1970 (9) TMI 128 - SC - Indian Laws

Summary

Issues:
1. Interpretation of partnership agreement and arbitration clause.
2. Validity of the agreement dated January 17, 1968.
3. Jurisdiction of arbitrators in resolving disputes.
4. Supersession of partnership agreement by subsequent agreement.
5. Authority of arbitrators in disputes involving valuation.

Analysis:

Issue 1: Interpretation of partnership agreement and arbitration clause
The case involved a partnership agreement between two brothers for three businesses. The agreement included a clause stating that all disputes between the partners shall be referred to arbitration. The respondent claimed that an oral agreement was reached on January 17, 1968, for the appellant to retire from the partnership. The court held that the agreement for dissolution of the partnership fell within the scope of the arbitration clause, emphasizing that disputes regarding partnership dissolution were covered by the partnership agreement's arbitration provision.

Issue 2: Validity of the agreement dated January 17, 1968
The respondent claimed that the appellant agreed to retire from the partnership on January 17, 1968, against payment of a price determined by a valuer. The appellant denied this agreement. The court did not determine the validity of the agreement but emphasized that such a dispute, if true, would constitute a valid issue for arbitration under the partnership agreement.

Issue 3: Jurisdiction of arbitrators in resolving disputes
The appellant challenged the jurisdiction of the arbitrators, arguing that the subsequent agreement superseded the partnership agreement. The court rejected this argument, stating that the dispute regarding partnership dissolution could still be referred to arbitration under the original partnership agreement's arbitration clause.

Issue 4: Supersession of partnership agreement by subsequent agreement
The court dismissed the argument that the subsequent agreement superseded the partnership agreement, clarifying that the subsequent agreement aimed at dissolution of the partnership and did not invalidate the original arbitration clause.

Issue 5: Authority of arbitrators in disputes involving valuation
The respondent's agreement involved a valuation of the appellant's share, which the appellant argued extinguished the arbitrators' authority. The court held that the valuation issue could be referred to the arbitrators under the partnership agreement's arbitration clause, emphasizing that the primary dispute was about the truth of the agreement for partnership dissolution.

In conclusion, the Supreme Court upheld the lower court's decision, emphasizing that the dispute regarding partnership dissolution fell within the scope of the arbitration clause in the partnership agreement. The court dismissed the appeal and awarded costs to the respondents.