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2025 Supreme(Online)(HP) 7685
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Jyotsna Rewal Dua, J
Nitin Gupta – Appellant
Versus
Arrpit Aggarwal – Respondent
Arb. Case No. 116 of 2025
For the Appellants/Petitioners: Mr. Mohit Chadha, Mr. Shubham Sood
For the Respondents: Mr. Desh Raj Thakur, Mr. Ravneet Kumar
Interim relief under Section 9 of the Arbitration and Conciliation Act is denied when halting operations of a partnership firm may cause irreparable harm, affirming the need for business continuity until the arbitration process resolves partnership disputes.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 9 - Indian Partnership Act, 1932 - Sections 43, 46, 47, and 53 - Petition to restrain a partner from conducting business after dissolution notice - The partnership firm constituted was deemed 'at will' but involved clauses pertaining to mutual consent for dissolution - Irreconcilable differences led to the request for interim relief, but it was found that continuation of business was necessary to avoid irreparable loss - Balance of convenience favored respondent, as the business was running profitably and maintaining employee livelihoods is critical. (Paras 1-5)
(B) Interim Relief - The court highlighted the conditions necessary for granting interim relief including prima facie case, balance of convenience, and avoidance of irreparable harm - It emphasized that halting business could destroy the subject matter of arbitration and adversely impact employed individuals. (Paras 4(i) and 5)
Facts of the case:
The petitioner sought to restrain the respondent from managing the partnership firm, claiming that a notice for dissolution had been issued due to differences - Both partners had equal stakes in profit/loss, and the firm existed since 2014, incorporating pharmaceutical manufacturing.
Findings of Court:
The court ruled against granting interim relief as it could cause significant operational disruptions, and the partnership firm was a running concern.
Issues: The principal issues included the nature of the partnership agreement (at will vs. mutual consent for dissolution) and the necessity of interim measures to protect the business.
Ratio Decidendi: The court stated that until formal dissolution occurs through the arbitration process, the business must continue to operate to safeguard multiple interests, thus denying the petitioner's request for immediate cessation of operations.
Result: Petition dismissed.
| Table of Content |
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| 1. dissolution of the partnership firm is not granted at this stage (Para 5) |
Jyotsna Rewal Dua, Judge
This petition moved under Section 9 of the Arbitration and Conciliation Act, 1996 (in short the ‘Arbitration & Conciliation Act’) seeks:-
i) To restrain the respondent/his representatives, assignees, agents, employees or any other persons acting on his behalf from carrying out any business operations in the name of M/s Vidhyasha Pharmaceuticals or transacting in the name of the Firm in any
ii) Closure of the production activities of the partnership firm till the dissolution of the firm gets completed;
iii) To H restrain the respondent from selling, transferring, alienating, encumbering or disposing of any goods, stock-in-trade, raw materials, finished goods, or any part of the inventory lying at the partnership firm; and for freezing the bank accounts int the name of the partnership firm. Further prayer has been made to appoint a Receiver to take possession, custody and control of the entire inventory of the partnership firm including all stock-in-trade, raw materials, finished goods and any other assets forming part of the firm’s inventory.
2. M/s Vidhyasha Pharmaceuticals was constituted as partnership firm on 24.06.2014 between S/Sh. Parkash Chand Bansal, Nitin Gupta (petitioner) and Arrpit Aggarwal (respondent). Sh. Parkash Chand Bansal retired from the partnership firm. The firm was reconstituted on 06.01.2015 between the remaining two partners who had 50% shares in the net profits and losses of the partnership business. Both the partners (parties herein) are real cousins. The partnership firm was to manufacture pharmaceutical products, medicines, tools, dyes and also to do service job work.
2.(i) The case of the petitioner is that:- (i) Partnership constituted on 06.01.2015 was ‘at will’ governed by the Indian Partnership Act, 1932 (in short the ‘Partnership Act’). Irreconcila.ble differences have now cropped up between the two partners: On 26.05.2025, petitioner issued notice of dissolution of the partnership to the respondent invoking Section 43 of the Partnership Act. Petitioner also got the notice of dissolution of the partnership firm published in the newspapers (Himachal Tribune & Delhi Tribune) on 15.06.2025. The partnership firmt stood dissolved on the date of publication of the notice; (ii) Respondent has got no right to carry on business of partnership firm from 26.05.2025 or alternatively from 15.06.2025 onwards; (iii) Petitioner has filed Arbitration Case No. 203 of 2025 in this Court under Section 11 of the Arbitration & Conciliation Act seeking appointment of an Arbitrator.
2.(ii) Learned Counsel for the petitioner drawing support from Sections 43 , 46, 47 & 53 of the Partnership Act urged that H petitioner has a right to seek the claimed relief against the other partner. On dissolution of the partnership firm, it’s business needed winding up. Respondent is required to be restrained from carrying out the partnership business till the appointment of Arbitrator/ adjudication of dispute by the competent authority. All actions pursuant to partnership deed needed to be stopped. Production activity in furtherance of partnership business was also required to be halted.
In support of above submissions reliance was placed u.pon Ashok Kumar Mittal vs. Ashwani Kapoor & Anr., [AIR 2005 Delhi 323] and Ravinder Singh Ahluwalia of Mumbai Indian Inhabitant vs. Kuljinder Singh Ahluwalia of Mumbai Indian Inhabitant & Ors.3 Arb. Petition (Lodging) No. 375 of 2009, decided on 07.05.2009, High Court of Bombay.
a. In Ashok Kumar Mittal 2 both the partners of the firm had filed Section 9 petitions. One partner sought protection as an interitm measure to restrain the other partner from obstructing him in running the hotel and also to restrain him from getting revoked the licence granted to the partnership firm to run the hotel. The other partner had also petitioned to restrain the first partner from running business of t
