IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
A. RAJASHEKER REDDY, J.
P. Rajesh Babu – Appellant
Versus
Somuri Purnachandra Rao and Others – Respondents
Arbitration Application No. 46 of 2020
Decided On : 08-06-2021
Arbitration and Conciliation Act, 1996 - Section 11(5) and (6) - Partnership Deed – Disputes - Seeking to appoint sole Arbitrator - Parties in this arbitration application are members of one family - Applicant is daughter-in-law and respondents 1 and 2 are her father-in-law and mother-in-law, the 3rd respondent is her sister-in-law, respectively - All four family members established partnership firm in name and style of M/s. Reliance Developers to do business in construction activity viz. construction of roads and highways, bridges, buildings, commercial and residential complexes etc - It was agreed in the registered partnership deed, dated, that 1st respondent would function as managing partner, applicant as working partner and respondents 2 and 3 as partners of firm - That as per clause 9 of partnership deed, after tallying profit and loss accounts of firm, less charge of interest, remuneration and expenses of firm, remaining proceeds of firm was agreed to be shared at 25 % by applicant, 10% by 1st respondent, 40% by 2nd respondent and 25% by the 3rd respondent - Remuneration to be paid to partners was also stipulated under clause 7 of deed - That with active support of applicant’s father they have undertaken construction of 14 projects at various places - Whether it is compulsorily registrable document need not be examined as original partnership deed dated being a registered one under Partnership Act, subsequent amended partnership deed being a consequential document its registration – Held, applicant and the respondents are only four partners of firm and they entered into partnership deed and they are only parties to arbitration agreement - Firm, which is dissolved, not being a party and cannot be called as party as such arbitration application is not bad for non-joinder of firm as party - It was pleaded by respondents that the husband of the applicant was the key person and he is alter-ego of the applicant. But, admittedly the husband of applicant is employee of firm and he cannot be related to claims made in arbitration - Moreover he is neither a partner nor a party to the arbitration agreement and till date he did not make any claim against firm or partners - He is no way concerned with affairs of firm except in capacity of an employee - Cogent perusal of Arbitration clause would reveal that clause is widely worded and not just limited to the disputes amongst partners during subsistence of partnership firm. Courts should, if circumstances allow, lean in favour of giving effect to arbitration clause to which parties have agreed - Issues (ii) and (iii) are answered accordingly - Arbitration application is allowed.
ORDER :
1. This arbitration application is filed under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 (for short “the Act”) seeking to appoint sole Arbitrator to resolve the disputes between the parties arising under the Partnership Deed dated 27-10-2011 and the amended Partnership Deed dated 18-09-2014 of the dissolved firm M/s. Reliance Developers.
2. The facts of the case briefly stated are:
Booz Allen and Hamilton Inc. vs. SBI Home Finance Ltd. (2011) 5 SCC 532
Keshavlal Lallubhai Narandas vs. Patel Bhailal Narandas
M/s Duro Felguera S.A. vs. M/s. Gangvaram Port Limited
M/s. SMS Tea Estates vs. M/s. Chandmari Tea Co. Pvt. Ltd. (2011) 14 SCC 66
Manohar Reddy vs. Maharashtra Krishna Valley Development Corporation
National Agricultural Co-Op. Marketing Federation India Ltd. vs. Gains Trading Ltd. (2007) 5 SCC 692
Prem Lata vs. M/s. Ishar Dass Chaman
Sukanya Holdings Pvt. Ltd. vs. Jayesh H. Pandya
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.
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....
Dissolution of partnership - Non-compliance of Clause 18 of Partnership Deed - Absence of any embargo to refer post dissolution dispute to Arbitrator, it is not possible to accept that Arbitration cl....
The main legal point established in the judgment is that the dissolution of a partnership firm entitles a partner to seek settlement of accounts and interim reliefs under Section 9 of the Arbitration....
Mere allegations of fraud do not inherently preclude arbitration unless they raise complex issues requiring a full trial; straightforward financial disputes remain arbitrable under the Arbitration an....
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