# Bharat Petroleum Corporation Limited v. M/s. Gupta & Company & Ors

- **Citation:** (2023) 2 ILRA 6
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-01-27
- **Case number:** Arbitration and Conciliation Application U/S 11(4) No. 58 of 2021
- **Bench:** Manoj Kumar Gupta
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/bharat-petroleum-corporation-limited-v-m-s-gupta-company-ors-49717
- **Pages:** 3

## Headnote

A. Arbitration and Conciliation Act, 1996Section 11(4). Section 40 -appointment of
arbitrator-
the
issue
arises
for
consideration is whether after death of
one of the partners of the firm, this Court
can appoint an Arbitral Tribunal for
deciding the claim-Held-under section 40
of the Act, an arbitration agreement does
not stand discharged on account of death
of any party thereto, unless the right of
action is extinguished by operation of lawsection 45 of the Act clearly stipulates
that notwithstanding the dissolution of a
firm, the partner s continue to be liable as
such to third parties for any act done by
any of them which would have been an act
of the firm if done before the dissolution,
until
public
notice
is
given
of
the
dissolution-The
specific
case
of
the
applicant is that the surviving partners
without informing the applicant about
death of one of its partners, continued to
transact business with it-Consequently,
no merit in the contention that on account
of death of one of the partners and
resultant dissolution of the firm, the
dispute between the parties could not be
referred for adjudication to the arbitratorAs by operation of law, the Director, or
his nominee cannot act as an arbitrator,
therefore,
the
applicant
has
rightly
approached to the Court to constitute an
Arbitral Tribunal. (Para 1 to 17)

The application is allowed. (E-6)

## Text

6 INDIAN LAW REPORTS ALLAHABAD SERIES
(2023) 2 ILRA 6
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 27.01.2023

BEFORE

THE HON'BLE MANOJ KUMAR GUPTA, J.

Arbitration and Conciliation Application U/S
11(4) No. 58 of 2021

Bharat Petroleum Corporation Limited
 ...Applicant
Versus
M/s. Gupta & Company & Ors.
 ...Opposite Parties

Counsel for the Applicant:
Sri Komal Mehrotra

Counsel for the Opposite Parties:
Sri Preet Pal Singh Rathore, Sri Chandra
Bhan Gupta, Sri Kamlesh Kumar Singh, Sri
Bal Mukund Singh

A. Arbitration and Conciliation Act, 1996Section 11(4). Section 40 -appointment of
arbitrator-
the
issue
arises
for
consideration is whether after death of
one of the partners of the firm, this Court
can appoint an Arbitral Tribunal for
deciding the claim-Held-under section 40
of the Act, an arbitration agreement does
not stand discharged on account of death
of any party thereto, unless the right of
action is extinguished by operation of lawsection 45 of the Act clearly stipulates
that notwithstanding the dissolution of a
firm, the partner s continue to be liable as
such to third parties for any act done by
any of them which would have been an act
of the firm if done before the dissolution,
until
public
notice
is
given
of
the
dissolution-The
specific
case
of
the
applicant is that the surviving partners
without informing the applicant about
death of one of its partners, continued to
transact business with it-Consequently,
no merit in the contention that on account
of death of one of the partners and
resultant dissolution of the firm, the
dispute between the parties could not be
referred for adjudication to the arbitratorAs by operation of law, the Director, or
his nominee cannot act as an arbitrator,
therefore,
the
applicant
has
rightly
approached to the Court to constitute an
Arbitral Tribunal. (Para 1 to 17)

The application is allowed. (E-6)
(Delivered by Hon'ble Manoj Kumar
Gupta, J.)

1. Matter taken up in the revised call.

2. Sri Komal Mehrotra, learned
counsel
for
the
applicant
and
Sri
Chandrabhan Gupta, learned counsel for
respondent no.2 are present.

3. None present for respondent no.3.

4. The instant application has been
filed under Section 11(4) of the Arbitration
& Conciliation Act, 1996 (hereinafter
referred to as the 'Arbitration Act') for
appointment of an arbitrator to resolve the
disputes between the applicant and Mahesh
Chandra Gupta (since dead), Devi Prasad
Gupta-opposite party no.2 and Shiv Prasad
Gupta-opposite party no.3, who were
carrying on business in the name and style
of M/s. Gupta & Company (opposite party
no.1), in pursuance of an agreement with
the applicant pertaining to "dispensing
pump
and
selling
license"
dated
08.02.2014.

5. The case of the applicant is that one
of the partner of the firm namely, Mahesh
Chandra
Gupta
died
on
15.08.2018.
Opposite party nos.2 and 3, the remaining
partners, without informing the applicantcompany, continued to carry on business in
the name of the firm and received supplies
2 All. Bharat Petroleum Corporation Limited Vs. M/s Gupta & Company & Ors.
7
of petroleum products on 28.09.2018 but,
did not make the payment thereof.

6. Arbitration Clause 19 stipulates
that any dispute or difference between the
parties arising out of the agreement will be
referred to the sole arbitration of the
Director (Marketing) of the ApplicantCompany, or of some Officer of the
Company
nominated
by
him.
The
provisions of the Arbitration Act have been
made
applicable
to
the
arbitration
proceedings. It is urged that in view of
Section 12(5) of the Arbitration Act, the
Director (Marketing) of the Company, nor
any officer of the company, could act as an
arbitrator. Thus, the procedure prescribed
under the agreement having failed by
operation of law, an arbitrator be appointed
by this Court.

7. Sri Chandra Bhan Gupta, learned
counsel appearing on behalf of opposite
party no.2 submits that since the license
was in name of the partnership firm and as
Mahesh Chandra Gupta, one of the partner
of the firm had died, therefore, the firm
stood
automatically
dissolved.
It
is
submitted that in such circumstances, the
matter cannot be referred to arbitration at
all. He places reliance on Clause 13 of the
Partnership deed between the partners,
which is as follows:

"(13) That in event of the death of
any partner, the partnership deed will come
to an end and the same can be reconstituted
only with formal written approval from
Bharat Petroleum Corporation Limited.
However the surviving partners can with
the approval of the corporation in writing
carry on the business of the said firm
purely on temporary basis on the terms and
conditions to be determined by the
corporation at their sole discretion."

8. Learned counsel for the applicant,
on the other hand, submits that the two
surviving partners continued to carry on
business in the name of firm and also
received supplies of petroleum products,
and therefore, there is no impediment in
appointment of an arbitrator nor the claim
of the applicant would stand defeated
automatically on the said ground.

9. The issue which thus arises for
consideration is whether after death of one
of the partners of the firm, this Court can
appoint an Arbitral Tribunal for deciding
the claim of the applicant against the firm.
No doubt, by virtue of Section 42 of the
Indian Partnership Act, 1932 (hereinafter
referred to as the 'Act'), a partnership firm
stands automatically dissolved, in the event
one of the partners of the firm dies, but it is
subject to there being no contract to the
contrary. Clause 13 of the Partnership deed
contains a contract to the contrary between
the partners. It permitted the surviving
partners to carry on business in firm's name
with the approval of the ApplicantCompany. Moreover, the case of the
applicant is that the surviving partners
without informing the applicant about the
death of one of the partner on 15.08.2018,
continued to transact business in the firm's
name and also received supplies of
petroleum products on 28.09.2018 and
thus, cannot escape liability to make the
payment or to get the dispute decided, nor
can resist constitution of Arbitral Tribunal
to adjudicate upon the claim of the
applicant.

10. Section 50 of the Partnership Act,
which is relevant, is extracted below:

"50. Personal profits earned
after
dissolution.-Subject
to
contract
between the partners, the provisions of
8 INDIAN LAW REPORTS ALLAHABAD SERIES
clause (a) of section 16 shall apply to
transactions by any surviving partner or by
the representatives of a deceased partner,
undertaken after the firm is dissolved on
account of the death of a partner and
before its affairs have been completely
wound up:

Provided that where any partner
or his representative has bought the
goodwill of the firm, nothing in the section
shall affect his right to use the firm-name."

11. Relevant part of Section 16 of the
Act is also extracted below:

"16. Personal profits earned by
partners.-Subject to the contract between
the partners, -

(a) if a partner derives any profits
for himself from any transaction of the firm,
or from the use of the property or business
connection of the firm or the firm-name, he
shall account for that profit and pay it to
the firm;"

12. Under Section 40 of the
Arbitration and Conciliation Act, 1996, an
arbitration agreement does not stand
discharged on account of death of any party
thereto, unless the right of action is
extinguished by operation of any law.
Section 45 of the Act clearly stipulates that
notwithstanding the dissolution of a firm,
the partners continue to be liable as such to
third parties for any act done by any of
them which would have been an act of the
firm if done before the dissolution, until
public notice is given of the dissolution.
The specific case of the applicant is that the
surviving partners without informing the
applicant about death of one of its partners,
continued to transact business with it.
Consequently, I find no merit in the
contention that on account of death of one
of the partners and resultant dissolution of
the firm, the dispute between the parties
could not be referred for adjudication to the
arbitrator.

13. As by operation of law, the
Director (Marketing) or his nominee cannot
act as an arbitrator, therefore, the applicant
has rightly approached this Court to
constitute an Arbitral Tribunal.

14. The application is allowed.

15. This Court proposes the name of
Sri Rahul Sahai, Advocate for being
appointed as Arbitrator. His address is
20/12 A, Panna Lal Road, Allahabad
(Mobile No. 9415235110). He will be paid
fees in accordance with the Fourth
Schedule.

16. Let consent of Sri Rahul Sahai,
Advocate be obtained by the office in terms
of Section 11(8), read with Section 12(1) of
the Act by sending a letter to him.

17. In case, the proposed arbitrator
does not give his consent or the disclosures
in terms of sub-section (1) of Section 12,
the application will be listed before the
Court for the limited purpose of proposing
name of alternate arbitrator.
----------
(2023) 2 ILRA 8
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 14.02.2023

BEFORE

THE HON'BLE RAJESH SINGH CHAUHAN, J.

Criminal Misc. Bail Application No. 7719 of 2022

Abdul Razak Peediyakkal ...Applicant
Versus
U.O.I. ...Opposite Party