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TMI Blog2023 (11) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... amount in dispute in arbitration and proceeded to hold that the Court exercising such power should not withhold relief if a strong prima facie case is made out and the balance of convenience is in favour of an interim order. The facts and circumstances which were presented before the learned arbitrator or were disclosed in fits and spurts by the appellant/surviving partners fully justify the impugned interim order dated 17.4.2023. There can be no jurisdictional objection to the impugned order as the Act of 1996 grants the arbitral tribunal plenary powers to pass such orders for preserving the dispute in the arbitration. The order also does not suffer from any factual or legal infirmity and is certainly not arbitrary or perverse. The Court is accordingly of the view that the impugned order does not call for any interference - Application dismissed. - MOUSHUMI BHATTACHARYA, J. For the Appellant : Abhrajit Mitra, Sr. Adv., Sarvapriya Mukherjee, Snehashis Sen, Shounak Mukherjee and Sourav Ghosh, Advs. For the Respondent : Ratnanko Banerji, Sr. Adv., Kumarjit Banerjee, Sanchari Chakraborty, Tanishka Khandelwal and Aadil Naushad, Advs. JUDGMENT MOUSHUMI BHATTACHARYA, J. 1. The present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the respondent no. 1/claimant and the appellants in context of the claimant's prayer for directing the appellants to set apart Rs. 6,41,73,413.00/-being the total balance pertaining to Pawan Kumar Churiwal's shares (the father of the claimant) as on 12.1.2021, the learned arbitrator was of the view that the claimant and/or the other legal heirs of the deceased partner, Pawan Kumar Churiwal are entitled to accounts and a share in the profits in the LLP. The appellants were accordingly directed to keep a sum of Rs. 6 crores apart in a separate interest bearing account in the name of the LLP. The appellants were also directed to furnish the particulars of accounts to the claimant and to maintain the accounts till disposal of the arbitration. Arguments of the appellant/LLP and the remaining partners : 6. The appellant is Concrete Developers LLP, within the meaning of the Limited Liability Partnership Act, 2008 and was the respondent no. 1 in the arbitration. Learned counsel appearing for the appellant seeks to challenge the impugned interim order on several grounds, the first of which is that the impugned order is contrary to several sections of The Arbitration and Conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LLP and that the impugned order aims to preserve the value of the share of the deceased partner. Decision 11. The entire factual matrix of the appeal revolves around an interim order passed by the learned sole arbitrator in the application filed by the respondent no. 1/claimant under section 17(1) of the 1996 Act. The facts leading to the claim filed by the respondent no. 1 have been briefly stated in the first part of this judgment and are not being repeated. The respondent no. 1's prayer in the arbitration was for drawing up of the accounts of the partnership business in which the respondent no. 1's deceased father, Pawan Kumar Churiwal, was the single-largest share-holder and one of the three designated partners of the LLP. 12. Pawan Kumar Churiwal held 33.40% shares in the LLP at the time of his demise on 12.1.2021. The claimant prayed for his induction in the LLP under clause 22(v) of the LLP Agreement. The appellant and the remaining partners (the Sureka Group) refused to induct the respondent no. 1 as a partner in place of his father. The respondent no. 1 accordingly filed the statement of claim as well as the application for interim relief in the circumstances. 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a sum of Rs. 1.28 crores is adjusted against Rs. 7.70 crores, a sum of Rs. 6.41 crores would still stand to the credit of the deceased partner (the father of the respondent no. 1).The impugned order also reflects the figure of Rs. 6,41,73,413.00/-. 18. Clause 22(v) read with clause 22(i) of the LLP Agreement shows that the deceased partner had right, title and interest in the existing inventory and assets of the LLP. Hence 1/3rd of the share of assets of the deceased partner at the time of demise would work out to be Rs. 7.70 crores. Moreover, Rs. 6.4 crores would be the value of the share of the deceased partner at the time of his demise upon adjustment of the negative balance. This would be the case even if the argument of negative balance made by the appellant and the other partners is accepted to be correct. 19. The learned arbitrator has taken the amount of Rs. 6.41 crores as the rightful entitlement of the respondent no. 1 being the legal heir of the deceased partner. The arbitrator accordingly directed a sum of Rs. 6 crores to be kept in a separate interest bearing account of the LLP as a measure of protection to the respondent no. 1 until his induction as a partner in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as sufficient evidence before the learned arbitrator of creation of revenue amounting to almost Rs. 38 crores during the pendency of the arbitration on account of sale of the 8 remaining flats after the death of the claimant's father, Pawan Kumar Churiwal in the project which was being developed by the partnership firm. vi) The affidavit-in-reply of the claimant also carried the evidence of the proceeds from the sale of flats being transferred and accredited to the transfer accounts. The appellant and the surviving partners sought to explain the aforesaid as repayment of short-term loans from partners. 23. The above instances further buttress the basis of the order for preserving whatever assets of the LLP remained as on 17.4.2023 till conclusion of the arbitration. It is of significance that the impugned order is an interim order without having any finality attached to it. 24. The above facts within which the impugned order was passed would hence dislodge the grounds taken by the appellant and the surviving partners for challenging the impugned order. The appellant says that the impugned order is contrary to section 28(3) and other provisions of the 1996 Act since there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is interfered with. 29. Further, a section 37 Court is required to be less nosey on facts and less willing to interfere with interim orders for the asking also for the reason which follows. The court must be circumspect in an appeal under Section 37(2)(b) of the 1996 Act : 30. The discussion on this aspect requires Section 37(2)(b) to be set out. 37. Appealable orders.-(2) Appeal shall also lie to a court from an order of the arbitral tribunal- (b) granting or refusing to grant an interim measure under section 17. 31. An appeal challenging an order passed by the arbitral tribunal granting/refusing an interim measure of protection under Section 17 of the 1996 Act is not in the nature of a first appeal. The court will hence be bound within the embargo under Section 5 of the 1996 Act which contains a general bar on judicial intervention in matters governed by Part I of the Act. Apart from Section 5, the court must also bear in mind that an order passed by the arbitral tribunal under Section 17(1) is essentially an order on exercise of discretion. 32. Section 17(1) confers power on an arbitral tribunal to grant interim measures of protection in equal measure as that to a court under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 34 of the Act. The norm should be surface-scratching and not deep-drilling into the factual well of the matter. 36. A comparison in this regard may be made to a section 34 Court where the Court would similarly be confined to the grounds of patent illegality or perversity for setting aside of an award. It would also be important to bear in mind that an interim order of protection fits snugly into Section 17(1)(ii)(a) to (d) within the almost limit-less powers conferred on the arbitral tribunal to grant such other interim measure of protection as may appear to the arbitral tribunal to be just and convenient [17(1)(ii)(e)]. Therefore, the appeal court should take a hands-off approach to any jurisdictional objection to an interim order passed by the arbitral tribunal. 37. This would be the advisory, with a statutory high-five, where the effect of the interim order is clearly of a temporary nature. The Court would have to assess whether the interim order would cause irrevocable prejudice to the appellant so as to frustrate the appellant's claim/defence altogether and render the arbitration inconsequential. There are several decisions including that of Dinesh Gupta vs. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akes such orders subject to Order XXXVIII Rule 5 of the CPC. Apart from the fact that this position has substantially been diluted by later decisions of the Supreme Court, the present matter does not involve any order of attachment. Shiv Kumar Sharma vs. Santosh Kumari (2007) 8 SCC 600 held that a court of law cannot exercise its discretionary jurisdiction de hors the statutory law. Jai Balaji Industries Ltd. vs. Hyquip Systems Pvt. Ltd.; (2010) 4 CHN 87(Cal) was a case of unliquidated damages which is totally distinguishable from the present case. Secretary and Curator, Victoria Memorial Hall vs. Howrah Ganatantrik Nagrik Samity (2010) 3 SCC 732 is an exposition on reasons being the hallmark of an order and fundamental to the administration of the justice-delivery system. The impugned order in the present case is replete with reasons. 41. The facts and circumstances which were presented before the learned arbitrator or were disclosed in fits and spurts by the appellant/surviving partners fully justify the impugned interim order dated 17.4.2023. There can be no jurisdictional objection to the impugned order as the Act of 1996 grants the arbitral tribunal plenary powers to pass such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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