VidhiSangh

Supreme Court of India · 06/12/2024

TARUN DHAMEJA versus SUNIL DHAMEJA & ANR.

[2024] 12 S.C.R. 987

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Summary

An arbitration clause in a partnership deed saying that arbitration 'shall be optional' and that the arbitrator will be appointed by mutual consent does not make the clause non-existent or dependent on every party agreeing to arbitrate. Read as a whole, it lets an aggrieved party, including a deceased partner's legal representative, invoke arbitration, and the court may appoint the arbitrator if the parties cannot agree. The Section 11(6) petition was allowed.

Issues

  1. Whether a partnership-deed clause stating that arbitration 'shall be optional' and that the arbitrator will be appointed by the partners' mutual consent is a binding arbitration agreement or only an enabling clause requiring every party's agreement.
  2. Whether the legal representative of a deceased partner can invoke the clause.
  3. Whether the court can appoint an arbitrator under Section 11(6) when the parties do not agree on one.

Provisions considered

Held

Result

Appeal allowed; High Court judgment set aside; the appellant's Section 11(6) petition treated as allowed. The Madhya Pradesh Arbitration Centre (or the centre attached to the High Court at Indore) is to appoint an arbitrator, who must file the Section 12 declaration within 15 days. No view expressed on the merits.

Judgment PDF: Supreme Court of India, [2024] 12 S.C.R. 987.