IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION (LODGING) NO. 664 OF 2008 ARBITRATION PETITION (LODGING) NO. 664 OF 2008 ARBITRATION PETITION (LODGING) NO. 664 OF 2008 Mohammed Anwar Kapadia & Anr. ...Applicants/ Petitioners vs M/s.Ana Laboratories & Ors. ...Respondents Mr.Shabbir T. Kapadia for the Petitioners. Mr.Karl Tamboly i/b. M/s.FZB & Associates for Defendant Nos.1 to 3. CORAM : V.M. KANADE, J. CORAM : V.M. KANADE, J. CORAM : V.M. KANADE, J. DATED : SEPTEMBER 23, 2008 DATED : SEPTEMBER 23, 2008 DATED : SEPTEMBER 23, 2008 P.C. :- P.C. :- P.C. :- 1. Heard Counsel for the petitioners and Counsel for the respondents. 2. The petitioners are the legal heirs of late Anwar Sharafali Kapadia who was partner of M/s. Ana Laboratories. The petitioners’ father expired on 4th December, 2006. The petitioners are claiming their legal dues after his expiry from the surviving partners who have continued to carry on business of the said partnership firm. It is the case of the petitioners that the petitioners are entitled to have a share in all - 2 - the properties of the partnership firm including a goodwill of the firm in view of clause 4 of the Partnership Deed. 3. It is submitted that during the pendency of the arbitration proceedings in order to protect the right of the petitioners, an order of injunction be passed restraining the respondents from creating third party rights in respect of the partnership assets. Clause 14 of the Partnership Deed contemplates that in the event, there is any dispute between the partners or their legal representatives in respect of any matter touching the partnership affairs including the valuation of the assets and the determination of the liabilities of the firm, the matter should be referred to an arbitrator. Both the parties have now agreed in the Court that they have no objection if the matter is referred to Shri Rajadhyakshya for arbitration. 4. Counsel for the respondents, on the other hand, submits that the legal heir of the retiring partner is entitled to one half amount of the value of the goodwill - 3 - which is ascertained in the manner provided in clause 13. He submitted that there is a gross delay in filing this petition and therefore, on that count, the petitioners are entitled to claim an interim order. Secondly, it is submitted that in view of Section 11 and 14 of the Partnership Act, the legal representatives of the deceased partner would be entitled to the share in terms of the Partnership Deed. He submitted that therefore, the petitioners would be entitled to get the share of their father as laid down in clause 13. He further submitted that the respondents have roughly calculated the dues of the deceased father of the petitioners in their letter dated 18th October, 2007 which comes about Rs.25 lakhs. He, therefore, submitted that no case is out for grant of any injunction restraining the surviving partners from claiming any third party rights in respect of the partnership assets. He further submitted, after taking instructions from his client who was present in court, that the surviving partners are ready to deposit an amount of Rs.25 lakhs in this court during the pendency of the arbitration proceedings and they are willing to give undertaking to - 4 - secure the interest of the petitioners if any additional amount is directed to be paid by the arbitrator over and above Rs.25 lakhs. He relied on two judgments of the Apex Court in support of the said submission in the case of Khushal Khemgar Shah and others vs. Mrs.Khorshed Khushal Khemgar Shah and others vs. Mrs.Khorshed Khushal Khemgar Shah and others vs. Mrs.Khorshed Banu Dadiba Boatwalla and another, reported in 1970 (1) Banu Dadiba Boatwalla and another, reported in 1970 (1) Banu Dadiba Boatwalla and another, reported in 1970 (1) SCC 415 SCC 415 SCC 415 and in the case of Controller of Estate Duty, Controller of Estate Duty, Controller of Estate Duty, Gujarat-I, Ahmedabad vs. Smt.Mrudula Nareshchandra, Gujarat-I, Ahmedabad vs. Smt.Mrudula Nareshchandra, Gujarat-I, Ahmedabad vs. Smt.Mrudula Nareshchandra, reported in 1986 (Supp) SCC 357. reported in 1986 (Supp) SCC 357. reported in 1986 (Supp) SCC 357. 5. In my view, it is not necessary to go into the merits of the controversy regarding the rights of the legal representatives of the deceased partner. This question will be decided by the arbitrator after hearing both the parties. The only question which is required to be considered is in what manner the interest of the petitioners can be protected during the pendency of the arbitration proceedings. In my view, it is not necessary to restrain the respondents by passing order restraining them from creating third party rights in respect of the entire partnership assets. The interest of the petitioners would be protected if the respondents - 5 - are directed to deposit Rs.25 lakhs in this Court within the period of two weeks from today and to file an undertaking in this court that they would deposit and/or pay the petitioners herein any additional amount that may be determined by the arbitrator over and above Rs.25 lakhs within a period of two weeks thereafter. Order accordingly. 6. After the said amount is deposited, the Prothonotary & Senior Master shall invest the said amount in a Nationalised Bank in a fixed deposit for a period of one year. Thereafter, it may be renewed till the final award is passed by the Arbitrator and the amount may be disbursed as per the directions given by the arbitrator in the award which is passed. 7. All other questions and contentions are kept open. Ad-interim order which was passed earlier, accordingly, is modified in the aforesaid terms. 8. Arbitration petition, accordingly, is disposed of. - 6 - 9. Counsel for the petitioners submits that the respondents may be directed to supply copies of the property documents of the partnership assets. The petitioners are at liberty to make an application before the arbitrator and seek appropriate directions from the arbitrator. 10. The parties are directed to approach the arbitrator within one week from today. (V.M. KANADE, J.) (V.M. KANADE, J.) (V.M. KANADE, J.)