Arbitration clauses in partnership agreements remain enforceable despite changes in partnership structure, and deficiencies in stamp duty are curable and do not bar arbitration.

1. As per office report dated 26.07.2023, opposite party No. 1 has been duly served by registered post but no one has appeared on his behalf. In respect of opposite party No. 2, the notice sent to him by registered post has returned with the endorsement of refusal. Thus, service on the said respondent is also sufficient.

However, no one has appeared on his behalf also.

2. Heard Shri Ujjawal Satsangi and Shri Rishabh Srivastava along with Shri Prabhav Srivastava, learned counsel for the applicants and Shri Abhay Kumar Singh, learned counsel for opposite party No. 3.

3. The instant application under Section 11 of the Arbitration and Conciliation Act, 1996 has been filed by the applicants invoking the power of this Court to constitute an arbitral tribunal in respect of the disputes arising between the parties out of partnership agreements dated 29 August 2016, 2 March 2020 and 20 February 2021.

4. The facts in brief are that a partnership agreement was executed on 29 August 2016 between applicant no. 1 (Ram Taulan Yadav) and one Sheela Yadav for doing business in the name of M/s Autar & Associates. As per Clause 14 of the said agreement all disputes and differences arising between the parties would be referred to mutually acceptable arbitration. On 2 March 2020, a retirement-cum-partnership deed was executed in respect of the partnership business. Thereby, Smt. Sheela Yadav retired from the partnership firm while Smt. Madhu Yadav (Applicant No. 2), Ram Milan Yadav, Himanshu Kesarwani (Opposite party No. 1) Saurabh Kesarwani (Opposite party No. 2) were introduced as new partners. The share of each of them is mentioned in Clause-1 of the partnership deed. Clause 17 of the said agreement also contains an arbitration clause for referring all disputes and differences to mutually acceptable arbitration. On 20 February 2021, a supplementary deed of partnership was executed whereby Ram Milan Yadav retired from the partnership firm with effect from 31 March 2021 and Radhey Shyam Mishra (opposite party No. 3) was inducted as a new partner. It seems that thereafter a memorandum of understanding (MoU) dated 09.09.2022 was executed between the partners of the firm and thereunder, the parties agreed that the properties given by the applicants in mortgage to secure the loan taken by the firm from the financial institutions would be released and thereafter, the applicants would retire from the partnership firm. In compliance of the said arrangement, four properties of the applicants were redeemed from mortgage, however, five properties remained mortgaged. This gave rise to disputes and differences between the parties, the resolution of which has been sought through arbitration. The applicants suggested name of three arbitrators vide its notice dated 15 April 2023. Opposite party no. 1 agreed to the name of Mr. Justice Vipin Sinha, Former Judge of this Court whereas opposite parties No. 2 & 3 did not respond to the notice.

5. Opposite party No. 3 has filed counter affidavit and has opposed the appointment of arbitral tribunal. The main grounds to oppose the constitution of arbitral tribunal are (1) the partnership firm was unregistered and partnership deed was not properly stamped, therefore, bar of Section 69 of the Partnership Act, 1932 and Sections 33 and 35 of the Stamp Act, 1899 would apply; (2) there was no arbitration clause in the supplementary partnership agreement dated 20 February 2021 whereby opposite party No. 3 was inducted as partner in the partnership firm for the first time. The arbitration clauses in the previous agreements are not bi