Hemlata Devi vs Biswanath Shaw & Anr

The Court : In this application under Section 11(6) of the Arbitration & Conciliation Act, 1996, as amended by Act No.3 of 2016 (in short, "the Act of 1996") the petitioner has prayed for appointment of an Arbitrator to adjudicate the disputes between the parties relating to the partnership business, namely, M/s. Deoram Saran & CO. The respondents are the partners of the said partnership firm.

According to the petitioner, her husband, namely, Shri Anand Kumar was one of the partners of the said partnership firm. The terms and conditions under which the partners of the said firm carried on business were agreed and recorded in the deed of partnership dated October 30, 2010. The said deed of partnership also contained an arbitration agreement between the parties thereto for adjudication of all disputes relating to the said partnership firm through arbitration.

According to the petitioner, her husband, namely, Shri Anand Kumar had assigned all his rights and obligations under the said deed of partnership in favour of herself and, as such, she has become a partner of the said partnership firm. Earlier, an application filed by the said Anand Kumar under Section 11 of the Act of 1996 for adjudication of the disputes between the partners of the said firm was allowed by order dated September 27, 2016. Subsequently, however, the said order dated September 27, 2016 was recalled on the ground that the same was obtained by suppressing the material fact that the said Anand Kumar had ceased to be a partner of the said partnership firm and he had transferred all his rights relating to the business of the partnership firm in favour of his wife, the present petitioner.

It is the case of the petitioner, that by virtue of the assignment of all the rights of the said Anand Kumar of the said partnership firm in favour of herself, she has acquired various rights relating to the business of the partnership firm including the right to dissolve the firm. She further claims that as an assignee of the right of her husband relating to the said partnership business she has also become a party to the arbitration agreement contained in the said deed of partnership dated October 30, 2010. After passing of the said order dated August 3, 2018 the present petitioner issued the notice under Section 21 of the Act of 1996 for reference of the disputes raised by herself to the nominated arbitrator. Since the respondents have not agreed to the appointment of the Arbitrator as named by her, the petitioner has filed this application.

In the application, there is no statement as to how with the alleged assignment of the rights of her husband the petitioner became a party to the arbitration agreement between the original partners of the said firm. The petitioner submitted that as per Section 29 of the Partnership Act, 1932 after obtaining assignment of all the rights of her husband in respect of the business of the partnership firm, she is deemed to have become a party to the arbitration agreement contained in Clause 16 of the said deed of partnership dated October 30, 2010. An arbitration clause contained in a deed of partnership is an independent agreement and with the mere assignment of any right relating to the business of the partnership firm by any partner in favour of third party, the latter does not become a party to the arbitration agreement.

In any event, as mentioned earlier in the application the petitioner could not make out any case to substantiate that there exists any arbitration agreement between the parties herein under Section 7 of the Act of 1996.

For the reasons as aforesaid, I do not find any merit in this application.

Accordingly, AP No.731 of 2018 stands dismissed.

In view of dismissal of AP No.731 of 2018, the application, GA No.2977 of 2018 filed by the respondents for dismissal of the petitioner's application has become infructuous and the same stands disposed of without any orders.