In a recent judgment the Delhi High Court pronounced that merely because the arbitration agreement refers to the disputes between ‘partners’, the same cannot debar or take away the right of enforcement of such an arbitration agreement vested in the legal heirs of the deceased partner in view of Section 40 of the Act.
The said ruling was delivered in the judgment of Jyoti Gupta Vs. Kewalsons, ARB.P. 599/2017 & I.A. 1357/2018, decided on 19.03.2018
In the facts of the present case, a petition under Section 11 of the Arbitration and Conciliation Act, 1996 was filed by the Petitioner praying for appointment of a Sole Arbitrator for adjudicating the disputes that have arisen between the parties in relation to a Partnership Deed. It is pertinent to mention that one of the partners Mr. Shyam Gupta had expired before the invocation of arbitration clause in the partnership deed.
One of the primary grounds of objection taken by the counsel for the Respondents was that the arbitration agreement contained in clause 15 of the Partnership Deed is only between the ‘partners’ and as the term ‘partner’ does not include their legal heirs in the Partnership Deed, legal heirs cannot invoke the arbitration agreement.
Disagreeing with the contentions of the Respondent, the Delhi High Court held that in the facts of the present case it would suffice that Section 40 of the Act expressly provides that an arbitration agreement shall not be discharged by the death of any party thereto and can be enforced by or against the legal representatives of the deceased. Placing reliance on the judgments of Prem Lata Vs. M/s Ishar Dass Chaman Lal (1995) 2 SCC 145 and Ravi Prakash Goel Vs. Chandra Prakash Goel (2008) 13 SCC 667, the Apex court held that upon death of a partner, the arbitration agreement between the partners shall survive and can be enforced by the legal heirs of the deceased partner. Further, merely because the arbitration agreement refers to the disputes between ‘partners’, the same cannot debar or take away the right of enforcement of such an arbitration agreement vested in the legal heirs of the deceased partner in view of Section 40 of the Act.