The court upheld the validity of an arbitration clause in a partnership agreement, enabling resolution of disputes through arbitration.

ORDER

The petitioner and the 1^st respondent are partners of a firm.

The 2^nd respondent is the husband of the 1^st respondent and according to the petitioner he is managing the affairs of the firm on behalf of the 1^st respondent. The partnership was reconstituted on 01.04.2025. The copy of the deed of reconstitution of the partnership is produced as Annexure A1. Clause 26 of Annexure A1 reads as under:

“26. Any dispute or difference of opinion arising between the partners in relation to the interpretation, implementation, or enforcement of any of the provisions of this Deed, or any other matter connected with the partnership, shall be referred to arbitration in accordance with the provisions of the Arbitration and Conciliation Act , 1996, as amended from time to time.”

2. On 04.06.2025 a deed of retirement/relinquishment was entered into between the petitioner and the 1^st respondent whereby the 1^st respondent retired from the partnership firm. A copy of the deed of retirement/relinquishment dated 04.06.2025 is produced as Annexure A2. Petitioner submits that serious disputes have arisen between the parties regarding the business of the firm. Various facts have been stated in the memorandum of arbitration request alleging that there was many actions by the 1^st respondent contrary to the understanding between the parties. Invoking Section 9 of the Arbitration and Conciliation Act , MA(Arb.)No.1 of 2025 was filed before the Commercial Court, Pala. The Commercial Court granted an injunction by order dated 17.10.2025. A copy of which has been produced as Annexure A6. Thereafter Annexure A4 notice was issued by the petitioner invoking the arbitration clause in the partnership agreement. As there is no consensus among the parties about nominating an arbitrator, this arbitration request has been filed.

3. Notice was issued and respondents have entered appearance trough counsel.

4. Heard the learned counsel for the petitioner and the learned counsel for the respondents.

5. It is pointed out by the learned counsel for the respondents that the 2^nd respondent is not a partner in the partnership firm and therefore the arbitration clause is not binding on the 2^nd respondent. The learned counsel also submitted that the allegations against the respondents are denied by them.

6. It is clear from the pleadings and submissions made at the Bar that serious disputes have been arisen between the parties. I am satisfied that there is a valid arbitration clause in the partnership deed and the same has been invoked by issuing a notice as contemplated under Section 21 of the Arbitration and Conciliation Act by the petitioner.

Therefore, the arbitration request is allowed and the following directions are issued:

1. The Kerala High Court Arbitration Centre is directed to nominate a District Judge (Retd.) from Panel-III, preferably from Kottayam, as the sole Arbitrator to resolve the disputes that have arisen between the petitioner and the respondents under Annexure A1.

2. The learned Arbitrator may entertain all issues between the parties in connection with the said Agreement, including questions of jurisdiction and limitation, if any, raised by the parties. All contentions of the parties are left open and they are at liberty to raise their claims and counterclaims, if any, before the learned Arbitrator, in accordance with law.

3. The Registry shall communicate the substance of this order to the Kerala High Court Arbitration Centre within ten days and the Centre shall inform the learned Arbitrator within a further period of one week and shall obtain duly signed Form 3 as required under Rule 20(4) of the Kerala High Court (Arbitration Centre) Rules, 2025 and forward the same to this Court.

4. Upon receipt of the Form 3, the Registry shall issue a certified copy of this order with a copy of the Form 3 a