The High Court of Judicature at Allahabad has upheld an arbitration award of over ₹8.99 crore, ruling that arbitration proceedings initiated by a partnership firm do not abate upon the death of one of its partners. The division bench, comprising Chief Justice Arun Bhansali and Justice Jaspreet Singh, dismissed an appeal filed by U.P. Electronics Corporation Ltd. (UPEC), which sought to set aside an arbitral award and a subsequent commercial court order that had favored the claimant firm, P.S. Global. The Court’s decision clarifies that procedural irregularities—such as a partner dying after signing a claim but before its formal submission—do not fundamentally invalidate the arbitral process or strip a tribunal of its jurisdiction.

The dispute originated from a 2018 tender floated by the UPEC for the supply and installation of sophisticated DNA instruments for a Forensic Scientific Laboratory (FSL) in Varanasi. P.S. Global was awarded the work contract after a competitive bidding process, and it successfully fulfilled its obligations by installing 31 items. While the project was certified as working satisfactorily by the Deputy Director of the laboratory, UPEC abruptly terminated the contract in June 2018, citing a subsequent inquiry committee report and confiscating the firm’s performance bank guarantee of ₹93,79,535.

Following a court-mandated arbitration, the sole arbitrator passed an award on February 4, 2022, ordering UPEC to pay ₹8,99,38,275 along with 8% annual interest. This award was later affirmed by Commercial Court No. 2, Lucknow, in December 2025. Challenging this in the High Court under Section 37 of the Arbitration and Conciliation Act, 1996, the Corporation argued that the proceedings were void ab initio because the claim was filed on behalf of a deceased partner.

Procedural Technicalities Versus Substantive Justice

Addressing the appellant's contention that the claim was "non-est" due to the partner's death, the Court emphasized that a partnership firm is a collective entity of its partners. The judges noted that the claim petition was signed while the partner, Shiv Kumar Verma, was alive, and his death was disclosed to the arbitrator at the first available opportunity during the filing of a replication. Drawing on Order XXX, Rule 4 of the Code of Civil Procedure, the Court held that the legal representatives of a deceased partner need not be impleaded to continue proceedings in the firm's name.

"The firm is a collective name of its partners. Even if one partner had died but the remaining partner were alive, which fact came to be informed while filing the replication and once the claimant was a partnership firm , hence, borrowing the principles of Order XXX C.P.C., the proceedings were to go on and it would not abate ," the bench observed.

The Court further clarified that procedural hurdles which do not affect the merits of the case cannot serve as grounds to void an arbitral award. Reiterating the limited scope of judicial interference in arbitration matters, the Court stated, "Not every procedural irregularity can have the effect of vitiating an award nor would it permit the Court under Section 34 or this Court under Section 37 of the Act of 1996 to interfere."

Allegations of Fraud and Corporate Misconduct

UPEC had also challenged the award on the grounds of "public policy," alleging that P.S. Global had formed a cartel with other bidders to manipulate the tender process. The Corporation argued that the firm was initially unregistered and had misrepresented its partnership details to bypass Section 69(3) of the Indian Partnership Act, 1932.

The Court, however, dismissed these allegations, noting that the Corporation failed to provide cogent evidence to support its claims of fraud. It highlighted that the tender screening committee had already evaluated the bids and that the Corporation had itself issued a corrigendum due to the specialized, single-source nature of the equipment, which explained why multiple bidders shared similar experience certifications.

"A plea of fraud or corrupt practice is easier to plead than to establish the same. Unless a plea is established by cogent evidence , it cannot form the basis of any finding," the judgment remarked. The Court observed that UPEC's decision to terminate the contract without following the mandatory 30-day notice period under Clause 6.17 of the agreement was a significant procedural failure that the arbitrator correctly identified as illegal.

Final Determination on Contractual Liability

Regarding the argument that the UPEC was merely a facilitator and that the State of Uttar Pradesh through the Police Technical Services was the necessary party, the Court rejected the premise of non-joinder. It noted that the contractual privity existed exclusively between UPEC and P.S. Global, as all correspondence, the work order, and the eventual termination notice were issued by the Corporation in its capacity as a separate legal entity.

The Court also addressed the argument regarding the Section 34 order being non-reasoned, holding that while an order must be speaking, it does not need to be excessively elaborate if the essential findings are based on the record. Finding that the Commercial Court had adequately considered the primary contentions, the High Court held that a remand would be unwarranted and would only contribute to unnecessary litigation delays.

Ultimately, the High Court affirmed the arbitral award, finding it to be based on sound evidence and valid findings of fact. By dismissing the appeal, the Court has reinforced the principle that arbitration, as a mechanism for dispute resolution, should remain immune from hyper-technical procedural challenges that do not influence the fundamental fairness of the process. The dispute, which has spanned several years, now concludes with the affirmation of the arbitrator’s original decision, requiring the U.P. Electronics Corporation to fulfill the payment obligations dictated by the award.