Sunday 11 December 2016

Whether court can grant interim relief U/S 9 of Arbitration Act if unregistered partnership firm is in existence?

 The relevant clauses of partnership agreement are
already quoted. They show that the parties cannot put
to an end themselves to the contract unless the project
is completed. The submissions made and copy of
proceeding filed in this Court under section 11 of the Act
(Application No.12 of 2012) show the nature of dispute
which Sanjay has raised. There is a dispute that
Jugalkishor is not giving accounts of partnership firm to
Sanjay and the dispute has arisen between these two
partners regarding accounts of business of firm. As per
this record, Sanjay wants to settle this dispute amicably
and he wants to continue with the project and complete
it as provided under the agreement. Thus, Sanjay does
not want the relief of dissolution of the partnership in the
adjudication. Thus, the partnership is in existence and
Sanjay has no intention to go for dissolution of
partnership. In view of this nature of dispute raised by
Sanjay, this Court has no hesitation to hold that the bar
given by section 69 (3) of Partnership Act is applicable
against Sanjay and due to that even interim relief under

section 9 of the Act cannot be given.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
BENCH AT AURANGABAD
ARBITRATION APPEAL NO.: 6 OF 2015

Tapadiya Construction Ltd.,

V
Sanjay Suganchand Kasliwal,

CORAM:- T. V. NALAWADE, J.
DATED:- 3rd DECEMBER, 2015.
Citation: 2016(6) MHLJ 768 Bom

2. Notice after admission, made returnable forthwith.
By consent, heard both the sides for final disposal.
3. The Appeal is filed under section 37 of the
Arbitration and Conciliation Act, 1996 [hereinafter
referred to as the Act] against the judgment and order of
Miscellaneous Application numbered as M.A.R.J.I. No.198
of 2014 which was pending in the Court of Principal
District Judge, Parbhani. The said proceeding was filed
by present Respondent No.1 Sanjay Kasliwal under
section 9 of the Act against present Appellant, which is a
public limited company and Respondent No.2 Jugalkishor
Tapadia. The learned Principal District Judge has granted
relief of injunction against the Appellant and Respondent
No.2 to prevent them from alienating in any way,
immovable property of Appellant company situated in
Hingoli, District Hingoli, till the dispute between
Respondent Nos.1 and 2 is adjudicated by Arbitral
Tribunal. One decree is already obtained by Buldhana
Urban Cooperative Housing Society against Respondent
Nos.1 and 2 and their Partnership for recovery of the
amount in respect of which the present proceeding is

filed and the said decree is put to execution in Regular
Darkhast No.339 of 2013. The learned Principal District
Judge has given option to Respondent No.2 to give bank
guarantee of the decretal amount in the said proceeding
for getting the present injunction relief vacated.
4. Respondent Nos.1 and 2 have entered into a
partnership agreement and the partnership came into
existence on 7th March, 2007. The name of the
partnership firm is M/s Kasliwal Empires and its place of
business is Aurangabad. The object of the partnership is
to make construction and develop housing project at
Satara area of Aurangabad. The Respondent Nos.1 and
2 have agreed to distribute profit and loss equally
between them. The other terms and conditions of
contract of partnership, which are relevant for the
present matter, can be found in clause Nos.7, 8, 10, 11,
12, 14 and 17. They are as under:
“7) It is agreed that drawings will be
allowed to all the parties out of surplus funds of
the firm. For this purpose the meaning of
“Surplus” is not profit but funds lying with the
firm after meeting expenses both capital and
revenue of the firm but before drawings of the
partners. Such drawings will be allowed
without hampering the day-to-day business of
partnership firm.
8) The accounts of the partnership firm
shall be taken annually on 31st March of every
year and at the end of every year the Profit and
Loss Account and Balance Sheet shall be
prepared and verified by all the partners and
thereafter a copy of which shall be supplied to
each partner.
9. ... ... ...
10. The bank account in the name of the
firm shall be opened with any nationalized,
commercial or co-operative bank as may be
agreed by the partners and all moneys,
cheques and other securities belonging to the
firm except those required for current
expenses shall be paid into or deposited with a
bank or bankers of the firm and bank account
shall be operated by anyone of the partners.
11. It is specifically decided that the
partnership shall be a specific partnership for
the object of completion of the housing project
at Satara, Aurangabad and that no partner
shall be allowed to retire before the completion
of project mentioned above unless the project

is completed or the claim of other partners is
mutually settled.
12. The firm shall not dissolve upon the
death, retirement or insolvency of any partner.
Upon dissolution it shall be wound up and the
assets and liabilities dealt with in accordance
with the provisions of the Indian Partnership
Act.
13. ... ... ...
14. That it is specifically decided that all
the documents whether registered or
unregistered for purchase/ sale/ lease etc. of
any immovable property flats, row houses or
any other tenements shall be signed and
executed by any one of the partners.
15. ... ... ...
16. ... ... ...
17. If any dispute or difference arises
between the parties hereto touching the
business of the firm or interpretation of any
provision hereof or otherwise, relating to the
firm and its business the same shall be referred
to arbitration and the arbitration shall be
governed by relevant Arbitration Act.”

5. In the application filed under section 9 of the Act by
Respondent No.1 Sanjay he contended that the
construction work of the project is going on, on Gat
No.74 situated at Satara. Sale deed in respect of this
property is got executed for the firm by Respondent
No.1. The area covered by the project is 23422.51
Sq.mtrs. The project is of construction of 248 units
comprising of 54 row houses, 2 independent bungalows,
24 twin bungalows and 168 flats. The land was
purchased for the consideration of more than 3 crore
rupees.
6. At Para No.4 of the application, filed under section
9 of the Act, Respondent No.1 Sanjay contended that the
firm has not obtained any loan or financial assistance
from any bank or financial institution. Thus, it is the
case of Respondent No.1 Sanjay that only the loan in
question, taken from Buldhana Cooperative Credit
Society, is taken by them but it is not specific case that
this loan was taken by the firm.
7. It is the case of Respondent No.1 Sanjay that he
has made investment of several crores of rupees in that

project but Respondent No.2 Jugalkishor has made
investment of negligible amount. It is the contention of
Respondent No.1 Sanjay that as on 31st March, 2013, as
per finalized balance sheet of this firm, the amount
receivable by Sanjay in his capital account is Rs.18.15
crore as against the amount received by Respondent
No.2 Jugalkishor in the same account of 3.61 crore.
Thus, it is the contention of Respondent No.1 Sanjay that
his investment is more by around Rs.14.5 crore.
8. It is the contention of Respondent No.1 Sanjay that
he and Respondent No.2 Jugalkishor had jointly obtained
loan of Rs.9 Crore from Buldhana Cooperative Credit
Society by giving security of the aforesaid project of the
firm. It is contended that the amount taken as the loan
was to be utilized by them for aforesaid project. It is the
contention of Respondent No.1 Sanjay that Respondent
No.2 Jugalkishor made him some representation and due
to trust reposed on Jugalkishor the amount of Rs.8 Crore
was transferred through R.T.G.S. method in the account
of present Appellant Company on 12th August, 2010.
9. It is the contention of Respondent No.1 Sanjay that

Jugalkishor is Managing Director of present Appellant
company and this company is under total control of
Jugalkishor. It is contention of Respondent No.1 Sanjay
that by using the amount of Rs.7 Crore from aforesaid
amount of Rs.8 Crore, the Appellant company has
purchased the immovable property in Hingoli. It is
contended that the remaining amount of Rs.1 Crore was
withdrawn by Jugalkishor for himself from the account of
the said company. The immovable property from Hingoli
is shown to be purchased for the consideration of
Rs.9.51 Crore under sale deed dated 30th December,
2013.
10. It is the case of Respondent No.1 Sanjay that the
aforesaid amount of Rs.7 Crore was directly paid to the
vendor, Nidhi Mercantile Limited and at that time
Appellant company was not having other amount in its
account. It is contended that these circumstances are
sufficient to infer that fraud was played by Jugalkishor on
him.
11. It is the case of Respondent No.1 Sanjay that
Jugalkishor committed default in making repayment of

aforesaid loan and due to that the Cooperative Credit
Society took action and decree is also obtained by the
society in respect of the loan of Rs.9 Crore. it is
contended that Regular Darkhast No.339 of 2013 is filed
by the said society for recovery of Rs.10.78 Crore. It is
contended that in view of aforesaid circumstances, the
property purchased at Hingoli by Appellant Company
needs to be treated as the property jointly owned by
Sanjay and Jugalkishor and so action needs to be taken
in respect of that property also.
12. Sanjay has informed about the other proceedings
pending between the parties and has contended that
with malafide intention and to block the property of
Kasliwal Empire firm, application No.414 of 2013 is filed
in District Court, Aurangabad by Jugalkishor. Sanjay has
contended that he has filed Arbitration Application No.12
of 2012 under section 11 of the Act in High Court for
appointment of Arbitrator. It is his case that in view of
the aforesaid circumstances, interim measures need to
be taken in respect of the property purchased by
Appellant company at Hingoli.

13. The Appellant company filed say in proceeding filed
under section 9 of the Act by Sanjay. Admittedly, it is a
public limited company, though it is not disputed that
the wife and other close relatives of Jugalkishor have
most of the share capital of this company and
Jugalkishor was Managing Director. Present appeal is
also filed by Jugalkishor on behalf of the company.
Following contentions were made for this company in
section 9 proceedings.
(i) That, Sanjay had filed proceeding under section
9 of the Act firstly in Aurangabad District Court
which was bearing No.103 of 2014 and similar
relief in respect of the same property was
claimed. It is the contention that in the said
proceeding Sanjay had applied for permission to
make present Appellant company party
respondent but this application was rejected and
this decision had become final. It is the
contention of Appellant company that the
District Court, Aurangabad had refused to give
relief against Appellant company in proceeding

No.103 of 2014 but this circumstance was not
disclosed in District Court, Parbhani by Sanjay.
(ii) That, Proceeding No.103 of 2014 filed by Sanjay
in District Court, Aurangabad was dismissed
though on the ground of territorial jurisdiction
and that decision became final. This
circumstance needs to be considered against
Sanjay.
(iii) Appellant company has no concern whatsoever
with the Partnership business done under the
name and style as “Kasliwal Empire” and
Appellant Company had no transaction at all
with the said partnership. Appellant Company
was also not party to Arbitration agreement
signed by Jugalkishor and Sanjay. So, the
proceeding cannot be filed against appellant
company under section 9 of the Act.
(iv) The money which was received by Jugalkishor
from the joint loan account of Jugalkishor and
Sanjay, was his personal amount and he had
credited that amount in the account of appellant

company. The company had treated that
amount as loan from Jugalkishor and the
account in respect of the said amount of
Jugalkishor was settled by the company and so
the property purchased in the name of Appellant
company is the property of Appellant company
and it is not the property of Jugalkishor.
Similarly, this property cannot be treated as
joint property of Jugalkishor and Sanjay.
(v) The property of Appellant Company cannot be
treated as subject matter for adjudication of
dispute, if any such dispute is referred to
Arbitral Tribunal.
(vi) That, only because Jugalkishor is the Director
and he was Managing Director for some time of
Appellant Company, inference is not possible
that the company is under his full control and
the property of the company belongs to him
alone. Some other legal defence were also
taken.
14. Both the sides produced so many documents

before the Principal District Judge, Parbhani. The
Principal District Judge, Parbhani has held for the
purpose of section 9 application, as follows:
(i) The loan obtained from Buldhana Cooperative
Credit Society was personal loan of Sanjay and
Jugalkishor and it was not the loan taken by
partnership firm.
(ii) For the loan of Rs.9 Crore, Jugalkishor and Sanjay
had mortgaged the property of Kasliwal Empire,
the firm to Buldhana Cooperative Credit Society.
(iii) The disputed property from Hingoli does not
belong to Kasliwal Empire or Sanjay Kasliwal but
the property belongs to present Appellant
Company.
(iv) Though the present Appellant Company is third
party to the aforesaid agreement, order under
section 9 of the Act can be made against the
Appellant Company as the money which was
taken by Jugalkishor from aforesaid loan amount
was also used for purchasing the disputed

property.
(v) Right of Sanjay may be frustrated and the
Arbitration proceeding, if any, started in future
may become infructuous if the property in
dispute from Hingoli is not preserved and this
property is affecting the subject matter of
Arbitration agreement.
(vi) Jugalkishor is a Director of present Appellant
Company and is also Partner of Kasliwal Empire
firm and so order can be made against Appellant
Company and also Jugalkishor.
15. The aforesaid portions of prima facie findings given
by the Principal District Judge show that even after
giving the findings on first four points in favour of
present Appellant Company the learned Principal District
Judge gave the order of injunction against the Appellant
Company. Further, when Buldhana Cooperative Credit
Society had no concern with the dispute going on
between Jugalkishor and Sanjay, indirectly relief is given
against the recovery which can be made by the said
society in aforesaid execution proceeding. The alternate

order shows that by giving bank guarantee of the
decretal amount, the Appellant Company can get the
injunction vacated. Nothing is said about the right of the
said credit society with regard to the bank guarantee.
Thus, the learned Principal District Judge has not
considered the consequences of at least alternate order.
16. The operative part of order made by learned
Principal District Judge, Parbhani, as interim measure
under section 9 of the Act is as under:
“01) Respondent Nos.1 and 2 are hereby
restrained from transferring, alienating and
creating third party interest over the property
purchased at Hingoli in the name of respondent
No.2 under registered sale deed No. 4912/2013
dt. 30/12/2013 as more specifically mentioned
in Schedule A of Exh. F pending the resolution of
dispute by Arbitrator.
02) If respondent No.1 furnishes bank
guarantee of the decretal amount in R. D.
No.339 / 2013 arising out of award No. ARB/
BUCCS/ 93/ 107/ 2012 The Buldana Urban
Co-op. Credit Society Vs. Jugalkishor Chhaganlal
Tapadiya and others the restraintment order
against respondent Nos.1 and 2 in clause (1) of

order will stand vacated automatically.
03) No order as to costs.”
17. It is already observed that the second part of
aforesaid operative order indirectly affects the rights of
one Credit Cooperative Society to recover its dues from
the firm and the two partners of Kasliwal Empire on the
basis of decree given to this society. Even when the
society was not party to the aforesaid proceeding,
indirectly, the Principal District Judge has asked the
society to accept the bank guarantee. The nature and
terms and conditions of the bank guarantee are not spelt
out by the learned Principal District Judge in this order
and so such order could not have been made against the
said society. It needs to be observed that this part of the
order is not binding on the said society.
18. The learned senior counsel appearing for
Respondent, Sanjay submitted that the relief which was
claimed and which is granted by the District Court falls
under section 9 (ii), (b), (d) and (e) of the Act and this
order is of the nature of temporary injunction. There
cannot be any dispute over this proposition.

19. In the case reported as (2007) 7 Supreme Court
Cases 125 [Adhunik Steels Ltd. V/s Orissa
Manganese and Minerals (P) Ltd.] the Apex Court
has laid down that in view of the nature of relief of
injunction mentioned in section 9 of the Act, the
provisions of Specif Relief Act, and also the provision of
Order 39 of Civil Procedure Code need to be considered
and used while deciding the application made under
section 9 of the Act. There cannot be any dispute over
this proposition. In section 9 of the Act itself, at the end,
it is made clear that for making the order under this
provision the Court shall have the same powers as it has
in any proceeding which comes before it. This implies
that the conditions laid down in the provisions of Specific
Relief Act and also Order 39 Rule 1 and 2 of Civil
Procedure Code need to be satisfied for getting the relief.
The burden is always on the applicant to satisfy the
conditions laid down, like prima facie case, balance of
convenience, and that irreparable loss will be caused to
him if the relief is not granted in his favour. All the three
conditions need to be fulfilled. Further, the relief being
discretionary relief, the conditions spelt out even in

Section 41 of Specif Relief Act need to be kept in mind
and only in a fit case the Court is expected to use the
discretionary power.
20. In the case reported as 2000 (4) Bom.C.R. 273,
Bombay High Court [Newage Fincorp (India) Ltd.
V/s Asia Corpn. Securities Ltd.] the guidelines are
given for dealing with the matters like present one by
this Court and they are as under:
(i) That in the event of withholding the relief
of interim measures he will suffer an
irreparable injury;
(ii) that in the event of his success in the
arbitration proceedings he will not have
the proper remedy, in being awarded
adequate damages;
(iii) that in taking into consideration the
comparative mischief of inconvenience to
the parties, the balance of convenience is
in his favour or in other words;
(iv) that his inconvenience in the event of
withholding the relief of interim measures
will in all events exceed that of the
respondents in case he is not granted
relief; and lastly;

(v) the petitioner must show a clear necessity
for affording immediate protection to his
alleged right or interest which would
otherwise be seriously injured or
impaired.”
21. Many technical and legal points are raised by the
learned counsel for the Appellant company and also by
the learned counsel representing Jugalkishor and on
those grounds the learned counsel submitted that the
District Court could not have granted the relief. This
Court is not addressing in detail so called technical
points. In view of the observations made by Honourable
Apex Court in the case of of “Adhunik Steels Ltd.” (cited
supra) this Court is considering the provision of section 9
of the Act, the material available in the present case and
for deciding the matter for the purpose of section 9 of
the Act.
22. It is already observed that it was necessary for
Sanjay to make out prima facie case. He was expected
to show that some serious issue is there which needs to
be tried in Arbitration. Admittedly, the property is
standing in the name of present Appellant Company and

it is situated at Hingoli. If Sanjay fails to make out a
case that such serious issue is involved, there is no
question of granting the relief of interim injunction in
respect of this property. When no prima facie case is
made out, no serious issue is shown as available for
arbitration, there is no question of considering the other
two conditions like balance of convenience, the
possibility of success of Sanjay in the matter which may
be taken before the Arbitrator and the case that
irreparable loss will be caused to Sanjay or Kasliwal
Empire.
23. The learned Principal District Judge, Parbhani has
held that the immovable property situated at Hingoli
belongs to present Appellant company and it is not
property of Kasliwal Empire or of its two partners like
Sanjay and Jugalkishor. However, the learned Principal
District Judge has observed that the property at Hingoli
affects subject matter of Arbitration. Let us see as to
whether the property involved in proceeding under
section 9 of the Act really affects the subject matter of
Arbitration. Section 9 of the Act is as follows:

“9. Interim measures, etc., by Court. - A
party may, before or during arbitral
proceedings or at any time after the making of
the arbitral award but before it is enforced in
accordance with section 36, apply to a Court:-
(i) for the appointment of a guardian
for a minor or a person of unsound mind for
the purposes of arbitral proceedings; or
(ii) for an interim measure of protection
in respect of any of the following matters,
namely:-
(a) the preservation, interim custody or
sale of any goods which are the subject-matter
of the arbitration agreement;
(b) securing the amount in dispute in
the arbitration;
(c) the detention, preservation or
inspection of any property or thing which is the
subject-matter of the dispute in arbitration, or
as to which any question may arise therein and
authorising for any of the aforesaid purposes
any person to enter upon any land or building
in the possession of any party, or authorising
any samples to be taken or any observations
to be made, or experiment to be tried, which
may be necessary or expedient for the

purpose of obtaining full information or
evidence;
(d) interim injunction or the
appointment of a receiver;
(e) such other interim measure of
protection as may appear to the Court to be
just and convenient,
and the Court shall have the same power for
making orders as it has for the purpose of, and
in relation to, any proceedings before it.”
24. The relevant portion of agreement of partnership
and the pleadings of Sanjay from pleading under section
9 of the Act are already quoted. The partnership is only
for one project and it cannot be dissolved by the
partners unless and until the project is completed. The
case of Sanjay shows that no loan is taken by this firm
for the project. The learned Principal District Judge has
also held on the basis of the record like sanction letter of
aforesaid credit cooperative society that, it was personal
loan of Sanjay and Jugalkishor and it was jointly taken by
them and it was not the loan given to firm Kasliwal
Empire.

25. The record shows that at the relevant time the
amount of around Rs.15 Crore had come to the joint
account of Jugalkishor and Sanjay. It needs to be kept in
mind that this was not the amount of firm. As per the
partnership agreement the firm is expected to keep its
money in account of the firm. Out of the amount of
Rs.15 Crore, the amount of Rs.8 Crore was transferred by
Jugalkishor and Sanjay jointly to Appellant Company by
using R.T.G.S. method. The account extract further
shows that these two partners then withdrew the
amount of more than Rs.3 crore each from this joint
account. From the other clauses of partnership
agreement, already quoted, it can be said that they had
made arrangement for distributing the money collected
even for partnership business even when if it was not
actual profit. The amount which was taken as loan
jointly by them, was given to Jugalkishor in the year
2010 and from the record it can be said that no dispute
was raised about this amount by Sanjay till the year
2014. These circumstances are sufficient to prima facie
show that the amount was given to Jugalkishor as per
the settlement between Jugalkishor and Sanjay and

Jugalkishor gave this amount to the Appellant company
for its use. The property from Hingoli was purchased for
the consideration of more than Rs.9 Crore and the
amount of 7 Crore rupees out of the amount of 8 Crore
given to Jugalkishor was used in this transaction of
Appellant company. There was no agreement of any
kind between the Appellant company and Kasliwal
Empire or between Appellant company and Sanjay in
respect of this amount. Thus, the inference is not
possible that Jugalkishor deceived Kasliwal Empire or
Sanjay by using this amount for Appellant Company.
There are many other circumstances in support of this
probability.
26. In the present proceeding, this Court had asked the
learned counsels of both the sides about the present
assets of Kasliwal Empire. Learned counsel for
Jugalkishor submitted that the value of the property of
Kasliwal Empire, at present, is more than Rs.100 Crore.
The learned Senior Counsel representing Sanjay
submitted that the value is around Rs. 90 Crore. Sanjay
has come with a case that no loan is taken by Kasliwal

Empire. The learned counsel for Jugalkishor submitted
that by mortgaging the property of Kasliwal Empire not
only the aforesaid amount of Rs.9 Crore was taken from
the Credit Cooperative Society but more loan amount, of
Rs.30 Crore was taken and that amount is passed to son
of Sanjay. Record like a letter given by this institution in
that regard is produced. On the basis of that record, the
learned Principal District Judge has given finding that
such other loan was also taken. Thus, by mortgaging the
property of Kasliwal Empire not only Jugalkishor has
taken the money but Sanjay and his son have taken the
money which is more than the amount taken by
Jugalkishor when Jugalkishor has equal share in the
partnership business of Kasliwal Empire. Due to these
circumstances, it is not possible for Sanjay to say that as
the property of the project is mortgaged for the amount
of Rs.8 Crore given to Jugalkishor, for securing that
amount, the property of Appellant company from Hingoli
needs to be considered in Arbitration proceeding.
Considering the value of the project of Kasliwal Empire
and aforesaid circumstances it cannot be said that there
was the necessity of taking of such security.`

27. Even if the case of Sanjay that he has made
investment of Rs.14.5 Crore more than the investment
made by Jugalkishor is accepted as it is, considering the
assets of Kasliwal Empire and the nature of agreement of
partnership, it cannot be said that Jugalkishor has
withdrawn more amount than his entitlement and so
there is no prima facie case on this point.
28. The learned counsel for Jugalkishor made a
statement with regard to security and gave list of the
properties owned by Jugalkishor. It was submitted for
Jugalkishor that, Jugalkishor is independently in a
position to discharge the entire liability in respect of the
aforesaid loan of Rs.9 Crore and for that he is ready to
give even the security of that amount to the cooperative
society. It is already observed that it is up to the society
to proceed against the property of Kasliwal Empire, or
the properties of both Jugalkishor and Sanjay and that
point cannot be considered in the present proceeding. In
the present case, it needs to be considered as to
whether it will be difficult to execute the Award, if any,
made by Arbitrator. Record produced by both the sides

show that prior to filing of the application in Parbhani
Court by Sanjay, proceeding was already started by
Jugalkishor under section 9 of the Act in District Court,
Aurangabad in respect of the property of Kasliwal
Empire. In that proceeding, the order of status-quo is
made and Sanjay is prevented from disposing of the
property of the Kasliwal Empire. When Sanjay also could
have gone against the property of Kasliwal Empire or the
property of Jugalkishor, if he had fear that the Award, if
any, given by Arbitrator will not be executable, he
preferred to go only against the property of Appellant
Company of which Jugalkishor is a Director. Probably
that company is under his control. There is clear
probability that Sanjay wanted to block the property of
this Company and stop the development activities of this
company.
29. The proceeding for appointment of Arbitrator was
filed in the year 2012 by Sanjay. It can be said that till
the year 2014 he never thought that the property of
Appellant Company has any relation with the business of
Kasliwal Empire. When the amount of Rs.8 Crore was

given in the year 2010, Sanjay took steps under section
9 of the Act in the year 2014. This circumstance also
speaks lot about the intention, it creates possibility that
the intention of Sanjay is to create pressure. Due to this
circumstance also the injunction needs to be refused.
Thus, no case is made out for balance of convenience in
respect of the property at Hingoli and it is not probable
that irreparable loss will be caused to Sanjay if appellant
company makes use of this property or disposes of the
property. The learned Principal District Judge has also
mentioned that Sanjay has not come to the Court with
clean hands. In spite of this observation, the learned
Principal District Judge granted the relief. It appears that
only due to circumstance that amount of Rs.8 Crore was
given to Jugalkishor from the joint account of Jugalkishor
and Sanjay and out of that amount the amount of Rs.7
Crore was used for Appellant Company for purchasing
the property at Hingoli, the learned Principal District
Judge thought that it is desirable that relief is given in
respect of this property. In view of the facts and
circumstances already mentioned, it is not possible to
believe that there is eminent danger of infringement of

legal or equitable rights of Sanjay. It can also be said
that Sanjay did not prosecute the matter filed for
appointment of Arbitrator in this Court and for more than
3 years the said matter is pending. Thus, on merits, the
learned Principal District Judge, Parbhani has committed
error in granting relief of injunction in respect of the
property of the present Appellant company.
30. The record of the accounts produced by the
Appellant Company showing the dealings between the
Appellant Company and Jugalkishor is sufficient to prima
facie show that this property belongs to Appellant
Company. The learned Principal District Judge ought to
have considered probability that by making such order it
was stopping development activity of the Appellant
company when the appellant company has no concern
with the business of Kasliwal Empire.
31. The learned counsel for the Appellant company
argued that some legal points with regard to the
provision of Section 9 of the Act also need to be
considered and they create such hurdles that it is not
possible to grant relief under section 9 of the Act in

favour of Sanjay. He submitted that those legal points
are not properly addressed by the learned Principal
District Judge. This Court is discussing those points
herein after.
32. The relief of injunction against a party (Appellant
company) who is not party to the Arbitration
agreement :- On this point, the learned counsel for the
Appellant Company took this Court through some
provisions of the Act and he cited some reported cases.
Other side also relied on the wording of provision of
Section 9 and on some reported cases. Section 9 of the
Act is already quoted. This provision is interpreted by
Honourable Apex Court and relevant cases are cited
hereinafter. The provision shows that condition for
getting relief under section 9 of the Act is that the
Applicant must be 'party' to Arbitration agreement. The
section does not prohibit giving of relief against a person
who is not a party to Arbitration agreement. Further, the
last sentence of this section like “the Court shall have
the same powers for making orders as it has for the
purpose of and in relation to any proceeding before it”

shows that the Court can use the provisions of Civil
Procedure Code against third party. On this point, the
case reported as (2007) 6 Supreme Court Cases 798
[Arvind Constructions Co. (P) Ltd. V/s Kalinga
Mining Corporation and others] can be referred.
33. The learned counsel for Sanjay placed reliance on
the case reported as 2010 (2) Mh.L.J. 657 [Girish
Mulchand Mehta and another V/s Mahesh S. Mehta
and another], In this case, this Court has held that
order under section 9 of the Act can be made against
third party. The facts of this case were different. There
was development agreement between a cooperative
housing society and a developer. There was Arbitration
clause in the said agreement. Few members of the
society, who were in minority, were against this
development agreement. A proceeding was filed under
section 9 of the Act by the developer against society and
its members as members were creating obstruction.
Receiver was appointed and then the property was
handed over to the developer under section 9 of the Act.
In this case, the Court held that though the person

objecting was not party to the agreement, as he had
become member of the cooperative society, he had lost
independent identity and he had no rights independent
of the society. It was observed that he had the rights
available only under the statute and bylaws of the
society. This Court referred the observations made by
Kerala High Court and made following observations, on
this point:
“12. The next question is whether order
of formulating the interim measures can be
passed by the Court in exercise of powers
under section 9 of the Act only against a party
to an Arbitration Agreement or Arbitration
Proceedings. As is noticed earlier, the
jurisdiction under section 9 can be invoked
only by a party to the Arbitration Agreement.
Section 9, however, does not limit the
jurisdiction of the Court to pass order of
interim measures only against party to an
Arbitration Agreement or Arbitration
proceedings; whereas the Court is free to
exercise same power for making appropriate
order against the party to the Petition under
section 9 of the Act as any proceedings before
it. The fact that the order would affect the
person who is not party to the Arbitration

Agreement or Arbitration Proceedings does not
affect the jurisdiction of the Court under
section 9 of the Act which is intended to pass
interim measures of protection or preservation
of the subject matter of the Arbitration
Agreement.
13. The appellants, however, place
reliance on the decision of the Kerala High
Court in the case of Shoney Sanil V/s M/s
Coastal Foundations (P) Ltd. and ors. reported
in AIR 2006 Kerala 206. In that case the
question considered was whether the writpetitioner,
admittedly, a third party to an
alleged Arbitral Agreement between the
respondents inter se, and who had in his
favour a confirmed Court sale and certificate
of such sale and delivery of possession,
following and arising under an independent
decree, could be dispossessed, injuncted or
subjected to other Court proceedings under
section 9 of the Act? The Kerala High Court
held that orders under section 9 (ii) (c) can be
passed only in relation to subject-matter of
dispute in arbitration which may be in
possession of any party since it is not the
intention of the Act or any arbitration
proceedings as conceived by the law of
Arbitration to interfere with or interpolate third

party rights. It concluded that on a plain
reading of section 9 of the Act and going by
the Scheme of the said Act, there is no room
to hold that by an interim measure under
section 9, the rights of third party holding
possession on the basis of Court sale could be
interfered with, injuncted or subjected to
proceedings under section 9 of the Act.
Instead, it held that section 9 of the Act
contemplates issuance of interim measures by
the Court only at the instance of party to
Arbitration Agreement with regard to the
subject-matter of the Arbitration Agreement.
The Court has, however, noted that such order
can be only against the party to an Arbitration
Agreement or at best against any person
claiming under him. The Principle expounded
in this decision is that if a third party has
independent right in the subject-matter of the
Arbitration Agreement, section 9 cannot be
invoked to affect his rights. At the same time,
the Kerala High Court has plainly opined that it
is possible to pass orders under section 9
against a third party if such person is claiming
under the party to the Arbitration Agreement.
Thus understood, section 9 can be invoked
even against a third party who is not party to
an arbitration agreement or arbitration
proceedings, if he were to be person claiming

under the party to the arbitration agreement
and likely to be affected by the interim
measures. The appellants herein will have to
substantiate that they were claiming
independent right in respect of any portion of
the subject-matter of the Arbitration
Agreement on their own and not claiming
under the respondent No.2 society who is
party to the Arbitration Agreement in absence
thereof, the Court would certainly have
jurisdiction to pass appropriate order by way
of interim measures even against the
appellants herein, irrespective of the fact that
they are not party to the Arbitration
Agreement or the Arbitration Proceedings.”
34. The aforesaid case was decided by Division Bench
of this Court. This case was subsequently referred in
many cases by Delhi High Court like the cases reported
as Manu/DE/1853/2013 [Citation: 2013(3)ARBLR52
(Delhi) - Dorling Kindersley (India) Pvt. Ltd. V/s
Sanguine Technical Publishers & Ors.],
MANU/DE/1914/2014 [Gatx India Pvt. Ltd. V/s
Arshiya Rail Inrastructure Limited] etc.
35. In the second case, order under section 9 of the Act
was made against Respondent No.2 company when

Respondent No.2 company was holding company of
Respondent No.1 company and there was Arbitration
Agreement between the Petitioner company and
Respondent No.1 Company. Under the deed of
guarantee, Respondent No.2 Company had guaranteed
payment of full of the amount due and payable to
petitioner by Respondent No.1 Company. In view of
these circumstances order was made against third party.
The observations made by Delhi High Court are at para
75 and they as as under:
“75. Respondent No.1 is a wholly owned
subsidiary of respondent No.2. It is not
uncommon that in cases where group
companies substantially constitute one
economic entity, the courts instead of going by
the separate legal entities of the companies,
have lifted the corporate veil, and looked at the
common economic entity of the group to which
they belong. In view of the facts of the case,
and the conduct of the parties as reflected from
the material on record, it does, prima facie,
appear that the respondents conducted their
affairs as constituents of the Arshiya Group.
Aslo, in as much, as, respondent no.2 has
undertaken to honour respondent no.1's

obligations towards the petitioner as its own
primary obligations, and the petitioner has a
right to claim from respondent no.2, the
amounts allegedly due and payable by
respondent no.1 under the lease, there is a
commonality of interest between respondent
No.1 and respondent No.2. Moreover, looking at
the dismal financial condition of respondent
No.1 as discussed hereinafter, a direction only
to respondent No.1 to furnish the required
security might not afford adequate protection to
the petitioner. Therefore, I am of the opinion
that the facts of the instant case are such that
orders under section 9 ought to be passed
against Respondent No.2.”
36. The learned counsel for Appellant company placed
reliance on a case of Delhi High Court like MANU/DE/
0380/2008 [Smt. Kanta Vashist and Ors. V/s Shri
Ashwani Khurana]. In this case, there was the
agreement between Smt. Kanta and Ashwani. There was
allegation against Ashwani that he had created 16
companies and relief was claimed to block the properties
of all the 16 companies to secure the amount which was
allegedly due to Smt. Kanta from Ashwani. Delhi High
Court held that these 16 companies were separate legal

entities, though they were family companies of Ashwani
and it was further held that it cannot be said that they
were parties to the Arbitration agreement only because
Ashwani, who was Director of the Companies, was
signatory to Arbitration Agreement with Smt. Kanta. In
another case, on which reliance was placed by learned
counsel for the Appellant Company like MANU/DE/
1906/2009 [Ajay Makhija V/s Dollarmine Exports
Pvt. Ltd. and Ors.] Delhi High Court held, on facts, that
there was no material for lifting of corporate veil.
37. Learned senior counsel for Sanjay placed reliance
on two more cases reported as (2000) 3 Supreme
Court Cases 312 [Subhra Mukherjee And Another
V/s Bharat Coking Coal Ltd. And Others] and
MANU/DE/ 0098/2005 [Goyal MG Gases Pvt. Ltd,.
V/s Air Liquide Deutschland GmbH and Ors.] of
Delhi High Court. On the basis of observations made,
learned counsel submitted that the learned Principal
District Judge, Parbhani has rightly pierced the veil of
incorporation of Appellant company to ascertain who is
the real owner. In the first case of Subhra Mukherjee

(cited supra) the Apex Court has held that “Court would
be justified in piercing the veil of incorporation to
ascertain true nature of transaction, the identities of
parties involved and to ascertain as to whether the
transaction was genuine and bonafide.” In the second
case of Goyal (cited supra) Delhi High Court has referred
a case of Apex Court and on observations that “Though
company is a legal personality entirely distinct from its
members and the company is entitled of enjoying rights
and being subjected to duties, in exceptional cases the
Court is entitled to lift the veil of corporate entity and
pay regard to the economic realities behind the legal
facade.” There are further observations of the Apex
Court that when group of companies constitute one
economic entity, the Court may instead of going by
separate legal entities of the companies, look at the
common economic entity of the group to which they
belong. There cannot be any dispute over the
propositions which are made by the Apex Court.
38. From the law laid down in aforesaid cases, by
Division Bench of this Court, the Apex Court and Delhi

High Court, the following deductions for the purpose of
use of section 9 of the Act are possible:
(i) Order under section 9 of the Act can be made
against a person who is not party to Arbitration
Agreement provided that prima facie case is made
out that subject matter or part of subject matter of
Arbitration is with the third party and the third
party has no independent right in respect of the
said subject matter. If the property in the hands
of third party affects subject matter of arbitration,
then also order can be made.
This follows that if the third party has prima facie
case that it is holding the property on its own and not
through party to Arbitration Agreement, such order
cannot be made. Further, if the property of the third
party has no concern with subject matter of the
Arbitration then also such order cannot be made against
third party.
(ii) If there is material, corporate veil needs to be lifted
by the Court to ascertain as to who is the real
owner of property. If the property belongs to party

to agreement, order can be made by presuming
that they are one economic entity.
In the present matter, in facts and circumstances of
the case, this Court has no hesitation to hold that Sanjay
has failed to make out the case that the property of
Hingoli of Appellant Company is subject matter of
Arbitration or it has any relation with the subject matter
of Arbitration.
39) Point:- Kasliwal Empire firm being unregistered
firm, whether the dispute can be referred to
Arbitral Tribunal when there is intention to
continue the partnership. This point refers to the
point of tenability of proceeding under section 9 of
the Act in such case.
This point has two parts. The first part is the effect
of non-registration on the rights of the partner. The
second part is about the further effect of non-registration
of the firm on the proceeding under section 9 of the Act.
This point also involves the point of the scope of
consideration of relevant points for such proceeding.

40. The aforesaid point has the base of provision of
section 69 of Indian Partnership Act, 1932 which gives
effect of non-registration. Relevant portion of section 69
is Section 69 (1) (2) and (3) and it reads, as under:
“69. Effect of non-registration. - (1) No suit
to enforce a right arising from a contract or
conferred by this Act shall be instituted in any
court by or on behalf of any person suing as a
partner in a firm against the firm or any person
alleged to be or to have been a partner in the
firm unless the firm is registered and the person
suing is or has been shown in the Register of
Firms as a partner in the firm.
(2) No suit to enforce a right arising from
a contract shall be instituted in any Court by or
on behalf of a firm against any third party unless
the firm is registered and the persons suing are
or have been shown in the Register of Firms as
partners in the firm.
(3) The provisions of sub-sections (1) and
(2) shall apply also to a claim of set-off or other
proceeding to enforce a right arising from a
contract, but shall not affect, -
(a) the enforcement of any right to sue
for the dissolution of a firm or for accounts of a
dissolved firm, or any right or power to realise

the property of a dissolved firm, or
(b) the powers of an official assignee,
receiver or Court under the Presidency-towns
Insolvency Act, 1909 (3 of 1909) or the
Provincial Insolvency Act, 1920 (5 of 1920) to
realise the property of an insolvent partner.”
(Underline added).
41. The basic case on the effect of non registration of
partnership firm is AIR 1964 SC 1882 (Jagdish
Chandra Gupta V/s Kajaria Traders India Limited).
This case was decided by 4 Honourable Judges of the
Supreme Court. The facts of the reported case show
that there was unregistered partnership agreement
between Jagdish Chandra and Kajaria Traders and it was
to supply Manganese ore to a party from New York. As
Jagdish Chandra failed to carry out his part of the
agreement, application under section 8 (2) of Indian
Arbitration Act, 1940 was made after following the
necessary procedure, for appointment of an Arbitrator.
Jagdish Chandra took defence that there was bar of
provision of section 69 (3) of Partnership Act, to such
proceeding. While allowing his objection, the Apex Court

laid down as follows:
(i) The expression “other proceeding” used in section
69 (3) of Partnership Act includes a proceeding filed
under section 8 (2) of Arbitration Act, 1940, for
appointment of Arbitrator.
(ii) The wording of section 69 (3) of Partnership Act like
“a right arising from contract” cover the proceeding filed
under section 8 (2) of Arbitration Act, 1940.
(iii) The ban given by section 69 (1) (2) applies against
the partner if he seeks enforcement of rights given
under partnership agreement and when he is not asking
for dissolution or for adjudication of dispute after
dissolution of the firm as mentioned in section 69 (3) (a)
of Partnership Act
42. The learned Senior Counsel for Sanjay placed
reliance on the case reported as (2004) 3 SCC 155
(Firm Ashok Traders and another V/s Gurumukh
Das Saluja and others). This case was decided by two
Honourable Judges of Supreme Court. The facts of this
reported case show that application was filed for

appointment of Receiver under section 9 of the Act by a
partner of unregistered firm. The learned counsels of
both sides agreed before Supreme Court to get the
decision of the appeal pending in Supreme Court de hors
the issue involved in the matter like “the effect of the
bar created by provisions of section 69 (1) (2) (3) of
Partnership Act to make order under section 9 of the
Act”. The Apex Court decided the matter due to such
agreement between the parties and made order under
section 9 of the Act. While making order, the Apex Court
said that it was giving prima facie opinion and the
following view taken by the Apex Court was tentatively
taken.
“The bar created by section 69 of the Partnership
Act does not affect the maintainability of application
under section 9 of the Act”.
43. The learned counsel for the Appellant Company
submitted that law was not laid down by the Apex Court
in Firm Ashok Trader's case (cited supra) in view of
aforesaid specific observations made by the Apex Court
and though the case of Jagdish Chandra (cited supra)

was referred, the law laid down in Jagdish Chandra's
case is not disturbed or interpreted. There is force in
this submission made by learned counsel for the
Appellant company.
44. On this point, there are cases of this Court also. In
the case reported as AIR 1994 Bom. Page 16
(Chandulal Hathibhai Shah V/s Champaklal
Ambalal Parikh) Division Bench of this Court relied on
the case of Jagdish Chandra (cited supra) and held that
the rights under section 20 of Arbitration Act, 1940
cannot be enforced when partnership is unregistered to
the extent mentioned in section 69 of the Partnership
Act. In the case reported as 2008 (5) Bom.C.R. 855,
Bombay High Court, (Oberoi Construction Pvt. Ltd.
V/s Warali Shivshahi Housing Society Ltd.) Division
Bench of this Court has held that in an application filed
under section 9 of the Act it is necessary for the Court to
decide, whether there is an arbitration agreement which
is valid in law and whether the dispute sought to be
raised is covered by that agreement? While laying down
this law, this Court referred and relied on the view

expressed by Honourable 6 Judges of Apex Court
(majority view) in the case reported as 2005 (8) SCC
618 [S.B.P. & Co. V/s Patel Engineering Ltd.]
45. On the aforesaid point, learned senior counsel for
Sanjay placed reliance on the case reported as
MANU/MH/1775/2010 (Ezra Victor Aboody V/s H.
Dhanrajgir Estate Pvt. Ltd.). The facts of this case
were altogether different. The partnership was
terminated and reference was to be made for damages
for repudiation of the partnership. Thus, this case is on
different point.
46. The learned senior counsel for Sanjay placed
reliance on another case reported as (2013) 15
Supreme Court Cases 414 (Arasmeta Captive
Power Company Private Limited V/s Lafarge India
Private Limited), the case decided by two Honourable
Judges of the Apex Court and submitted that the
objection available under section 69 (3) of Partnership
Act cannot be considered in proceeding filed under
section 9 of the Act. This submission is not at all
acceptable. In this case also, the Apex Court laid down

that application for appointment of Arbitrator can be
made under section 11 of the Act only if there is valid
Arbitration Agreement. However, it is observed that at
the time of appointment of Arbitrator, the issue like
Arbitrability of matter like “excepted matter” cannot be
dealt with. There cannot be any dispute over this
proposition.
47. The learned senior counsel for Sanjay alternatively
submitted that all the disputes can be referred to
Arbitrator and after the reference of the dispute, the
Arbitrator himself can decide the objection available
under section 69 (3) of Partnership Act. He placed
reliance on one case reported as (2012) 12 Supreme
Court Cases 581 (State of Goa V/s Praveen
Enterprises). The facts of this reported case were
altogether different and the point involved was also
different. The case was with regard to the entitlement to
make claims in respect of the dispute and limits in
relation to the claims made in the notice and it was also
in respect of entitlement of other side to raise claims
under counter claim.

48. On the power and duty of the Court dealing with
application under section 9 of the Act there are
observations of Apex Court in the case of Patel
Engineering (cited supra) and the observations of the
Honourable 6 Judges of the Apex Court at para No.18 are
as under:
“18, It is also not possible to accept the
argument that there is an exclusive
conferment of jurisdiction on the arbitral
tribunal, to decide on the existence or validity
of the arbitration agreement. Section 8 of the
Act contemplates a judicial authority before
which an action is brought in a matter which is
the subject of an arbitration agreement, on
the terms specified therein, to refer the
dispute to arbitration. A judicial authority as
such is not defined in the Act. It would
certainly include the court as defined in
Section 2 (e) of the Act and would also, in our
opinion, include other courts and may even
include a special tribunal like the Consumer
Forum (See Fair Air Engineers (P) Ltd. and
another V. N. K. Modi (1996 (6) SCC 385).
When the defendant to an action before a
judicial authority raises the plea that there is
an arbitration agreement and the subject

matter of the claim is covered by the
agreement and the plaintiff or the person who
has approached the judicial authority for
relief, disputes the same, the judicial
authority, in the absence of any restriction in
the Act, has necessarily to decide whether, in
fact, there is in existence a valid arbitration
agreement and whether the dispute that is
sought to be raised before it, is covered by the
arbitration clause. It is difficult to
contemplate that the judicial authority has
also to act mechanically or has merely to see
the original arbitration agreement produced
before it, and mechanically refer the parties
to an arbitration. Similarly, Section 9 enables
a Court, obviously, as defined in the Act, when
approached by a party before the
commencement of an arbitral proceeding, to
grant interim relief as contemplated by the
Section. When a party seeks an interim relief
asserting that there was a dispute liable to be
arbitrated upon in terms of the Act, and the
opposite party disputes the existence of an
arbitration agreement as defined in the Act or
raises a plea that the dispute involved was not
covered by the arbitration clause, or that the
Court which was approached had no
jurisdiction to pass any order in terms of
Section 9 of the Act, that Court has

necessarily to decide whether it has
jurisdiction, whether there is an arbitration
agreement which is valid in law and whether
the dispute sought to be raised is covered by
that agreement. There is no indication in the
Act that the powers of the Court are curtailed
on these aspects. On the other hand, Section
9 insists that once approached in that behalf,
-- the Court shall have the same power for
making orders as it has for the purpose of and
in relation to any proceeding before it”.
Surely, when a matter is entrusted to a Civil
Court in the ordinary hierarchy of Courts
without anything more, the procedure of that
Court would govern the adjudication [See
R.M.A.R.A. Adaikappa Chettiar and Anr. V. R.
Chandrasekhara Thevar (AIR 1948 P.C. 12).”
49. It is also laid down by the Apex Court in Patel
Engineering case, cited supra, that in the application
filed under section 11 of the Act the preliminary aspect
like existence of valid arbitration agreement needs to be
decided.
50. The aforesaid position of law shows that the larger
bench of the Apex Court in Jagdish Chandra's case (cited
supra) has laid down that the expression “other

proceeding” used in section 69 (3) of the Partnership Act
includes even the application filed under section 8 (2) of
Arbitration Act, 1940. In the case of Patel Engineering,
cited supra, the Apex Court has laid down that before
appointing Arbitrator under section 11 of the Act it is
necessary to consider the preliminary aspect like
existence of valid arbitration agreement. It is also laid
down that the court deciding the proceeding under
section 9 of the Act is also expected to consider the
existence of such agreement. When it is laid down that
reference of the dispute in a case, like the present one to
Arbitration, is not possible as such reference is barred,
this aspect needs to be considered in a proceeding filed
under section 9 of the Act and on this aspect the
applicant needs to make out prima facie case. The
Applicant needs to be necessarily “party” to the
agreement and so these aspects need to be considered.
51. Let us ascertain as to what is nature of the dispute
which Sanjay wants to refer to arbitration. This exercise
is necessary in view of the aforesaid position of law. The
definition of “Arbitration Agreement” can be found in

section 2 (1) (b) and section 7 of the Act. The provision
of section 7 of the Act shows that there can be
arbitration agreement (a) to submit all or certain
disputes to Arbitral Tribunal and (b) the dispute may
have arisen already before the making of the agreement
or may arise subsequent to the arbitration agreement.
The definition shows that the existence of “dispute” is
essential condition for appointment of Arbitrator. In view
of the position of law, already discussed the case of the
existence of dispute also needs to be made out to get
order under section 9 of the Act. It also needs to be kept
in mind that every dispute need not necessarily be
treated as a dispute giving cause of action for
Arbitration. Thus, the terms of reference are critical in
arbitration process. The 'dispute' and the terms of
reference need to be ascertained very cautiously when
there is objection like the objection available under
section 69 (3) of Partnership Act. When section 69 (3) of
Partnership Act has created a clear bar of referring some
disputes to Arbitration, it needs to be ascertained
whether the dispute raised is also barred due to this
provision, for reference. The provision of section 21 of

the Act can be referred in this regard.
52. The relevant clauses of partnership agreement are
already quoted. They show that the parties cannot put
to an end themselves to the contract unless the project
is completed. The submissions made and copy of
proceeding filed in this Court under section 11 of the Act
(Application No.12 of 2012) show the nature of dispute
which Sanjay has raised. There is a dispute that
Jugalkishor is not giving accounts of partnership firm to
Sanjay and the dispute has arisen between these two
partners regarding accounts of business of firm. As per
this record, Sanjay wants to settle this dispute amicably
and he wants to continue with the project and complete
it as provided under the agreement. Thus, Sanjay does
not want the relief of dissolution of the partnership in the
adjudication. Thus, the partnership is in existence and
Sanjay has no intention to go for dissolution of
partnership. In view of this nature of dispute raised by
Sanjay, this Court has no hesitation to hold that the bar
given by section 69 (3) of Partnership Act is applicable
against Sanjay and due to that even interim relief under

section 9 of the Act cannot be given.
53. Some other points were raised by learned counsel
for Appellant company and they are as under:
(I) That, the first application under section 9 of the Act
was filed in District Court, Aurangabad by Jugalkishor in
the year 2013 and so in view of the provisions of section
42 of the Act all the subsequent proceedings ought to
have been considered by District Court, Aurangabad.
The District Court, Parbhani had no jurisdiction over the
subject matter of Arbitration and in view of bar of
provision of section 42 of the Act, District Court, Parbhani
had no jurisdiction to make such order.
(II) The term “Court” mentioned in section 9 and 34 of
the Act is the District Court of the District where subject
matter is situated or where the cause of action arose. At
Hingoli, District Hingoli, there is District Court but Sanjay
filed proceeding in District Court, Parbhani and for that
reason also District Court, Parbhani had no jurisdiction
over the matter.
(III) The first application under section 9 of the Act was

filed by Sanjay in District Court, Aurangabad only against
Jugalkishor. The application filed by Sanjay to allow him
to make Appellant Company party respondent to the
proceeding was rejected by District Court, Aurangabad
and that order has become final. In view of this
circumstance, it was not open to Sanjay to implead
Appellant company again in a proceeding filed under
section 9 of the Act.
54. There is force in all the aforesaid contentions made
for the Appellant company. This Court has considered
the main legal challenges extensively and the decision
on those points is sufficient for decision of the present
matter. There is no need to discuss the aforesaid
circumstances in detail and those circumstances are
matter of record.
55. In view of the discussions made above this Court
holds that the order under challenge cannot sustain in
law. In the result, the appeal is allowed. The judgment
and order of the Principal District Judge is hereby set
aside. The application filed under section 9 of the Act by
the present Respondent, original applicant, stands

rejected. Relief of temporary injunction stands vacated.
The learned senior counsel for the Respondent Sanjay
submitted that he wants to challenge the decision of this
Court in Supreme Court. So, for four weeks the order
made by the Principal District Judge to continue.
56. In view of final disposal of the Arbitration Appeal
itself the pending civil applications, if any, also stands
disposed of.
 [T.V. NALAWADE, J.]
Dt.03/12/2015

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