CASE TITLE : Rahul Verma & Ors. v. Rampat Lal Verma & Ors.
The Supreme Court has reiterated that an arbitration agreement is enforceable against the legal representatives of a deceased partner of a partnership firm.”An arbitration agreement does not cease to exist on the death of any party and the arbitration agreement can be enforced by or against the legal representatives of the deceased,” the Court stated, referring to the judgment in Ravi Prakash Goel v. Chandra Prakash Goel & Anr., reported in (2008) 13 SCC 667
The Supreme Court held that an arbitration agreement does not cease to exist on the death of any party and the arbitration agreement can be enforced by or against the legal representatives of the deceased. The Court dismissed a Special Leave Petition (SLP) against the Judgment of the Gauhati High Court which allowed an Appeal filed by the Respondents under Section 37(1)(a) of the Arbitration and Conciliation Act, 1996 (the Act). The High Court had quashed the Order of the Commercial Court which had dismissed a Petition filed by the Respondents under Section 8 of the Act. A Bench of Justice JB Pardiwala and Justice R Mahadevan held “It is a well-established position of law that the term ‘partners’ extends to and would include their legal heirs, representatives, assigns or legatees, etc. Persons claiming under the rights of a deceased person are the representatives of the deceased party, and therefore, both the parties to the agreement and their legal heirs are entitled to enforce an arbitral award and are bound by it.
In light of Section 40 of the Act of 1996 the existence of an arbitration agreement is not affected by the death of a party to the arbitration agreement.
As a consequence, the right to sue for rendition of account also survives, ensuring that the legal representatives can assert or defend claims arising from the partnership agreement.” Also Read – Section 24A Consumer Protection Act Prescribes Two Years Limitation Period; But Delay Can Be Condoned By Recording Its Reasons: Supreme Court The AOR Shagufa Salim appeared for the Petitioners, while AOR Pavan Kumar Chaturvedi appeared as party-in-person for the Respondents.
The Court emphasized on the definition of a ‘legal representative’ under Section 2(1)(g) of the Act of 1996 to hold that an arbitral agreement and the award is enforceable by or against the legal representatives of the deceased.”
Similarly, the Delhi High Court in Jyoti Gupta v. Kewalsons (2018) held that “merely because the arbitration agreement refers to the disputes between ‘partners’, the same cannot debar or take away the right of enforcement of such an arbitration agreement vested in the legal heirs of the deceased partner in view of Section 40 of the Act.” , since the legal heirs of the deceased partner, namely, Sampat Lal Verma, have stepped into the shoes of the deceased, clause 15 of the partnership agreement will operate to bind both the petitioners and the respondents.”
Accordingly, the Supreme Court dismissed the SLP.
