Vivek Slaria vs. Neeraj Tyagi
Original PDF →Facts
The petitioner, Vivek Slaria, and the respondent, Neeraj Tyagi, were equal partners in a firm named M/s Greenlatte, established by a Partnership Deed dated 30.11.2013. Disputes arose due to the respondent's alleged refusal to share 50% of the firm's liabilities, including unpaid statutory dues (GST and TDS) and third-party dues totaling Rs. 71,36,951/- since January 2020. The petitioner claims the respondent misused partnership funds, siphoning Rs. 24 lacs to her personal account. Despite sufficient funds in the partnership account, liabilities remained unpaid, leading to a tax notice for GST registration cancellation and subsequent suspension of the GST registration due to non-filing of returns. The petitioner invoked arbitration, proposing an arbitrator, but the respondent did not consent.
Held
The Court held that it has the power to appoint a sole arbitrator under Section 11(5) of the Arbitration and Conciliation Act, 1996, to adjudicate the disputes between the parties arising from the Partnership Deed dated 30.11.2013. The disputes, as presented by the petitioner, involve significant financial liabilities, including GST and TDS, and alleged misuse of partnership funds, which are arbitrable matters. The Court noted that the parties had prayed for the appointment of a sole arbitrator. Consequently, the Court appointed Mr. Justice (Retd) V.K. Jain as the sole Arbitrator to adjudicate the disputes. The arbitration proceedings are to be conducted under the Delhi International Arbitration Centre (DIAC), and the arbitrator's fee will be as per DIAC Rules. The Arbitrator is also directed to ensure compliance with Section 12 of the Arbitration and Conciliation Act, 1996, before commencing arbitration. No issues were expressly left undecided.
Key Issues
1. Whether the Court has the power to appoint a sole arbitrator to adjudicate disputes arising from a partnership deed, specifically concerning financial liabilities including GST and TDS, under Section 11(5) of the Arbitration and Conciliation Act, 1996? Petitioner's arguments: The petitioner contended that disputes regarding the non-payment of statutory dues (GST and TDS) and third-party liabilities, as well as alleged misuse of partnership funds, fall within the scope of arbitration as per the Partnership Deed. The respondent's refusal to cooperate and pay her share of liabilities necessitated the invocation of arbitration. The petitioner sought the appointment of a sole arbitrator to resolve these financial and operational disputes. Respondent's arguments: The respondent did not provide specific arguments against the appointment of an arbitrator in the judgment. However, their communication dated 27.10.2020 indicated a lack of consent for the arbitrator proposed by the petitioner.
Sections Cited
Section 11(5), Section 12
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
J U D G M E N T (oral)
Present petition has been preferred under Section 11(5) of the Arbitration and Conciliation Act, 1996 seeking appointment of sole arbitrator to adjudicate the disputes between the parties with regard to the Partnership Deed dated 30.11.2013. 2. As per the version of petitioner, petitioner and respondent, who are said to be husband and wife, were equal partners of M/s Greenlatte, a partnership firm arising out of a partnership deed dated 30.11.2013, whereunder both the partners have an equal share in the net profit, loss and ARB.P. 190/2021 all other liabilities of the firm.
It is submitted by the petitioner that due to extreme incompatibilities between petitioner and respondent, respondent has refused to take responsibility of her 50% share in the liabilities of the firm. The present dispute between the parties is with regard to non-payment of statutory (GST and TDS) and third-party dues of the partnership firm which add upto Rs.71,36,951/- and remain unpaid since January 2020. 4. As per version of petitioner, respondent misused partnership fund in connivance with Mr.Sinkul Tyagi, her relative, by siphoning off Rs.24 lacs from partnership fund account to her personal account thereby violating clause 6 of the Partnership Deed. As a precaution, petitioner sent a letter to Branch Manager, HDFC Bank on 22.01.2020 requesting them to stop all debits from partnership account and to only permit debit after mutual consent of both petitioner and respondent.
It is further submitted that petitioner time and again sought cooperation in paying GST, TDS and third-party dues of the firm which respondent refused to do. Moreover, respondent also refused to pay her 50% share of the abovesaid dues. Further submitted that due to the non- cooperation of respondent, the petitioner is suffering everyday and as a ARB.P. 190/2021 result, despite having sufficient balance in the partnership bank account amounting to Rs.1,15,80,102/-, has been unable to discharge liabilities of the firm. Petitioner situation further worsened having received tax notice dated 22.12.2020 for cancellation of GST registration by the Assistant Commissioner of State Tax. Also, petitioner served notice to the respondent for payment of outstanding financial governmental liabilities on 12.10.2020 which the respondent denied and ultimately, GST registration was suspended on account of non-filing of GST returns for a continuous period of six months.
It is pleaded on behalf of the petitioner that vide notice dated 23.10.2021, petitioner invoked arbitration under clause 18 of the Partnership Deed and appointed Mr.Harsh Jha, Advocate sole arbitrator and invited respondent to give confirmation to the same. In reply thereof, respondent vide its communication dated 27.10.2020 did not give her consent for the appointment of Mr.Harsh Jha, Advocate being the sole arbitrator.
During the course of hearing, learned counsel for the parties prayed this Court to appoint sole arbitrator to adjudicate the disputes between the parties.
Accordingly, Mr. Justice (Retd) V.K. Jain (Mobile: 9650116555) is ARB.P. 190/2021 appointed sole Arbitrator to adjudicate the dispute between the parties.
The arbitration shall be conducted under the Delhi International Arbitration Centre (DIAC).
The fee of the Arbitrator shall be in accordance with the Schedule of Fees prescribed under the Delhi International Arbitration Centre (DIAC) (Administrative Cost and Arbitrators Fees) Rules, 2018. The learned Arbitrator shall ensure compliance of Section 12 of Arbitration and Conciliation Act, 1996 before commencing the arbitration.
With aforesaid directions, the present petition is accordingly disposed of.
A copy of this order be sent to the learned Arbitrator as well as Delhi International Arbitration Centre (DIAC) for information.
(SURESH KUMAR KAIT) JUDGE OCTOBER 26, 2021 ab
Reproduced from the public record of the Delhi High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.