Shine Legal India | Lucknow

The petitioner, Prashant Mohta, was a partner in the respondent no. 3 partnership firm, Ultra Carbon Industries, until his retirement on September 17, 2022.
A dispute arose regarding the petitioner's dues from the firm, leading him to invoke an arbitration clause and appoint an arbitrator.
The petitioner alleged manipulation of accounts by the respondents and claimed his dues.
The respondents filed a counterclaim, seeking a declaration regarding the firm's stock-in-trade and claiming sums for alleged losses and retained goods.
An independent auditor was appointed by the arbitrator.
The arbitrator, under Section 17 of the Arbitration and Conciliation Act, 1996, ordered the petitioner to sign the firm's financial statements, despite his objections to their accuracy.
The petitioner challenged this order, leading to the present appeal under Section 37 of the 1996 Act.

Scope of Interference: The extent to which the court can interfere in an appeal under Section 37 of the 1996 Act.
Validity of the Order: Whether the arbitrator's order was valid and within their jurisdiction.
Applicability of Accounting Standards: The binding nature of Accounting Standards on Income Tax Authorities.
Binding Nature of the Tribunal's Order: Whether the arbitrator's order is binding on Income Tax Authorities.
Compulsion to Sign: Whether the petitioner can be forced to sign financial statements he disputes.

Petitioner's Arguments:

The order compels him to sign inaccurate statements, potentially incriminating him under the Income Tax Act.
The order could render the arbitration proceedings infructuous.
Accounting Standards are not binding on Income Tax Authorities.
The order violates his right against self-incrimination.

Respondents' Arguments:

The petitioner's refusal to sign hinders the firm's operations and tax filings.
The partnership firm continues to exist, and they can maintain their counterclaim.
The petitioner's relief under the Retirement Deed is contingent on signing the statements.
The arbitrator's view is rational and within the bounds of law.

The court held that the arbitrator's order was not in aid of the main relief sought in the arbitration and could potentially make the proceedings infructuous.
It clarified that Accounting Standards are not binding on Income Tax Authorities and the tribunal's order doesn't bind them either.
The court emphasized that compelling the petitioner to sign disputed financial statements could violate his right against self-incrimination.
The order was deemed beyond the tribunal's jurisdiction and set aside, allowing the petitioner's appeal.

Limited Judicial Intervention: Courts should minimally intervene in arbitration proceedings.
Section 37 Appeals: The scope of interference in appeals under Section 37 is limited to cases of illegality, perversity, jurisdictional error, or unconscionable injustice.
Self-Incrimination: Compelling someone to sign documents that could incriminate them is against legal principles and constitutional morality.