Section 9 interim relief is not barred by partnership registration rules; receivership was modified with safeguards pending arbitration.

Section 69(3) of the Indian Partnership Act does not bar a section 9 application under the Arbitration and Conciliation Act by a person claiming as a partner of an unregistered firm, because section 9 seeks statutory interim protection to preserve the subject-matter of arbitration rather than enforce the underlying contractual right. The arbitration clause is treated as a separate agreement for that purpose. The interim receivership arrangement was also modified: the business was allowed to continue under the existing management as receivers, but subject to safeguards for accounts, sale proceeds, inspection, and supervision to protect the excluded partners pending arbitration.

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Issues: (i) whether the bar under section 69(3) of the Indian Partnership Act, 1932 applies to an application under section 9 of the Arbitration and Conciliation Act, 1996 by a person claiming as a partner of an unregistered firm; (ii) whether the interim arrangement made by the High Court appointing receivers over the running business required modification.

Issue (i): Whether the bar under section 69(3) of the Indian Partnership Act, 1932 applies to an application under section 9 of the Arbitration and Conciliation Act, 1996 by a person claiming as a partner of an unregistered firm.

Analysis: Section 69 bars suits and other proceedings to enforce a right arising from a contract where the firm is unregistered and the claimant is not shown as a partner in the Register of Firms. An application under section 9 is not a suit, and the right invoked under that provision is the statutory right of a party to an arbitration agreement to seek interim protection before, during, or after arbitral proceedings. The arbitration clause is treated as a separate agreement, and the interim relief sought under section 9 is meant to preserve the subject-matter of arbitration rather than enforce the underlying contractual right in court.

Conclusion: The bar under section 69(3) does not apply to an application under section 9 of the Arbitration and Conciliation Act, 1996.

Issue (ii): Whether the interim arrangement made by the High Court appointing receivers over the running business required modification.

Analysis: Appointment of a receiver depends on what is just and convenient. The business was already being run by one group for most of the licence period, and the material before the Court did not establish a strong case for displacing that arrangement. At the same time, the interim protection had to remain genuinely temporary and connected with contemplated arbitration, and the interests of the excluded partners had to be safeguarded by practical controls over accounts, sale proceeds, inspection, and supervision by the trial court and an observer.

Conclusion: The High Court's order was modified so that the business would continue under the actual management of Group B as receivers, subject to protective safeguards and supervision.

Final Conclusion: The appeal was disposed of by affirming the maintainability of the section 9 application, but the interim management arrangement was restructured to preserve the business and protect all parties pending arbitration.

Ratio Decidendi: A statutory application for interim protection under section 9 of the Arbitration and Conciliation Act, 1996 is not a proceeding to enforce a contractual right so as to attract the bar under section 69(3) of the Partnership Act, 1932; the court may grant only such temporary protective relief as is just and convenient pending contemplated arbitration.

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