThe petitioner and the respondents are partners of aregistered firm, namely, Bosco Clay Products, having its principalplace of business at Erumathala, Aluva. The firm is engaged in thebusiness of manufacture and sale of clay products. It is not indispute that the partnership firm was constituted on 20.11.1993.Subsequently, the firm was reconstituted on 1.3.2002 as perAnnexure A1. As per the reconstituted partnership, the petitioner isthe Managing Partner of the firm. The firm owned immovableproperties. According to the petitioner, an extent of 24.46 Ares ofimmovable property in R.S.No.79/6 of Aluva East Village, whichbelonged to the firm, was sold for a sum of Rs.24,22,500/- andinstead of appropriating the amount for the purpose of the firm asagreed upon, the respondents misused the funds and purchasedcertain other properties in their names. It is also alleged that anaccount was opened in the State Bank of Travancore in the name ofsome of the respondents and the amounts were deposited in thataccount as if the amount belongs to them personally. It is alleged Arb. Request NO.7 of 2010 :: 2 ::that the petitioner was not allowed to perform his duties as the Managing Partner of the firm and therefore, he could not file returnsbefore the Sales Tax and Income Tax authorities. Disputes arosebetween the partners. It is alleged that the respondents were takinghasty steps to sell the immovable property belonging to thepartnership firm. It is stated that the petitioner was constrained to fileO.P.(Arb.) No.1562 of 2008 before the District Court, Ernakulam(Annexure A2) under Section 9 of the Arbitration and ConciliationAct. It is stated that Annexure A2 is pending.

The petitioner sent Annexure A3 notice dated 14.8.2009 tothe respondents, in which, it was mentioned that the disputesbetween the parties are to be referred to arbitration. Sri.A.K.Joseph,a retired District Judge, was suggested as the Arbitrator. Therespondents sent Annexure A4 reply notice dated 7.9.2009, in replyto Annexure A3 notice. In Annexure A4, it was agreed that therespondents are ready for settling the issues by way of arbitration. However, the respondents suggested that Sri.K.Ramachandran, retired District Judge and who is a practicing advocate in the HighCourt of Kerala, shall be the sole Arbitrator. The respondents stated Arb. Request NO.7 of 2010 :: 3 ::in Annexure A4 that the disputes are slightly different. The relevantportion of Annexure A4 reads as follows:

According to my clients the following are theissues to be decided by way of Arbitration. They are: (a)To declare that the removal of your client from thepost of managing partner of the firm and hisexpulsion from the partnership is valid and bindingupon your client. (b)To declare that your client has only 1/8th share inthe movable and immovable properties of the firmreferred in paras five and six of this notice. (c)To audit the account of the firm for the year 2007-08, 2008-09 and to share the profit and lossproportionately. (d)To declare that the reconstitution deed executedbetween my clients on 27.9.2008 is valid andbinding upon your client.

In the Arbitration Request, the terms of reference to the Arbitrator are the following: Arb. Request NO.7 of 2010 :: 4 ::

TERMS OF REFERENCE 1. Whether the expulsion of the petitioner from thepartnership firm by the respondents is legally valid.2. Whether the account of the firm for the years 2007-08 and 2008-09 is properly maintained and audited andif not account may be audited by an auditor appointedby the arbitrator.3. Whether the petitioner is entitled for profit share andif entitled what is the quantum of profit share payable tothe petitioner for the year 2007-08 and 2008-09.4. Whether the property purchased as per documentNo.3281/08 having an extent of 4.250 cents inRe.Sy.No.62/2 of Aluva East Village and as perdocument No.3944/08 having an extent 2.322 cents inRe.Sy.No.87/5/2 of Aluva East Village in the name ofthe respondents is using the assets of the partnershipfirm and whether it is the property of the partnershipfirm.

The learned counsel for the petitioner submitted that thepetitioner has no objection in appointing Sri.K.Ramachandran as the Arb. Request NO.7 of 2010 :: 5 ::sole Arbitrator as suggested by the respondents. He also submittedthat the petitioner has no objection in the Arbitrator considering thedisputes mentioned in the reply notice sent by the respondents, asquoted above. In the light of the submissions made by the learned counsel forthe petitioner, the Arbitration Request is allowed. Sri.K.Ramachandran, retired District Judge and who is a practicingAdvocate in the High Court of Kerala, is appointed as the soleArbitrator. The Arbitrator shall decide the disputes between theparties as mentioned in the terms of reference in the ArbitrationRequest and also the disputes which the respondents have pointedout in paragraph 9 of Annexure A4 reply notice dated 7.9.2009.(K.T.SANKARAN)Judgeahz/