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TMI Blog2003 (9) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... Second respondent is holding 40% shares and he is also, a joint Managing Partner of the firm. Third respondent, like the petitioner, is holding 20% of the shares. Investment of the petitioner as well as third respondents in the firm in Rs. 3,21,700. There is overdraft facility of Rs. 15 lakhs for the firm. For facilitating the same, properties of respondents 1 to 3 are hypothecated. Contention of the petitioner is that accounts are not properly maintained in the firm for the year 2000-2001 and actual income and expenses reflected in the account books are not correct. Funds of the firm are misappropriated by respondents 1 to 3. So, petitioner wants to ascertain his share of profit for the period 2000-2001. It is not disputed that petitioner has requested for arbitration of the above dispute and that was accepted by the respondents. According to him, Rs. 45 lakhs is due to him as his share of profit for the year 2000-2001. He also stated that there is loss of trust reposed on the Managing Partners and, therefore, a Receiver should be appointed. He further stated that as his share of profit for the year 2000-2001, he was given only Rs. 50,000 for the full year. If he is a appointed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: " 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 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 observation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent as per section 21 of the Act. The material words occurring in section 9 are before or during the arbitral proceedings. his clearly contemplates to stages when the Court can pass interim orders, i.e., during the arbitral proceedings or before the arbitral proceedings. There is no reason as to why section 9 of the 1996 Act should not be literally construed. Meaning has to be given to the word before occurring in the said section. The only interpretation that can be given is that the Court can pass interim orders before the commencement of arbitral proceedings. Any other interpretation, like the one given by the High Court will have the effect of rendering the word before in section 9 as redundant. This is clearly not permissible. Not only does the language warrants such an interpretation but it was necessary to have such a provision in the interest of justice. But for such a provision no party would have a right to apply for interim measure before notice under section 21 is received by the respondent. It is not unknown when it becomes difficult to serve the respondents. It was, therefore, necessary that provision was made in the Act which could enable a party to ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that prima facie he has a strong case and an excellent chance of succeeding in the suit. The court will be slow to deprive a person of his de facto possession unless it is satisfied that the property is exposed to danger and loss and the person in possession has obtained it through fraud or force. "The high prerogative act of taking property out of the hands of one and putting it in pound under the order of the Judge ought not to be taken except to prevent manifest wrong imminently impending": Crawford v. Rose, 39 Ga 44 (quoted in Krishnaswamy v. Thangavelu AIR 1955 Mad. 430, 435). The conduct of the party seeking the appointment of the receiver is a relevant consideration in the exercise of this discretion. He who comes to equity must come with clean hands. As stated by Atkinson, J. in Dozier v. Logan 101 Ga. 173: The appointment of a receiver is recognized as one of the harshest remedies which the law provides for the enforcement of rights and is allowable only in extreme cases and in circumstances where the interest of the creditors is exposed to manifest peril. (quoted in AIR 1955 Mad. 430, 435). " Appointment of a Receiver is the hard step to be taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no contention that there is a wastage of the property of the bar and restaurant and the business will be destroyed if the present management is being continued. It is the case of the respondents that the petitioner did not join to renew the licence and, in fact, he had written to the Excise officials questioning the renewal of licence. Therefore, his intention is not to conduct the business or the protection of the business; but, just the opposite. 8. It is further contended that while pointing out the value of the liquor purchased had sold, petitioner has not adverted to the stock in trade as per the accounts for 2001-2002. For previous years, only lesser profit was given and petitioner had no objection for the same. For the year under attack, more profit was received by the petitioner and sale bills produced by the petitioner were not genuine. We are not concerned with the merits of the case here; but, only with the prima facie case and bona fides . We have already stated, Receiver can be appointed for interim protection of the property and it is an equitable remedy. The court below has given very valid reasons in rejecting the application for appointing a receiver. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration clause in the agreement and notice under section 21 is received by the other party, section 9 can be invoked. Existence of a valid arbitration agreement between the parties is a sine qua non for attracting jurisdiction under section 9. ( ii )An order passed under section 9 is appealable whether petitions are allowed or dismissed. Therefore, even though application for appointment of receiver filed by the petitioner is dismissed, the appeal is maintainable. ( iii )The interim order under section 9 is discretionary in nature and equitable in character and the Court has to be satisfied that there is a prima facie case and there is bona fides in the application and balance of convenience is in favour of issuance of interim direction as prayed for. But, such discretion has to be exercised judiciously. ( iv )The list of interim measures for protection given in sub-clause ( a ) to ( d ) of section 9( ii ) is not exhaustive as sub-clause ( e ) indicates other interim measures for protection also can be ordered, if Court is satisfied that they are just and convenient reasons. Power of Court under section 9( ii ) is wider than the powers under the old Act and power of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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