Partnership arbitration clause covers oral retirement and dissolution dispute, with jurisdictional challenge to arbitrators rejected.

A dispute over an alleged oral agreement for retirement from a partnership and dissolution of the firm was held to fall within the partnership arbitration clause. The Court treated the arrangement as, in substance, a dispute about dissolution of a partnership at will and settlement of rights on dissolution, including division of assets and liabilities. It further held that the later arrangement relied on by one party did not supersede the original arbitration clause; at most, it raised an issue for the arbitrators within the referred dispute. The challenge to arbitral jurisdiction therefore failed.

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Issues: Whether the dispute as to the alleged oral agreement for retirement from the partnership and dissolution of the firm fell within the scope of the partnership arbitration clause and was referable to arbitration under Section 33 of the Indian Arbitration Act, 1940.

Analysis: The alleged agreement was treated as one in substance for dissolution of a partnership at will and settlement of the partners' rights on dissolution. A dispute whether the partners agreed that one should retire was therefore a dispute touching the partnership agreement and the division of assets and liabilities. The Court also held that the subsequent arrangement set up by the respondent did not supersede the original arbitration clause; at most, it raised a question to be decided by the arbitrators as part of the dispute referred.

Conclusion: The dispute was arbitrable under the partnership deed and the challenge to the arbitrators' jurisdiction failed.

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