Soumitra Sen, J.@mdashThe Petitioner Rashmoy Das has taken out this application u/s 9 of the Arbitration and Conciliation Act, 1996, inter alia, praying for an order of injunction restraining the Respondents from dealing with and/or alienating and/or encumbering and/or parting with possession in respect of certain properties which according to the Petitioner belongs to the partnership firm the Respondent No. 5 herein Hahnemann Laboratory (India).
2. When the application was moved ad interim order was passed on January 28, 2004 and on February 5, 2004.
3. The main dispute appears to be in respect of a property situated at Patna. It was contended on behalf of the contesting Respondents that the said property was a lease hold property of one Rewati Ranjan Das who was the predecessor in interest of the Respondent Nos. 2, 3 and 4. It was submitted that the said property never belonged to the partnership firm and was a lease hold property of late Rewati Ranjan Das.
4. The Respondent Nos. 2, 3 and 4 have filed an application for vacating an interim order. Both the applications u/s 9 and the application for vacating are taken up together for hearing.
5. On behalf of the Respondents it was submitted that the said late Rewati Ranjan Das by a deed of lease dated January 14, 1966 obtained a lease of the land being premises No. 11G, Pataliputra Path, Rajendra Nagar at Patna (hereinafter referred to as the said premies) from the Patna Improvement Trust for a period of 99 years with effect from August 17, 1965.
6. In accordance with the provisions of the said deed of lease wherein allegedly a right to construct a residential commercial building was given, a building was constructed their act on the leasehold land.
7. At all material times, late Rewati Ranjan Das along with his family members resided at the said premises and had also let out the ground-floor thereof. The said premises stands recorded in the Municipal Records in the name of late Rewati Ranjan Das.
8. It was submitted that the building was constructed by late Rewati Ranjan Das out of his own funds the lease retails by all along paid by Rewati Ranjan Das in his personal capacity. No part of the partnership funds was used for construction of the building nor the building has been brought into the till of the partnership firm.
9. The contesting Respondents further submitted that although the head office of the Respondent No. 5 being the partnership firm was shown to be at the said premises but it was done only to facilitate correspondence with the partnership firm that by itself does not establish that the property was a partnership property. In support of the said contention reference was made to the Balancesheet of the firm as on March 31, 1999 to show that the said property was not reflected as an asset of the partnership firm.
10. It was further submitted that the interim orders were obtained without serving the contesting Respondents. The appearance of one Sanjoy Chattapadhyya as the Advocate for the Respondents was also disputed. It was alleged the said Sanjoy Chattapadhyya was never engaged by the contesting Respondents on their behalf and that the said Sanjoy Chattapadhyya while appearing on behalf of the Respondent No. 1 had submitted before the Court that he was appearing on behalf of the Respondents.
11. The partnership firm had three partners - late Rewati Ranjan Das, Ranjit Kumar Das and the Petitioner Rashmoy Das. All the three partners are brothers being, sons of one late Dr. Radha Ranjan Das. In the application u/s 9 the Petitioner has alleged that the partnership firm had set up factories for production of Homeopathic and Allopathic medicines at Govind Mitra Road at Patna and also at the said premises. It was also stated in the petition that the ground-floor and first-floor of the said premises were used as factory and a store room of the firm and that substantial stock of mater-ials and equipments and sophisticated machinery of the firm are still lying there. By disclosing the deed of partnership entered Into between the three partners it was sought to be pointed out that the said premises was described as the head office of the partnership firm.
12. The Petitioner has also filed a supplementary affidavit wherein it was contended that a separate licence has been issued by the Drug Controller both for the premises Govind Mitra Road as well as the said premises for manufacturing specific homeopathic medicines. The copies of the licence in respect of the said premises for manufacturing certain homeopathic medicines have also been disclosed. Various other evidences were sought to be disclosed showing that the said premises was used as the factory of the partnership firm.
13. It was also contended on behalf of the the Petitioner that the said premises was actually a joint family property and that late Rewati Ranjan Das had no individual business or source of income save as a partner of the firms belonging to the family or as a director of the family companies. It was contended that the building at the said premises was built with joint family funds. It was also contended that there are several pending litigation as between the parties and in one of such proceedings various properties were sought to be valued in order to arrive at an amicable settlement as between the parties from the list of assets which was submitted by late Rewati Ranjan Das and the Respondent No. 1 Ranjan Kumar Das it would appear that the said premises was included as a part of the joint family property. It was submitted that the said premises was sought to be valued and such value was included for the total division of the properties that itself would indicate that the said premises did not solely belong to Rewati Ranjan Das.
14. Various evidences have been relied upon on behalf of the both sides. On behalf of the Petitioner an attempt was made to show that the said premises was a part of the partnership properties and on behalf of the contesting Respondent No. 2, 3 and 4 attempt was made to show that the said premises was an individual property of late Rewati Ranjan Das and that it did not belong to the partnership firm. This is an application u/s 9 and for the purpose of granting an interim order till the final adjudication of disputes by an arbitrator only a prima facie view is required to be formed. The strict proof of evidence and evidenciary value of the documents disclosed in this proceeding need not be minutely scrutinized and the Court at this stage is only required to form a prima facie view.
15. The legal question which has been raised for adjudication before me is as to what constitute a partnership property and whether the legal heirs of a deceased partner not intending to join the partnership firm can be enjoined in the arbitration proceeding.
16. With regard to the first question the definition as to what constitute the property of the firm as defined under the Indian Partnership Act, 1932 is required to be looked into. Section 14 of the Partnership Act defines partnership property as follows:
Section 14. The property of the firm. Subject to contract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm or acquired, by purchase or otherwise by or for the firm, or for the purposes and in the course of the business of the firm and includes also the godwill of the business.
Unless the contrary intention appears, property and rights and interest in property acquired with money belonging to the firm are deemed to have been acquired for the firm.
17. Therefore, from the said definition it is clear that all properties, rights and interest of the property if brought into the stock of the firm or acquired by purchase or otherwise by and/or behalf of the firm or for the purpose and in course of the business of the firm would be considered to be a partnership property. The language of section is wide enough to include properties, which does not necessarily form a part of the assets as disclosed in the Balancesheet of the partnership firm. Even if a property is used for the benefit of the firm in some explicit manner then subject to the contract as between the parties the said property would be included and/or considered to be a partnership property. It was, however, sought to be contended on behalf of the contesting Respondents that the agreement of partnership relied upon by the Petitioner is a forged document. It was contended that the signature of late Rewati Ranjan Das has been forged in the said document. The said contention cannot be decided except by leading cogent evidence. Moreover, even if the said partnership deed is ignored for the time being, there are other evidences to show that the said premises was indeed used for the purpose of the partnership firm. The definition of the partnership property as defined under the Indian Partnership Act is similar to what has been defined and/or explained by Lord Lindley who has defined partnership property in the following manner:
Whatever at the commencement of a partnership is thrown into the common stock and whatever has from time to time during the continuance of the partnership been added thereto on obtained by means thereof, whether directly, by purchase or circuitously by employment in trade, belongs to the firm, unless the contrary can be shown.
18. The important thing is to find out the intention of the partners. If the partners agree that an individual property belonging to one partner shall remain out of the partnership till then it is required to be expressed by an agreement express or implied. Therefore, the persons may be entitled jointly or in common to a property and the same persons may be partners and yet that property may not be a partnership property. Moreover, the mere fact that the property in question was purchased by one partner in his own name is immaterial if it was paid out of the partnership funds. In such a case the said partner will be deemed to hold the property in trust for the fund, unless he can show that he holds the said property for himself alone.
19. The contention of the partner that the property was purchased by the joint family funds can always be rebutted upon production of proper evidence.
20. The decision of Miles v. Clarke 1953 (1) All. E.L.R. 779 was cited on behalf of the contesting Respondents in support of the proposition that all properties with which business is carried out does not automatically belong to the partnership. In the case of Miles v. Clarke 1953 (1) All. E.L.R. 779 it was held that in absence of any agreement, except for the consumable stock, which was actually used in the business, all other assets should be treated as being the property of the partner who brought them in. I have already indicated that what forms the property of the partner, would depend upon facts of each case. For the purpose of an application u/s 9 of the Arbitration and Conciliation Act, 1996, for the purpose of passing an interim order the Court is only required to form a prima facie view.
21. From the records disclosed in this proceeding there are sufficient materials on which the Court can come to a reasonable prima facie view that the properties which is the subject matter of this application was used for the partnership business.
22. The decision of
23. On behalf of the contesting Respondents it was submitted that they being the legal heirs of the deceased partner, Rewati Ranjan Das having not joined the partnership business, therefore, they are not bound by the terms of the partnership deed, which contains the Arbitration Clause. The death of one partner does not obliterate the Arbitration Clause in the agreement, it survives. The said principle is contained in Section 6 of the Arbitration and Conciliation Act, 1996.
24. The object of Section 6 appears to me is to keep the arbitration agreement alive and not to have the same revoked or render the same nonest on the death of any of the parties to the arbitration. Therefore, an Arbitration Clause can also be enforced against the legal representative or a deceased partner who was a signatory to the said Arbitration Clause. This view is supported by the decision of
25. For the reasons as aforesaid the interim order passed hereby confirmed both the applications u/s 9 and the applications for vacating interim order are disposed of accordingly.
