A Legal Perspective
During legal proceedings advocate plays a prominent role and especially when it comes to complex disputes that require expert knowledge, strategic discussions and detailed understanding of the law. Advocate Rajal Rai Dua is renowned in the field of arbitration and known for his ability to navigate intricate legal matters with precision and professionalism. In a recent case, advocate Rajal Rai Dua was represented by the petitioner in a partnership dispute between two parties. His participation in this case demonstrates his expertise in the court of arbitration and his obligation to ensure justice through an efficient legal framework. This judgement highlights the doctrine of severability in arbitration law, the Hon’ble Delhi High Court, in Arb.P. No. 253/2024, has confirmed that an arbitration clause incorporated in a partnership deed remains valid even following the dissolution of the partnership firm.
Case Background
The petition was filed under Section 11 of the Arbitration and Conciliation Act, 1996, by the petitioner represented by Advocate Rajal Rai Dua. The dispute originated between the petitioner and respondent, who were partners in M/s Applied Communication and Controls. The petitioner held a 51% ownership and respondent held 49% stake.This partnership firm was established on 01.06.2022 specializing in manufacturing of telecom and surveillance equipment and was later dissolved by an agreement dated 03.07.2023. Despite the mutually-agreed dissolution, disputes remained unresolved and caused the petitioner to invoke the arbitration clause as per Clause 19 of the partnership deed.
Legal Grounds for Arbitration
The clause 19 of partnership deed stated that
“That in case of any dispute between the parties hereto with regard to the matters relating to the partnership firm, the same shall be referred to a sole arbitrator mutually agreed upon by the parties hereto, at that time according to and subject to the provisions of the Indian Arbitrator Act 1940 with the modification therein from time to time.”
Advocate Rajal Rai Dua legally focussed on arbitration clause and his proceedings was to appoint the arbitrator to resolve disputes between the parties.
Legal Arguments and Proceedings
Advocate Rajal Rai Dua states that the arbitration clause contained in the agreement survived due to the doctrine of severability after the dissolution of partnership deed. This principle implies that an arbitration agreement remains valid, unaffected by the termination or dissolution of the underlying contract.
The Hon’ble Delhi High Court presided over by Justice Jasmeet Singh accepted the petition for the appointment of arbitrator to solve business conflicts from a partnership deed under Dua’s counsel. The respondent counsel Mr. Kochhar has no objection to the present petition and requested all legal submissions of the respondents be left open for consideration.
Court’s Judgement and Directives
The High Court acknowledge the importance and necessity of arbitration clause in partnership agreements for conflict resolution, the Court allowed the petition and appointed Mr. K.K. Bhuchar (Advocate) as the sole arbitrator. The court directed that arbitration can proceed under the aegis of the Delhi International Arbitration Centre (DIAC) and the remuneration in accordance with the DIAC (Administrative Cost and Arbitrators’ Fees) Rules, 2018.
The court requested the arbitrator to provide a declaration in terms of Section 12 of the Act prior to entering into proceedings. The Court also clarified that all rights and legal contentions of the parties, including objections, arbitrability claims and merits, were left open by the arbitrator for adjudication. The parties were instructed to approach the arbitrator within two weeks from the date of the order.
Case Conclusion
The case between petitioner and respondent serves as evidence for highlighting the importance of arbitration in partnership conflicts. This ruling strengthens the enforceability of arbitration clauses and upholds the principle that arbitration agreements remain independent and binding even if the principal contract ceases to exist. Advocate Rajal Rai Dua played a prominent role in advocating for his petitioner rights, ensuring the arbitration clause was upheld and a sole arbitrator was appointed, thereby demonstrating the validity of alternative dispute resolution in achieving equitable outcomes. This case is a best example for businesses and individuals involved in legal conflicts. It reaffirms the Delhi High Court’s commitment to upbringing arbitration as an effective dispute resolution mechanism.
For a detailed copy of Judgement.
Please visit https://delhihighcourt.nic.in/court/judegment_orders?pno=1194526
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