CHAUHAN, J. - (1.) THE dispute over the management of a hotel is the bone of contention between the parties. THE appellant has challenged the Order dated 9. 3. 2006 passed by the District Judge, Jaipur whereby the learned Judge has appointed a receiver in an application filed under Section 9 of the Arbitration and Conciliation Act, 1996 (henceforth to be referred to as `the Act' for short) by the respondent.
(2.) THE brief facts of the case are that respondent before this Court, Vikram Agarwal filed an application under Section 9 of the Act, against the appellant, Mahesh Agrawal. According to the application, the appellant and the respondent are cousin brothers. On 27. 1. 1999, both of them formed a partnership for the purpose of running a business in the name and style of M/s. Surya Hotel at Jaipur. For this purpose a partnership deed was signed on 27. 1. 1999. THE respondent claimed that in order to pursue his studies, he was out of Jaipur from 1. 6. 2001 to 30. 4. 2003. THErefore, during this period he was unable to look after the said business. However, whenever he would come back to Jaipur, he would ask the appellant about the business and about its income and expenditure. However, the appellant would neither show him the accounts, nor tell him about the business. THE appellant would also not let him sit in the hotel. In fact, whatever the earning, the appellant would siphon it off. Since the respondent was not satisfied with the appellant's behaviour, he sent him a notice on 9. 11. 2004 for dissolving the partnership. THE respondent, thereafter, filed a civil suit before the District Court, Jaipur, which was subsequently transferred to the Additional District Judge, No. 3, Jaipur City, Jaipur. But, realizing the existence of an arbitration clause in the partnership deed, the respondent moved an application for withdrawing the said civil suit. Subsequently, he sent a notice to the appellant for appointing Mr. Pradeep Katariya as the sole arbitrator. However, the appellant did not reply to the said notice. Thus, the respondent submitted the application under Section 9 of the Act for appointment of a receiver as according to him, the arbitral proceedings have yet to commence, the proceeding might also take a long time before completion. Hence, in order to protect his interest, it is imperative that a receiver be appointed. The appellant filed his written statement, wherein he claimed that respondent had never actively participated in the running of the hotel. It is the appellant who has always looked after the business. In fact, on 18. 7. 2002, the respondent's father wrote to the appellant that his son no longer wishes to continue in the partnership. Thereafter, on 18. 8. 2002, his father accepted Rs. 1,50,000/- from the appellant. Thus, the partnership stood dissolved from 18. 8. 2002. Hence, the appellant is the sole owner of the business. The only issue left to be decided by the arbitrator is about payment of some amount to the respondent. But, as the appellant was running the business there was no need to appoint a receiver. However, after hearing both the parties, the learned Judge appointed a receiver vide Order dated 9. 3. 2006. Hence, this appeal before this Court. Mr. Alok Garg, the learned counsel for the appellant, has raised a number of contentions before this Court: firstly, the respondent's father had taken Rs. 1,50,000/- from the appellant had sent a letter to the appellant about the dissolution of the partnership. Secondly, it is the appellant who is running the hotel ever since the inception of the partnership. Therefore, it is his interest that is paramount. Thirdly, running of a hotel requires twenty-four hour supervision. It also requires marketing, salesmanship, etc. Naturally, the receiver would not take as much interest in running the hotel, as would the appellant. In fact, according to the counsel, no receiver should be appointed on a running business as such appointment hurt the interest of the business. Fourthly, instead of appointing the receiver, which is the hardest remedy, the learned Court could have made provisions for keeping of the accounts, for submitting the accounts to the Court on monthly basis etc. In order to buttress his contentions, the learned counsel has relied upon the cases of C. D. Grover & Ors. vs. Ashok Kumar (AIR 1997 Raj. 281), Firm Ashok Traders & Anr. vs. Gurumukh Das Saluja & Ors. ( (2004) 3 SCC 155, Kalpana Kothari (Smt.) vs. Sudha Yadav (Smt.) & Ors. ( (2002) 1 SCC 203 ). On the other hand, Mr. R. K. Agarwal, the learned counsel for the respondent, has denied the dissolution of the partnership. According to him, the respondent had never authorized his father to send the notice for dissolution of the partnership. Therefore, the said notice does not bind him. Secondly, as a partners, he is entitled to know about the business. Thirdly, till the arbitrator is appointed, it is essential to preserve the property and the business. Since the appellant is siphoning off the earning without rendering any accounts to the respondent, it is essential that a receiver be appointed. He has, thus, supported the impugned order. We have given our anxious consideration to the rival contentions and have perused the impugned order.
(3.) THE appointment of receiver on a running hotel has attracted the attention of the Courts for a long time. While appointing a receiver the Court should keep certain factors in mind. Firstly, the appointment should be "just and convenient" for the protection of the hotel. Secondly, running a hotel is a commercial activity. THErefore, any such steps should be taken which would protect and promote the commercial interest. Thirdly, the interest of both the parties should equally be protected. Fourthly, a mechanism should be created so as to protect the interest of both the parties. Unless a compelling reason exists, which would depend on the facts and circumstances of each case, a stranger should not be introduced so as to take over the business and run it. (Ref. to : Firm Ashok Traders & Ors. (supra), Kalpana Kothari (Smt.) (supra ). In the present case the appellant has been running the hotel ever since 1999. He has been looking after the day-to-day management, the marketing and after the goodwill of the business. The appointment of a receiver would adversely affect the functioning of the hotel. For the receiver is not an expert in running the hotel. The supervision, the running of a hotel is a complex process. It involves not only the day-to-day maintenance, but also marketing, getting in touch with third parties to attract the client etc. The receiver can neither manage the actual running of the hotel, nor run around and get in touch will other parties for attracting the clients and to look after their needs. Therefore, a mechanism has to be worked out which would promote the interest of the business as well as protest the interest of both the parties. The respondent's main concern is about the financial side of the business. The respondent's complaint is that the appellant is siphoning off the income generated by the hotel. Therefore, this concern needs to be addressed. Hence, this appeal is allowed and the order dated 9. 3. 2006 passed by District Judge, Jaipur is hereby quashed and set aide. The respondent is directed to nominate a person within a period of one week from the date of this judgment. The appellant is directed to permit the respondent's nominee to sit in the accounts section. The respondent's nominee is permitted to examine the income and the expenditure of the hotel. The appellant shall submit the monthly statement of income and expenditure before the arbitrator by the seventh day of each month. The respondent's nominee shall have the right to inspect the hotel during the daytime. However, it is clarified that the respondent's nominee shall not interfere with the day-to-day functioning of the hotel. The day-to-day management shall be the sole responsibility of the appellant. No order as to costs. . ;