Case Note & Summary
The appellant, Masood Mohmmed Husain, filed an appeal against the rejection of his application under Section 9 of the Arbitration and Conciliation Act, 1996 by the learned Single Judge. The appellant was a partner in an unregistered partnership firm, M/s. Amber Enterprises, constituted by a Deed of Partnership dated 6th September 2002. The partnership deed contained an arbitration clause. Disputes arose between the partners, and the appellant sought interim relief under Section 9, including appointment of a receiver over partnership assets and other ancillary reliefs. The respondents opposed the application, contending that the firm was unregistered and that Section 69(3) of the Partnership Act, 1932 barred any proceeding to enforce a right arising from a contract relating to the firm. The learned Single Judge dismissed the application, holding that the bar under Section 69(3) applied. The Division Bench of the Bombay High Court, comprising R.M. Lodha and S.A. Bobde JJ., dismissed the appeal. The court held that an application under Section 9 of the Arbitration Act is a proceeding in a court and that the right to seek interim relief in respect of partnership assets arises from the partnership contract. Since the firm was unregistered, Section 69(3) of the Partnership Act barred such a proceeding. The court noted that the bar applies to all rights arising from a contract relating to the firm, including those sought to be enforced through arbitration or interim measures. The court also observed that the appellant could not circumvent the bar by invoking the arbitration clause, as the right to seek interim relief is ancillary to the right under the partnership contract. The appeal was dismissed with no order as to costs.
Headnote
A) Partnership Act - Section 69(3) - Bar on Proceedings by Partner of Unregistered Firm - Interim Relief under Section 9 of Arbitration Act - The court held that an application under Section 9 of the Arbitration and Conciliation Act, 1996 by a partner of an unregistered firm for appointment of receiver and other interim reliefs in respect of partnership assets is barred by Section 69(3) of the Partnership Act, 1932, as it is a proceeding to enforce a right arising from a contract relating to the firm. (Paras 5-8) B) Arbitration and Conciliation Act - Section 9 - Interim Measures - Applicability of Partnership Act Bar - The court held that the bar under Section 69(3) of the Partnership Act applies to proceedings under Section 9 of the Arbitration Act, as the latter is a proceeding in a court and the right sought to be enforced arises from a partnership contract. (Paras 5-8)
Issue of Consideration
Whether a partner of an unregistered partnership firm can maintain an application under Section 9 of the Arbitration and Conciliation Act, 1996 for interim relief in respect of partnership assets, given the bar under Section 69(3) of the Partnership Act, 1932.
Final Decision
The appeal is dismissed. The order of the learned Single Judge rejecting the application under Section 9 of the Arbitration and Conciliation Act, 1996 is upheld. No order as to costs.
Law Points
- Section 69(3) of the Partnership Act
- 1932 bars a partner of an unregistered firm from seeking interim relief under Section 9 of the Arbitration and Conciliation Act
- 1996
- as such relief is in respect of a right arising from a contract relating to the firm.
