In Jyoti Gupta v Kewalsons & Ors, Delhi High Court held that where an arbitration agreement refers to a dispute between “partners”, it does not prevent or take away the right of enforcement of such an agreement vested in the legal heirs of the deceased partner.
In this case, Kewalsons and Shyam Gupta were in a partnership. On the death of Gupta, his daughter, Jyoti Gupta, filed a petition under section 11 of the Arbitration and Conciliation Act, 1996, for appointment of a sole arbitrator for adjudicating disputes arising from a 1974 partnership deed. The application was opposed by Kewalsons and other partners on the ground that the arbitration agreement contained in clause 15 of the partnership deed was only between the “partners” and the term did not include their legal heirs, and therefore Jyoti Gupta could not invoke the arbitration agreement.
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The high court allowed the arbitration application by relying on section 40 of the arbitration act, which provides that an arbitration agreement will not be discharged by the death of any party and can be enforced by or against the legal representatives of the deceased. The court held that the death of a partner does not bring an end to the provision pertaining to arbitration, and the legal heirs would be entitled to invoke the arbitration clause. Although the legal heirs of the deceased partner may not be entitled to be inducted as a partner, the right to pursue a remedy by invoking the arbitral clause does not cease. The court allowed the arbitration application and appointed an arbitrator to adjudicate the disputes between the parties.
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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
