Bombay HC Appoints Arbitrator For Sibling Partners’ Dispute Over Firm Stock, Says Separate Companies Aren’t Automatically Bound

The parties became partners of M/s Prime Kitchen Care under an Admission-cum-Retirement Deed/Partnership Deed dated 14 March 2014, which contained an arbitration clause at Clause 33; they later executed a Supplementary Deed of Partnership dated 22 April 2022.

Disputes arose concerning the partnership business and alleged use of the firm’s stock in the business of M/s Nejyra Technical Services Private Limited. The Respondent also raised disputes concerning that company’s shares, an alleged Will, and related transactions, and lodged an FIR.

After the Respondent did not agree to the Applicant’s request to appoint a sole arbitrator, the Applicant applied under Section 11 of the Arbitration and Conciliation Act, 1996. The Respondent objected, among other things, that the disputes fell outside Clause 33 and that the notice under Section 21 was deficient.

Under Section 11(6-A) of the Arbitration and Conciliation Act, 1996, the Court’s inquiry at the appointment stage is limited to a prima facie examination of the arbitration agreement; it should not conduct a detailed trial of disputed facts, which may ordinarily be left to the tribunal under Section 16 (Shubham Equipment Private Limited v. Rothwell Water Company Limited, 2026 INSC 1098; Ajay Madhusudan Patel v. Jyotrindra S. Patel, 2024 INSC 710; Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1).

Clause 33 covers disputes connected with the Partnership Deed or things done pursuant to it, but does not bind non-signatories absent a proper legal basis.

Section 21 governs commencement of arbitral proceedings upon receipt of a request to refer the dispute; the notice need not contain the complete statement of claim (Adavya Projects Private Limited v. M/s Vishal Structurals Private Limited, 2025 INSC 507).

Section 43 applies limitation law to arbitration, but limitation for each claim depends on its nature and accrual; criminal liability remains for determination by the competent criminal forum.

Clause 33 existed between the Applicant and Respondent, and the allegations concerning the firm’s stock, accounts and business could prima facie engage their duties as partners, including their obligations to act faithfully and not make private profit at the firm’s expense.

The Court therefore declined to reject arbitration merely because the same transactions also involved separate companies. Those companies had not been shown to have agreed to arbitration, and the appointment could not authorise relief against them; company-share disputes and partnership claims were to be assessed separately.

The notice, read as a whole, identified the deed, the disputed transactions and the request for arbitration, and was not invalid merely because it omitted a specific monetary claim.

The Court left limitation and the merits of the allegations open. Nor could the arbitrator determine criminal liability or terminate the separate criminal proceedings.

The appointment did not bind non-signatory companies or determine the merits, limitation, or criminal liability; those matters were left open or to the competent forum.