ORDER
D.K. Deshmukh, J.
1. By this petition filed under section 34 of the Arbitration Act, the petitioner challenges the award of sole arbitrator dated 3-5-1999. The petitioner and the respondents are partners of the firm Engineers Combine. The petitioner and the respondents are brothers. As the dispute arose between the parties, an arbitrator who is the futher of the petitioner
and the respondents was appointed to resolve the dispute between the parties. What was referred to the sole arbitrator was the differences and disputes between the partners. The petitioner had sought dissolution of the firm and accounts and payment to him of his share in the firm. By the award, the arbitrator rejected the prayers for dissolution, however, directed that the petitioner be retired as a partner of the firm with effect from 28-2-1999. The arbitrator took into consideration the profit of another business carried on by the petitioner under the name and style of “Tejal Engineering Works” and treated those profits as profits of the firm and on valuation of the petitioner’s share in the firm, the arbitrator directed that the petitioner should pay to the firm an amount of Rs. 1,39,400/-. The arbitrator found that certain amounts were due from the firm to the respondent No. 3 and to one Dave Group. By the award it was directed that the partners should sell some of its immoveable properties to pay the amounts to the respondent No. 3 and Dave Group.
2. The learned Counsel for the petitioner challenged the award on several grounds. The first ground on which the award has been challenged is that the directions contained in the award for retirement of the petitioner is illegal and was beyond the power of the arbitrator. He submitted that as per the provision of Clause 24 of the Partnership Deed, a partner can retire by giving 90 days notice of retirement to the other partners. The learned Counsel submits that though it is true that the petitioner had addressed a letter dated 3rd October, 1998 to the arbitrator, wherein he has expressed his desire to retire, the petitioner subsequently filed his submission before the arbitrator, where he did not claim to be retired but instead he insisted on dissolution of the firm. According to the learned Counsel, therefore, the direction in the award is clearly illegal. The learned Counsel also submits that even if the letter dated 3rd October, 1998 is taken to be a notice of retirement, it could have been made effective from the date on which the period of 90 days expired. However, instead, the arbitrator has chosen an arbitrary date for retirement of the petitioner namely 28-2-1999. The learned Counsel further submits that the arbitrator had no authority in law to direct the retirement of the petitioner.
3. On behalf of the respondent it was contended, that in view of the letter of the petitioner addressed to the arbitrator dated 3rd October, 1998 where he had expressed his desire to retire, the arbitrator was perfectly justified in directing the retirement of the petitioner.
4. Now, if in the light of these rival submissions the record of the case is perused, it becomes clear that the arbitrator has not based his direction for retirement of the petitioner on the letter of the petitioner dated 3rd October, 1998. Perusal of the award shows that the arbitrator even does not refer that letter. Perusal of paragraph 7.14 of the award shows that the arbitrator took in to consideration the request made by the petitioner for dissolution of the firm in his written statement and rejected the same. It is thus clear that there is no substance in the submission of the learned Counsel for the respondents that because the petitioner had given a letter dated 3rd October, 1998 expressing his desire to retire the arbitrator gets an authority to order retirement of the petitioner. It is farther to be seen that, according to the terms of the partnership deed, the notice of retirement is to be addressed to the remaining partners. The letter dated 3rd October, 1998 is not addressed to the partners. Thus, I find substance in the submission made by the learned Counsel for the petitioner that the arbitrator had no authority to direct retirement of the petitioner from the firm.
5. The entire award is based on the direction issued by the arbitrator for retirement of the petitioner, therefore, really speaking when I find that the arbitrator was not justified in issuing direction for retirement of the petitioner, all other directions issued in the award will not survive. However, I find that apart from the above grounds there are other grounds also for setting aside the award, like breach of principle of natural justice. The arbitrator has done valuation of the immoveable properties of the firm on the basis of the valuation report called for by the arbitrator. It is common ground before me that though there is substantial difference in the valuation given by the petitioner of one of the properties and the valuation found by the arbitrator, the arbitrator at no point of time made available the copy of the valuation report, on which he had relied, to the petitioner. In my opinion, this clearly is in breach of principle of natural justice. It is further to be seen here that the arbitrator directed that some of the immoveable properties of the firm should be sold and the sale proceeds of those properties should be exclusively used to meet the liability of the respondent No. 3 and one Dave Group. I find considerable force in the submission of the learned Counsel for the petitioner that this direction creates a charge on the immoveable property of the firm in favour of the respondent No. 3 and the Dave Group. The learned Counsel appearing for the respondents submitted that the respondent No. 3 does not treat this direction as creating charge and as Dave Group is not a party to the award, even if by the award charge is created, it is not enforceable at the instance of the Dave Group. In my opinion, the submission has no substance, because the award clearly creates a charge in favour of the respondent No. 3 and Dave Group and though Dave Group is not a party to the award, it will not be entitled to enforce the charge by instituting independent proceedings. It is further to seen here that perusal of the provisions of section 2(na) and section 2(pa) of the Bombay Stamp Act, 1958 shows that as the award extinguishes the interest of the petitioner in the moveable properties of the firm and the share of the partners in assets is to be treated as moveable property, still stamp duty would be payable under the provisions of the Bombay Stamp Act. Thus, I find that the award that has been made by the arbitrator is infirm on more than one ground and therefore it is liable to be set aside. It is accordingly set aside.
At this stage the learned Counsel for the respondents submits that there was an order of temporary injunction made by the arbitrator on 12th December, 1998 restraining the petitioner from entering into factory premises of M/s. Engineers Combine and obstructing the work of Engineers Combine and that the petitioner was abiding by that order during the pendency of the proceedings before the arbitrator as also during the pendency of the present proceedings before the arbitrator and therefore, the petitioner should be directed to abide by that order up to 31-1-2000.
In view of the fact that the petitioner was abiding by the interim order made by the arbitrator in December, 1998 and considering the close relation between the parties, in my opinion, it would be in the interest of justice to direct the petitioner to continue to abide by that order till 31-1-2000. The petitioner is accordingly so directed.
Certified Copy expedited.