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2023 Supreme(All) 11

IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
Manoj Kumar Gupta, J.
Bharat Petroleum Corporation Limited – Applicant
Versus
M/S Gupta Company and Others - Opposite Parties
Arbitration And Concili. Appl.U/S11(4) No. - 58 of 2021
Decided On : 27-01-2023

Advocates:
Advocate Appeared:
For the Applicant : Komal Mehrotra
For the Opposite Party : Preet Pal Singh Rathore, Chandra Bhan Gupta, Kamlesh Kumar Singh

Headnote:

Arbitration & Conciliation Act, 1996 – Section 11(4), 12(5), 40 – Indian Partnership Act, 1932 – Section 42, 50, 16, 11(8), 12(1) – Partnership deed – Dispensing pump and selling license – Personal profits earned after dissolution – Personal profits earned by partners – Instant application has been filed under Section 11(4) of Arbitration & Conciliation Act, 1996 for appointment of an arbitrator to resolve disputes between applicant, who were carrying on business in name and style, in pursuance of an agreement with applicant pertaining to "dispensing pump and selling license" – Held, Under Section 40 of Arbitration and Conciliation Act, 1996, an arbitration agreement does not stand discharged on account of death of any party thereto, unless right of action is extinguished by operation of any law – Section 45 of Act clearly stipulates that notwithstanding dissolution of a firm, partners continue to be liable as such to third parties for any act done by any of them which would have been an act of firm if done before dissolution, until public notice is given of dissolution – Specific case of applicant is that surviving partners without informing applicant about death of one of its partners, continued to transact business with it – Consequently, Court find no merit in contention that on account of death of one of partners and resultant dissolution of firm, dispute between parties could not be referred for adjudication to arbitrator – Application is allowed.

JUDGMENT :

1. Matter taken up in the revised call.

2. Sri Komal Mehrotra, learned counsel for the applicant and Sri Chandrabhan Gupta, learned counsel for respondent no.2 are present.

3. None present for respondent no.3.

4. The instant application has been filed under Section 11(4) of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the 'Arbitration Act') for appointment of an arbitrator to resolve the disputes between the applicant and Mahesh Chandra Gupta (since dead), Devi Prasad Gupta-opposite party no.2 and Shiv Prasad Gupta-opposite party no.3, who were carrying on business in the name and style of M/s. Gupta & Company (opposite party no.1), in pursuance of an agreement with the applicant pertaining to "dispensing pump and selling license" dated 08.02.2014.

5. The case of the applicant is that one of the partner of the firm namely, Mahesh Chandra Gupta died on 15.08.2018. Opposite party nos.2 and 3, the remaining partners, without informing the applicant-company, continued to carry on business in the name of the firm and received supplies of petroleum products on 28.09.2018 but, did not make the payment thereof.

6. Arbitration Clause 19 stipulates that any dispute or difference between the parties arising out of the agreement will be referred to the sole arbitration of the Director (Marketing) of the Applicant-Company, or of some Officer of the Company nominated by him. The provisions of the Arbitration Act have been made applicable to the arbitration proceedings. It is urged that in view of Section 12(5) of the Arbitration Act, the Director (Marketing) of the Company, nor any officer of the company, could act as an arbitrator. Thus, the procedure prescribed under the agreement having failed by operation of law, an arbitrator be appointed by this Court.

7. Sri Chandra Bhan Gupta, learned counsel appearing on behalf of opposite party no.2 submits that since the license was in name of the partnership firm and as Mahesh Chandra Gupta, one of the partner of the firm had died, therefore, the firm stood automatically dissolved. It is submitted that in such circumstances, the matter cannot be referred to arbitration at all. He places reliance on Clause 13 of the Partnership deed between the partners, which is as follows:

"(13) That in event of the death of any partner, the partnership deed will come to an end and the same can be reconstituted only with formal written approval from Bharat Petroleum Corporation Limited. However the surviving partners can with the approval of the corporation in writing carry on the business of the said firm purely on temporary basis on the terms and conditions to be determined by the corporation at their sole discretion."

8. Learned counsel for the applicant, on the other hand, submits that the two surviving partners continued to carry on business in the name of firm and also received supplies of petroleum products, and therefore, there is no impediment in appointment of an arbitrator nor the claim of the applicant would stand defeated automatically on the said ground.

9. The issue which thus arises for consideration is whether after death of one of the partners of the firm, this Court can appoint an Arbitral Tribunal for deciding the claim of the applicant against the firm. No doubt, by virtue of Section 42 of the Indian Partnership Act, 1932 (hereinafter referred to as the 'Act'), a partnership firm stands automatically dissolved, in the event one of the partners of the firm dies, but it is subject to there being no contract to the contrary. Clause 13 of the Partnership deed contains a contract to the contrary between the partners. It permitted the surviving partners to carry on business in firm's name with the approval of the Applicant-Company. Moreover, the case of the applicant is that the surviving partners without informing the applicant about the death of one of the partner on 15.08.2018, continued to transact business in the firm's name and also received supplies of petroleum

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