The main legal point established is the court's authority to appoint an Arbitrator when an Arbitration Agreement is invoked, and the need for detailed examination of the effect of new agreements on the parties' rights.

JUDGMENT :

VIPIN SANGHI, J.

1. I have heard learned counsels, and proceed to dispose of this Application under Section 11(6) of the Arbitration and Conciliation Act, 1996.

2. The case of the applicant is that she entered into a partnership with the respondent vide Partnership Deed dated 11.12.2015. Under the said Partnership Deed, both the parties had 50% shares. Clause 17 of the Agreement contained an Arbitration Agreement between the parties provides that any dispute or difference which may arise between the partner or their legal representatives with regard to the meaning or effect of the said deed or any part thereof or respecting the account, profits and losses of the business or any other matter relating to the firm shall be referred to the Arbitrator-one to be nominated by each partner and in case of a dispute or difference, the same was to be referred to the decision of the Umpire.

3. It appears that disputes arose between the parties, and the applicant invoked the Arbitration Agreement on 17.10.2018. Despite the said invocation, the parties did not appoint the Arbitrators, and consequently, the applicant preferred Arbitration Petition No. 33 of 2019 titled Manju vs. Deepak Kaushik. The same was disposed of by the then Chief Justice on 05.11.2020, while observing that under Clause 17 of the Partnership Deed dated 11.12.2015, each party had to appoint one Arbitrator, which had not been done. The applicant was given liberty to act in terms of the Partnership Deed.

4. The applicant then again invoked the Arbitration Agreement dated 25.11.2020, and nominated one Arbitrator, namely Mr. M.C. Upreti, retired Additional Secretary, Uttarakhand as one Arbitrator. Since the respondent did not proceed to appoint the second Arbitrator, the applicant has again preferred the present Application.

5. Upon issuance of notice, the respondent has filed a counter-affidavit. According to the respondent, the said Arbitration Agreement does not survive. The respondent states that the parties had entered into a Supplementary Partnership Deed on 20.02.2018 in pursuance of the MOU dated 19.02.2018. Under the new Partnership Deed, the applicant retired from the Partnership Deed and one Mr. Jawahar Singh was inducted as a new Partner with 50% shares. Clause 3 of the new Partnership Deed reads as follows:

“3. It is declared that except as hereinafter provided the Retiring Partner hereby releases all his share, right, title and interest in the business, of the said partnership, its assets including goodwill, all licenses and permits held by the said Firm, Its receivables and outstanding contracts, that the same shall belong to the Continuing Partner and Admitting Partner in their respective proportion.”

6. On the aforesaid basis, the claim of the respondent was that the applicant had given-up all her rights and claims arising out of the original Partnership Deed dated 11.12.2015.

7. The submissions of the learned counsel were heard for some time by this Court on 17.02.2023 when the Court felt it necessary to examine the MOU referred to in the Supplementary Partnership Deed. The said MOU has been placed on record by the respondent, along with the Supplementary Affidavit dated 17.02.2023.

8. The submission of learned counsel for the applicant is that a perusal of Clause 4 of the MOU dated 19.02.2018 shows that the respondent had agreed to settle the Account of the applicant on the basis of the Account dated 31.03.2018. He submits that on this premise, the applicant had given-up her partnership with 50% shares and agreed to the induction of another partner, namely Sri Jawahar Singh with 50% shares in the business of the partnership. Clause 4 of the MOU reads as follows:

“4. That accordingly all the liabilities except specially agreed as per clause 2, all other liabilities even interest on DLL loan till date 31.03.2018 with penal interest etc will be liabilities of partners of firm as per first party and retiring partner Mrs. Manju Wife of Sh. Hari Dass Resident 2