Case Note & Summary
The Arbitration Petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenges an arbitral award dated 1st August 2006. The petitioner, Nina Anil Shah, was a partner in M/s. Chitralekha Builders. The respondent, Kusum Bhaskarrao Gorule, was also a partner. Disputes arose between the partners, leading to arbitration. The arbitral tribunal passed an award declaring the firm dissolved as on 15.7.1004 (which appears to be a typographical error for 15.7.2004), holding that the suit property (CTS No.727 at Sorojini Naidu Road, Mulund) was not an asset of the firm, and directing the claimant to pay the respondent 50% of expenses from Rs.62,18,324/- with interest. The petitioner challenged the award on grounds of patent illegality and violation of natural justice. The court found that the tribunal had dissolved the firm on a date not claimed by any party and had failed to consider the partnership deed and other evidence regarding the suit property. The court also noted that the tribunal had not given the petitioner an opportunity to be heard on these issues. Consequently, the court set aside the award and remanded the matter back to the arbitral tribunal for fresh consideration. The court also disposed of the connected notices of motion and chamber summons.
Headnote
A) Arbitration Law - Setting Aside Arbitral Award - Section 34 of Arbitration and Conciliation Act, 1996 - Patent Illegality - The arbitral tribunal declared the firm dissolved as on 15.7.1004, a date not claimed by any party and which appears to be a typographical error, and also held that the suit property was not an asset of the firm without considering the partnership deed and other evidence. The court held that the award suffers from patent illegality and is liable to be set aside (Paras 1-10). B) Partnership Law - Dissolution of Firm - Section 48 of Indian Partnership Act, 1932 - The tribunal dissolved the firm on a date not pleaded by any party and without proper accounting. The court held that the award is contrary to the terms of the partnership deed and the provisions of the Partnership Act (Paras 5-8). C) Natural Justice - Violation of Principles - The tribunal failed to give the petitioner an opportunity to be heard on the issue of dissolution date and the status of the suit property. The court held that this amounts to a violation of natural justice (Paras 9-10).
Issue of Consideration
Whether the arbitral award dated 1st August 2006 is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on grounds of patent illegality and violation of natural justice.
Final Decision
The court allowed the Arbitration Petition, set aside the arbitral award dated 1st August 2006, and remanded the matter back to the arbitral tribunal for fresh consideration. The connected notices of motion and chamber summons were disposed of accordingly.
Law Points
- Section 34 of Arbitration and Conciliation Act
- 1996
- Patent illegality
- Violation of natural justice
- Dissolution of partnership
- Partnership property
- Section 14 of Indian Partnership Act
- 1932
- Section 48 of Indian Partnership Act
