Dr. Papiya Mukherjee vs Aruna Banerjea And Anr
2022 Latest Caselaw 1105 Cal/2

              IN THE HIGH COURT AT CALCUTTA
                 ORIGINAL CIVIL JURISDICTION
                        (Original Side)

                                              A.P. No. 255 of 2021

                                           (Through Video Conference)

                                         Reserved on: 03.03.2022
                                         Pronounced on: 30.03.2022


Dr. Papiya Mukherjee
                                                               ...Petitioner
                                  -Vs-
Aruna Banerjea and Anr.
                                                          ...Respondents

Present:-

Mr. Arik Banerjee, Mr. Ayan Dutta, Mr. Rajib Mullick, Ms. Shreyashi Maity, Advocates ... for the petitioner

Mr. Rajarshi Dutta, Mr. Munir Ahmed, Mr. Shounak Mukhopadhyay, Mr. Anurag Ghosh, Advocates ... for the respondents

Coram: THE HON'BLE JUSTICE PRAKASH SHRIVASTAVA, CHIEF JUSTICE

Prakash Shrivastava, CJ:

1. This application under Section 11 of the Arbitration and

Conciliation Act, 1996 has been filed by the applicant for appointment

of arbitrator to resolve dispute between the parties.

2. Plea of the applicant is that she is one of the partners of

pathological laboratory namely, Calcutta Clinical Laboratory. The

said laboratory is being run by virtue of the original partnership deed

which was constituted and re-constituted from time to time. In 1980,

fresh partnership deed was executed between Dr. Bonbehari Banerjee,

Dr. Dhrubajyoti Banerjea and the applicant. Dr. Bonbehari Banerjee

had passed away, therefore, on 20th of May, 1992 Dr. Dhrubajyoti

Banerjea and the applicant had entered into a fresh deed of partnership

for running the said laboratory business. Dr. Dhrubajyoti Banerjea

being of old age had executed the power of attorney in favour of his

wife, respondent No.1 herein. Dr. Dhrubajyoti Banerjea also passed

away on 09th of April, 2015. Further case of the applicant is that in

terms of clause 9 of the partnership deed, respondent Nos.1 and 2

being surviving legal heirs and successors of Dr. Dhrubajyoti Banerjea

ought to have been substituted as partners in his place. After the death

of Dr. Dhrubajyoti Banerjea, the respondent No.1 started committing

various illegalities in relation to the business of the firm, therefore, the

applicant had filed application under Section 9 of the Act being

Miscellaneous Case No. 99 of 2016 and restrained order was passed

on 16th of March, 2016. Subsequently, the arbitrator was appointed

and arbitration proceedings continued for more than 4 years in which

both the parties had actively participated and after October, 2016 the

applicant was allowed to actively participate in the affairs of the

laboratory after giving an undertaking by the respondent before the

learned arbitrator. Since, talks of settlement took place, therefore, the

arbitration proceedings did not proceed further. Around December,

2019 respondent again started creating trouble, therefore, applicant

had served the notice dated 10.06.2020 invoking the arbitration clause

and making request to the respondent to appoint the arbitrator. The

respondent had denied the prayer by taking the stand that there was no

valid arbitration agreement between the parties.

3. Submission of learned Counsel for the applicant is that after

the death of Dr. Dhrubajyoti Banerjea, respondents being his legal

heirs are bound by the arbitration agreement and that earlier

arbitration had already taken place and in fact after dissolution of

partnership, subsequently respondent No. 1 was shown as partner and

that same objection raised by the respondent in the proceedings under

Section 9 of the Act were rejected.

4. Objecting to the prayer for appointment of arbitrator,

learned Counsel for the respondents submits that Dr. Dhrubajyoti

Banerjea has died and in terms of Sections 46 and 48 of the

Partnership Act, applicant has only limited right and that applicant has

no right, title and interest in the property and their only right is

relating to rendition of account.

5. Having heard the learned Counsel for the parties and on

perusal of the record, it is noticed that the partnership deed dated 20th

of May, 1992 executed between Dr. Dhrubajyoti Banerjea and the

applicant Papiya Mukherjee has not been disputed during the course

of argument. This partnership deed contains following arbitration

clause:

"10. That in case of differences or disputes between parties cropped up with regard to any matter or thing relating to the partnership affairs and terms and conditions and stipulations shall be referred to arbitrator to be appointed by the one part and the decision of such arbitrator shall be binding on the partners."

6. Dr. Dhrubajyoti Banerjea had died on 09th of April,

2015. Respondents are legal heirs / successors of Dr.

Dhrubajyoti Banerjea. Section 40 of the Arbitration Act clearly

provides that arbitration agreement will not be discharged by death of

party thereto and will be enforceable by or against the legal

representatives of the deceased. Section 42 of the Partnership Act,

1932 provides for dissolution of partnership firm by the death of a

partner. In terms of Section 46 of the Partnership Act, on the

dissolution of the firm every partner or his legal representative is

entitled to, as against all the other partners or their representatives, to

have the property of the firm applied in payment of the debts and

liabilities of the firm and to have the surplus distributed amongst the

partners or their representatives according to their rights. Section 47 of

the Partnership Act provides for continuing authority of partners for

purposes of winding up and Section 48 of the Partnership

Act provides for mode of settlement of account after dissolution. The

Hon'ble Supreme Court in the matter of Ravi Prakash Goel vs.

Chandra Prakash Goel and Another reported in (2008) 13 SCC 667

considering Section 40 of the Arbitration Act has held that:

"18. It is clear from Section 40 of the Arbitration Act that an arbitration agreement is not discharged by the death of any party thereto and on such death it is enforceable by or against the legal representatives of the deceased, nor is the authority of the arbitrator revoked by the death of the party appointing him, subject to the operation of any law by virtue of which the death of a person extinguishes the right of action of that person.

19. Section 2(1)(g) defines "legal representative" which reads thus:

"2. (1)(g) 'legal representative' means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased, and, where a party acts in a

representative character, the person on whom the estate devolves on the death of the party so acting;"

20. The definition of "legal representative" became necessary because such representatives are bound by and also entitled to enforce an arbitration agreement. Section 40 clearly says that an arbitration agreement is not discharged by the death of a party. The agreement remains enforceable by or against the legal representatives of the deceased. In our opinion, a person who has the right to represent the estate of the deceased person occupies the status of a legal person (sic representative). Section 35 of the 1996 Act which imparts the touch of finality to an arbitral award says that the award shall have binding effect on the "parties and persons claiming under them". Persons claiming under the rights of a deceased person are the personal representatives of the deceased party and they have the right to enforce the award and are also bound by it. The arbitration agreement is enforceable by or against the legal representative of a deceased party provided the right to sue in respect of the cause of action survives."

7. In terms of the above, though the respondents are not

signatory to the arbitration agreement dated 20th of May, 1992 but

being the legal representatives of Dr. Dhrubajyoti Banerjea, one of the

signatory of the agreement, are bound by it to the extent provided in

law. At the earlier stage, respondents themselves had sent the notice

dated 29th of February, 2016 admitting the partnership deed dated 20th

of May, 1992 and invoking the arbitration clause as legal heirs of the

deceased Dr. Dhrubajyoti Banerjea with the request to appoint the sole

arbitrator and the arbitrator was appointed and some proceedings

before the arbitrator had also taken place, therefore, their contrary

stand at this stage cannot be accepted.

8. Learned Counsel for the applicant has placed reliance upon

the judgment of the Hon'ble Supreme Court in the matter of Branch

Manager, Magma Leasing and Finance Limited and Another vs.

Potluri Madhavilata and Another reported in (2009) 10 SCC 103

wherein it has been held that with the termination of the contract

arbitration clause neither perishes nor becomes inoperative. Reliance

is also placed upon by the learned Counsel for the applicant on the

judgment of the Hon'ble Supreme Court in the matter of Aurohill

Global Commodities Ltd. vs. Maharashtra STC Ltd. reported in

(2007) 7 SCC 120 wherein the wide powers of arbitral tribunal has

been recognized and the judgment of the Hon'ble Supreme Court in

the matter of Agri Gold Exims Ltd. vs. Sri Lakshmi Knits &

Wovens and Others reported in (2007) 7 SCC 686 wherein it is held

that Section 8 of the Act is preemptory in nature and in a case there

exists an arbitration agreement, the Court is under obligation to refer

the parties to arbitration in terms of the arbitration agreement.

9. Having regard to the above circumstances of the case, I am

of the opinion that the arbitration agreement in the form of partnership

deed dated 20th of May, 1992 exists and after the death of Dr.

Dhrubajyoti Banerjea, the respondents being his legal representatives

are bound by the agreement to the extent provided by law. The dispute

exists between the parties, hence present application under Section 11

of the Act is allowed. Shri Kaushik Dey, Advocate resident of 3A,

Brindaban Mallick Lane (Behind Amherst Street Police Station),

Kolkata - 700 009 (Mobile No. - 9830467715) is appointed as

arbitrator. The arbitrator will be free to decide the scope of arbitration

and the issues to be taken up in arbitration in accordance with law.

The appointment of arbitrator is subject to obtaining his consent in

terms of Section 12(1) in the form prescribed in Schedule VI of the

Act.

10. Let this order be conveyed to the Arbitrator by the Registrar,

Original Side forthwith.

11. A.P is accordingly disposed of.

(PRAKASH SHRIVASTAVA) CHIEF JUSTICE

Kolkata 30.03.2022 ___________

PA(SS)

(A.F.R./N.A.F.R.)