The Madras High Court on Monday set aside an order passed by a court-appointed arbitrator, permitting Shanthi Gnanasekaran, daughter of famous businessman V.G. Panneerdas, to get included as a party in a pending arbitration proceeding related to a dispute between the present partners of VGP Beach Housing.
Justice S.M. Subramaniam, by a common order, allowed individual appeals filed by V.G. Santhosam, V.G.P. Ravidas, V.G.P. Rajadas and V.G.P. Babudas against the arbitrator’s decision to allow Ms. Gnanasekaran to get included as a party to the proceedings, though she was not a partner in the company.
The judge pointed out that VGP Beach Housing was originally formed on March 27, 1979, by Panneerdas and four other partners. In 1982, the partnership firm was reconstituted with the induction of two more members and upon the death of Panneerdas in 1988, his wife Parijatham became the sole successor of his share in the profits.
In 1992, Parijatham too died after nominating V.G.P. Ravidas as her nominee. Subsequently, the partnership firm was reconstituted multiple times until a dispute arose between the partners and got referred for arbitration. The High Court had appointed a retired judge of the Punjab and Haryana High Court as the arbitrator.
When the matter stood thus, Ms. Gnanasekaran filed an impleading petition before the arbitrator, claiming to have inherited the right of her father in the company and her plea was allowed, forcing some partners to approach the court. Allowing their appeals, Justice Subramaniam held that an arbitrator had no power to include a third party.
The judge said that Ms. Gnanasekaran would have to establish her claim only before a civil court and not before the arbitrator.
