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IN THE HIGH COURT OF BOMBAY
Bharati Dangre, J.
Parvez Khodayar Raisi - Appellant
Versus
Behram Rashid Zandbaf - Respondent
Commercial Arbitration Application No. 39 of 2023
Decided On : 26-06-2023
ARBITRATION - DISPUTE RESOLUTION IN PARTNERSHIP - Arbitration and Conciliation Act, 1996 - Sections 11(6), 35, 40, 2(g) - The court discussed the provisions of the Arbitration and Conciliation Act, 1996, particularly focusing on the appointment of a sole arbitrator under Section 11(6) and the implications of death on arbitration agreements as per Section 40. The court interpreted 'Legal Representative' under Section 2(g) to include heirs and executors, allowing them to participate in arbitration. The finality of arbitral awards under Section 35 was also emphasized, influencing the decision to appoint an arbitrator to resolve the disputes arising from the partnership agreement.
Fact of the Case:
The Applicant, a partner in M/s. Parsi Bakery, sought to refer disputes with former partners to arbitration following the death of a partner, Mr. Merwan Boman. The partnership deed allowed for arbitration in case of disputes and specified conditions for dissolution and continuation of the partnership upon a partner's death.
Finding of the Court:
The court found that the disputes could be referred to a sole arbitrator as per the partnership deed and the Arbitration and Conciliation Act. It ruled that the legal heirs of the deceased partner could participate in the arbitration proceedings, affirming the binding nature of the arbitration agreement despite the partner's death.
Issues: Whether the disputes arising from the partnership can be referred to arbitration, and whether the legal heirs of the deceased partner can be included in the arbitration process.
Ratio Decidendi: The court held that the arbitration agreement remains enforceable despite the death of a party, and the legal representatives of the deceased partner are entitled to participate in arbitration proceedings. The interpretation of 'Legal Representative' under the Act was crucial in allowing the heirs to be part of the arbitration.
Final Decision: The court appointed Mr. Akash Rebello as the sole arbitrator to resolve the disputes between the parties, allowing the legal heirs of the deceased partner to participate in the arbitration process.
JUDGMENT/ORDER
1. By the present application, the Applicant in the capacity as Partner of M/s.Parsi Bakery, seek reference of the disputes that have arisen with Respondent Nos.1 and 2 (erstwhile Partners of M/s.Parsi Bakery), since it is the claim of the Applicant that, he has dissolved the Partnership firm, to be referred to a Sole Arbitrator to be appointed by this Court, by invoking its power under Sub-Sec. (6) of Sec. 11 of the Arbitration and Conciliation Act, 1996. In the Application, Respondent No.3 is Executor, whereas, Respondent No.5 is beneficiary of the Will executed by one of the erstwhile Partner Mr. Merwan Boman Afsadizadeh, who is no more. His daughter is impleaded as Respondent No.4 to the Arbitration Application.
2. The request to refer the disputes to an Arbitrator is made in the wake of Clause 12, comprised in the Deed of Partnership entered between the four Partners on 1/12/2003. The Partnership Deed clearly set out the share of each of the Partner in the capital, assets, effects, goodwill and all tangible and intangible rights and benefits pertaining thereto including the benefits of tenancy rights of the said business premises as also the net profits and losses of the partnership business in the following proportions:
3. The Deed of Partnership specify that the duration of the Partnership shall be "At Will" of the Partners and in case if any partner desires to retire or separate from the Partnership at any time, he may do so on giving to the other/s not less than one calender month's previous notice in writing, of his intention to do so. An important clause in the Partnership Deed stipulate a contingency in case of death of one of the Partner and the said clause read thus:
4. In this background, on 14/5/2020, Mr.Merwan Boman expired and the Applicant addressed a communication to the other two Partners as well as the legal heirs of Mr.Merwan Boman asserting therein that the duration of the firm is 'At Will' and attempts were made to settle accounts, on the death of Merwan Boman as he is not desirous of continuing the relationship of a Partner with them. As a result, he is invoking option of dissolving the firm with immediate effect i.e. from the date of receipt of the notice and he invoked the arbitration vide its communication dtd. 15/12/2021, in the wake of Clause 12 and even the name of Advocate was suggested to act as Sole Arbitrator. Since there was no response from the other end, Arbitration Application is filed by invoking Sub Sec. (6) of Sec. 11, to appoint the Sole Arbitrator to resolve the disputes.
5. The learned counsel for Respondent Nos.1 and 2, have no objection for the disputes being referred to the Sole Arbitrator, as in ter
The arbitration agreement survives the death of a partner, and legal representatives of the deceased are entitled to enforce the agreement and participate in arbitration proceedings.
Legal heirs of a deceased partner are bound by the arbitration clause in the partnership deed, allowing disputes to be referred to arbitration despite the death of a partner.
Arbitration agreement – Existence of an arbitration agreement is not affected by death of a party to arbitration agreement.
The court held that an arbitration clause in a partnership deed survives the death of a partner, allowing the arbitration of disputes related to the partnership's operations.
The main legal point established in the judgment is that the dispute amongst the partners regarding the dealings of the firm could be referred to arbitration as per the partnership deed, but once the....
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