The court clarified the legal principles regarding dissolution of a partnership under Section 43 and Section 44 of the Partnership Act, emphasizing that the arbitrator's views were supported by evidence and did not warrant interference under Section 34 of the Arbitration and Conciliation Act, 1996.

S.C.Gupte, J.

1. These cross petitions challenge an award passed by a sole arbitrator in a partnership dispute.

2. Respondent No.1 to Arbitration Petition No.37 of 2012 was the claimant before the arbitrator. His case was that Respondent No.2 herein (who was Respondent No.4 before the arbitrator) had acquired rights for development of property bearing Survey No.27, Hissa No.3, CTS No.286 at Vile Parle, Mumbai ("the suit property") from the owners thereof and these rights were transferred to Petitioner No.1 partnership firm under an agreement of 10 April 1981; pursuant to this agreement, Petitioner No.1 had commenced work and partly constructed a building (RCC construction of 4 slabs and some brick work on the ground and first floor) on the property; since existing partners of Petitioner No.1 firm were short of funds, they approached the claimant for funds; the parties entered into two documents, one titled as a Memorandum of Understanding ('MOU') and the other as a Deed of Joint Venture Partnership ('JVP'), both dated 19 May 1988, whereby the claimant along with the existing partners and the deceased Manohar Bhaskar Kowli, who was also one of the partners of Petitioner No.1 firm, agreed to become a partner of the firm. The claimant was referred to as "incoming partner", whilst the then existing partners were referred to as "continuing partners". According to the claimant, he had contributed a sum of Rs.46 lakhs to the deceased Manohar Bhaskar Kowli and other existing partners towards his 50% share and in addition, had also paid some amount towards carrying out the construction work. It was submitted that since there was no progress in the construction work and his money contributed to the firm was blocked up for many years, he had called upon the partners of the firm to reimburse his payment. He had, accordingly, invoked the arbitration agreement forming part of the JVP. That is how the learned arbitrator adjudicated the disputes. The claimant had asked for specific performance of the MOU and the JVP. In the alternative, he had sought dissolution of the firm constituted by the JVP and account of his share in the assets of the firm.

3. It was, on the other hand, the case of the continuing partners that the documents were sham and bogus and of no effect. It was submitted that the claims were also barred by the law of limitation. The continuing partners also submitted that their agreement of 10 April 1981, by which they took over development rights in respect of the suit property, had been terminated by Respondent No.2 herein (Respondent No.4 in the reference).

4. The claimant gave oral evidence. He was cross-examined by advocates of the continuing partners as also of Respondent No.2 herein. Respondent No.2 herein also gave oral evidence. The continuing partners, however, chose not to lead any oral evidence.

5. On these pleadings and evidence, the learned arbitrator held that the firm could be dissolved treating the date of institution of the arbitration proceeding as an act of dissolution. The arbitrator held that the relief was not barred by limitation. The learned arbitrator held that though, ordinarily, on dissolution of a partnership, there should be an order for accounts, the facts and circumstances of the present case had established that there was no activity whatsoever effective from the date of the claimant joining the partnership firm. The arbitrator particularly noted that there was no activity whatsoever for maintaining accounts during the period of three years immediately preceding the date of commencement of arbitration and accounts prior to the said period, in any case, were barred by limitation. The arbitrator accordingly did not grant any relief for taking of accounts of the business. Considering, however, that a sum of Rs.25 lakhs was admittedly received and acknowledged by continuing partners, as stated in the MOU, the arbitrator was of the view that there was no reason why such payment should not be ac