Shri Kamal Nath Monga vs Shri Navin Kumar and Others

Gita Mittal, J.—By this order I shall dispose off this petition filed u/s 9 of the Arbitration & Conciliation Act, 1996 by the petitioners.

The facts giving rise to the present petition briefly noticed show that by a partnership deed dated 3rd February, 1962 Shri Prem Nath Monga (father of the petitioner herein); Shri Kishan Lal Kumar (father of respondent No. 1); Shri Bal Kishan Monga (father of respondent No. 2); Mrs. Sillina Abrecht (mother in law of respondent No. 3) and Mrs. Anita Abrecht had agreed to carry on the business of sale and purchase of watches, time pieces, clocks, spare parts thereof, and accessories and allied things thereto under the name and style of M/s. Farmag Watch Company. The partnership firm was carrying on its business from tenanted premises at No. 269, Dr. Dadabhai Naoroji Road, Fort, Mumbai. The partnership was reconstituted by a partnership deed dated 19th February, 1977 whereby the shares of the partners were redefined. On the death of Shri Kishan Lal Kumar on 24th September, 1991, his son Shri Naveen Kumar (respondent No. 1 herein) was inducted as a partner and a partnership deed dated 19th October, 1981 was executed.

Similarly on the death of Shri Prem Nath Monga on 21st January, 1982, the present petitioner Shri Kamal Nath Monga was inducted as a partner and a partnership deed dated 1st March, 1982 was executed. The five partners were holding the following shares:

(a) Shri Kamal Nath Monga 15% (b) Shri Vimal Nath Monga 10% (c) Shri Bal Kishan Monga 15% (d) Mrs. Sillina Abrecht 20% (e) Mrs. Anita Abrecht 20% (f) Shri Narin Kumar 20%

Shri Bal Kishan Monga expired on the 11th June, 1986 when his son Shri Ranjan Monga was inducted as a partner and a partnership deed dated 4th August, 1986 was executed. This partnership deed has been placed before this Court. The petitioner has contended that under the partnership deed dated 4th August, 1986, Shri Naveen Kumar, respondent No. 1 herein was made in-charge of the entire business and authorised to act for and on behalf of the said firm either himself or through any manager or other person. He was also authorised to appoint any other person to operate the bank accounts of the partnership. Clause 12 and 14 of the partnership deed have been relied upon by the plaintiff in support of this contention.

Disputes arose between the parties for the reason that even though respondent No. 1 was not authorised to exclude the other partners from the management control and administration of the affairs of the firm or to deprive them access to the books of accounts or other documents, since 1998, the respondent No. 1 fraudulently arrogated to himself all powers of managing the business and affairs of the firm to the exclusion of the petitioner. The petitioner was also not granted access to the books of account of the other documents. The petitioner also points out that apart from the Farmag Watch Company, the parties were also partners in two other partnership firms namely M/s Meridian Watch Company and M/s CH Abrecht. The respondent No. 1 is alleged to have caused these partnership firms to run in continuous losses while deriving unlawful gains to himself from the business of the partnership by falsification and defrauding of accounts and denying access to the records of the firm and also ousting the other partners from participation in the management of his affairs.

In support of the allegations of complete loss of confidence, trust and faith by the petitioner in the respondent No. 1, the petitioner has referred to an alleged sale of land by the respondent No. 1, which land actually belong to another partnership firm of which the petitioner was a partner alongwith the respondent No. 1. The second instance which has been cited is that of the illegal and unauthorised closure of the business of the partnership firm M/s CH Abrecht at Delhi and Calcutta and the usurption of the assets of the partnership firm by surrendering the tenancy of this firm in property at Calcutta and disposal of its movable assets.

The petitioner has also submitted that the partnership firm also has tenancy rights in the premises No. 269, Dr. Dadabhai Naoroji Road, Fort, Mumbai and other properties which the respondent No. 1 is treating as his self acquired properties and has threatened to alienate and transfer the same and also to surrender the tenancy rights of the partnership firm without the consent of the partners and to usurp the amounts received therefrom.

In these circumstances, apprehending illegal dispossession of the various assets of the partnership firm, the present petitioner filed the present application u/s 9 of the Arbitration & Conciliation Act before this Court seeking interim orders against the respondent Nos. 1 and 2 from parting with possession or surrendering the tenancy rights or other assets of the partnership firm till adjudication of the disputes between the parties by arbitration. This Court by an order dated 9th December, 2003 has issued a direction to the parties to maintain status quo in respect of property bearing No. 269, Dr. Dadabhai Naoroji Road, Fort, Mumbai.

The petitioner has also pointed out that respondent No. 2, Shri Ranjan Monga had filed Suit No. 957/1992 entitled Shri Ranjan Monga v. Shri Naveen Kumar and Ors. against the petitioner as well as respondent Nos. 1 and 3 herein which is pending before this Court. The respondent No. 2 has sought relief of rendition of accounts in the partnership firm M/s Farmag Watch Company and a relief of permanent injunction from expelling respondent No. 2 from the partnership or for execution of any fresh partnership deed to his exclusion. The respondent No. 2 had also prayed for an injunction from transferring or surrendering of the tenancy rights of the partnership business. This Court has granted an interim injunction restraining the defendants in the suit, that is the present petitioner and respondent Nos. 1 and 3 from parting with possession or surrendering tenancy rights in the said premises No. 269, Dr. Dadabhai Naoroji Road, Fort, Mumbai. Initially even though the present respondent No. 1 was contesting the claim of the plaintiff, however, subsequently the respondent No. 1, started colluding with the respondent No. 2 to persuade him not to pursue his Suit No. 957/1992 inasmuch as the interim injunction granted therein would thereupon stand vacated and would have enabled the respondent No. 1 to implement his illegal design of surrendering the tenancy rights of the partnership firm and selling the partnership assets as well as stocks etc to the exclusion of the partners.

The petitioner claims to have approached the respondent Nos. 1 and 2 seeking dissolution of the partnership firm by mutual consent and division of its properties and assets including goodwill, tenancy and ownership. However, the respondents have failed to react positively. Accordingly, the petitioner has got issued a notice dated 28th November, 2003 upon the respondents calling upon them to agree to the appointment of Justice S. Ranganathan, a retired Judge of the Supreme Court of India who is conducting arbitration between some of the parties herein with regard to M/s Standard Restaurant, another partnership concern.

Inasmuch as the respondent did not concede to the request for appointment of the arbitrator, the petitioner was constrained to file Arbitration Petition No. 35/2004 u/s 11 of the Arbitration & Conciliation Act, 1996 praying for appointment of an arbitrator. By a separate judgment, this Court has allowed the petition and appointed an arbitrator for reference of the disputes between the parties to his sole arbitration in terms of Clause 19 in the partnership deed which contained the arbitration agreement between the parties.

The present petition has been filed by the petitioner praying that this Court may restrain respondent Nos. 1 and 2 from, in any manner parting with possession or surrendering the tenancy rights of the premises No. 269, Dr. Dadabhai Naoroji Road, Fort, Mumbai or in any manner selling any partnership assets of the partnership firm M/s Farmag Watch Company till adjudication of the disputes between the parties by arbitration.

When this petition came up for hearing on the 9th December, 2003, Counsel for respondent No. 1 had entered appearance and accepted notice thereof. The court by orders passed on the same date had directed the parties to maintain status quo in regard to the tenanted premises No. 269, Dr. Dadabhai Naoroji Road, Fort, Mumbai. These orders have continued to operate even on date.

The main ground of opposition to the present petition is based on the objection raised with effect to this Court not having the territorial jurisdiction to entertain and adjudicate upon the subject matter of the present case. I have recorded detailed reasons rejecting this objection of the respondent No. 1 while passing orders on Arb.A. 35/2004. In view of the Section 2(e) of the Arbitration & Conciliation Act, 1996 which defines the expression Court. It would be apparent that so far as territorial jurisdiction of the court is concerned, Section 16 to 20 of the CPC would guide consideration of such an objection. Section 20 permits a suit to be filed in such court which whose territorial jurisdiction the cause of action has arisen wholly or in part or within whose territorial jurisdiction the defendants reside. From the array of parties I find that the petitioner and the respondents reside at Delhi within the jurisdiction of this Court. The respondent No. 3 has filed a reply and an affidavit stating that she does not contest the claim made by the petitioner in the present case. In view of the statutory provisions contained in Section 20 of the CPC and upon application of the doctrine of forum non conveniens, I am satisfied that this Court has the territorial jurisdiction to entertain and adjudicate upon the subject matter of the case.

There is no contest to the submission that the partnership firm M/s Farmag Watch Company has the tenancy rights in the property No. 269, Dr. Dadabhai Naoroji Road, Fort, Mumbai and also other immovable assets. The petitioner has also taken recourse to invocation of the arbitration Clause and has sought appointment of an arbitrator u/s 11 of the Arbitration & Conciliation Act, 1996.

It is trite that the legal principles which govern the discretion to grant interlocutory injunctions under Order 39 of the CPC are the very principles on which jurisdiction to grant relief u/s 9 of the Arbitration & Conciliation Act, 1996 rests. In this factual background, it certainly has to be held that the plaintiff has made out a prima facie case for grant of an ad-interim injunction. Balance of convenience, interest of justice and equity are also in favour of the petitioner and against the respondents.

However having regard to the nature of the disputes, interest of justice merits that the petitioner who is also a partner in the partnership firm is also directed to maintain the status quo with regard to these properties on the same terms on which the respondents have been directed.

Accordingly, this petition is allowed. The parties shall maintain status quo of title and possession so far as the property No. 269, Dr. Dadabhai Naoroji Road, Fort, Mumbai and also with regard to all assets of the partnership firm till adjudication of the disputes which have arisen between the parties.

This petition is allowed in the above terms.