1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION Amk ARBITRATION PETITION NO. 95 OF 2008 Manoj Kumar Dalmiya .. Petitioner Vs. M/s. Lakshmi Narayan Gaurishankar & Ors. .. Respondents Mr. Vrushabh Shah with Mr. H.G. Ganatra for the Petitioner. Mr. Girin N. Pandit for Respondent Nos.1 to 6. CORAM : MRS. R. S. DALVI, J. DATE : 20th April, 2010. P.C. 1. The petition is admitted and heard forthwith. 2. This petition challenges the award dated 22nd October, 2007 on the ground of public policy essentially maintaining that it is patently illegal and against the provisions of law and rules relating to ascertainment of share of retiring partner upon dissolution of a partnership firm. 3. The petitioner is the retiring partner. His parents are respondent Nos.3 & 5. The firms in which they were partners are respondent Nos.1 & 2. The HUF respondent No.4 is a partner in one of the firms. 4. The share of the petitioner upon dissolution of the firm had to be determined. Accounts of 2 firms were to be considered. In one firm the father, mother and the son 2 are partners. The other firm had the father, son and the HUF as it partners. The parties were referred to arbitration. The assets of the firms were required to be ascertained. Some of them are immovable assets including a separate flat. The valuation of the immovable assets was required to be done to pay the petitioner’s share therein. 5. The petitioner submitted certain documents, the most important being the income tax returns of the firms for 4 years prior to the dissolution of the firm and essentially for the last year ending March, 2000 immediately after which the petitioner dissolved the firm and retired. At no time the petitioner took any exception or made any grievance about the income tax returns of the firms. The record shows that the petitioner himself submitted those income tax returns. 6. It may be mentioned straightway that the petitioner would be bound by the contents of the returns, he himself having submitted them in the arbitration proceeding. The Arbitral Tribunal, upon hearing the parties and considering that accounts of the firms, by consent of the parties appointed a Chartered Accountant as the Commissioner. 7. It need hardly be said that once the income tax returns which considered the assets as well as liabilities of the firms are submitted, the Arbitral Tribunal or the Commissioner who is the accounting expert, is not required to go into the Books of accounts of the firms, the ledger accounts, balance-sheet etc. as it is based upon the 3 accounts books of the firms that the income tax returns are made out, audited and filed. These documents, therefore, merge in the income tax returns. 8. The Arbitral Tribunal separately considered the petitioner’s claim with regard to the separate assets of the firm and left to the independent expert the petitioner’s claim with regard to the accounts of the firms. 9. The Commissioner appointed by consent of the parties has gone into accounts reflected in the income tax returns of the firms as also the individual partners including the petitioner (which is now denied by the Advocate for the petitioner) and submitted by the petitioner himself. 10. The Commissioner also took into account the goodwill of the firm. 11. The share of the HUF which also a partner is considered. 12. One of the assets of the firm is a flat being Flat No.15 in Rozy Apartments at Santacruz (W). The share of the petitioner in that flat has also been determined. 13. The balance-sheet of the two firms as at 31st March, 2010, the letter of the petitioner with regard to the certain Fixed Deposits and bank accounts which he had written to the relevant banks for freezing the accounts credited therein, the agreement for the purchase of the flat to be valued, the valuation certificate, 4 account payee cheques received by the petitioner aggregating to Rs. 2,95,000/- and the income tax returns submitted by the petitioner were all considered by the Commissioner. The 4 Commissioner has in fact gone through the income tax returns not only of the year immediately preceding the year in which the petitioner dissolved the partnership firm, but 3 years earlier also. The Commissioner further considered the individual returns filed by the partners including the petitioner which has been specifically recited in the report. 14. The Commissioner has taken the amount standing to the credit of the petitioner in the accounts less the liability of the firm, as reflected in the income tax returns on the date of his retirement. This is precisely inconsonance with what has been held by the Apex Court in the case of Addanki Narayanappa Vs. Bhaskara Krishnappa that value of his share in the net partnership assets is as on the date of dissolution or retirement after a deduction of liabilities and prior charges. 15. The Commissioner has further considered the market value of the properties not only as shown in the balance sheet but also taking into account the other sale instances as certified by the Secretary of the Society where the premises was situated and added that market value to the value shown in the balance sheet for computation of the amount to be paid to the petitioner. The Commissioner has considered the valuation of the immovable property separately from the accounts of the firm as reflected in the income tax returns of the firm. The Commissioner has deducted the amounts received by the petitioner after the dissolution of the firm precisely to the extent of 4 cheques, the particulars of which were tenadered by the petitioner 5 aggregating to Rs.2,95,000/-. 16. The Arbitral Tribunal has, therefore, fully considered the case of the petitioner with regard to all the aspects and by consent of the parties left the accounting work to the accounting expert and accepted the report of the accounting expert after fully considering it and hearing petitioner’s objections thereon. 17. Upon the submission of the report by the Commissioner the parties were further heard (a fact which also denied by the Advocate for the petitioner). Para 12 of the Award is reflective of the defences taken by the petitioner including the petitioner’s claim that Books, account, ledgers etc. be also seen by the Arbitral Tribunal along with returns submitted to the Income Tax Department (in which the ledger accounts etc. get merged). The Arbitral Tribunal has considered that the Commissioner scrutinized the documents placed on record and considered them in accordance with the accounting principles. 18. The petitioner takes exception to the mode in which the Commissioner, appointed by consent of the parties who is an expert in the field of accounting, has considered the accounts of the firm. My attention has been specifically drawn to the Commissioner’s report made to be Arbitral Tribunal with regard to making up of accounts. It must be apparent that these accounts were made after the firm had filed its returns with the Income Tax Authority and after the petitioner had produced those returns and 6 submitted them to the Commissioner amongst his documents. The petitioner has therefore accepted the returns filed. The petitioner is estopped from contending anything otherwise than what is mentioned in the returns. Consequently all the other documents based upon which the returns were filed were not to be separately considered. 19. Only an Award which is patently illegal or such as would adversely affect the administration of justice or as would shock the consonance of any Court can be challenged under Section 34 of the Act as per the parameters laid down in the case of Oil and Natural Gas Corporation Ltd Vs. Saw Pipes Ltd. referred by the petitioner’s Advocate. 20. The objections to the Arbitral Award in the petition is, therefore, misconceived. The Arbitration Petition is, therefore, dismissed. 21. On the application of petitioner’s Advocate the award is stayed for 4 weeks. (R. S. DALVI, J.)