2. This is an application under Section 34 of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as the 'said act'). The sole Arbitrator has
made and published his award on April 2, 2025 in AP/400/2023. The
3. The petitioner is the claimant. The prayers in the statement of claim were
e. Appointment of Receiver till the disposal of the
Arbitral Proceedings;
f. Grant leave to and add, to alter or to amend the
Statement of Claims as may be deemed or to bring
new point(s) and/or evidence(s) documentary or
otherwise before or during the course of hearing
before the Learned Arbitrator;
g. Grant leave to reply to the Counter Statement of
Claims, if any, to be filed before it by the
Respondents;
h. Grant leave to allow Claimant to be represented by
Counsel in all hearings;
i. Pass such other order or orders as the Learned
Tribunal may deem fit and proper."
4. The petitioner is aggrieved by the said award on the various grounds. First,
that the learned Arbitrator did not consider the evidence on record while
holding that the petitioner's claim as 50% partner cannot be granted to the
petitioner. The award was opposed to public policy. The award was totally
based on presumption. In view of the pendency of the criminal revisional
application before the High Court, a receiver should have been appointed to
run the partnership business, till the dispute was resolved. The
remuneration to be paid to the petitioner for the assessment year 2024-2025
towards share of her father's entitlement had been left out. The report of the
private expert engaged by the petitioner to examine the handwriting of the
father (TKD), was not taken into consideration.
5. Mr. Das, learned advocate for the petitioner submits that the learned
Arbitrator erred in holding that the petitioner could not claim to be 50%
partner in respect of the partnership business although she was the sole
heir and legal representative of TKD, (one of the two partners), by holding
that, a competent court of law was yet to determine whether TKD's signature
in the supplementary partnership deed, by which Nikhil Sen, the respondent
no.2 (NS) had been inducted as one of the partners was forged or not. It is
further contended that a receiver should have been appointed till such time
this issue was resolved by a competent court of law instead of allowing NS
and Kalyan Dey (KD) to continue the partnership business upon inducting
the petitioner as 1/3rd partner in place of her 50% share in the partnership
business. It is further submitted that the deposition of SK, i.e., the
petitioner's husband, was misconstrued. The ITR forms of TKD which were
filed would clearly indicate that signature of TKD was forged. They were
distinct and different from the actual signature of TKD. According to Mr.
Das, failure on the part of the arbitrator to consider relevant evidence and
the propensity of the learned Arbitrator to rely on deposition of KD and NS
would render the award as partial and also perverse. Perversity was a good
ground for setting aside the award.
6. It is further submitted that the document obtained under the Right to
Information Act from the Central Public Information Officers, State Bank of
India ought to have been considered. The certificate submitted by NS with
regard to the account maintained with the State Bank of India and the
names of the partners appearing therein, was not genuine. The said
document was not issued by the State Bank of India. Had the learned
Arbitrator considered the said evidence, it would be abundantly clear that
the contention of NS that he was inducted as a partner in the business by
the supplementary deed of partnership, was false. Non-consideration of this
aspect goes to the very root of the award and as such, the award should be
set aside.
7. Having considered the submissions of Mr. Das, this Court now proceeds to
deal with the issue as to whether the award suffers from perversity or patent
illegality on the face of it, which will persuade this Court to set aside the
same. The scope of interference with an arbitral award is very limited.
8. The learned Arbitrator recorded the submissions of the respective parties
and framed the following issues:
" i) Whether PK is entitled to the reliefs claimed by
her on the basis of her contention that the
Supplementary Deed of 2018 carries a forged
signature of the late TKD and accordingly, she is
entitled to 50% share of the business of the Firm
based on the Original Deed of 1992?
ii) Whether the Respondents, i.e. KD and NS, are
correct in contending that PK is entitled to only
33.33% share as a partner of the Firm based on
the Supplementary Deed?
iii) To what other relief or reliefs is PK entitled, if
any?"
9. At first, the Arbitrator addressed the allegation of forgery of the signature of
TKD in the supplementary deed of partnership. The petitioner's claim was
that the supplementary deed was not a genuine document as TKD's
signature had been forged. Thus, NS was never inducted as the partner.
TKD and KD were the only partners. Taking advantage of the demise of TKD,
NS was inducted illegally by KD by forging the signature of TKD in a
fabricated document, with a prior date. The petitioner's case is that she is
the only legal heir of TKD. Upon demise of TKD, in terms of the clause of the
original partnership deed, she should be 50% partner in the partnership
business. The learned Arbitrator held that the issue as to whether TKD's
signature was forged or not, was sub-judice. On the one hand, there was a
report of a private forensic examiner who tendered evidence on behalf of
petitioner, claiming the signature to be forged, but on the other hand, there
was a report of the official investigating agency which had concluded the
investigation upon direction of the High Court. It was found by the examiner
of the Questioned Document Department that the signature of TKD in the
supplementary deed of partnership when compared to other admitted
signature of TKD, was by one and the same person. The police complaint
was closed by citing mistake of fact. The said official report was accepted by
a competent court i.e., the learned ACMM, Kolkata. A Narazi Petition was
filed by the petitioner. The Narazi Petition was dismissed by the learned
ACMM and the said order is now under challenge in the criminal revisional
application. The learned Arbitrator gave primacy to the report filed by the
Anti-Fraud Section, Lal Bazar of the Kolkata Police which was accepted by a
competent Court of Law. Thus, it was held by the Arbitrator that the
allegation of forgery had not been proved and till such time the said
signature was not found to be forged, the petitioner could only claim to be
one-third partner along with KD and NS. Thus, the relief granted to the
petitioner was that she should be treated as 33.33% partner in the
partnership business on and from April 1, 2025 and the status of the
petitioner as 50% partner would change only if the competent Court of law
had found that TKD's signature was forged and the supplementary deed of
partnership was not genuine.
10. The Arbitrator discussed the facts. The said supplementary deed came into
existence on April 3, 2018. TKD was alive for three financial years following
the said deed and expired in May 2021. The deposition of SK, the witness
No.2 for the petitioner had been considered. He had deposed that the
signature of TKD in the ITR form of the firm for the assessment year 2019-
2020 was not his genuine signature. However, from the balance-sheet and
profit and loss accounts for the financial years 2018-2019, 2019-2020,
2020-2021 and 2021-2022, it emerged that TKD was allocated his share of
remuneration, interest on capital and share of profits for the said four
financial years. Although, there was nothing on record to show that TKD
had consented to receive one-third share of allocation for the financial years'
corresponding to his life time but from an analysis of the accounts of the
firm, it could be seen that the apportionment of the shares of partners on
50% basis was between the financial year 2014-2015 and 2017-2018
whereas, the said apportionment was on one-third basis from the financial
year 2018-2019 to financial year 2023-2024. The entire calculation in
support of the apportionment had been depicted by the learned Arbitrator by
way of charts.
11. The learned Arbitrator further noticed that the annual turnover of the firm
rose from Rs.4.43 crores to Rs.5.86 crores and then to Rs. 7.15 crores. The
rise in business corresponded to the positive performance of the business as
testified by both KD and NS. The evidence of KD also corroborated such
fact. NS also testified that the daily sales of the firm could range between a
minimum of Rs.10,000/- per day to a maximum of Rs. 3 lakhs per day,
depending upon the season and the demand from customers.
12. The fact that the firm was prospering would be evident from the testimony
of both KD and NS. The long hours that they were working, the sponsorship
of foreign trips that they were getting for meeting the target customers etc.
have been elaborately discussed to show that the partnership business was
a going concern and was doing very well. Such findings, in my opinion, are
matters of fact, of which the Arbitrator is the master. Moreover, considering
the progress in the business and the rise in the turnover after of TKD's,
demise the tribunal rightly did not grant prayers (d) and (e) of the statement
of claim. As KD did not file his ITR statements, learned Tribunal analysed
the balance sheet and profit and loss accounts of the firm which were filed
by KD through his learned Advocate. From an analysis of the said profit and
loss account of the firm for the financial years after the death of TKD, that
is, between financial year 2022-2023 and 2023-2024, it emerged that each
of the existing partners enjoyed three benefits, i.e., Remuneration, Return
on Capital and Share of Profits. In terms of the amendment to Clause 07 of
the Original Deed as introduced by the supplementary deed only active
partners participating in the business of the firm would be entitled to draw
remuneration governed by Section 40(b) of the Income Tax Act, 1961. After
the death of TKD, only KD and NS withdrew remuneration, marking the
remuneration of TKD as Nil. The remuneration withdrawn by KD and NS for
the said two financial years has been extracted in the form of another chart.
13. It was argued that no remuneration was marked against TKD for the
aforementioned financial year on the premise of lack of participation in the
firm by his legal heir, i.e., the petitioner. However, the learned Arbitrator
came to a conclusion that it was important to note that the petitioner may
not have had access to the business because of the challenges she had
thrown to the genuineness of the signature of TKD in the supplementary
deed. The learned Arbitrator did not allow full remuneration for the financial
years 2021-2022, 2022-23 and 2023-24 when KD and NS had taken their
shares of remuneration but had allowed the petitioner Rs.13,48,750/- for
the corresponding financial years 2021-22, 2022-23 and 2023-24, i.e, for
the period when TKD had expired and his remuneration had been marked
Nil. With regard interest on capital and share of profit for the financial years
2021-2022, 2022-2023 and 2023-2024, Rs. 30,78,005/- had been awarded
to the petitioner. How the figures were arrived at, has been specifically
discussed by the learned Arbitrator in the following paragraphs of the
award:-
"O) Furthermore, Balance Sheets/Profit & Loss Accounts of FYs 2022-2023
and 2023-2024 would show that KD and NS had apportioned themselves
Interest on Capital and Share of Profits in the following manner:-
Financial Kalyan Dey Nikhil Sen
Year
Interest on Share of Profits Interest on Share of Profits
Capital Capital
2022-2023 563709 318667 411693 318667
2023-2024 711171 539526 527683 539526
P) It would also appear from a look at Chart I (supra) that for the said FYs
2022-2023 and 2023-2024, the Interest on Capital for the late TKD was
shown as Rs. 5,64,250/- and Rs. 6,27,367/- respectively, whereas the
Share of Profits of the late TKD, presumably calculated at 33.33% or one-
third Partner, stood at Rs. 3,18,667/- and Rs. 5,39,526/- respectively.
However, none of the aforestated amounts pertaining to Interest on Capital
and Share of Profits was paid to PK, presumably again due to the pendency
of this dispute.
Q) The total entitlement of the late TKD adding Remuneration, Interest on
Capital and Share of Profits for Fys 2021-2022, 2022-2023 and 2023-2024
following his death in May, 2021 was Rs. 10,29,235/- Rs. 8,82,917/- and
Rs. 11,66,893/- corresponding to 35.24%, 21.25% and 16.54% as a
percentage on Profits (see Chart IV) (supra). From another look at Chart IV
(supra), it would be evident that while the late TKD enjoyed 50% share of
Profit between FYs 2014-2015 to 2017-2018, the same stood at around
36.64%, 35.34%, 38.53% and 35.24% for FYs 2018-2019 to 2021-2022, i.e.
roughly corresponding in his lifetime as one-third share, before dropping to
21.25% and 16.54% in FYs 2022-2023 and 2023-2024 after his death. This
drop in the Share of Profits can be attributed to the fact that while KD and
NS remunerated themselves handsomely at Rs. 8,29,502/- and
Rs.12,00000/- each for FYs 2022-2023 and Fys 2023-2024 treating
themselves to the active partners, TKD'share of Remuneration was marked
NIL. At this stage it would be relevant to note that for FYs 2014-2015 to
2017-2018, the then partners, i.e, TKD and KD, had foregone their
respective claims on Interest on Capital, which, as per procedure, they are
entitled to forego on the premise that the Firm has not generated profits to
persuade the partners to withdraw Interest on Capital.
R) It is evident that both KD and NS decided to make full use of the
Amendment to Clause 07 to the Original Deed of 1992 by the alleged
Supplementary Deed of 2018, by allocating the Remuneration to themselves
only for FYs 2022-2023 and 2023-2024 following the death of TKD. At the
same time, each of them has suppressed the fact of the heavy
Remuneration drawn by them to the tune of Rs. 8.29 Lakhs and Rs. 12
Lakhs each annually in their evidence before this Tribunal and only stated
that they withdrew a meagre sum of Rs. 24,000/- per month each as
Remuneration.
S) This Tribunal of the view that till the Supplementary Deed is proved not
to be fake having not been prepared on the basis of an alleged forged
signature, PK, being unable to obtain access to participating in the Firm'
business, will be entitled to draw Remuneration at Rs. 4 lakhs and Rs. 6
lakhs each, i.e 50% of the Remuneration drawn by KD and NS, for FYs
2022-2023 and 2023-2024 respectively. In addition, following the death of
TKD in May, 2021 PK would also be entitled to her late father' share of
Remuneration standing at Rs. 3,48,750/- corresponding to FY 2021-2022.
T) Therefore, as on the date of this Award, PK will be entitled to receive
total Remuneration as the succeeding Partner in the Firm to the share of
TKD assessed at 13,48,750/- corresponding to FYs 2021-2022, 2022-2023
and 2023-2024. This will be paid to PK by the Respondents for the Firm
within two weeks from the date of this Award, failing which the said sum
will carry an interest at 12% per annum till actual payment."
U) On and from 1st April, 2025, PK will be entitled to participate as an
active partner in the Firm holding one-third share, with the modalities of
such day-to-day participation to be actually worked out by the three
partners, i.e. PK, KD and NS.
V) Additionally, PK shall be entitled to the late TKD' share of Interest on
Capital and Share of Profits for FYs 2021-2022, 2022-2023 and 2023-
2024, i.e. following his death in May, 2021 and starting from the close of FY
2021-2022 on 31st March, 2022 and starting from 1st April, 2021,
cumulatively assessed at Rs. 10,29,235/-, Rs. 8,82,917/- and
Rs.11,66,893/- respectively (see Chart IV (supra)). The total entitlement
therefore of PK both towards Interest on Capital and Share of Profits for FYs
2021-2022, 2022-2023 and 2023-2024 stands at Rs. 30,78,005/- to be
paid by KD and NS for the Firm, also within two weeks from the date of this
Award, failing which such amount shall carry an interest at 12% per annum
till actual payment.
14. Moreover, the finding on the issue that only after final adjudication as to
whether the signature of the petitioner was forged, her case of being 50%
partner could be established is correct. The learned Tribunal had kept that
issue alive and open. Thus, the contention of Mr. Das that the learned
Tribunal did not peruse the vital evidence on record, is not accepted. The
balance-sheet and profit and loss account were examined and analysed and
a calculation was made as to how the petitioner being the sole legal heir of
TKD should be treated as 1/3 partner with 33.33% share in the
remuneration and interest on share of capital and profit, during the period
when she was litigating against KD and NS as the heir of TKD. Although
only active partners were entitled to remuneration, but upon considering
that the petitioner may not have been able to participate as an active
partner because she had challenged the deed, the learned Arbitrator had
directed payment. I do not find any patent illegality in the award.
15. In the matter of McDermott International Inc. v. Burn Standard Co. Ltd.,
reported in (2006) 11 SCC 181, the Hon'ble Apex Court held as follows:-
"59. Such patent illegality, however, must go to the root of the matter.
The public policy violation, indisputably, should be so unfair and
unreasonable as to shock the conscience of the court. Where the
arbitrator, however, has gone contrary to or beyond the expressed law of
the contract or granted relief in the matter not in dispute would come
within the purview of Section 34 of the Act. However, we would consider
the applicability of the aforementioned principles while noticing the
merits of the matter."
16. In Rashtriya Ispat Nigam Ltd. vs Dewan Chand Ram Saran reported in
(2012) 5 SCC 306, the Hon'ble Apex Court held that the Court cannot
interfere with the award and substitute its view with the interpretation
accepted by the arbitrator. The reason being that, the Court does not sit in
appeal over the findings and decision of the arbitrator, while deciding an
application under Section 34 of the said Act. The arbitrator is legitimately
entitled to take a view after considering the material before him/her and
interpret the agreement. The judgment should be accepted as final and
binding. The findings here are based on adequate evidence and the view
expressed is a possible view.
17. In the matter of ONGC Ltd. vs Western Geco International Ltd. reported
in (2014) 9 SCC 263, the Hon'ble Apex Court held that the Arbitral Tribunal
must apply its mind to the attending facts and circumstances while taking
the view one way or the other. Non-application of mind is a defect that is
fatal to any adjudication. Application of mind is best done by recording
reasons in support of the decision. This award is well reasoned.
18. In the decision of Associate Builders vs DDA reported in (2015) 3 SCC 49,
the Hon'ble Apex Court elaborately examined the question of public policy in
the context of Section 34 of the Act, specifically under the head
"fundamental policy of Indian Law". It was held that the principles of
juridical approach demand a decision to be fair, reasonable and objective.
On the other side, anything arbitrary and whimsical would not satisfy the
said requirement. There is no way that this court can hold that the award is
either arbitrary or capricious.
19. In State of Haryana vs Gopi Nath & Sons reported in 1992 Supp (2) SCC
312 it has been held that apart from the cases where a finding of fact is
arrived at by ignoring or excluding relevant materials or by taking into
consideration irrelevant materials, the finding of an arbitrator cannot be
perverse and infirm in law. Such is not the case here. The award does not
defy logic.
20. In OPG Power Generation Private Limited vs. Enexio Power Cooling
Solutions India Private Limited and Another reported in 2024 SCC
OnLine SC 2600. Scope for interference with an arbitral award was
discussed in paragraph 68 and 69 which are quoted below:-
"Scope of interference with an arbitral award
68. The aforesaid judicial precedents make it clear that while exercising power
under Section 34 of the 1996 Act the Court does not sit in appeal over the arbitral
award. Interference with an arbitral award is only on limited grounds as set out in
Section 34 of the 1996 Act. A possible view by the arbitrator on facts is to be
respected as the arbitrator is the ultimate master of the quantity and quality of
evidence to be relied upon. It is only when an arbitral award could be categorised as
perverse, that on an error of fact an arbitral award may be set aside. Further, a
mere erroneous application of the law or wrong appreciation of evidence by itself is
not a ground to set aside an award as is clear from the provisions of sub-section (2-
A) of Section 34 of the 1996 Act.
This extract is taken from OPG Power Generation (P) Ltd. v. Enexio Power Cooling
Solutions (India) (P) Ltd., (2025) 2 SCC 417 : 2024 SCC OnLine SC 2600 at page
69.In Dyna Technologies [Dyna Technologies (P) Ltd. v. Crompton Greaves
Ltd., (2019) 20 SCC 1, paras 27-43] , a three-Judge Bench of this Court
held that courts need to be cognizant of the fact that arbitral awards are not
to be interfered with in a casual and cavalier manner, unless the court
concludes that the perversity of the award goes to the root of the matter and
there is no possibility of an alternative interpretation that may sustain the
arbitral award. It was observed that jurisdiction under Section 34 cannot be
equated with the normal appellate jurisdiction. Rather, the approach ought
to be to respect the finality of the arbitral award as well as party's autonomy
to get their dispute adjudicated by an alternative forum as provided under
the law."
21. In Steel Authority of India Limited versus M/s TLT Engineering India
Private Limited and Anr., the Hon'ble Court held that, a court exercising
jurisdiction under Section 34 of the said Act, cannot undertake an
adjudication and supply reasons in support of an award or supplement the
reasons of the arbitral tribunal. In this case, the court is not required to
justify the findings arrived at by giving additional reasons and
interpretations to make the award sustainable.
22. In Dyna Technologies Private Limited vs. Crompton Greaves Limited
reported in (2019) 20 SCC 1, a Three-Judge Bench of the Hon'ble Apex
Court held that the jurisdiction under section 34 of the said Act could not be
equated with the normal appellate jurisdiction. Rather, the approach would
be to respect the finality of the arbitral award as well as the party's
autonomy to get the dispute resolved by an alternative forum as provided in
law. In the said decision, the Hon'ble Apex Court also held that the award
was amenable to challenge if no reasons were recorded or the reasons
recorded were unintelligible, improper and revealed a flaw in the decision
making process. The scope of interference of the courts on the interpretation
or the construction of the contract by the tribunal was also discussed in the
said decision and it was held that the Courts should not interfere when the
view of the arbitral tribunal on the terms of the contract was a possible view.
It was further observed that the arbitral Tribunal had the jurisdiction to
interpret a contract having regard to the terms and conditions of the
contract, conduct of the parties, the correspondences exchanged,
circumstances of the case and pleadings.
23. Lastly, the need is to ensure that the decision is neither perverse nor
irrational and that no reasonable person would have arrived at the same or
the same could not be sustained in a court of law.
24. This is not a case where the petitioner's claim was not considered. The
petitioner was given due hearing. The petitioner adduced evidence. The
husband of the petitioner also deposed. They were allowed to file all
documents. The learned tribunal being the master of facts had categorically
analysed each and every aspect with regard to the balance sheets. The
learned tribunal was persuaded to hold that the order of the Court which
had accepted the report of the investigating authority should be given
primacy over the report of a private individual engaged by the petitioner.
However, the point has still been left open. Secondly, on the calculation of
the profit sharing for the financial years between the execution of the
supplementary deed and till the demise of TKD, it was seen that profit
sharing was bordering around 1/3 share each amongst TKD, KD and NS
and that itself would stand testimony to the fact that TKD was a party to the
induction of NS and had accepted 1/3rd share in the partnership business
along with KD and NS. The claim of 50% was rightly held to be dependent
on the final decision of the competent court of law.
25. The application is thus, dismissed. The award is upheld.
(SHAMPA SARKAR, J.)
B.Pal/S.Kumar
