Remedy under an order under Section 9 A & C Act is similar to Order 39 CPC #indianlaws

Grant or refusal of an interim measure of protection by way of an ad-interim order under Section 9 of the Act is, thus, an appealable order under Section 37

The question that arose before the Court was that how any order passed by the Court in an application to it under Section 9 of the Arbitration and Conciliation Act, 1996 (the Act) is not an order passed under Section 9 by reason of the Court having exercised powers under Order 39 Rule 1 of the Code of Civil Procedure. The present appeal was filed against the order passed on an application under Section 9 of the Arbitration and Conciliation Act, 1996 whereby application for appointment of Court Receiver of the business and assets of the partnership firm was rejected.

Appellants and Respondents were partners in a partnership firm that was initially formed by three brothers. The two Appellants were the widow of two partners and Respondents were the sons of third partner. Appellants alleged Respondent of attempting to utilise the partnership assets for his personal benefit at the cost of the partnership business. The firm was dissolved vide dissolution notice and the Appellants invoked the arbitration agreement forming part of the Deed of Partnership and suggested appointment of a sole arbitrator. Pursuant to disputes and differences, an arbitration application under Section 9 of the Act was filed by the Appellants wherein an ad-interim injunction order was passed against the Respondents restraining them from withdrawing any amount from the partnership account except under joint signatures of the Appellants. However, the application for appointment of Court Receiver was rejected which was the subject matter of present appeal.

The Court observed that while entertaining an application under Section 9 of the Act, the Court has the same power for making orders as it has for the purpose of and in relation to any proceeding before it. This is on the principle that when a power is conferred under a special statute and on an ordinary court of land without laying down any special condition for exercise of that power, the general rules of procedure of that court would apply. Thus, every order by the District Court under Section 9, whether ad-interim or interim, is passed by using powers of the Court which are ordinarily exercised while deciding an interlocutory application before it. These include powers under Order 39 or well recognised principles for exercise of such powers. The order passed by the court in an application made to it under Section 9 of the act by exercising such powers is very much an order passed under Section 9, and is appealable under Section 37 of the Act. Grant or refusal of an interim measure of protection by way of an ad-interim order under Section 9 of the Act is, thus, an appealable order under Section 37. There is nothing in law which requires the life of such an order to extend beyond the pendency of the proceeding under Section 9.

In regard to the present matter it was held that the partnership was at will. The receipt of dissolution notice was not disputed and after dissolution of a partnership firm, the partners cannot exercise their rights with respect of the partnership firm except for the purposes of winding up of the business of the partnership firm. In order to protect and preserve the assets and the business of the partnership firm pending winding up of the affairs of the firm and settlement of accounts between partners, it is ordinarily necessary that a Receiver is appointed of such business and assets.

After the service of dissolution notice, Respondent has no right to carry on business of the partnership either on account of the partners or his own account and in view of the factual circumstances it was an error committed in not granting an ad-interim receiver.

[Perin Hoshang Davierwalla & Anr. vs. Kobad Dorabji Davierwalla & Ors.]
(Bombay HC, 07.05.2014)