{"id":248125,"date":"2008-11-20T00:00:00","date_gmt":"2008-11-19T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-urmila-goel-vs-ms-hemlata-goel-ors-on-20-november-2008"},"modified":"2018-11-03T17:52:09","modified_gmt":"2018-11-03T12:22:09","slug":"ms-urmila-goel-vs-ms-hemlata-goel-ors-on-20-november-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-urmila-goel-vs-ms-hemlata-goel-ors-on-20-november-2008","title":{"rendered":"Ms. Urmila Goel vs Ms. Hemlata Goel & Ors on 20 November, 2008"},"content":{"rendered":"
Delhi High Court<\/div>\n
Ms. Urmila Goel vs Ms. Hemlata Goel & Ors on 20 November, 2008<\/div>\n
Author: Rajiv Sahai Endlaw<\/div>\n
*IN THE HIGH COURT OF DELHI AT NEW DELHI\n\n+      I.A.3188& 6230\/1998 in CS(OS) 1762A\/1990 &\n       Execution Petition 108\/1999.\n\n%                                           Date of decision: 20.11.2008\n\nMS. URMILA GOEL                                        ..... Plaintiff \/Decree Holder\n                                  Through: Mr. Vinod Kumar, Advocate\n\n                                          Versus\n\nMS. HEMLATA GOEL & ORS                          ....Defendants\/Judgment Debtors\n                                 Through: Ravi Gupta & Mr. Ankit Jain Advocates\n\n\n\nCORAM :-\nHON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW\n\n1.     Whether reporters of Local papers may\n       be allowed to see the judgment?       Not necessary\n\n2.     To be referred to the reporter or not?                Not necessary\n\n3.     Whether the judgment should be reported\n       in the Digest?                        Not necessary\n\n\nRAJIV SAHAI ENDLAW, J.\n<\/pre>\n
1.     CS(OS) 1762A of 1990 was filed under section 20<\/a> of the Arbitration<\/p>\n
Act, 1940 with respect to an Arbitration Clause as under, contained in the<\/p>\n
partnership deed between the parties:-\n<\/p>\n
       “All disputes and questions in connection with the
\n       partnership of this deed arising between the partners or
\n       between any of them and the legal representatives of the
\n       other or between their respective legal representatives
\n       and whether during or after the partnership shall be
\n       referred to the sole arbitration of an arbitrator
\n       unanimously chosen by them”.\n<\/p><\/blockquote>\n
2.     With the consent of the parties, Justice D.R. Khanna (Retd.) of this<\/p>\n
court was appointed as the arbitrator vide order dated 5th November, 1996<\/p>\n
and award dated 4th March, 1998 was made and against which I.A. No. 3188<\/p>\n
of 1998 under section 30<\/a> and 33<\/a> of the Arbitration Act 1940 and under<\/p>\n
section 34<\/a> of the Arbitration and Conciliation Act<\/a>, 1996 was filed on behalf<\/p>\n
of Ms. Hem Lata Goyal, Mr. Sanjay Goyal and Mr. Sandeep Goyal and I.A.<\/p>\n
I.A.3188& 6230\/1998 in CS(OS) 1762A\/1990 Ex P 108\/99                        Page 1 of 8<\/span>
\n No.6230 of 1998 under section 34<\/a> of the Arbitration and Conciliation Act<\/a>,<\/p>\n
1996 was filed on behalf of Smt. Urmila Goyal and Shri Ashok Goyal. As<\/p>\n
noted in the order dated 3rd February, 2005, CS (OS) 1762A of 1990 stood<\/p>\n
disposed of on the appointment of the arbitrator and the objections, if any,<\/p>\n
to the award ought to have been filed as independent proceedings. However,<\/p>\n
since the aforesaid two applications were filed in the CS (OS) 1762 A of<\/p>\n
1990 and notices were issued and had been pending for long, it was not felt<\/p>\n
necessary to require the parties to cure the said defect.<\/p>\n
3.     Smt. Urmila Goyal and Shri Ashok Goyal also filed execution 108 of<\/p>\n
1999 of the award treating the same as a decree under the Arbitration Act<\/a>,<\/p>\n
1996. As the aforesaid would show, there was a controversy between the<\/p>\n
parties as to whether the award was under the 1940 Act or under 1996 Act.<\/p>\n
However, after the pronouncement of the Apex Court in ONGC Vs. Saw Pipe<\/p>\n
Ltd. AIR 2003 SC 2629, on 11th January, 2004 the counsel for the parties<\/p>\n
agreed that the objections may be considered without considering as to<\/p>\n
whether the objections were under the 1940 Act or under 1996 Act. This<\/p>\n
has been recorded in this judgment to define the scope of consideration of<\/p>\n
the objections.\n<\/p>\n
\n
4.     Shri Ravi Gupta, Advocate for Smt. Hem Lata Goyal, Shri Sanjay<\/p>\n
Goyal and Shri Sandeep Goyal and Mr. Vinod Kumar, Advocate for Smt.<\/p>\n
Urmila Goyal and Shri Ashok Goyal have been heard.\n<\/p>\n
\n
 5.    The objections of the clients of Shri Ravi Gupta, Advocate may be<\/p>\n
summarized thus:-\n<\/p>\n
\n
        A. That the arbitrator in para 41 of the award could
\n           not have passed an order of division of property
\n           No.1850\/51, Khari Baoli, Delhi and the same was
\n           beyond the scope of reference and not within the
\n           domain of the arbitration, especially considering
\n           that a suit for partitioning of the said property<\/p>\n
I.A.3188& 6230\/1998 in CS(OS) 1762A\/1990 Ex P 108\/99             Page 2 of 8<\/span>
\n             was pending, as noted in the award also and
\n            which is still pending.\n<\/p><\/blockquote>\n
       B.    That the finding of the arbitrator that his clients had
\n             withdrawn the entire money standing to their capital
\n             account was contrary to the admitted balance sheet as
\n             on 31st March, 1989 and thus the award directing his
\n             clients to pay money towards the capital account of
\n             Mr. Vinod Kumar’s clients is liable to be set aside.\n<\/p><\/blockquote>\n
       C.    That as per the terms & conditions of the partnership
\n             deed, interest at 12% per annum only was payable on
\n             the capital amount and the award of interest at 18%
\n             per annum is contrary to the deed.\n<\/p><\/blockquote>\n
       D.    That the award directing his clients to pay the money
\n             due from the partnership firm to the trust is erroneous.\n<\/p><\/blockquote>\n
       E.    That the arbitrator could not award pre reference
\n             period interest.\n<\/p><\/blockquote>\n
       F.    That the partnership firm had no goodwill and in any
\n             case dispute as to goodwill was not arbitrable. The
\n             computation of the amount which his clients were
\n             directed to pay towards goodwill was also disputed.\n<\/p><\/blockquote>\n
6.     The clients of Mr. Vinod Kumar, Advocate objected to the award on<\/p>\n
the ground of the arbitrator having denied the relief of mesne profits with<\/p>\n
respect to property No. 1850\/51, Khari Baoli, Delhi.<\/p>\n
7.     During the course of hearing Mr. Vinod Kumar, Advocate fairly stated<\/p>\n
that since the suit for partition was already pending, para 41 of the award<\/p>\n
with respect to which, most of the objections and time of Mr. Ravi Gupta,<\/p>\n
Advocate was directed, was merely in the nature of the observations of the<\/p>\n
arbitrator and was not executable. He further fairly conceded that his<\/p>\n
clients were not seeking possession of any portion of the said property in<\/p>\n
execution of the award and would seek their remedies with respect to the<\/p>\n
said property in the partition suit. He further contended that subject to the<\/p>\n
clients of Mr. Ravi Gupta, Advocate not raising any objection in this regard<\/p>\n
for the reason of the arbitration proceedings, his clients would seek the<\/p>\n
remedy of mesne profits qua the said property also in the suit for partition<\/p>\n
and would not press their objections in I.A. 6230 of 1998 here. It is the<\/p>\n
contention of Mr. Ravi Gupta that the matter of partition of property<\/p>\n
No.1850\/51, Khari Baoli, Delhi was outside the domain of arbitration. That<\/p>\n
I.A.3188& 6230\/1998 in CS(OS) 1762A\/1990 Ex P 108\/99                Page 3 of 8<\/span>
\n being the contention, it is in any case not open to his clients to contest the<\/p>\n
claim, if any, of the clients of Mr. Vinod Kumar, Advocate for mesne profits<\/p>\n
in the suit for partition. With these observations and these concessions, the<\/p>\n
I.A. No.6230\/1998 and the main objection of the clients of Mr. Ravi Gupta<\/p>\n
disappears.\n<\/p>\n
\n
8.     As far as the grant of interests at the 18% per annum by the arbitrator<\/p>\n
on the capital of the clients of Mr. Vinod Kumar, Advocate is concerned,<\/p>\n
also, there does not appear to be any dispute. Admittedly, the partnership<\/p>\n
deed provides for the payment of interest on capital to the partners @ 12%<\/p>\n
per annum. The arbitrator appears to have been erroneously informed that<\/p>\n
as per the partnership deed the capital was to carry interest at 18% per<\/p>\n
annum. The arbitrator on that basis only has allowed interest at 18% per<\/p>\n
annum on the capital to the clients to Mr. Vinod Kumar, Advocate.          The<\/p>\n
same being an error apparent on the face and also being contrary to the<\/p>\n
terms of the partnership deed between the parties is liable to be modified.<\/p>\n
The award under the 1940 Act could, in any case, be modified by the court.<\/p>\n
The award under 1996 Act also is capable of being modified as held by me<\/p>\n
recently in Union of India Vs. Modern Laminators Manu\/DE\/1237\/2008.<\/p>\n
Thus the award is modified to the extent of awarding interest on the capital<\/p>\n
amount at 12% per annum instead of at 18% per annum as provided in para<\/p>\n
24 of the award.\n<\/p>\n
\n
9.         As far as the objection with respect to award of interest for pre-<\/p>\n
reference period is concerned, the same is now no longer res integra. The<\/p>\n
arbitrator is empowered to grant pre-reference interest. No argument in<\/p>\n
this regard was also raised by Mr. Ravi Gupta, Advocate.<\/p>\n
10.       As far as the objections with regard to the arbitrator not taking<\/p>\n
into consideration the amount standing to the capital account of the clients<\/p>\n
of Mr. Ravi Gupta, Advocate is concerned, a perusal of the award shows<\/p>\n
that the arbitrator has considered the accounts for the year 1988-89. The<\/p>\n
I.A.3188& 6230\/1998 in CS(OS) 1762A\/1990 Ex P 108\/99               Page 4 of 8<\/span>
\n arbitrator has used the expression “they show that the respondents have<\/p>\n
withdrawn almost all their capital amounts”. The accounts also show that<\/p>\n
the respondents i.e. Mr. Ravi Gupta’s clients had withdrawn Rs.1,84,736\/-,<\/p>\n
Rs.73,019\/- & Rs.53,162\/- from their capital account in comparison to the<\/p>\n
sum of Rs.5077\/- withdrawn by Smt. Urmila Goyal, client of Mr. Vinod<\/p>\n
Kumar, Advocate. It was for the said reason that the aforesaid observation<\/p>\n
was made by the arbitrator and the same cannot be called out of context.<\/p>\n
Undoubtedly, the closing balance shows some money in the capital account<\/p>\n
of the clients of Mr. Ravi Gupta, Advocate also and the arbitrator has also<\/p>\n
not said that they had withdrawn the entire money standing to their capital.<\/p>\n
11.        The arbitrator in para 23 of the award gives his reasons for<\/p>\n
directing         Mr. Ravi Gupta’s clients to pay monies due under the capital<\/p>\n
account of Mr. Vinod Kumar’s clients and of Smt. Gomti Devi, together with<\/p>\n
interest as aforesaid. The arbitrator found that the firm had a closing stock<\/p>\n
of Rs.14.25 lakh at the time of dissolution. It was further found that an<\/p>\n
amount of Rs.1.48 lakh was due from Lipton whose agency business the<\/p>\n
firm was carrying on. The arbitrator further found that Mr. Vinod Kumar’s<\/p>\n
clients were not claiming any share in the value of the stocks or in the<\/p>\n
amount due from the Lipton, and had left the same to the respondents. The<\/p>\n
arbitrator also instead of apportioning the value of the stocks and the said<\/p>\n
amounts left the same for the benefit of Mr. Ravi Gupta’s clients, thereby<\/p>\n
adjusting the amounts due to them against their capital in the same. Thus,<\/p>\n
it is not as if the award of the arbitrator with respect to the capital account<\/p>\n
is without any reason or basis whatsoever.\n<\/p>\n
\n
12.      It is not permissible, neither under the 1940 Act nor under the 1996<\/p>\n
Act for this court to sit in appeal on an award. The interference with the<\/p>\n
reasons, unless they are found to be contrary to the agreement or such as<\/p>\n
no reasonable person could reach, is not permissible. Neither of the two<\/p>\n
exceptions are applicable in the present case.\n<\/p>\n
\n
I.A.3188& 6230\/1998 in CS(OS) 1762A\/1990 Ex P 108\/99                Page 5 of 8<\/span>\n<\/p>\n
 13.       Mr. Ravi Gupta, Advocate also has not denied the value of the<\/p>\n
stocks or the amount due from the Lipton. All that he has argued is that the<\/p>\n
value of the stocks represented the capital and capital account of his clients<\/p>\n
could not be adjusted against the monies due from Lipton without it being<\/p>\n
established whether the said monies were or could be realized or not.<\/p>\n
Significantly, it was not argued that in all these years when the matter has<\/p>\n
remained pending, the said monies have not been realized.              Further<\/p>\n
considering the fact that it was the clients of Mr. Ravi Gupta, who after the<\/p>\n
dissolution of the firm continued to deal with Lipton, no fault can be found<\/p>\n
with the said reasoning. The objections in this regard and the objections as<\/p>\n
to the direction with respect to the payment to the trust are thus dismissed.<\/p>\n
14.       The only surviving objection of Mr. Ravi Gupta’s client is with<\/p>\n
respect to the goodwill. The partnership deed does not contain any clause<\/p>\n
regarding goodwill. As far as the arbitrability thereof is concerned, I find<\/p>\n
Mr. Vinod Kumar’s clients to have in their plaint under section 20<\/a> of the<\/p>\n
Arbitration Act, 1940 itself to have raised a claim for goodwill. I have not<\/p>\n
found anything in the written statement filed by Mr. Ravi Gupta’s clients<\/p>\n
contending that the claim for goodwill was not maintainable or not<\/p>\n
referable.     It is also not the argument that there were no pleadings or<\/p>\n
arguments before the arbitrator qua the claim for goodwill.<\/p>\n
15.      The partnership firm was carrying on business for several decades<\/p>\n
prior to its dissolution, as agents of Hindustan Lever\/Lipton. The partners<\/p>\n
were family members. It is further not in dispute that immediately after<\/p>\n
dissolution, Mr. Ravi Gupta’s clients or at least some of them entered into<\/p>\n
the agreement with HLL\/Lipton to carry on the same business as was<\/p>\n
earlier being carried on by the firm. It is further not in dispute that not only<\/p>\n
the principals of the business i.e. HLL\/Lipton were the same but the<\/p>\n
employees carrying on business were also the same, i.e. the employees of<\/p>\n
the firm were engaged by the clients of Mr. Ravi Gupta. Some arguments<\/p>\n
were raised as to whether the business was being carried on from the same<\/p>\n
I.A.3188& 6230\/1998 in CS(OS) 1762A\/1990 Ex P 108\/99                Page 6 of 8<\/span>
\n premises i.e. 1850\/51 Khari Baoli, Delhi or not. Mr. Ravi Gupta, Advocate<\/p>\n
has shown copies of Form-A under the Partnership Laws showing the<\/p>\n
address of the new business as of Ram Nagar i.e. of residence of his clients.<\/p>\n
However, it is not in dispute that the said property is in control of Mr. Ravi<\/p>\n
Gupta’s clients. It is not hard to imagine and as must have been done by<\/p>\n
the arbitrator also that the business of agency earlier being carried on by<\/p>\n
the firm was continued by Mr. Ravi Gupta’s clients. The said business is<\/p>\n
found to have been a very successful business having turnover of over Rs.5<\/p>\n
crores in those days. The business must be having a large customer base<\/p>\n
also, the benefit whereof would have also fallen to Mr. Ravi Gupta’s clients.<\/p>\n
16.       Mr. Ravi Gupta, Advocate relying upon the judgment cited before<\/p>\n
the arbitrator also urged that there could be no goodwill of an agency<\/p>\n
business, specially since Lipton\/HLL terminated the agency agreement on<\/p>\n
dissolution of the firm. He further argued that there was no restriction in<\/p>\n
the partnership deed on the partners after dissolution carrying on the same<\/p>\n
business as that of the firm. It was further argued that it was open for Mr.<\/p>\n
Vinod Kumar’s clients also to carry on the same business and to try to enter<\/p>\n
into the agreement with HLL\/Lipton and merely because of quirk of<\/p>\n
circumstances there was none available in that group to carry on the<\/p>\n
business and his clients engaged in the same business ought not to burden<\/p>\n
them with payment for goodwill.\n<\/p>\n
\n
17.      Again not only, I do not find any of the aforesaid as grounds to<\/p>\n
interfere with the award but also do not find any merits in the aforesaid<\/p>\n
submissions and even if permitted I am unable to arrive at a conclusion<\/p>\n
other than reached by the arbitrator. The clients of Mr. Ravi Gupta,<\/p>\n
Advocate were immediately able to enter into an agreement with<\/p>\n
Lipton\/HLL only for the reason of the faith re-posed by HLL\/Lipton in them<\/p>\n
for the reason of their being partners in the firm with which HLL\/Lipton<\/p>\n
was earlier carrying on business.               What else if not goodwill would it<\/p>\n
I.A.3188& 6230\/1998 in CS(OS) 1762A\/1990 Ex P 108\/99                    Page 7 of 8<\/span>
\n       constitute. It is also found that Mr. Ravi Gupta’s clients used the same<\/p>\n
      name merely with a suffix “and Co”.\n<\/p>\n
\n
      18.      The arbitrator has also awarded interest at 12% per annum on the<\/p>\n
      amounts found due towards goodwill. Considering the fall in interest rate<\/p>\n
      during the interim period and following the dicta in Krishna Bhagya Jal<\/p>\n
      Nigam Ltd. Vs. Harishchandra Reddy AIR 2007 SC 817 and Flex<\/p>\n
      Engineering Ltd. Vs. Antartica Construction Co. 2007 (2) Arb. LR 387<\/p>\n
      (Delhi), I accordingly modify the rate of interest on the amount awarded<\/p>\n
      towards goodwill, during the pendency of the objections from 12% per<\/p>\n
      annum to 9% per annum. However, the principal amount post judgment<\/p>\n
      shall again incur interest at 12% per annum.\n<\/p>\n
\n
      19.      Save as aforesaid, I do not find any ground to interfere with the<\/p>\n
      award. As aforesaid there was a controversy as to whether the award is<\/p>\n
      under the 1996 Act or under 1940 Act. However, since while appointing<\/p>\n
      the arbitrator, it was said that he is appointed under the provisions of the<\/p>\n
      1996 Act, instead of making the award the rule of the court, the objections<\/p>\n
      are dismissed, making the award executable as a decree of the court. Mr.<\/p>\n
      Vinod Kumar’s clients have applied for execution.         Unless the amounts<\/p>\n
      awarded save as modified here in above are deposited\/paid within 30 days<\/p>\n
      of this order, issue warrants of attachment of the properties of the<\/p>\n
      judgment debtors as per list filed, returnable on 20th March, 2009 upon on<\/p>\n
      the decree holder taking requisite steps.\n<\/p>\n
\n
                                                             RAJIV SAHAI ENDLAW
\n                                                                   JUDGE
\nNovember 20, 2008
\nPP<\/p>\n
      I.A.3188& 6230\/1998 in CS(OS) 1762A\/1990 Ex P 108\/99              Page 8 of 8<\/span>\n <\/p>\n","protected":false},"excerpt":{"rendered":"
Delhi High Court Ms. Urmila Goel vs Ms. Hemlata Goel & Ors on 20 November, 2008 Author: Rajiv Sahai Endlaw *IN THE HIGH COURT OF DELHI AT NEW DELHI + I.A.3188& 6230\/1998 in CS(OS) 1762A\/1990 & Execution Petition 108\/1999. % Date of decision: 20.11.2008 MS. URMILA GOEL ….. Plaintiff \/Decree Holder Through: Mr. Vinod Kumar, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[14,8],"tags":[],"class_list":["post-248125","post","type-post","status-publish","format-standard","hentry","category-delhi-high-court","category-high-court"],"yoast_head":"\nMs. Urmila Goel vs Ms. Hemlata Goel & Ors on 20 November, 2008 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ms-urmila-goel-vs-ms-hemlata-goel-ors-on-20-november-2008\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ms. Urmila Goel vs Ms. Hemlata Goel & Ors on 20 November, 2008 - 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