Arbitration clause enforceable for dissolution and accounts of a dissolved partnership firm despite non-registration

Section 69 of the Indian Partnership Act, 1932 does not bar enforcement of rights relating to dissolution of a firm, accounts of a dissolved firm, or realization of its property, because those claims are expressly excepted by Section 69(3)(a). The Court held that a contractual arbitration clause could be used to enforce those excepted rights, so an application under Section 20 of the Arbitration Act, 1940 was maintainable despite the firm's non-registration. The objection based on Section 69 therefore failed, and the dispute was directed to proceed to arbitration under the partnership deed.

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Issues: Whether an application under Section 20 of the Arbitration Act, 1940 was maintainable for reference to arbitration where the partnership firm was unregistered, in the context of rights claimed on dissolution of the firm and rendition of accounts.

Analysis: Section 69 of the Indian Partnership Act, 1932 bars suits and proceedings to enforce contractual rights by or on behalf of an unregistered firm, but sub-section (3)(a) expressly excepts actions for dissolution of a firm, accounts of a dissolved firm, and realization of the property of a dissolved firm. The contractual arbitration clause was treated as a mode of enforcing those excepted rights. The embargo in Section 69 could not be extended so as to nullify the statutory exceptions, and the earlier interpretation of "other proceedings" did not displace the effect of the carve-out in sub-section (3)(a).

Conclusion: The application under Section 20 of the Arbitration Act, 1940 was maintainable, and the objection based on Section 69 of the Indian Partnership Act, 1932 failed.

Final Conclusion: The appeal succeeded, the High Court's view was set aside, and the dispute was directed to proceed to arbitration in accordance with the partnership deed.

Ratio Decidendi: Where a partnership firm is dissolved, a contractual arbitration clause may be invoked to work out the excepted rights preserved by Section 69(3)(a) of the Indian Partnership Act, 1932, and the non-registration bar cannot defeat such enforcement.

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