TaxTMI 
TaxTMI 
2007 (3) TMI 838
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....y under the Partnership Deed dated 09.08.1983. Pushplata retired from partnership w.e.f. 31.03.1992. Thereafter, other partners carried on the business and a new partnership deed was executed on 01.04.1992. 4. Clause 5 of the same provided that the net profits of the partnership business as per accounts maintained after deduction of all necessary expenses shall be divided and distributed amongst the partners at the close of each accounting year in the following ratio: 1) Sri Chandra Prakash Goel, Respondent No. 1- 31% 2) Sri Rakesh Kumar, Respondent No. 2- 34% 3) Smt. Dulari Devi, Petitioner's Mother- 35% 5. Clause 13 of the Partnership Deed refers to arbitration clause. It reads as under: That all the disputes touching the affairs of the partnership firm shall be referred to arbitrator in accordance to the provisions of the Indian Arbitration Act and the award of such Arbitrator shall be final and binding on the parties. 6. When the respondents did not render accounts of the partnership firm to the appellant's mother despite repeated verbal requests, she on 05.06.2004 sent a notice to the respondents raising dispute regarding ac....
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.... an application for an Arbitrator by the son of one of the deceased partners of the Firm. The partnership deed is annexed. The lady died on 6.10.2004. If an arbitration has been commenced by the lady during her lifetime, it might have been continued by the son who is applicant before this Court, by obtaining substitution. However, the arbitration is being attempted to be commenced now. Whether the heirs of a deceased partner or parties, are to be deemed as parties, to an arbitration agreement contained in a partnership deed, is a question of intention and construction in every different cases. The deed annexed does not show that any of the parties mentioned was to be construed by contract as including his/her heir, successor or assignee. That usual clause is absent. Furthermore the son claims as legatee of a will not yet probated. It is well known that Courts of law cannot look into unprofaned wills. In these circumstances I am of the opinion that the applicant has no presently establishable binding arbitration agreement with the respondent. The application is, therefore, dismissed. A suit might be filed. Sd/- Ajoy Nath Ray, C.J 10.2.2006 ....
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....n Act, 1996 are characterized by 'party autonomy' and accordingly are founded upon the contract giving preeminence to the will of the parties and even the interference of the Court has been curtailed to the minimum possible level. It is the contention of the learned Counsel that the rights of the legatee under the Partnership Act are regulated and conditioned by Section 29 of the Indian Partnership Act. and on the said strength he is only entitled to receive the share of the assets of the firm to which the testator, his predecessor was entitled. It is further submitted that the answering respondents have never denied the rendition of the deceased partner's account to her share as per the deed and that the respondents have always been ready and willing to pay her share if so ordered by the Court. 14. Mr. Chandra Shekhar further submitted that no dispute have ever arisen during the lifetime of Dulari Devi and she was the tax payer, all the accounts were conducted in her presence and with her consent during her lifetime and that no dispute was ever even alluded during her lifetime. Accordingly, the appellant as a legatee on her behalf can continue the claiming for resol....
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....b) Whether the arbitration can be commenced by the heirs after the death of partner especially where the dispute had arisen already during the life time of the partner? c) Whether in view of Section 46 read with Section 48 of the Indian Partnership Act as well as Section 40 of the Arbitration Act, 1999, the petitioner is entitled to claim appointment of arbitrator under the arbitration clause of the Partnership Deed and the Hon'ble Chief Justice of the Allahabad High Court has erred in overlooking these provisions? Before we proceed further, it is useful to reproduce. 16. Section 40 of the Arbitration Act and Sections 46, 47 and 48 of the Indian Partnership Act. 40. Arbitration agreement not to be discharged by death of party thereto.- (1) An arbitration agreement shall not be discharged by the death of any party thereto either as respects the deceased or as respects any other party, but shall in such event be enforceable by or against the legal representative of the deceased. (2) The mandate of an arbitrator shall not be terminated by the death of any party by whom he was appointed. (3) Nothing in this section shall affect the....
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....ereto 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. 18. Section 2(1)(g) defines "legal representative" which reads thus: 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 person, and, where a party acts in a representative character, the person on whom the estate develops on the death of the party so acting. 19. 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 deceased person occupies the status of a legal person. Section 35 of the ....
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.... by limitation, the partner cannot sue any partner in possession of the assets for a share therein, and the limitation will be governed by Article 5 of the Limitation Act. 21. On the dissolution of the firm, the arbitration clause does not come to an end and so if a dispute had arisen during the lifetime of the deceased partner, his legal representatives would be entitled to take proceedings under Section 20 of the Arbitration Act, 1940. 22. When a partner dies and the partnership comes to an end it is not only right but also the duty of the surviving partner to realize the assets for the purpose of winding up of the partnership affairs including the payment of the partnership debts. However, it is true that in a general sense the executors or administrators of the deceased partner may be said to have a lien upon the partnership assets in respect of his interest in the partnership and taking the partnership account. 23. Section 47: It is clear that the commencement of the dissolution does not at once terminate the authority of the partners. Such authority continues at least for 2 purposes, namely, 1) so far as necessary to wind up the affairs of the firm; and 2) to complet....