Suresh Raithatha vs Bharti Navnit Raithatha
2025 Latest Caselaw 3128 Bom

Bombay High Court

Suresh Raithatha vs Bharti Navnit Raithatha on 11 March, 2025

Author: A.S. Chandurkar

Bench: A.S. Chandurkar

    2025:BHC-OS:3971


                             9-COMAPL-15179-2023.doc



                                        IN THE HIGH COURT OF JUDICATURE AT BOMBAY
          Digitally signed
          by KANCHAN
KANCHAN   VINOD
VINOD     MAYEKAR
MAYEKAR   Date:
          2025.03.11
                                              ORDINARY ORIGINAL CIVIL JURISDICTION
          18:27:10 +0530




                                COMMERCIAL ARBITRATION APPEAL (L) NO. 15179 OF 2023
                                                                 WITH
                                 COMMERCIAL ARBITRATION APPEAL (L) NO.15191 OF 2023
                                                                 WITH

                                 COMMERCIAL ARBITRATION APPEAL (L)NO.15193 OF 2023

                                                                 WITH

                                 COMMERCIAL ARBITRATION APPEAL (L) NO.15201 OF 2023

                             1. Suresh Raithatha
                             Adult, Indian Inhabitant, having his
                             address at 1st Floor, Modi Estate, Agra
                              Road, Ghatkopar (West), Mumbai 400 086

                             2. Bhakti N. Dresswala
                             Adult, Indian Inhabitant, having her
                             address at 1st Floor, Modi Estate, Agra
                             Road, Ghatkopar (West), Mumbai 400 086                ...Appellants

                                             VERSUS

                             Bharti Navnit Raithatha
                             Of Mumbai, Indian Inhabitant, having her
                             address at 17/1-A, Sky Scraper, Bhulabhai
                             Desai Road, Mumbai 400 026                            ...Respondent

                                                              ...
                             Mr. Simil Purohit, Senior Advocate with Mr. Gauraj Shah & Ms. Nirali
                             Atha i/b Dua Associates, for Appellants.

                             Ms. Ayesha Damania i/b Ms. Sonal Mishal & Co., for Respondent.
                                                            ...
                                                                 1/22
                             ADN/KVM




                                  ::: Uploaded on - 11/03/2025           ::: Downloaded on - 11/03/2025 22:43:09 :::
 9-COMAPL-15179-2023.doc




CORAM : A.S. CHANDURKAR & RAJESH S. PATIL, JJ.
Date on which the arguments were heard : 13th December, 2024
Date on which the judgment is pronounced   : 11th March, 2025.




JUDGMENT (PER RAJESH S. PATIL, J.) :

1. These group of four Arbitration Appeals filed under Section 37

of the Arbitration and Conciliation Act, 1997, challenges an order

passed by Sole Arbitrator on 3 rd December, 2022 as an interim award,

which decided the issue of date of dissolution of the partnership firm,

and as confirmed by an order passed by the learned Single Judge of

this Court on an application filed under Section 34 of the Arbitration

and Conciliation Act, 1997 thereby confirming the view of the

learned Sole Arbitrator.

2. The parties are closely related to each other, being family

members. The parties entered into four Deed of Partnerships dated

16th January 1996, for the purpose of manufacturing and trading of

textile fabrics. There were arbitration clauses in each of the Deed of

Partnership. There were three partners in the said partnership firm,

all having equal share i.e. 33.33%.

3. As disputes arose between the partners, the respondent herein

invoked Arbitration proceedings. By an order dated 15th October,

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2003, the parties were referred to Arbitral Tribunal, constituting of

the learned Sole Arbitrator Justice M. L. Pendse (Retd).

4. As the proceedings were pending before the Sole Arbitrator,

the Appellants issued dissolution notice on 4 th April, 2008 on the

ground that the partnerships were at will as regards all the four

partnership firm. The respondent by her reply dated 10 th April 2008

objected to the dissolution notice.

5. As the Sole Arbitrator expressed his inability to continue with

the proceedings, by an common order dated 1st July 2010, Justice S.

S. Parkar (Retd) was appointed as a new Arbitrator in place of the

erstwhile Arbitrator.

6. Before the learned Arbitrator on 27th January 2011, while the

matter after recording of evidence was posted for final hearing.

Appellants raised an issue of first deciding the date of dissolution of

partnership. The learned Arbitrator indicated that the issue would be

decided at the stage of final hearing. In March 2011 issues were

framed by the learned Arbitrator.

7. In between August and September, 2022, at the time of

hearing, the Appellants again raised the issue of date of dissolution

of partnership. On behalf of the Appellants written submissions were

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filed so also the respondent filed their written submissions. On 3 rd

December, 2022 an interim award was passed by the learned Sole

Arbitrator. The said interim award passed by the learned Sole

Arbitrator was challenged before the learned Single Judge of this

Court, in an Application filed under Section 34 of the Arbitration and

Conciliation Act, 1997 (for short 'the Act'). By a common order

dated 20th April, 2023 the learned Single Judge of this Court

dismissed the Petitions filed under Section 34 of the Act upholding

the interim award of the learned Sole Arbitrator.

8. By present four Commercial Arbitration Appeals filed under

Section 37 of the Act, the appellants have challenged the interim

award passed by the learned Single Judge of this Court.

9. Mr. Simil Purohit, learned Senior counsel appeared on behalf of

the appellants (original respondents before the Arbitral Tribunal) and

made his submissions :-

9.1 He submitted that the there is a fundamental difference

between dissolution on one hand and retirement/ death on the other

hand. Whilst Retiring, a partner withdraws from the partnership and

the status of the partnership continues between the other partners.

Retirement is a severance of the relationship/ interest of the retiring

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partner from the firm and dissolution is the severance of the inter se

relationship of the partners.

9.2 He submitted that thus, retirement has no bearing on

dissolution. A partnership-at-will is constructed so that the partners

can dissolve the partnership when they desire. Therefore, a plain

reading of Section 40 of the Act would have no application.

9.3 He submitted that assuming that Clauses 13 and 14 of

the Deeds of the Partnership can at all be read to determine the true

nature of the said Firms, even then the same do not show any

intention of the said Firms to continue, notwithstanding the death or

retirement of the partners. There is no question of Clauses 13 and 14

defining the duration of the partnership and thus, the objections

raised by the Respondent are null, void and immaterial.

9.4 He submitted that furthermore, two of three partners

have issued a notice of dissolution. It is trite that one person cannot

form a partnership. Thus, even logically the firm ceased to be in

existence as on 8th April 2008, the date of the Notice.

9.5 He submitted that in the present case, there are three

partners out of which two have given their notice to dissolve the firm

and one partner alone cannot continue or insist on continuation of

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the firm. Paragraph 18 of the judgment again fortifies that case

before the Court for the case where the partnership contract had

provisions for duration of the partnership to be "till there are two

partners".

9.6 He submitted that it is pertinent to note that Death and

Retirement are just methods through which a partnership can be

dissolved if indicated in the Partnership Deed, whereunder in the

facts of that case, the Court inferred intention when there was no

direct clause (Para 12).

9.7 He submitted that the death clause merely offers the legal

heirs, successors, etc. the option (not a right) to join the partnership

if they so want, rather than mandating their admission as the heirs of

the dead partner (Clause 14 in the Deed of Partnership dated 16 th

January 1996).

9.8 He submitted that hence, it was not available on

the one side hold that the firm could not be dissolved by notice of

dissolution, and on the other hand, to defer the issue on determining

the date for later. Equally, it was not available to defer the entire

matter since the order dated 27th January 2011 clearly provides that

the issue of dissolution and determining the date of dissolution

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would be taken up at the final hearing upon issues bring framed. So,

after framing of issues and evidence being led, there was no scope of

dissecting the matter and virtually rendering the aspect of dissolution

academic.

9.9. He submitted that the dissolution date is most vital

especially in the facts of the present case. Since that would have a

bearing of drawing of accounts which is also impinges with the claim

made by the claimant/respondent.

9.10 He submitted that the learned Arbitrator and the Single

Judge has failed to adjudicate as to the date of dissolution.

9.11 He submitted that the respondent/the claimant has not

shown any provision or any matter available for the firm to be

dissolved which is available with the Arbitrator to support the

Impugned Award. Neither has anything being shown as to how the

Arbitrator can decide the date of dissolution later on which could

lead to a fait accompli.

9.12 He submitted that the partnership cannot be foisted on

unwilling partners or partners cannot be compelled to continue with

the firm when they have decided to dissolve the firm which is distinct

from giving notice of retirement and also distinct from dissolution by

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mutual consent of all partners under section 40.

9.13 He submitted that then there is a provision for accounts

and payout for want of Agreement and if there is no Agreement and

only one party is willing to carry out the business, then, the same

was to be carried on as a sole proprietary (not partnership) which

again shows that there is been no intention to provide for the

duration and determination of the firm.

9.14 He submitted that in a partnership dispute, determining

the date of dissolution cannot be deferred. This is vital to the

drawing up of accounts.

9.15 He submitted that the learned Arbitrator decided the

issue and held that the partnership is not at will whilst on the other,

he has left the same for determination.

10. Mr. Purohit relied upon the following judgments to buttress his

submissions :-

(a) The judgment of Supreme Court in case of Karumuthu Thiagarajan Chettiar & Anr. vs. E. M. Muthappa Chettiar, 1

(b) The judgment of Supreme Court in case of Mohuduman vs. Mohaslum, 2

(c) The judgment of Bombay High Court in case of Anant Purushottam Athavale vs. Govind Purushottam Athavale, 3 1 AIR 1961 SC 1225 2 1991 (1) SCC 412 3 2005 AIR (Bom) 301

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(d) The judgment of Gujarat High Court in case of Keshavlal Lallubhai Patel & Ors. vs. Patel Bhailal Narandas & Ors., 4

(e) The judgment of Calcutta High Court in case of Yasmin Khalique & Ors. Vs. Mukhtar Akam, 5

(f) The judgment of Delhi High Court in case of Suresh Kumar Sanghi vs. Amrit Kumar Sanghi & Ors., 6

(h) The judgment of Madhya Pradesh High Court in case of Ramesh Kumar vs. Lata Devi & Ors., 7

11. Ms.Damania, learned counsel appeared on behalf of the

respondent (original claimant) and made her submissions :-

11.1 She submitted that one has to see whether the

interpretation of the terms of the Partnership Deed by the Hon'ble

Arbitral Tribunal is so perverse that the Hon'ble Tribunal's view is not

even a possible view and is in conflict with the public policy of India.

The Hon'ble Tribunal has held that the Partnership Deed, when read

as a whole, shows that the partnership between the Appellants and

the Respondent was not "at will" and hence the partnership could not

be terminated by letter of dissolution dated 4* April 2008 issued by

the Appellants.

11.2 She submitted that the appellants have challenged the

4 AIR 1968 GUJARAT 157 5 2021 SCC OnLine Cal 1357 6 AIR 1982 Delhi 131 7 2007 AIR (MP) 153

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impugned interim award on merits and are asking this Hon'ble Court

to hold that the partnership between the parties was "at will". The

only way to determine whether the partnership between the parties

is "at will" or not is by interpreting the terms of the Partnership Deed

i.e. interpreting the contract between the parties.

11.3 She submitted that the Appellants have erroneously

submitted that if the partnership between them is held to be not "at

will" then there is no avenue open to the partners for terminating the

partnership between themselves and that this cannot be a just and

fair interpretation to the partnership deed. This contention is

contrary to the provisions of the Partnership Act, 1932 relating to

dissolution by a Court and the Appellants' own prayer submitted by

way of Supplementary Counter Claim before the Arbitral Tribunal.

11.4 She submitted that prayer (a) in the Supplemental

Counter Claims filed by the respondents dated November 2010 (page

297 of the Appeal) reads as follows:

"(a) That it be declared that the partnership firm carried out under the name and style of M/s Arti Textiles stands dissolved with effect from 4th April, 2008 or such other date as the Hon'ble Tribunal deem fit and proper."

11.5 She submitted that the Appellants cannot therefore, contend that unless the partnership is held to be "at will" they will be

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left with no option but to continue a dead partnership. They themselves have, in the alternative, invoked Section 44 (g) and urged the Hon'ble Arbitral Tribunal to determine the date of dissolution of the 4 suit firms.

11.6 She submitted that the Appellants had called upon the Tribunal to only decide as a preliminary issue, whether the suit firms stood dissolved by the notices of dissolution dated 4 April 2008. This is evident from the Minutes dated 20 th August 2022 of arbitration proceeding (page 167 of the Appeal) which record as follows:

"Thereafter, counsel for the Respondents advances his arguments regarding the date of dissolution of the Partnership Firm as per the Notice of Dissolution dated 4 th April 2008. As the time is over, on the next date the reply arguments will be advanced on behalf of the Claimant. "

11.7 She submitted that both parties restricted arguments before the Hon'ble Tribunal to the issue of whether the suit partnership firms were "at will" or not and whether they stood dissolved by notice of dissolution dated 4th April 2008. No arguments were advanced by either party on what alternative date should be fixed as the date of dissolution in the event the Hon'ble Tribunal decides that the partnerships were not at will. The Appellants, therefore, cannot now find fault with the Hon'ble Tribunal for not determining a date of dissolution. 11.8 She submitted that "the Claimant submits that the 4 suit partnership firms are not dissolved by the alleged letters of dissolution dated 4th April 2008. If at all the firms are to be dissolved, the date of dissolution of the 4 Suit Partnership Firms should be the

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date of the Award of this Hon'ble Tribunal.

11.9 She submitted that the Claimant acknowledges that the Respondents no longer wish to continue in partnership with her. The Claimant however submits that the Respondents cannot unilaterally dissolve the partnership since it was not a partnership "at will". The Respondents are at liberty to retire from the suit firm and the partnership deeds provide for the Claimant to continue to run the business as a sole proprietorship. In the alternative, this Hon'ble Tribunal will have to pass necessary order dissolving the 4 suit partnership firms u/s 44 of the Partnership Act. The date of such dissolution will be the date of the Award."

11.10 She submitted that since the Respondent/Claimant has submitted to the Hon'ble Arbitral Tribunal that the date of the award be determined as the date of dissolution and the Appellants/Respondents have called upon the Tribunal to determine the date of dissolution "as deemed fit and proper" the Tribunal will determine the said date upon hearing final arguments in the matter. 11.11 She submitted that admittedly, there is no express provision in the partnership deed itself fixing duration i.e. any fixed period of partnership. Similarly, there does not appear to be any explicit provision prescribing the mode of determining the partnership. All the same, it has to be seen if the partnership agreement incorporates any stipulation which may constitute an implied agreement between the parties to continue the partnership for any specific period. Similarly, the Court has to consider whether any terms and conditions warrant an inference that the partnership is to be determined a particular manner or at a particular point of time.

[ RAJESH S. PATIL, J. ]                      [ A.S. CHANDURKAR, J. ]





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