ERACH F. D. MEHTA versus MINOO F. D. MEHTA

Citation: [1971] 2 S.C.R. 99 · Decided: 09-09-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed
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Judgment (excerpt)

A 
ERACH F. D. MEHTA 
v. 
MINOO F. D. MEHTA 
September 9, 1970 
99 
B 
(J. C. SHAH, K. S. liEGDE AND A. N. GROVER, JJ.] 
c 
D 
E 
F 
G 
Arbitration-Partnership--C/ause in deed of partnership for .ref<rence 
of diaputes tc Arbitratlon--One of the partners setting up .agreeinent that 
partnership be dissolved-If dispute, regarding existence of such agreement 
one touching Partnership Agreement. 
A partnership deed entered into between 
the appellant 
and the 
respondent contained a clause for reference "df all disputes and questions 
whatsoeyer which may arise during partnership or afterwards between the 
partners touching the partnership agreement including division of assets, 
debts or liabilities", to arbitration. When disputes arose, the respondent 
claimed that the partners had reached al\ oral agreement stipulating that 
the appellant was to retire from the partnership and was to assign and 
transfer to the respondent his rights, title and interest in the partnership 
business. The appellant denied the two agreements set up by the respon-
dent. Subsequently, the dis)lute was referred to arbitration. The appellant 
submitted to arbitration without prejudice to his stand that the arbitra-
tors had no jurisdiction to go into the question of the alleged agreement 
set up by the respondent. The arbitrators were unable to make an award 
within the period prescribed by the Arbitration Act. 
'The appellant then 
submitted an application to the High Court under s. 33 of the Arbitration 
Act contending that the agreement set up by the respondent gave rise to 
new rights and .obligations between the parties and to a dispute relating 
to the&e rights and obligations created by the new agreement the arbitration 
clause of the partnership agreement had no apf.licatlon. The High Court 
rejected the contention. Dismissing the appea , 
HELD : The clause "all disputes and questions whatsoever which 
may arise during the partnership or afterwards 
between the 
~or~'lers 
touching the partnership agreement including division of assets, debts an'' 
liabilities" clearly covers a dispute whether the parties agreed that the 
partnership be dissolved. The agreement set up by the respondent while 
maintaining the covenants of the partnership agreement seeks to dissolve 
the partnership and to settle the rights and obligations of the 
partners 
arising out of the dissolution of the partnership. A dispute whether the 
partnership was dissolved by mutual agreement was clearly a 
dispute 
between the parties touching the partnership agreement. [102 F-Gl 
CIVIL APPELLATE JURISDICTION : Civil Appeals No. 2535 of 
1969. 
Appeal by special leave from the judgment dated August 28, 
September I, 1969 of the Bombay High Court in Award Petition 
No. 41of1969. 
H 
S. T. Desai, S. P. Bharucha, P. C. Bhartari, for the appellant. 
M. C. Chag/a, F. S. Narlman, P. R. Nariman, P. R. Mridu/ and 
I, N. Shroff, for the respondent. 
100 
SUPREME COURT REPORTS 
(1971] 2 S.C.R. 
The Judgment of the Court was delivered by 
A 
. 
Shah, J. 
. This appeal with special leave is filed against the 
1uctgn_ii:nt of a smgle Judge of the High Court of Bombay dismissing 
a petition under s. 33 of the Indian Arbitration Act, 1940. 
On December 22, .1966, the appellant and the respondent, who 
arc brothers, entered mto an agreement to carry on in partnership 
B 
three businesses (1) Messrs F. D. Mehta & Company; (2) The 
Great Western Stores; and (3) Dr. Writer's Chocolates and Can-
ning Company. The relevant terms of rhe deed of partnership 
were as follows : 
"1. The agreement has come into effect from the 
2nd day of November 1966. 
C 
3. The duration of the partnership shall be at will. 
7. The net profits of the partnership after payment 
of all the outgoings incidental to the partnership busi-
ness shall belong to the partners in equal shares and 
they shall likewise bear all losses including loss of 
I> 
capital. 
15. All disputes and questions whatsoever which 
shall either during !he partnership or afterwards arise 
between the partners or between one of them and the 
personal representatives ·of the other or between 'their 
respective personal representatives touching these pre-
E 
sents or the interpretation of this deed or the construc-
tion of the application thereof or any clause or thing 
herein contained or any account valuation or division of 
assets debts or liabilites to be made hereunder or as to 
any act deed or commission of either partner or as to 
any
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