SHAMSHUL ISHRAR KHAN v. ALKA CHANDEWAR
Challenge to Arbitral Award and Purging Contempt - Validity of Best Judgment Assessment and Adverse Inference when a Partner Withholds Accounts and Defies Interim Non-Alienation Orders.
Court: Bombay High Court
Citation: 2026:BHC-OS:7887
Decision Date: 02-04-2026
List of Laws
Arbitration and Conciliation Act, 1996; Indian Partnership Act, 1932; Limitation Act, 1963; Contempt of Courts Act, 1971; Right to Information Act, 2005
- Facts: The Petitioner, Shamshul Ishrar Khan (Khan), and the Respondent, Alka Chandewar (Alka), were partners in M/s Saras Developers. According to the last admitted Partnership Deed of 1997, Alka held an 80% share and Khan held 20%. Disputes arose when Khan produced subsequent deeds from 2002-2003 and a Retirement Deed alleging Alka had retired. Alka challenged these as forged and fabricated, subsequently issuing a Dissolution Notice in 2008 and invoking arbitration. During the arbitral proceedings, Khan stopped participating after his recusal application against the arbitrator was rejected. The Arbitral Tribunal found the retirement deeds to be forged based on evidence from the Registrar of Firms and the Income Tax Department, eventually awarding Alka Rs. 7.39 crores based on a "best judgment assessment" of sales turnover.
- Procedural Posture: Khan filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the award. Simultaneously, Alka filed a Contempt Petition alleging Khan wilfully disobeyed interim orders regarding the non-alienation of partnership assets.
- Issue: 1. Whether the arbitral award was vitiated by patent illegality or perversity regarding findings on limitation and the quantification of the respondent's share. 2. Whether the petitioner's conduct amounted to contempt of court for violating tribunal directions.
- Holding: 1. No, the award is valid and not perverse. 2. Yes, the petitioner is guilty of contempt, but is given an opportunity to purge it by depositing the awarded amount.
- Reasoning: The Court reasoned that Khan, having stayed away from the arbitration, could not complain about the "best judgment assessment" made by the arbitrator. Since Khan withheld audited accounts and financial statements, the arbitrator was entitled to draw an adverse inference and rely on registered sale deeds to compute profits. On limitation, the Court held that a partner’s right to an account arises upon dissolution; hence, the claim was within time. Regarding contempt, Khan's execution of Deeds of Confirmation in 2014, despite explicit 2010 and 2012 orders prohibiting the alienation of flats, constituted a "gross defiance" of the justice delivery process. To purge this contempt, Khan must deposit the entire awarded sum in Court within six weeks.
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