A court may preserve a disputed partnership firm’s operations pending Section 9 proceedings.

The petitioners and respondent Nos. 1 and 2 were partners in Mukunda Shiva and Associates, a firm of Chartered Accountants employing more than 185 people and undertaking audit and other professional work for clients.

After disputes arose, respondent Nos. 1 and 2 issued a notice dated 12 September 2026 dissolving the firm, asserting that it was a partnership at will; the notice resulted in the firm’s bank accounts being frozen.

The petitioners disputed the basis and effect of the notice, relying on the partnership deed’s arbitration clause and seeking interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, read with Order XXXIX Rules 1 and 2 of the CPC.

The Commercial Court had ordered the applications to be heard, but consideration remained inconclusive. The petitioners challenged that order and sought, among other reliefs, permission to continue the firm’s operations and access its bank accounts pending the Section 9 applications.

1. Whether interim protection was warranted to safeguard the parties’ and third parties’ interests while the Commercial Court considered the pending Section 9 applications.

2. Whether the Court should determine at this stage whether the firm was dissolved at will or whether the dispute concerned the retirement of partners.

Section 9 of the Arbitration and Conciliation Act, 1996 empowers a court to grant interim measures of protection that are necessary, just and convenient during arbitral proceedings.

Order XXXIX Rules 1 and 2 of the CPC were invoked in the pending applications as the procedural basis for interim relief.

Clause 36 of the partnership deed referred disputes between the partners—including disputes concerning the deed, professional conduct and dissolution—to arbitration.

The Court noted that Sections 139–141 of the Companies Act, 2013 address the appointment and recognition of firms in the context of company auditors, relevant to the firm’s asserted ongoing professional obligations.

The respondent relied on Section 43 of the Indian Partnership Act, 1932 and V. Sumitra Reddy v. K. Ranganadha Reddy, Civil Appeal No. 8167/2017, in support of the dissolution-at-will position; the High Court did not decide that substantive question.

The Court considered that the dissolution notice and frozen accounts could disrupt the firm’s existing audit, tax and GST work, affect its clients, and have consequences for its employees.

Because the partnership deed referred disputes concerning dissolution to arbitration, the character and effect of the notice—including whether the firm was dissolved or the matter involved retirement—were issues for the pending proceedings, not questions to be resolved in the writ petition.

To preserve the position pending the Commercial Court’s determination, and without expressing a view on the parties’ merits, the Court found an interim arrangement appropriate.

The arrangement was to remain in force until the Commercial Court considered the applications.

The Commercial Court was directed to decide them independently, with all contentions kept open, and was requested to dispose of them by 13 November 2026.