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.

ORDER :

Manindra Mohan Shrivastava, C.J.

1. Applicant has filed this application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act of 1996’) for appointment of an arbitrator in the matter of alleged dispute between the parties to a contract providing for adjudication of disputes through the process of arbitration.

2. As pleaded by the applicant, M/s. Verma & Company, 214, Jaipur Road, Ajmer is a registered firm under the provisions of Indian Partnership Act, 1932 (hereinafter referred to as ‘the Act of 1932’). After the death of one of the two partners namely; Dinesh Kumar Verma, his son Akshay Verma was admitted as partner w.e.f. 24.12.2013 and new partnership was constituted which came into existence vide partnership deed executed on 24.12.2013 between Sita Devi Verma and Akshay Verma, which is duly signed by each of them. Clause-9 of the partnership deed provided that all the disputes shall be settled by the arbitration according to the provisions of the Act of 1996.

3. On 14.03.2022, one of the partners Sita Devi Verma addressed a communication to the Branch Manager, Bank of Baroda stating therein that the accounts in the name of the firm be stopped/closed and she also informed that she had executed a Power of Attorney in the name of her son-in-law Atul Karel. The Branch Manager of the Bank informed the other partner Akshay Verma regrading letter of Sita Devi Verma for freezing of the accounts of the firm. On 21.03.2022, Akshay Verma replied that the firm had been a very old customer of the bank, therefore, no action or cognizance should be taken on the basis of the communication sent by the other partner Sita Devi Verma. This was followed by another communication dated 26.03.2022 through the advocate repeating request not to initiate any action or take cognizance of the communication sent to the bank by Sita Devi Verma. Sita Devi Verma again sent a letter on 21.04.2022 to the Branch Manager of the bank with a request to restart overdraft account of the firm in the name of M/s. Verma & Company.

It is further averred that Akshay Verma had submitted an affidavit stating therein that misunderstanding between the parties had been cleared and, therefore, consent was given to operate the overdraft account. It was also stated in the application that Sita Devi Verma vide communication dated 29.06.2022, addressed to the Marketing Division, Indian Oil Corporation Ltd., stated that she was an illiterate lady of 89 years, thus, she had forwarded the nomination of her daughter Shakuntala Karel for partnership. In the meanwhile, Sita Devi Verma expired on 12.07.2022.

4. In the aforesaid background, Bank of Baroda sent a legal notice on 04.08.2022 to the firm M/s. Verma & Company, Akshay Verma, legal representatives of deceased Sita Devi Verma and legal representatives of deceased Rajendar Verma for execution of necessary documents in favour of the firm by reconstituting the firm or repay outstanding amount of Rs.1,75,33,186/- along with interest and other expenses, failing which appropriate legal action would be taken.

5. As dispute had already arisen between applicant-Akshay Verma and Sita Devi Verma (since deceased), the applicant requested the non-applicants, i.e., legal representatives of deceased Sita Devi Verma to settle the dispute, but despite repeated requests, non-applicants have not taken any step for settlement, therefore, application has been filed for appointment of an arbitrator.

6. By filing reply to the applicatio