Claims arising from partnership rights remain arbitrable despite the parties’ familial relationship.

The Applicant and Respondent No.1 were partners in Respondent No.2 firm under a Partnership Deed dated 9 October 1992, which contained an arbitration clause at Clause 18.

After the third partner retired in 2017, the Applicant claimed a 50% share in the firm.

The Applicant, who was unable to manage his affairs, was represented by his son, appointed as his Legal Guardian by the High Court on 5 September 2024.

In December 2024, the firm received Rs.25,00,000 in connection with the transfer of tenancy rights concerning Godown No.20.

The Applicant sought Rs.12,50,000 as his alleged share and accounts of the firm.

After the Respondent did not agree to arbitration following the Applicant’s notice dated 6 January 2026, the Applicant applied under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of a sole arbitrator.

1. Whether the disputes concerning the firm’s accounts, the Rs.25,00,000 receipt and the Applicant’s alleged share were prima facie covered by the arbitration agreement in Clause 18

2. Whether the objections concerning the Legal Guardian’s authority and alleged suppression precluded appointment of an arbitrator

3. Whether the Applicant’s claims were barred by limitation so as to warrant rejection of the Section 11 application

Under Section 11 of the Arbitration and Conciliation Act, 1996, the Court’s inquiry is limited to a prima facie examination of the existence of the arbitration agreement; contested or laborious questions are ordinarily left to the arbitral tribunal, as explained in ASF Buildtech Private Limited v. Shapoorji Pallonji and Company Private Limited, 2025 INSC 616, paras. 111 and 133.

A dispute’s connection to a partnership is assessed by the right claimed and the relationship from which it arises; a family relationship between the parties does not, by itself, make a partnership dispute non-arbitrable.

The Court also relied on Tarun Dhameja v. Sunil Dhameja & Anr., 2024 SCC OnLine SC 3715, concerning the practical application of a partnership deed’s arbitration clause and its invocation by a legal representative in the circumstances of that case.

The Court found that the arbitration agreement in Clause 18 was not disputed and that the Applicant’s claims for accounts and a share of money received by the firm arose from the partnership relationship, rather than merely from the parties’ family relationship.

The Respondent’s admission that the firm received approximately Rs.25,00,000, alongside the parties’ disagreement over the Applicant’s entitlement and the accounting of that amount, established a real dispute suitable for reference to arbitration; the Court did not decide the merits of the claimed 50% share.

The objections to the Guardian’s authority and alleged suppression were unsupported by material showing that the guardianship appointment had been stayed or set aside, or that the Guardian lacked authority to protect the Applicant’s interests.

As the principal monetary dispute arose in December 2024, arbitration was invoked in January 2026, and the Section 11 application was filed in 2026, no apparent limitation bar justified rejection at that stage; limitation of individual claims was left to the tribunal.

It appointed Mr. Abhishek Kothari, Advocate, as Sole Arbitrator to adjudicate disputes arising out of and in connection with Clause 18 of the Partnership Deed.

The Tribunal was left free to decide all questions on the merits, including entitlement, accounts, authority and limitation.

The parties were directed to bear the arbitration costs and fees equally in the first instance, subject to the final award on costs.