In the absence of dissolution or express stipulation, the goodwill of a firm is an asset that devolves to the legal representatives of a deceased partner.

ORAL ORDER

(PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)

This Petition is structured on the proposition that in the absence of Dissolution/Resolution, no claim be made in respect of Goodwill of the firm which continues to be in existence despite death of a partner. In support of this, learned Sr. Counsel appearing for the Petitioner draws our attention to the provisions of the Partnership Act , 1934 more particularly to Sections 14 , 15 & 55.

2. Learned counsel appearing for the contesting Respondent resists the Petition contending that the question is no longer res integra in the light of Apex Court decision in KHUSHAL KHEMGHAR SHAH & OTHERS v. KHORSHED BANU DABIDA BOTAWALLA &

ANOTHER1, wherein Paragraph No.6 reads as under:

“6.We are unable to agree with Mr. Nariman that in the interpreting a deed of partnership, business whereof its is stipulated shall be continued by the surviving partners after the death of a partner, the Court will not award to the legal representatives of the deceased partner a share in the goodwill in the

1970 (1) SCC 415

absence of an express stipulation to the contrary. The goodwill of a firm is an asset. In interpreting the deed of partnership, the Court will insist upon some indication that the right to share in the assets is, by virtue of the agreement that the surviving partners are entitled to carry on the business on the death of the partner, to be extinguished. In the absence of a provision expressly made or clearly implied, the normal rule that the share of a partner in the assets devolves upon his legal representatives will apply to the goodwill as well as to other assets.”

3. At this stage, learned Sr. Advocate appearing for the Petitioner on instruction of advocate on record seeks leave of the Court to withdraw the Petition with liberty to move an appropriate application before the learned Arbitrator to treat the question as to arbitrability of dispute relating to claim for the Goodwill as property of the firm as a Preliminary Issue.

4. Having heard the learned counsel for the parties and having perused the Petition papers, we are inclined to grant leave to withdraw the Petition coupled with liberty as sought for to move the application of the kind before the learned Arbitrator. In that connection, all contentions are kept open.

Ordered accordingly and Writ Petition is disposed off, costs having been made easy.