Jain Motor Car Company and Others vs Deepti Jain

Aruna Suresh, J.—Vide this order I shall dispose of OMP No. 324/2007 filed u/s 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as Act) and IA No. 12934/2007 filed by the respondent being counter interim reliefs against each other based on the common facts of the case. The undisputed facts of this case are that petitioners No. 2 to 6 and the respondent are the partners of the registered partnership firm namely M/s Jain Motor Car Company (petitioner No. 1). Petitioner No. 1 firm owns a petrol pump at Guru Gobind Singh Marg, New Rohtak Road, New Delhi-110005 which is the retail outlet of M/s IBP Co. Ltd. selling petrol, diesel and lubricants etc. on the terms and conditions mentioned in the licence deed dated 12.7.1989. Petitioner No. 1 firm has opened current accounts with Canara Bank, P.S. Road, Karol Bagh, New Delhi and with State Bank of Bikaner and Jaipur, Faiz Road, Karol Bagh, New Delhi in the name of petitioner No. 1 firm and its branches, namely. Bhiku Ram Jain Exports and JMC Industries respectively.

All the above mentioned partners of petitioner No. 1 firm are related to each other. Respondent, wife of Sh. Virender Jain was taken as a partner in the partnership firm in 1983. A partnership deed dated 1.7.1983 was executed between the partners of the said partnership firm. As per clause 7 of the said partnership deed, petitioners No. 2 to 6 have 90% share, whereas, respondent has 10% share in the profit and loss of the firm. Under the terms of the licence deed petitioner No. 1 has to make a daily advance payment of Rs. 7-8 lacs through cheques for purchasing petroleum products, namely petrol, diesel, lubricants etc. It is on the basis of the receipt of said cheques that M/s IBP Co. Ltd. delivers the petroleum products to the firm. The cheques issued to M/s. IBP Co. Ltd. are to be encashed on presentation failing which petitioner No. 1 firm would face closure of the petrol pump for violation of the terms and conditions of the licence.

As per clause 10 of the partnership deed, all partners including the respondent authorized petitioners No. 3, 4 and 6 to singly operate the bank accounts at Canara Bank and State Bank of Bikaner and Jaipur and the said bankers permitted petitioners No. 3, 5 and 6 to singly operate the bank accounts of the firm. There have been no complications since 2-3 decades of any kind at all.

The respondent wrote a letter to the above mentioned bankers stating that she should be recognized as one of the signatories in the said operations of the bank account and from 11.6.2007 no cheque in which she is not a signatory be approved or passed for payment. On 4.6.2007, the respondent wrote a letter to the Canara Bank inter alia requiring them not to clear the cheques issued by the partnership firm without her signatures. Respondent also wrote a letter to the petitioners indicating her desire to become a signatory to the cheques and calling upon the petitioners not to make any cash payments but to make only cheque payments.

The Canara bank refused to act on the letter issued by the respondent. Therefore, a dispute arose between the partners within the meaning of clause 12 of the Partnership Deed. The petitioners intend to refer the dispute to the arbitrator for entering into reference which has arisen inter se the parties in a short while.

The petitioners have prayed that the respondent be restrained from acting contrary to the partnership deed and asking the bankers not to pass or clear any cheques which are not signed by her as a partner and/or from making any attempts either directly or indirectly to restrain the petitioners No. 3, 4 and 6 from singly operating the bank accounts of the petitioner No. 1 firm and issue necessary directions to the bankers in this regard. They have further prayed that the respondent be restrained from making any attempts either directly or indirectly to create any other obstacle or hindrance in the running of the petitioner No. 1 firm.

In IA No. 12934/2007 the respondent has sought interim relief seeking direction to petitioners No. 2 to 6 to disclose facts relating to the issuance of cheques in the name of the firm which does not bear the signature of the respondent and which have been honoured by its bankers as well as, yet to be honoured for the period from 4.6.2005 till the date it is supplied to the respondent and also to direct the petitioners and the respondent to sort out the issue of operation of the bank account of petitioner No. 1 amicably amongst themselves and in the meantime the operation of the bank accounts with State Bank of India, Canara Bank, State Bank of Bikaner and Jaipur or any other bank for all its units including Jain Motor Car Company, JMC Industries etc. for the time being be suspended till the issue is amicably settled amongst partners.

Partners in the firm M/s. Jain Motor Car Company Ltd. worked peacefully and in consonance with each other for substantially long time. The constitution of the erstwhile partnership was changed because of the change of the partners, who either opted out of the partnership or who became partners in the firm later on. The only dispute inter se the partners who all happened to be close family relatives of petitioner No. 1 is the operation of the account of the partnership firm maintained in various banks by only one partner as per clause 10 of the partnership deed. A general power of attorney was executed by all the partners of the firm on 3.9.1996 in favour of Sh. Arvind Jain a partner of the firm whereby he was authorized:-

To sign and submit all the tender papers with the Government Authorities/Agencies including Indian Railways.

To appear before Government Authorities for negotiations in regard to the tenders and finalize rates for the products with the authorities/agencies.

To collect all the payments, forms and other documents from the authorities/agencies.

To sign and execute guarantee papers and other declarations including filing duly sworn Affidavits, Undertakings, Indemnity Bonds and other papers/documents as may be required by the said Government Authorities/Agencies.

And to do all acts, deeds and things which our General Attorney deems fit and proper in regard to finalization of any deals/rates etc.

Respondent does not disputes her signature on this power of attorney. Therefore, operation of the bank accounts by one of the partners was agreed to between the partners with no objections from either side. For the best reasons known to the respondent, she started writing letters to various banks asking them not to clear the cheques which are presented without her signatures. If the operation of the bank accounts is stopped as prayed by the respondent and her signatures are made mandatory on every cheque in violation of the terms and conditions of the partnership deed, it is likely to cause irreparable loss and injury to the business of the partnership firm. Not only that, the business of the partnership firm may come to a halt, the firm is likely to suffer huge losses. Despite the fact that respondent has been writing letters to various banks since 4.6.2007 and has also sought interim relief by way of a mandate to be issued to the petitioners to get the matter settled amicably, it seems that respondent herself has not taken any initiative to get the matter resolved amicably nor has invoked the arbitration clause till date.

In Modern Metal Industries and Another Vs. Smt. Shanti Parolia and Others, where respondent sent letters to the bank asking the bank to stop the payment of firm''s bank account, it was observed that to stop payment of the firm''s bank account was an act of extreme highhandedness and in breach of trust and malafide. It was further observed that this betrays irresponsible and reckless behaviour on the part of the respondents and was in breach of the terms and conditions of the partnership deed and Partnership Act.

It remains undenied that immediate payments have to be made on behalf of the firm on a regular monthly basis for labour wages, electricity bills, telephone bills, trade tax, central excise and other government and public dues, purchase of raw materials etc. for timely production and supply of goods to the purchasers and in particular to the Government of India (Ministry of Defence) within the stipulated and fixed deadlines under the contract and obtaining bank guarantees under the government contracts without which the contracts would face cancellation and for these payments, the petitioner No. 2 genuinely requires immediate resumption of normal operation of the bank account without the stoppage of payment of cheques as claimed by respondent in her application.

Though there are allegations of misappropriation of funds of the firm by the petitioners No. 2 to 6, a very grave and sudden situation would arise if the business of the firm itself faced imminent danger of being paralysed if the bankers are stopped from honouring the cheques which are not signed by the respondent. Hence I am of the opinion that an interim injunction u/s 9 of the Act as prayed should be granted for protection of the firm from severe crises and imminent danger of its business coming to a grinding halt resulting in huge and irreparable loss.

Hence, petition is allowed. Respondent is hereby restrained from writing letters to the bankers of petitioner No. 1, partnership firm, or from giving them any instructions not to pass or clear any cheques which are not signed by her as a partner. She is further restrained from obstructing petitioners No. 3, 4 and 6 from singly operating bank accounts of petitioner No. 1 firm or issue any directions to the bankers in this regard. She is further restrained from creating any obstacle or hindrance in the smooth running of the business of petitioner No. 1 firm. Since the parties have failed to refer the dispute to arbitration as per clause 12 of the partnership deed, they are directed to invoke clause 12 of the partnership deed within three months from the date of this order failing which the interim order granted to the petitioners would become inoperative. There are no orders as to cost.