Vinay Tuli & Anr. vs Vijay Tuli & Ors.
2009 Latest Caselaw 4265 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI


                                              Date of Reserve: September 09, 2009
                                                  Date of Order: October 22, 2009

+Arb. Appeal 16/2009
%                                                            22.10.2009
     Vinay Tuli & Anr.                                 ...Appellant
     Through: Mr. S.C. Singhal with Mr. S.R. Sharma, Advocates

        Versus

        Vijay Tuli & Ors.                              ...Respondents
        Through: Mr. Sandeep Sethi, Sr. Advocate with Mr. Darpan Wadhwa,
        Advocates



        JUSTICE SHIV NARAYAN DHINGRA

1.      Whether reporters of local papers may be allowed to see the judgment?

2.      To be referred to the reporter or not?

3.      Whether judgment should be reported in Digest?


        JUDGMENT

1. This appeal has been preferred by the appellant under Section 37 of

the Arbitration & Conciliation Act, 1996 against an order dated 9th July 2009

passed by the learned Arbitrator allowing an application of respondent for

deleting the reference made regarding M/s Alok International in the

appellant's reply and confining the arbitration proceedings only to the affairs

of M/s Mayur International.

2. Brief facts relevant for the purpose of deciding this appeal are that

disputes arose between partners of M/s Mayur International of which claimant

claimed a share of 50% and respondents were shareholders to the balance

50% shares. There was an arbitration clause in the partnership deed. By an

order dated 6th January 2009, this Court on an application under Section 11 of

Arb. A. 16/2009 Vijay Tuli & Anr. vs. Vijay Tuli & Ors. Page 1 Of 4 the Arbitration & Conciliation Act, 1996, appointed a sole arbitrator to

adjudicate the disputes between the partners of partnership firm M/s Mayur

International. Before the arbitrator, the appellant (respondent before the

arbitrator) filed reply-cum-counterclaim and in this counterclaim raised

disputes in relation to the assets of the firm M/s Alok International. The

respondent (claimant before the Arbitrator) made an application under

Section 16 before the Arbitrator to delete the reference qua M/s Alok

International stating that the claim made by appellant in respect of M/s Alok

International were beyond the scope of arbitration proceedings. This

application of respondent was allowed and hence this appeal.

3. The appellant's contentions before this Court are the same as the

appellant had raised before the arbitrator. All these contentions have been

dealt with by the learned arbitrator at length and the learned arbitrator after

referring to the judgments cited by the appellant has come to conclusion that

since no reference was made in respect of M/s Alok International and M/s Alok

International was previously admitted by the appellant as an independent

entity in the proceedings before the Provident Fund Authorities and M/s Alok

International was a proprietary concern of HUF, being not a part of M/s Mayur

International could not be the subject matter of arbitration proceedings

before the arbitrator.

4. The appellant has contended that the partner of M/s Mayur Intentional

had been working for M/s Alok International also. The appellant (respondent

no.1 before the arbitrator) had been signing the cheques on behalf of M/s

Alok International. All concerns including M/s Mayur International were family

concerns and as such learned arbitrator was duty bound to lift the veil and

Arb. A. 16/2009 Vijay Tuli & Anr. vs. Vijay Tuli & Ors. Page 2 Of 4 find out as to in what manner M/s Alok International was functioning and

since M/s Alok International was conducting exactly the same business from

the same premises, same telephone numbers, fax, computers, stocks, staff

and inasmuch as Shri Vinay Tuli was also a signatory in bank account of M/s

Alok International, therefore it was not a separate entity and the arbitrator

must pierce the veil concerning the affairs of M/s Alok International and

consider it as a part of the arbitration reference since M/s Alok International

was a part and parcel of M/s Mayur International.

5. I consider that this argument of appellant must fail. A person can have

many business ventures. There is no restriction on a person on becoming

partner of several firms and owning proprietorship firms simultaneously as

well as being a director of the companies and member of HUF. A person can

enter into a contract with different persons in different capacities for the

purpose of business. Where a person has entered into a partnership deed

with other partners and the partnership deed contained an arbitration clause,

if the dispute of partnership firm is referred to an arbitrator that would not

mean that every other business activity of the person would become subject

matter of arbitration. In order to invoke arbitration agreement, it is necessary

that there should be an arbitration agreement between the parties. In the

present case, M/s Mayur International was the partnership firm of which the

appellant and respondent were the partners. M/s Alok International is a

proprietorship owned by HUF. M/s Alok International is not a partner of M/s

Mayur International nor is the HUF a partner of M/s Mayur Intentional. Merely

because respondent, apart from being a partner of M/s Mayur Intentional, is

also a Karta of HUF it would not bring M/s Alok International within the fold of

partnership firm, nor signing of cheques by appellant or the joint use of the

Arb. A. 16/2009 Vijay Tuli & Anr. vs. Vijay Tuli & Ors. Page 3 Of 4 premises or telephone or fax number by the partnership firm and M/s Alok

International would fuse the identity of M/s Mayur International and M/s Alok

International and convert M/s Alok International as a partner of M/s Mayur

International. Moreover, a person cannot be allowed to reprobate and

aprobate according to his convenience. The learned arbitrator has extensively

quoted the stand taken by the appellant before the Provident Fund

Authorities where the appellant had given a detailed rejoinder to the

Provident Fund Authorities explaining how M/s Mayur International and Tuli

International and M/s Alok International were three independent and separate

entities. He had given in detail the structure of the three business entities and

their independent establishment. He had resisted tooth and nail the effort of

P.F. Inspector to count three entities as one for the purpose of provident fund.

The appellant now cannot be allowed to have liberty to change the stand

according to his convenience and take the stand that M/s Alok International

was a part and parcel of M/s Mayur Intentional.

6. In view of my foregoing discussion, I find no force in this appeal. The

appeal is hereby dismissed.

October 22, 2009                            SHIV NARAYAN DHINGRA J.
rd




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