M D Nehaluddin vs Nusarat Shakil Ahmed
- Court
- Bombay High Court
CNR No : HCBM020267432026
2026:BHC-OS:23527
arbapl26742-2026-J.doc
AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION APPLICATION (L) NO.26742 OF 2026
M.D. Nehaluddin
… Applicant
Vs.
ATUL
GANESH
KULKARNI
Nusarat Shakil Ahmed
… Respondent
Digitally signed by
ATUL GANESH
KULKARNI
Date: 2026.10.30
11:19:40 +0530
Mr. Vijay Dighe for the Applicant.
Mr. Mohammed Zain Khan with Mr. Ashraf Kapoor i/by
One Legal for the Respondent.
CORAM : AMIT BORKAR, J.
RESERVED ON : OCTOBER 28, 2026.
PRONOUNCED ON : OCTOBER 30, 2026
JUDGMENT:
1. The present Application is filed under Section 11 of the
Arbitration and Conciliation Act, 1996, seeking appointment of a
Sole Arbitrator to decide the disputes between the Applicant and
the Respondent arising out of the Admission-cum-Retirement
Deed/Partnership Deed dated 14 March 2014, notarized on 15
April 2014, and the Supplementary Deed of Partnership dated 22
April 2022, relating to the partnership firm M/s Prime Kitchen
Care.
2. The relevant facts, as stated by the Applicant are as follows.
On 8 November 2013, a Partnership Deed was executed between
Mr. Jay Prakash and Mr. Mohammad Zahid Siddiqui for carrying
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on business under the name and style of M/s Prime Kitchen Care
at Mumbai. On 14 March 2014, the Admission-cum-Retirement
Deed/Partnership Deed was executed, by which the Applicant and
the Respondent became partners of M/s Prime Kitchen Care.
Under the said deed, their respective shares in the profits of the
firm were fixed at 25% and 75%. The deed was notarized on 15
April 2014. Clause 33 of the Partnership Deed provides for
resolution of disputes through arbitration. On 21 January 2021,
the Applicant incorporated M/s Nejyra Technical Services Private
Limited under the Companies Act, 2013. During the year 2021,
disputes arose between the Applicant and the Respondent
concerning the affairs and management of the partnership
business and certain allegations relating to the establishment and
functioning of M/s Nejyra Technical Services Private Limited. The
Applicant denies the allegations made against him. Thereafter,
with the intervention of their father, the parties settled their
disputes and executed a Memorandum of Understanding dated 1
August 2021. Under the said Memorandum, they agreed upon
arrangements for restructuring their respective business interests.
On 1 October 2021, pursuant to the Memorandum of
Understanding, the parties' father was appointed as a Director of
M/s Nejyra Technical Services Private Limited. The necessary
statutory formalities were thereafter completed. On 22 April 2022,
the Applicant and the Respondent executed a Supplementary Deed
of Partnership, modifying the earlier terms of their partnership.
They agreed to continue as working partners with equal
participation and remuneration. On 22 January 2025, the parties'
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father resigned from the position of Director of M/s Nejyra
Technical Services Private Limited. His resignation was accepted,
and the necessary statutory formalities were completed. On 9
February 2025, the Respondent sent an email to the Applicant and
the Chartered Accountant proposing dissolution of M/s Prime
Kitchen Care on the ground that the firm was not carrying on any
business.
3. On 10 February 2025, the parties' father issued a public
notice stating that the alleged Will dated 10 October 2021 was
forged and fabricated. On 2 August 2025, the Respondent lodged
FIR No. 533 of 2025 at B.K.C. Police Station, Mumbai, making
allegations arising out of the partnership business and related
transactions. The Applicant disputes these allegations. On 22 June
2026, the Applicant issued a notice invoking Clause 33 of the
Partnership Deed and called upon the Respondent to agree to the
appointment of a Sole Arbitrator. Despite service of the notice, the
Respondent neither replied nor agreed to the appointment of an
Arbitrator. In these circumstances, in July 2026, the Applicant filed
the present Application under Section 11 of the Arbitration and
Conciliation Act, 1996, seeking appointment of a Sole Arbitrator
for adjudication of the disputes between the parties.
4. I have heard Mr. Dighe, learned Advocate appearing for the
Applicant, and Mr. Mohammed Zain Khan, learned Advocate
appearing for the Respondent. The main question before this Court
is whether the disputes between the parties are connected with
Clause 33 of the Partnership Deed and whether a Sole Arbitrator
can be appointed under Section 11 of the Arbitration and
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Conciliation Act, 1996.
5. Mr. Dighe submitted that this Court has to see whether the
Partnership Deed contains an arbitration clause. According to him,
the Applicant and the Respondent are still governed by the said
deed and the disputes are relating to the business, accounts and
property of M/s Prime Kitchen Care. He submitted that the
Respondent is trying to take the dispute towards M/s Nejyra
Technical Services Private Limited and M/s Nejyra International
Private Limited, so that the matter does not go to arbitration.
According to him, the disputes are civil and commercial in nature,
but the Respondent has given them the colour of criminal matters.
6. Mr. Khan, learned Advocate for the Respondent, submitted
that the arbitration clause is limited to disputes between the
partners arising from the Partnership Deed or things done under it.
According to him, the real disputes are about the formation and
working of M/s Nejyra Technical Services Private Limited, the
alleged arrangement regarding its shares, the Memorandum of
Understanding, the alleged Will dated 10 October 2021 and the
later removal of their father, Mr. Ish Mohammad, as Director and
the alleged transfer of his shares. He submitted that these matters
do not arise from the Partnership Deed. He pointed out that the
company and some other persons whose rights may be affected are
not parties to the arbitration agreement.
7. From the submissions of both sides, it appears that the
parties are not agreeing on where their disputes should be
decided. There is no serious dispute about the existence of an
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arbitration clause. The main question is whether the disputes
raised by the Applicant come within that clause and whether the
objections of the Respondent are sufficient to refuse the
appointment of an Arbitrator.
8. Clause 33 of the Admission-cum-Retirement Deed/
Partnership Deed dated 14 March 2014 provides for arbitration.
The said clause reads as follows:
"All disputes and differences by and between the Partners
and their heirs and representatives, in any way relating to or
arising out of or connected with any of the provisions hereof
or anything done in pursuance hereof including those
relating to dissolution and/or retirement shall be referred to
the Arbitration of any single Arbitrator appointed by mutual
consent ... Such Arbitration shall be governed under the
Indian Arbitration and Conciliation Act of 1996... The
arbitration proceedings shall be conducted at Mumbai, India
…"
9. The words in this clause have to be understood in their
proper meaning. It covers disputes about the terms of the
Partnership Deed and the things done under it. It is not restricted
only to money disputes or dissolution of the firm. But it cannot
mean that every dispute between the parties, even if having no
connection with the Partnership Deed, must be referred to
arbitration. Some connection with the rights and duties under the
deed has to be there. Clause 24(d) of the Partnership Deed states
that each partner will be "just and faithful to one another". Clause
24(e) states that "No Partner shall make any private profit at the
cost of the Partnership Firm." The deed contains provisions
regarding the accounts, money and duties of the partners in
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running the business. From these terms, it can be seen that the
partners had accepted certain duties towards each other
concerning the property, money, accounts and business of the firm.
10. The notice dated 22 June 2026 refers to the allegation that
the Applicant used the stock belonging to M/s Prime Kitchen Care
for the business of M/s Nejyra Technical Services Private Limited.
The value of such stock is stated to be about Rs. 24 lakhs and the
transactions are alleged to have been made through 121 invoices.
The Applicant has denied these allegations and has stated that
they are false and without any basis. The notice refers to the FIR
filed by the Respondent and alleges that criminal proceedings were
started to put pressure upon the Applicant. These allegations have
to be considered together and not separately. The dispute is not
only about whether the Applicant committed the offences
mentioned in the FIR. It concerns the allegation that stock
belonging to the partnership firm was used for the business of
another company and that the Applicant obtained benefit from
those transactions. At this stage, this Court is not deciding whether
these allegations are true or false. But the allegations do show that
there may be a dispute regarding the property and accounts of the
firm and the duties of the partners.
11. If it is found that stock belonging to M/s Prime Kitchen Care
was transferred or used against the terms of the Partnership Deed,
a question may arise whether the Applicant failed to perform his
duties as a partner. On the other hand, if the allegations are found
to be false, that may have an effect on the accounts and rights of
the parties. These matters can be examined by the Arbitral
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Tribunal, depending upon the claims placed before it. Merely
because another company is alleged to be involved in the
transactions, it does not mean that the entire dispute about the
property and accounts of the partnership firm is outside Clause 33.
The Respondent is right in saying that M/s Nejyra Technical
Services Private Limited is a separate legal entity. A company has
its own legal identity, which is different from the identity of its
shareholders and directors. Merely because a partner has some
business connection with a company, the company does not
become a party to the Partnership Deed. The same position applies
to M/s Nejyra International Private Limited. At this stage, no
material has been shown to establish that either company signed
Clause 33 or otherwise agreed to be bound by it. Therefore, by
appointing an Arbitrator under the Partnership Deed, this Court
cannot make either of these companies a party to the arbitration
agreement. The Arbitrator cannot grant relief against these
companies as if they had agreed to arbitration, unless there is a
proper legal basis for doing so. But this position is different from
the disputes between the Applicant and the Respondent about
their own rights and duties as partners. Whether a particular claim
comes within the arbitration clause has to be seen by looking at
the claim itself and not only because another company is
mentioned in the dispute.
12. The Memorandum of Understanding dated 1 August 2021
requires to be considered. This document is between Mr. Ish
Mohammad and Mr. Mohd. Nehaluddin. Under the heading "C.
Prime Kitchen Care", it states that the gross turnover and business
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activities of the earlier firm would continue. It mentions Nehal
Mohammad and Nusrat with 50% participation each. Under the
heading "D. Share holdings and Directorship", it refers to M/s
Nejyra Technical Services Private Limited and records the proposed
shareholding of 50% each for Mr. Ish Mohammad and Mr. Mohd.
Nehaluddin. Thus, the Memorandum of Understanding refers both
to the earlier partnership business and to the new company. This
gives some support to the Applicant's submission that the business
arrangements were connected with each other. However, the
document placed before this Court was executed between Mr. Ish
Mohammad and Mr. Mohd. Nehaluddin. The Respondent is not
shown as a person who signed it. There is no arbitration clause in
this document. Therefore, this document cannot be treated as a
separate arbitration agreement between the Applicant and the
Respondent. It cannot be said that the company agreed to
arbitration through this document.
13. The Respondent has raised disputes about the alleged Will,
her claim of beneficial ownership in the shares of M/s Nejyra
Technical Services Private Limited, the alleged misuse of Mr. Ish
Mohammad's digital signature and the correction of the company's
register of members. These matters are different from the ordinary
disputes about the accounts and duties of partners. Whether the
Will was executed and is genuine, whether the alleged transfer of
shares was lawful and whether the company's records need
correction cannot be finally decided in this Application under
Section 11. At this stage, there is no basis for this Court to declare
that any of these documents is genuine, forged or fabricated. The
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Respondent has submitted that any order regarding the company's
shares or register of members would affect the company and its
present directors and shareholders, including the Applicant's wife,
Mrs. Nilofer Jahan. This objection has force to the extent that the
Respondent seeks relief against persons or companies who are not
parties to the arbitration agreement and have not agreed to
arbitration. Appointment of an Arbitrator cannot be treated as
permission to decide the rights of such persons merely because
they are connected with the transactions in dispute. However, it
would not be proper to say that every dispute relating to the
partnership must remain outside arbitration merely because
another company is involved in the same transactions. The
disputes about the company's shares and the disputes about use of
the partnership firm's stock, money or accounts may be connected
with the same facts, but their legal nature may be different. A
claim about the company's shares may affect the company and
persons who are not parties to Clause 33. On the other hand, a
claim about the firm's stock and accounts may concern the duties
of the Applicant and the Respondent towards each other under the
Partnership Deed. Both types of claims have to be examined
separately according to their nature.
14. This approach finds support from the decision of the
Supreme Court in Shubham Equipment Private Limited and
Another v. Rothwell Water Company Limited and Others, 2026
INSC 1098, decided on 8 October 2026. The Supreme Court held
that at the stage of Section 11(6-A), the Court has to make a prima
facie examination about the existence of an arbitration agreement.
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It observed that where disputes under different agreements relate
to different matters, questions about the scope of the disputes and
the involvement of persons who have not signed the arbitration
agreement may require examination by the Arbitral Tribunal. The
fact that claims have some common connection does not mean that
appointment of an Arbitrator must be refused. But this does not
mean that every person who has not signed the agreement
becomes bound by it. The position of each person and the terms of
the agreement have to be considered separately.
15. The limited role of the Court under Section 11 has been held
in Ajay Madhusudan Patel and Others v. Jyotrindra S. Patel and
Others, 2024 INSC 710. The Supreme Court held that while
appointing an Arbitrator, the Court is not required to hold a
detailed trial into disputed facts. It has to see whether an
arbitration agreement exists and whether there is a prima facie
reason to refer the dispute to arbitration. Questions of fact which
can be decided by the Arbitral Tribunal under Section 16 should
ordinarily not be finally decided at this stage. The same approach
is found in Vidya Drolia and Others v. Durga Trading Corporation,
(2021) 2 SCC 1, particularly paragraph 153. The Supreme Court
held that where the facts and legal position can be argued from
both sides, the parties should ordinarily be referred to arbitration,
leaving the Tribunal to decide the questions which come within its
jurisdiction. In the present case, Clause 33 is contained in the
Partnership Deed executed between the Applicant and the
Respondent. The main objection of the Respondent is about the
meaning and scope of that clause and the actual nature of the
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disputes. These objections do not show that the arbitration
agreement does not exist or that all the disputes raised by the
Applicant are clearly outside its scope.
16. Mr. Khan has submitted that the notice dated 22 June 2026
does not state any claim made by the Applicant, any amount
payable to him or any specific relief sought against the
Respondent. Therefore, according to him, the notice is not a valid
request under Section 21 of the Arbitration and Conciliation Act,
1996. This objection has to be considered because Section 21 deals
with the commencement of arbitral proceedings. Unless the parties
have agreed otherwise, the proceedings are treated as having
commenced on the date when the Respondent receives the request
to refer the dispute to arbitration.
17. The notice in the present case does not contain a detailed
statement of claim or mention any particular amount payable to
the Applicant. It could have been written in a clearer manner.
However, it identifies the Partnership Deed, refers to the disputed
use of the firm's stock and the transactions with M/s Nejyra
Technical Services Private Limited, denies the allegations made
against the Applicant and specifically invokes Clause 33. It calls
upon the Respondent to agree to the appointment of a Sole
Arbitrator to decide the existing disputes. The notice has to be read
as a whole and along with the disputes which had already arisen
between the parties. The fact that the notice does not mention a
specific money claim does not mean that there is no dispute which
can be referred to arbitration. The Applicant will have to state the
exact claims and reliefs sought in the pleadings before the Arbitral
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Tribunal. The notice need not contain every detail which would be
included in the final statement of claim. What is important is
whether the request to refer the dispute to arbitration can be
understood from the notice. In the present case, it can be
understood that the Applicant disputes the allegations regarding
the partnership business and seeks a decision on the disputes
between the partners under the Partnership Deed.
18. The Supreme Court considered the purpose of a notice under
Section 21 in Adavya Projects Private Limited v. M/s Vishal
Structurals Private Limited and Others, 2025 INSC 507. The Court
held that the notice is necessary for starting arbitration and for
determining limitation. However, the contents of the notice do not
restrict the claims which may later be made before the Arbitral
Tribunal. Questions about whether a particular claim can be
maintained or is within limitation can be decided by the Tribunal
on the basis of the pleadings and evidence. This does not mean
that a request for arbitration is not required. It only means that the
notice need not contain the complete statement of claim. Applying
this principle, the notice dated 22 June 2026 cannot be rejected
only because it does not mention a particular amount or give every
relief in detail.
19. The Applicant has submitted that the present Application is
within three years under Section 43 read with Section 21 of the
Act. This submission requires some clarification. Section 43 applies
the law of limitation to arbitration, while Section 21 deals with the
commencement of arbitral proceedings. These provisions do not
mean that every claim relating to the partnership business
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becomes within limitation merely because the notice invoking
arbitration was issued in June 2026. The limitation for each claim
will depend upon the nature of that claim and the date when the
cause of action arose. The limitation applicable to the Section 11
Application is different from the limitation applicable to the claims
which may be placed before the Arbitrator. Therefore, it is not
necessary to give a final finding on limitation of every claim at this
stage. This issue is left open for the Arbitral Tribunal to decide
according to law.
20. The objection based on the criminal proceedings does not
justify rejection of the entire Application. The Respondent relies
upon allegations of forgery, misuse of Mr. Ish Mohammad's digital
signature, wrongful transfer of shares and wrongful gain to the
Applicant. These are serious allegations. But registration of an FIR
does not mean that every civil dispute connected with the same
transactions cannot be decided through arbitration. Similarly,
merely because the Applicant has denied the allegations, it cannot
be held that the criminal proceedings are false or were started only
to put pressure upon him. This does not mean that the Arbitrator
can decide whether the Applicant or the Respondent has
committed any criminal offence. The Arbitrator cannot conduct a
criminal trial or decide criminal liability in place of the competent
criminal court. The Arbitrator cannot direct that the FIR should be
treated as false merely because the parties are referred to
arbitration. The investigation and criminal proceedings must
continue according to law. If the parties rely upon the same
transactions before the Arbitrator, those transactions can be
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examined only for deciding the civil rights and duties which come
within the arbitration agreement.
21. Mr. Dighe has alleged that the Respondent and her husband
are using the criminal proceedings to extort money from the
Applicant. He has submitted that the Respondent is opposing
arbitration with an improper intention. These are allegations made
by the Applicant. The material before this Court does not justify a
finding that the Respondent is trying to extort money or that the
FIR is false. At the same time, registration of the FIR cannot be
treated as proof that the Applicant committed the acts alleged
against him. Both sides must be given the opportunity to prove
their respective cases before the forums which have jurisdiction to
decide them. I am therefore unable to accept the submission that
appointment of an Arbitrator would make the criminal proceedings
infructuous. Arbitration and criminal proceedings have different
purposes. Arbitration may decide the civil and commercial rights of
the parties under the Partnership Deed. Criminal proceedings
decide whether an offence has been committed and whether
criminal liability arises. One proceeding does not replace or end
the other.
22. The Respondent's objection that the notice is defective
because it does not mention a particular amount payable to the
Applicant has to be considered along with the entire notice. The
notice identifies the Partnership Deed, the allegations about the
firm's stock and transactions with the separate company, and the
Applicant's denial of those allegations. It invokes Clause 33 and
asks for appointment of a Sole Arbitrator to decide the existing
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disputes. Though the notice could have been written more clearly,
it identifies the disputes which the Applicant wants to refer to
arbitration. The Applicant can state the detailed claims and exact
reliefs before the Arbitral Tribunal. The absence of a fixed money
claim in the notice does not make the request for arbitration
invalid.
23. It must be made clear that this order does not decide
whether the Applicant is entitled to any particular amount,
whether the Respondent has a valid counterclaim or whether the
transactions complained of amount to a breach of the Partnership
Deed. These questions require examination on their merits. The
role of this Court under Section 11 is limited. The Court has to see
whether an arbitration agreement exists and whether the dispute
can prima facie come within that agreement. It is not required to
conduct a trial into the disputed transactions or decide the final
rights of the parties before an Arbitrator is appointed.
24. In the aforesaid circumstances, the present Application under
Section 11 of the Act, is deserved to be disposed of in terms of the
following order:
A) Mr. Ashish Venugopal, Advocate of this court is hereby
appointed as the Sole Arbitrator to adjudicate upon the
disputes between the Applicant and the Respondent arising
out of or in connection with their rights and obligations
under the Admission-cum-Retirement Deed/Partnership
Deed dated 14 March 2014 and, to the extent applicable, the
Supplementary Deed of Partnership dated 22 April 2022,
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including the claims and counterclaims arising therefrom;
Office Address:- Chambers of Nikhil Sakhardande, Sr. Adv.,
1101, 1 Infinity, Cawasji Patel Street, Fort, Mumbai –
400001.
Email: [email protected]
B) A copy of this Order will be communicated to the
Learned Sole Arbitrator by the Advocates for the Applicant
within a period of one week from today. The Applicant shall
provide the contact and communication particulars of the
parties to the Arbitral Tribunal along with a copy of this
Order;C) The Learned Sole Arbitrator is requested to
forward the statutory Statement of Disclosure under Section
11(8) read with Section 12(1) of the Act to the Advocates for
the Applicant so as to enable them to file the same in the
Registry of this Court. The Registry of this Court shall retain
the said Statement on the file of this Applicant and a copy of
the same shall be furnished by the Advocates for the
Applicant to the Advocates for the Respondent;
C) The Learned Sole Arbitrator is requested to forward the
statutory Statement of Disclosure under Section 11(8) read
with Section 12(1) of the Act to the parties within a period
of two weeks from receipt of a copy of this Order;
D) The parties shall appear before the Learned Sole
Arbitrator on such date and at such place as indicated, to
obtain appropriate directions with regard to conduct of the
arbitration including fixing a schedule for pleadings,
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examination of witnesses, if any, schedule of hearings etc. At
such meeting, the parties shall provide a valid and functional
email address along with mobile and landline numbers of the
respective Advocates of the parties to the Arbitral Tribunal.
Communications to such email addresses shall constitute
valid service of correspondence in connection with the
arbitration;
E) All arbitral costs and fees of the Arbitral Tribunal shall
be borne by the parties equally in the first instance, and shall
be subject to any final Award that may be passed by the
Tribunal in relation to costs.
25. All issues on merits are expressly kept open to be agitated
before the arbitral tribunal appointed hereby.
26. All actions required to be taken pursuant to this order shall
be taken upon receipt of a downloaded copy as available on this
Court’s website.
(AMIT BORKAR, J.)
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