PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL)-1 vs. ULTRA HOME CONSTRUCTION PVT. LTD.,

O.M.P. (COMM) 381/2017 & O.M.P. (COMM) 433/2017

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Claim No. 2: 1/3rd amount of Rs. 12,00,000/- towards cost of Treatment Plant, Electric connection and Electric fittings, tube wells and its fittings, water fittings, printing tables, big size heavy duty generator, etc.

Claim No. 3: 1/3rd amount of Rs. 12,00,000/- towards stock of misprint sarees, cloth sketch books, beggary and aluminium dying frames, etc.

Claim No. 4: 1/3rd sum of Rs. 60,00,000/- towards goodwill.

Claim No. 5: a sum of Rs.2,86,651/- towards interest of capital amount (Hari Om Sharma)

Claim No. 6: a sum of Rs.3,92,000/- towards salary loss/ damages from 01.04.2003 to 30.04.2007, and a sum of Rs. 1, 72,567/- towards compound interest on the said amount.

Claim No. 7: a sum of Rs.1,58,462/- towards interest on unsecured loans and further a sum of Rs. 1,50,375/- towards Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

O.M.P. (COMM) 381/2017 & O.M.P. (COMM) 433/2017

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compound interest on the said amount for the period of 16.10.2003 to 30.04.2007, after adjustment of a sum of Rs. 1,00,000/- received on 15.08.2004 and a sum of Rs. 62,240/- towards compound interest from 15.08.2004 to 30.04.2007.

Claim No. 8: a sum of Rs.1,45,165/- towards profit average per year Rs. 2,22,147/3.

Claim No. 9: sum of Rs.65,141/- towards loss/ damage in tenancy rights.

Claim No. 10: sum of Rs.1,95,423/- including compound interest towards his share in stock of color chemicals.

Claim No. 11: sum of Rs.17,97,562/- including compound interest towards amount of bills not entered in the books of M/s Ashika Textile.

Claim No. 12: sum of Rs.13,41,899/- including compound interest towards loss/damages sustained due to fabricated bills along with compound interest for the period of 01.04.2003 to 30.04.2007.

Claim No. 13: sum of Rs.19,505/- towards loss or rent security.

Claim No. 14: sum of Rs.71,89,388/- including compound interest towards the amount which became payable to job work to the claimant for which billing has not been made.

Claim No. 15: a sum of Rs.78,116/- towards interest on unsecured loan of Rs.2,00,000/- for the period 11.07.2002 to 31.03.2003 and on the balance amount of Rs. 1,50,000/- for the period of 15.08.2004 to 30.04.2008.

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(a) Claim no. 1A: 1/3rd share of a sum of Rs.6,00,000/- towards cost of plant and Machinery and a sum of Rs.30,000/- towards cost of furniture. (b) Claim no. 1B, the claimant has claimed 1/3rd share of a sum of Rs. 6,00,000/- towards Goodwill. (c) Claim no 1C, the claimant has claimed his 1/3rd share of a sum of Rs. 2,00,000/- towards stores and small Articles. (d)Claim no. 1D: 1/3rd share of Rs. 6,00,000/- towards cost of colour and chemicals stock and a sum of Rs. 1,00,000/- towards cost of other materials.

Thus in all, the claimant has claimed has claimed a sum of Rs. 25,10,000/- towards his 1/3rd share of the total amounts claimed under claims 1A, 1B, 1C and 1D.

Claim no. 2: sum of Rs. 90,990/- along with compound interest towards interest on capital.

Claim no. 3: sum of Rs. 3,43,000/- along with compound interest towards salary/loss/damages for the period 01.04.2003 to 30.04.2007.

Claim no. 4: sum of Rs. 62,219/- towards interest on unsecured loan.

Claim no. 05: sum of Rs.1,71,511/- towards loss/Damages in Net Profit.

Claim no. 6 the claimant has claimed a sum of Rs. 33,333/- along with compound interest towards Loss/Damage in Tenancy Right Value.

Claim no.7: sum of Rs.110843/- towards his share value of colour and chemicals and chemicals on 31.03 included in item no. 1. Claim no. 08: sum of Rs.16,52,888/- along with compound interest for the period 01.06.2001 to 30.06.2003 and further a sum Rs.24,82,528/- along with compound interest for the period 01.07.2003 to 30.04.2007 towards loss/damage due to fabricated bills. Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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Claim no.9 the claimant has claimed a sum of Rs. 10,66,570/- along with compound interest towards loss / damage due to bogus wages entry.

Claim no. 10, the claimant has claimed a sum of Rs. 17,65,20/- along with compound interest for the years ending 31.03.2002, 31.03.2003 and 31.07.2003 and further a sum of Rs. 2,10,687/- along with compound interest for the period 01.08.2003 to 30.04.2007 towards Cartage misappropriated.”

Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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b. The respondents are directed to pay to the claimant a sum of Rs. 1,38,203/- under claim no. 05.

c. The respondents are directed to pay to the claimant a sum of Rs.40,000/- under claim no.06.

d. Against claims no.07 & 15, no amount towards principal has been awarded in favour of the claimant. However, against this claim a sum of Rs. 21,000/- has been awarded towards interest.

e. The respondents are directed to pay to the claimant a sum, of Rs. 10,285/- against claim no. 08.

f. The respondents are directed to pay to the claimant a sum of Rs.51,285/- against claim no.11.

g. The respondents are directed to pay to the claimant a sum of Rs.10, 000/- against claim no. 13.

h. The respondents are directed to pay a sum of Rs.10,79,907/- towards interest and this amount includes the amount of interest of Rs.21,000/- awarded against claims no.07& 15.

i. The claims no. 03, 04, 09, 10, 12 & 14 raised on behalf of the claimant have been rejected.

j. The claim of the claimant towards cost has been rejected.

k. As held in para 45 of the Award, the partnership firm namely : M/s. Ashika Textiles stands dissolved from the date of this Award i.e 28.04.2017.”

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Firms from the date of Award. The total value of the assets pertaining to M/s Ashika Textiles, was calculated as Rs.16,95,181/- and the 1/3rd share of the petitioner, has been calculated as 5,65,060/-. The learned Arbitrator has also held that the petitioner is entitled to recover the balance amount of the capital to the extent of Rs.1,38,203/- which was ascribed to his share as per the Balance Sheet as on 31.03.2003. The simple interest on the sum of Rs.2,00,000/- extended by him as loan for the period 01.04.2003 to 16.10.2003 and on Rs.1,50,000/- for the period 17.10.2003 to 18.08.2004, has been allowed. The has also been held entitled to Rs.10,285/-. The simple interest @9% p.a. has been granted on all the Claims except on Rs.1,38,203/- granted towards principal Capital Amount on which interest @12% p.a. has been granted. 13. The Final Award dated 28.04.2017 in regard to M/s Classic Processors, is in the following terms:- “a. The respondents are directed to pay to the claimant a sum of Rs.28,955/- under claim no.01 A.

b. The respondents are directed to pay to the claimant a sum of Rs. 02,00,000/- under claim no. 01 D.

c. The respondents are directed to pay to the claimant sum of Rs. 90,990/- under claim no. 02.

d. The respondents are directed to pay to the claimant a sum of Rs. 28,525/- under claim no. 03.

d. Against claims no. 04, no amount towards principal has been awarded in favour of the claimant. However, against this claim a sum of Rs.5,521/- has been awarded towards interest.

Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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e. The respondents are directed to pay to the claimant a sum of Rs. 18,604/- under Claim No. 05.

f. The respondents are directed to pay to the claimant a sum of Rs.05,01,119/- towards interest and this amount includes the amount of interest of Rs.5,521/-awarded against claim no. 04.

g. The claims no.01 B, 0I C, 06, 07, 08, 09 & 10 raised on behalf of the claimant have been rejected.

j. The claim of the claimant towards cost has been rejected.

k. As held in para 45 of the Award, the partnership firm namely: M/s. Classic Processors stands dissolved from the date, of this Award i.e 28.04.2017.”

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O.M.P. (COMM) 381/2017 & O.M.P. (COMM) 433/2017

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explanation, who did not respond satisfactorily due to which the petitioner was compelled to get the bank accounts of the Partnership Firms suspended on 19.07.2004. 18. The respondent No. 2 provided List of Assets dated 10.08.2003, on 15.08.2004. On the same day, some Accounting Records were also made available to the petitioner. On not coming forward for clarifications and explanations, the petitioner served them with three Legal Notices and ultimately, initiated the Arbitration proceedings. 19. It is asserted that the Issue No. 1 in regard to limitation has been decided wrongly by the learned Arbitrator. It has been proved on record from the documents and the evidence as led by the parties, that the factory and business of the Partnership Firm was illegally closed w.e.f. 01.08.2003. The vacant possession of the business premises was handed over to the landlord on the last working day of Partnership Business i.e. 31.07.2003, which has resulted in damages to the appellant. The learned Arbitrator has failed to appreciate the evidence on record and has wrongly and arbitrarily decided that the cause of action arose on 31.07.2003. 20. The petitioner had come to know about the closure of the Business only in the first week of June 2004, consequent to which he got the Bank Accounts of the Partnership Firm suspended on 19.07.2004. The first Legal Notice was issued on 27.10.2004, after which some documents and Accounting Records along with the cheque in lieu of balance loan amount of Rs.1,50,000/-, were received by the petitioner on 15.08.2004. The date of Cause of Action should have been taken as first week of June 2004 but the learned Arbitrator has not conducted properly in arriving at the illegal decision. In concluding that all the Claims and disputes have arisen prior to Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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three years from 29.08.2005 i.e. the date of invoking the Arbitration, are barred by limitation. The learned Arbitrator has wrongly declined to decide Claims Nos. 8, 12 and 14 in the case of M/s Ashika Textiles and Claim Nos. 8, 9 and 10 in the case of M/s Classic Processors by observing that they are all barred by limitation. 21. The petitioner has further claimed that in Issue No.2 instead of grant of damages for the pre-Reference Period while deciding the Claim Nos. 8, 11, 12 and 14 in the Case of M/s Ashika Textiles and Claim Nos. 8, 9 and 10 in the Case of Classic Processors, the learned Arbitrator has granted interest/one month profit (reduced profit in the Final Accounts)/one month salary, which was never claimed by the petitioner. 22. The petitioner further claimed that the Bank Accounts were being operated by the other respondents, who were also making purchases of raw material, doing job work for remuneration, receiving bills for the raw materials, creating bills for the job work and consequently, they both have succeeded in allegedly deceiving the petitioner. 23. It was also asserted that the respondents without the knowledge of the petitioner started their own respective Proprietorship businesses, for doing the same job work with the same customers, using the goodwill of the two Firms and also using the skilled labour and the equipment without dissolving the Partnership business. It was claimed that the goodwill and the customers of the two Firms, have been diverted by the respondents to their respective businesses. As per his Claim Statement, he is entitled to damages which has been caused to him since 01.08.2003, because of the deliberate and wilful misconduct of the respondents enclosing down the factory and business of the Partnership Firm w.e.f. 01.08.2003, with the mala fide intention of Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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running the same business in their individual names by expelling the petitioner from the business. 24. It is further asserted that the respondents are liable to make good the losses to the Claimant of his share misappropriated by the respondents along with the Damages for the period prior to the Reference by taking the misappropriated amount as part of the actual profit along with the shown reduced profit in the Balance Sheets, for the relevant period for deciding the Claim of the petitioner for Damages. 25. It is further asserted that such Claims of the petitioner were not barred by Limitation and have been wrongly denied simply on the ground of being barred by Limitation. 26. It is further asserted that the amount awarded for the Claim No. 4 in M/s Ashika Textiles and Claim No. 1(b) in the case of M/s Classic Processors, for goodwill of the petitioner in both the Firms, is much too less and is not justifiable, according to the Principles of Natural Justice and is, therefore, unlawful. Furthermore, the facts and the documents have been considered by violating and overlooking the provisions of the Partnership Act and these Claims have been decided arbitrarily by the learned Arbitrator, by taking its own views, which are not based on facts, relevant material and substantial law of the Land. 27. It is also asserted that the learned Arbitrator while deciding the Claims of Goodwill in both the Cases has wrongly rejected and found no merit in the allegations of the petitioner that the Accounts audited by the Chartered Accountant, were fabricated. It is asserted that these findings are de horse the evidence and the contents of the Partnership Deed and other Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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documents. The conclusions have been arrived at de horse the admissions and the evidence made by the witnesses/respondents in their testimony. 28. It is further asserted that Claim No. 11 of the petitioner for Damages for the period beyond 31.07.2003, have been wrongly denied by the learned Arbitrator by observing that the factory and the business of the Partnership, stood closed on 31.07.2003, and the petitioner was not entitled to any Damages beyond 31.07.2003. It is asserted that such findings of the learned Arbitrator were arbitrary and beyond the jurisdiction under the Law. 29. By way of the Claim No. 12 in M/s Ashika Textiles, the petitioner had sought the amount misappropriated by the respondents, by entering false and fabricated Bills in the Books of Accounts for the purpose of showing reduced actual Profits, to cause injury to the plaintiff. The learned Arbitrator failed to consider the fabricated and false bills on the ground of falling within the period prior to three years from 31.08.2005 i.e. the date of invoking the Arbitration and held them to be barred by limitation. It is asserted that such findings of the Claim being barred by Limitation, was contrary to the statute and also contrary to the admissions made by the Witness No. 4 of the respondents, Mr. Kapil Dev Kumar, an Associate of CA Firm. The observations of the learned Arbitrator are also contrary to the evidence on Record and the Audit Reports, the Final Accounts and Balance Sheets of each Accounting Year, which have been held to be genuine. 30. It is further asserted that the learned Arbitrator had referred to the Legal Notice dated 01.08.2005, Ex. CW-1/5 wherein the Claimant had admitted that “everything was fine in the month of June 2003”. However, the learned Arbitrator has failed to consider that the Claimant came to know about more misappropriations done by the respondents under the Head of Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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Wages and Cartage Accounts in the case of M/s Classic Processors, as well as, in the case of M/s Ashika Textiles, wherein certain entries of Job Work, had not been entered into the Account Books. Unless the Accounts were explained or clarified by the respondents along with the other attending circumstances, the Account Books were to be considered as fine till June 2003. However, by neglecting and ignoring the Claims of such false and fabricated Bills for Rs.30,00,000/- in the same Legal Notice. By taking only selective incomplete material and evidence, relevant and favourable only to the respondents, the learned Arbitrator was adamant to see only that which was favourable to the respondents. There is complete violation of Principles of Natural Justice. The rights of the Claimant did not end with the Legal Notice dated 01.08.2005 since many of the Claims were unexplained and unclarified which, however, have been taken into consideration one-sidedly in favour of the respondents and the relevant material on these aspects, has been overlooked and not considered. 31. The petitioner has asserted that number of Claims have been decided by the learned Arbitrator by drawing adverse inference against him on the ground that Mr. Hari Om Sharma, Accountant, who was maintaining the Books of Accounts of the Partnership Firm in question, was introduced by the Claimant. There is no ground for drawing any adverse inference against the petitioner on this ground, especially in the absence of any evidence to the contrary. Merely because Mr. Hari Om Sharma had been introduced by the petitioner, cannot lead to any conclusion of adverse inference against the petitioner. 32. The Issue No.3 was in regard to the payment of interest. Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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or the post-Reference Period is much too less, not justified and against the settled Principles of Natural Justice. 35. The impugned Award has thus, been challenged as being based on no evidence or the conclusions being contrary to the evidence as well as to the documents in the Partnership Deeds. The Awards are, therefore, claimed to be liable to be set-aside. 36. The Respondents, Mr. Saumen Kumar Chatterjee and Mr. Sunil Kumar Malhotra have contested the Petition under Section 34 of the Act, as well as have filed their Cross-objections Vide OMP (COMM) 433/2017. 37. In their reply as well as in their own Objections, the respondents have asserted that the two Claims filed by the petitioner, had been decided after more than 10 years. The delay was occasioned due to multiple amendments (three to four) of the Statement of Claim at various stages and inclusion of various Claims which were not raised or included in the Arbitration Notice. That apart, huge time was consumed in recording of evidence and passing of the detailed Award. 38. The respondents have asserted that the Arbitration proceedings at the inception were not maintainable since the „dispute‟ as raised by the Claimant in the Notice, related to unpaid share upon dissolution of Partnerships but subsequently, it was expanded to dissolution of both the Partnership Firms and for distribution of the assets in the Statement of Claim. He also made a Claim that the respondents had committed fraud of the Accounts of both the Firms and challenged the expenses incurred by the Partnership Concerns purportedly to reduce the profits without any challenge to the receivables for the period commencing from January 2001. Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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The circumstances upon which the finding of dissolution can be based should be of an unequivocal character and the inference of dissolution should be irresistible.” 41. The respondents in the Reply have explained that the claimant had signed the audited Accounts of the Firms for the period 2002-2003 and thus, cannot raise any dispute for the preceding years. Both the Firms had been dissolved on 31.07.2003 and the proceeds were distributed equally amongst the partners, after settling the liabilities, a fact which is admitted by the petitioner. The respondents had asserted that it was the claimant who was maintaining the books of accounts and financial statements, as is evident from the Audited Balance Sheets of the Firm, which have been signed by all the three partners. The respondents claimed that both the Firms were running into heavy losses or on meagre profit, which was not commensurate with their time, efforts and investments. Moreover, because of the differences amongst the partners, the business became unworkable. It was also asserted that the Claimant by producing bogus bills of the Proprietorship concerns without delivery of the materials induced the respondents to release the payments. The Claimant was also allegedly signing the cheques particularly the payments made to the Proprietorship concerns of the petitioner. 42. It was further asserted that there was no Clause in the Partnership Deeds, which restrained any of the partners from starting the separate business in the same line of business. It was explained that difference between the partners got further crystalised on account of alleged allegations of misappropriation of alleged amount of Rs.10.8 Lakhs by respondent No. Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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1, in regard to the sale of land in the joint name of the wife of the Claimant and the wife of the respondent No. 2. 43. The respondents specifically denied that they had been using the Goodwill or the same customers or their raw are material and skilled workers of the dissolved Partnership Firm. It is asserted that the respondent No. 2 had been doing the business in the related trade since 1976. Respondent No. 1 is a Textile Technical person in the trade since 1975. Furthermore, M/s Ashika Textiles was already running in the name of M/s Ashika Prints since 1992 and the petitioner had been inducted in 1995. After the dissolution of the Firms, the workers were paid off, the factory was closed, and the site was handed over to the landlord. The new businesses opened by the respondents and the petitioner respectively, were independent, without any connection whatsoever with the dissolved Partnership Firms. 44. It was further explained by the respondents that though the petitioner vide his Letter dated 19.07.2004, had stopped the operation of the Firm‟s Bank Account by writing a Letter dated 19.07.2004 to the Bank, he himself restarted the operation of the Bank Accounts of the Partnership Firms to withdraw the amount which became payable to him on receipt of a cheque from the respondents, pursuant to the dissolution of the Partnership Firms and settlement of accounts. The officials of the bank had told the respondents that the Bank operation had been restarted on account of the Letter received from the petitioner. 45. The respondents in the cross-objections to the Award further claimed that the interest awarded under the impugned Award is excessive and is more than the principal amount determined by the Arbitral Arbitrator. In regard to M/s Ashika Textiles, the principal amount has been determined as Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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Rs.8,14,833/- while the interest calculated on the principal amount is Rs.10,79,907/-. Likewise, in the case of Classic Processors, the principal amount is determined as Rs.3,67,074/- while the interest has been calculated as Rs.5,01,119/-. The period of interest has also been calculated wrongly from the date of cause of action instead of date of commencement of arbitral proceedings. The petitioners cannot be permitted to take benefit of their own wrong. 46. The pendente lite and future interest as granted by the learned Arbitrator is substantially high without there being any reasons given for grant of such high rate of interest. It is the petitioner who himself delayed the proceedings by incorporating unnecessary and time-barred Claims. The learned Arbitrator himself observed in Paragraph 54 of the Award that the petitioner has not placed true facts and has tried to conceal material facts. The learned Arbitrator had also come to the finding that the Claims made by the petitioner, were highly inflated and consequently, the Claim of the petitioner towards costs, was rejected. In this perspective, the Award of interest as such high rate is patently illegal. 47. Moreover, the findings have been given contrary to the evidence on record. The Arbitrator by refusing to allow the recording of evidence of Mr. Kiran Pal Singh Chauhan in whose presence and at whose instance, the parties had amicably resolved all their disputes on 15.08.2004, which has resulted in grave prejudice to the respondents. The rejection of such evidence by Order dated 06.08.2014 is contrary to Law, resulting in serious prejudice to the respondents. It is therefore, asserted that the impugned Award dated 28.04.2017 (corrected on 01.07.2017), granting the amounts to the petitioner, is liable to be set aside. Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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Exh.RW-2/4 to Joint Director (Factories) Ghaziabad Division; copy of the Survey Report to the Sales Tax Department Exh.RW-2/6; copy of letter dated 08.09.2003 Exh.RW-2/5 to the Electricity Department, indicating that the two Partnership Firms stand closed. 56. The learned Arbitrator referred to the evidence of the claimant wherein he asserted that the two Firms had been illegally shut down without informing the claimant and all assets were sold in violation of the provisions of law. However, the claimant himself gave a suggestion to Respondent No.2 in the cross examination that he received a sum of Rs.1,00,000/- in respect of premises bearing no. 72/11, Rajinder Nagar Industrial Area (Front Portion) pertaining to M/s. Ashika Textiles and another sum of Rs.1,00,000/- in respect of premises No.72/11, Rajinder Nagar Industrial Area (Back Portion) in respect of M/s. Classic Processors which was taken on rent on 31.03.2013 by the firms. Ld. Arbitrator concluded that this suggestion of the claimant suggested that he was aware of the surrender of the tenancy premises on 31.07.2003 to the landlord. 57. It has been rightly concluded by the learned Arbitrator that the business of the two Firms were closed w.e.f. 31.07.2003 about which all the parties were aware and the Notices thereafter about the closure of the business had been sent to the respondents to various agencies. 58. The bone of contention, however, is whether the Firms also stood dissolved from 31.07.2003 when the business was closed, as was claimed by the respondents, but denied by the Petitioner. 59. The learned Arbitrator observed that as per Clause 10 of the Partnership Deed, Partner was required to serve one month notice upon the other persons for dissolution of the Firm which admittedly had not been sent Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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by the respondents to the petitioner. Therefore, it was concluded that there was no dissolution of the firm. 60. Reference be also made to Section 43 of the Partnership Act which provides for Dissolution of the Partnership at will, which reads as under: “43: Dissolution by notice of partnership at will. (1) Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. (2) The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice.”

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Adjudicating Authority that the conduct of a partner has been such that it is not reasonably practicable for other partners to carry on the business in partnership. 64. Relying on the said judgment, the learned Arbitrator held that Clause 20 of the Partnership Deeds provided for referral of all the disputes pertaining to the partnership to the Arbitrator and that the decision of the Arbitrator shall be binding. Considering that after the closure of the business on 31.07.2003, according to the claimants the conduct of the Respondents who unilaterally sent Notices to various Authorities and disposed of the assets, was destructive of mutual confidence. Therefore, the learned Arbitrator held that the date of dissolution of the two Firms shall be from the date of the Award. 65. As has been rightly held by the learned Arbitral Arbitrator, the date of closure cannot be deemed to be a date of dissolution of partnership since all the assets of the partnership were yet to be distributed. The claimant was right in feeling aggrieved that there was no dissolution of partnership despite which all the assets of the Firms were disposed of. Therefore, the findings of the learned Arbitrator about there being no dissolution and to hold that the partnership firms shall be dissolved w.e.f. the date of Award, does not suffer from any illegality or perversity and does not warrant any interference. Bar of S.69 Partnership Act in regard to unregistered Partnership Firms. 66. The second objection that has been raised by the Respondents in their counter challenge to the impugned Award, is that because admittedly the Partnership Firms were not registered, the claims of the claimants against the respondents were not maintainable on account of the statutory bar of under Section 69 of the Partnership Act. Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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Therefore, the ld. Arbitrator rightly held that part Claims which were raised beyond a period of three years, were clearly barred by limitation. 76. There is no infirmity in the findings of the learned Arbitrator about certain portions of the claims which were prior to 28.08.2002 being barred by limitation. No interference on the findings of the learned Arbitrator on the aspect of limitation is warranted. Claims on merits: 77. The Claimant in connection to M/s. Classic Processors had raised 10 Claims for various amounts, totalling to Rs. 1,66,36,128/-. 78. In Claim No.1, he asserted that he was entitled to an amount proportionate to 1/3rd share towards cost of plant and machinery, cost of furniture, goodwill, stores & small articles, cost of colour & chemical stock, and cost of other materials, i.e. 1/3rd share of Rs. 25,10,000/-. The learned Arbitrator after appreciating the evidence in detail has granted Rs. 28,955/- after assessing the value of the plant, machinery, furniture, and fixture at Rs. 86,863/- and further Rs. 2,00,000/- towards the value of colour & chemical stock after tallying the same with the value mentioned in Balance Sheet though has rejected the amounts pertaining to claim of goodwill and value of stores & other articles owing to non-production of documentary evidence in support of the claim. The learned Arbitrator has in detail considered different claims and the conclusions are based on cogent evidence. 79. Likewise, 15 Claims have been made by the claimant in respect of M/s. Ashika Textiles, totalling to Rs. 1,51,22,374/- Claim Nos.1 to 4 were towards the value of the assets of the Partnership Firm, such as plant & machinery, treatment plant, misprint sarees, aluminium dying frames, and goodwill. Claim No. 5 pertains to interest on capital amount. Claim No. 6 Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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relates to salary loss/damages. Claim No.8 was pertaining to the share of the claimant in the profit average per year. Likewise, Claims No.9 was towards the loss/damage on account of surrender of the tenancy rights. Claims No. 10-15 (except Claim No. 13 which pertains to loss of rent security) concern interest towards various amounts. 80. The challenge by the Claimant to these amounts was essentially on merits which lie beyond the scope of objections under Section 34 of the Arbitration and Conciliation Act. In the case of National Highway Authority of India v. M. Hakeem, (2021) 9 SCC 1 it has been held that there can be no re-appreciation of evidence and unless the findings are based on no evidence, they cannot be said to be perverse or set aside, while deciding the Objections under Section 34 of the Act. 81. In view of the aforesaid, the challenge by the claimant to the various amounts allowed to him by the learned Arbitrator is not tenable. 82. Issue no.4 was in regard to the grant of interest on the Claims. The learned Arbitrator in detail considered the rival contentions and gave cogent reasons for grant of interest at the rate of 9% on the amounts/Claims and 12% interest on the Capital Account. 83. The relevant paragraphs of the award are reproduced hereunder: - “134. From the law laid down by the Hon'ble Supreme Court in the above-mentioned cases it is clear that interest is to be granted keeping in view the overall facts and circumstances of the case. Keeping in view the facts and circumstances in the present case and particularly the lapse of time, this Arbitrator is of the opinion that it would meet the ends of justice if the claimant is awarded simple interest@ 09% per annum. The aforesaid rate of 9% per annum shall be applicable to all the claims except claim no 05. Under claim no 05 the claimant has claimed the Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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principal amount of Rs. 1,38,203/- towards his capital. Clause 06 of the partnership deed which has been reproduced in para 01 of this Award, provides that the partner who has contributed the capital to the partnership firm shall be entitled to interest @18% per annum on the amount of capital. This clause further provides that in case of loss or lower income, rate of interest can be nil or lower than 18% as may be agreed and decided amongst the partners. Along with the photocopies of the audit report andincome tax return for the assessment year 2003-04 (financial year 2002-2003) Exh.R3, photocopy of the audited Balance sheet and photocopy of the capital account have also been annexed. The photocopy of the capital account, which is at page 45 of the documents annexed with the reply of the respondents to the amended claim statement, shows that the capital of the claimant for the earlier year which was carried forward in the financial year 2002-2003 (assessment year 2003-2004) was Rs.1,46,760/- and on this amount, the firm had paid a sum of Rs. 17611/- towards interest. On the basis of these figures, the rate of interest comes to 12% per annum; the said facts show that the rate of interest had been agreed to 12% per annum amongst the partners. In view of these facts, it is held that the claimant shall be to entitled to interest@ 12% per annum with regard to the amount awarded under claim no. 05. 135. As regard the period for which the interest shall become payable to the claimant, it may be relevant to state that the amount awarded under various claims except claims no 07 & 15, became payable to the claimant on 01.08.2003 after the factory and business of the partnership firm was closed on 31.07.2003. As regards the claims no.07 & 15, it may be noted that against these two claims, the claimant has been awarded only interest on the amount of Rs. 2,00,000/- which was advanced as loan by the claimant to the partnership firm for the period 01.04.2003 to 16.10.2003 which comes to Rs. 9,750/- and on the balance amount of loan of RS.1,50,000/- for the period 17.10.2003 to 15.08.2004 which comes to Rs. 11,250/-. With regard to Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified

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interest on the claim no. 05, the interest on the awarded amount of Rs. 1,38,203/- @12% per annum for the period of 164 months (01.08.2003 to 31.03.2017) comes to Rs. 226652/-. The awarded amount under claims no. 01 & 02 is Rs. 5,65,060 /- under claim no. 06 is Rs. 40,000/-, under claim no. 08 is Rs. 10,285/-, under claim no. 11 Rs. 51,285/- and under claim no. 13 is Rs. 10,000/-. The total amount awarded in favour of the claimant under claims no 1 & 2, 06, 08 11 & 13 comes to Rs. 6,76,630/-. The interest on the said amount for the period of 164 months (01. 08.2003 to 31.03.2017) @ 09% per annum comes to Rs. 8,32,255/- .Thus the total amount of interest under claims no. 01 & 02, 05, 06, 07 & 15, 08, 11 & 13 shall come to Rs. 10,79,907/- it may be noted here that since claims no. 03, 04,09,10,12, & 14 have been rejected no amount towards interest is payable in respect of these claims.”

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(NEENA BANSAL KRISHNA) JUDGE

OCTOBER 28, 2024/RS

Digitally Signed By:VIKAS ARORA Signing Date:28.10.2024 20:40:45 Signature Not Verified