Partnership subsists after dissolution for winding up the business and adjusting the rights of the partners, allowing the enforcement of rights arising from a contract even after dissolution. The court can appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 if the respondent fails to respond to the arbitration clause.

( 1 ) BY this application the applicant seeks to appoint independent Abitral tribunal under Sections 11 (6) of the Arbitrtion and Conciliation Act, 1996 (for short the Act ).

( 2 ) IT is averred by the applicant that on december 31, 2003 a partnership deed was executed by the applicant and the respondent for the purpose of running bore-well digging business. Clause 13 of the said deed that related to Arbitration, reads as under :-

"that any dispute or difference which may arise between the partners or between their representatives with regard to the constitution, meaning, effect of this deed or any part or respecting account, profit and loss of the business or right and liabilities of partner under this deed or on the dissolution or winding up of the business or ay other matter relating to the partnership profession shall be referred to arbitration and all the provisions of the Indian Arbitration Aet shall apply. "

( 3 ) AFTER having borrowed loan from City corporation Finance Ltd. , two trucks were purchased and machineries got installed by the firm. However with mutual consent of partners the firm was dissolved on August 26, 2005. A decision was arrived at between the partners that the respondent will sell the trucks and machineries and repay outstanding loan amount. The remaining sale proceeds will thereafter be divided equally between the partners. The respondent however did not sell the trucks and machineries but started his own bore-well business and had been earning sum of Rs. two lacs per month. The applicant served notice on the respondent for doing the needful but all went in vain. Ultimately vide legal notices dated March 6. 2006 and April 8, 2006 the respondent was asked to propose the name of the Arbitrator to settle the dispute but the notices remained unresponded.

( 4 ) THE respondent filed reply to the application raising preliminary objection in regard to maintainability of the application. It was pleaded that since partnership deed was not registered it could not be acted upon. It was further stated that Clause 13 did not contemplate for arbitration after dissolution of partnership.

( 5 ) I have pondered over rival submissions and scanned the case law placed for my perusal.

( 6 ) BEFORE proceeding further it will be useful to refer to the relevant statutory provisions.

( 7 ) SECTION 40 of the Partnership Act, 1932 (for short 1932 Act) provides that a partnership firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners.

( 8 ) SECTIONS 46, 47 and 48 of 1932 Act relate to the rights of partners and mode of settlement of account. These sections read as under :-

"46. Right of partners to have business wound up after dissolution.- On the dissolution of a firm every partner or his representative is entitled, as against all the other partners of their representatives, to have the property of the firm applied in payment of the debts and liabilities of the firm, and to have the surplus distributed among the partners or their representatives according to their rights. "

"47. Continuing authority of partners for purposes of winding up.- After the dissolution of a firm the authority of each partner to blind the firm and the other mutual rights and obligations of the partners, continue notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise : provided that the firm is in no case bound by the acts of a partner who has been adjudicated insolvent; but this proviso does not affect the liability of any person who has after the adjudication represented himself or knowingly permitted himself to be represented as a partner of the insolvent. "

"48. Mode of settlement of accounts between partners.- In setting the accounts of a firm after dissolution, the following rules shall, subject to agreement by the partners, be observed :- (