Bombay High Court
Mahindra Mangilalji Jain vs Radha Construction Co And Ors on 4 March, 2026
2026:BHC-OS:5597
Neeta Sawant carapl_12427_25 and carbpl 8173_25.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION APPLICATION (L) NO.12427 OF 2025
Mahindra Mangilalji Jain ...Applicant
V/s.
M/s Radha Construction Co and Ors. ...Respondents
WITH
COMMERCIAL ARBITRATION PETITION (L) NO.8173 OF 2025
Mahindra Mangilalji Jain ...Petitioner
V/s.
M/s Radha Construction Co and Ors. ...Respondents
WITH
INTERIM APPLICATION (L) NO. 30822 OF 2025
IN
COMMERCIAL ARBITRATION PETITION (L) NO.8173 OF 2025
M/s Radha Construction Co and Ors. ...Applicants
V/s.
Mahindra Mangilalji Jain and Ors. ...Respondents
_______________________________________________________________________________
Mr. Gauraj Shah with Ms. Aakansha Anand i/b M/s. Mahesh Menon &
Co. for the Applicant.
Mr. Abhishek Kothari with Mr. Nilesh Gala, Mr. Manish Gala & Mr.
Minil Shah for Respondent Nos. 1, 2, 5 and 6 and for Applicant in
IAL/30822/2025.
Mr. Kavyal P. Shah with Ms. Gunjan Shah for Respondent No.8.
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Mrs. Naina Poojary, Master (Adm.) with Mrs. Mrunal Manjrekar, Section
Officer, Court Receiver, High Court, present
________________
CORAM: SANDEEP V. MARNE, J.
JUDG. RESD. ON: 13 FEBRUARY 2026
JUDG. PRON. ON: 04 MARCH 2026
JUDGMENT:
1) This is an Application filed by the Applicant under Section
11 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) for
appointment of an Arbitrator alongwith Petition under Section 9 for
seeking interim measures before commencement of the arbitral
proceedings. In Section 9 Petition, Petitioner seeks direction against the
Respondents for execution of registered Agreement/Deed for Sale of
premises admeasuring 5,000 sq.ft. as per Allotment Letter dated 16
October 2017 as agreed under the Memorandum of Understanding dated
16 October 2017 (MOU). Petitioner also seeks furnishing of Bank
Guarantee for amount of Rs.17,60,00,000/- for securing the amount
payable to him under Memorandum of Understanding dated 16 October
2017. The Petitioner also seeks injunction from creating third party
rights in respect of the Petition property as well as disclosure in respect
of transactions effected for various premises in the building named
‘Ventura Commercial Hub’.
FACTS
2) Respondent No.1 is a Partnership Firm engaged in the
business of developing properties in India. The Firm initially comprised
of Respondent Nos.2 to 5 as the partners vide Partnership Deed dated 1
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October 2010. The Firm has undertaken a project for construction of
commercial building named ‘Ventura Commercial Hub’ at land bearing
Survey No.314 Hissa No.4 C. T. S. Nos.460A, 460/1 to 2l4, 46l, 46l/l to 11,
admeasuring 6823.5 sq.m. at Village-Malad, Taluka -Borivali, Mumbai
Suburban District. By Agreement dated 28 January 2013, Respondent
No.6 was inducted as incoming partner in the Firm. Respondent Nos.2 to
6 approached the Petitioner through Respondent No.7. Petitioner and
Respondent No.7 are partners in M/s. Manibhadra Developers.
Respondent Nos. 2 to 7 represented to the Petitioner that the
construction of the project was ongoing and requested him to invest
monies in the project. By Deed dated 11 February 2015. Petitioner and
Respondent No.7 were admitted as partners for Respondent No.1-Firm.
According to the Petitioner, he initially invested amount of
Rs.1,84,59,000/- in the year 2014-15. He was given 20% share in the
partnership firm. The Petitioner claims to have made further payment of
Rs.62,40,000/- after his admission in the Firm and this is how his total
contribution in the Firm was Rs.2,46,99,000/-. By further Deed dated 11
December 2015, Respondent No.8 was admitted in the Firm as incoming
partner and according to the Petitioner, his 20% share in the Firm
remained unaffected.
3) According to Petitioner, Respondent No.7 approached him
on 16 October 2017 and called upon him to retire from the Firm if he was
not willing to invest further amount. Accordingly, Retirement-cum-
Partnership Deed dated 16 October 2017 was executed, under which
Petitioner, Respondent Nos.7, 3, 4 and 8 retired from the Partnership
Firm and Respondent Nos.2, 5 and 6 remained as continuing partners.
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On the same day, i.e., 16 October 2017, Deed of Cancellation of
Admission and Partnership Deed was executed for retiring the Petitioner
from the Firm. On 16 October 2017, MOU was executed under which the
continuing partners agreed for payment of 17,60,00,000/- to the outgoing
partners for their retirement. According to the Petitioner, all the three
documents were executed simultaneously on 16 October 2017.
Additionally, Allotment Letter dated 16 October 2017 was issued by the
continuing partners in respect of area of 5000 sq.ft. in the project as
agreed under the MOU. The continuing partners also issued cheques in
the name of the Petitioner as agreed in the MOU. According to the
Petitioner, the three agreements, allotment letters and the cheques were
kept in Escrow Account with the Advocate as agreed in clause 8(e) of the
MOU. Petitioner kept on demanding for payment of amount agreed
under the MOU and the Respondent and continuing partners started
giving flimsy excuses and delayed payment due to him. Another
Memorandum of Understanding was executed in November 2019 (MoU-
2), under which Rajendrakumar Hastimal Singhvi released all his right,
title and interest under the three documents in favour of the Petitioner.
Petitioner claims to have obtained rights of Rajendrakumar Singhvi
under the three Agreements in pursuance of MoU-2 executed in
November 2019. Another Memorandum of Understanding dated 20
February 2020 (MoU-3) was executed under which Rajendrakumar
Singhvi once again released his right, title and interest in the three
documents in favour of the Petitioner. He also executed declaration-
cum-indemnity on 20 February 2020 confirming that the Petitioner is
entitled to recover amount of Rs.17,60,00,000/- from the continuing
partners.
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4) Petitioner demanded the amount of Rs. 17.60 crores and also
demanded the three documents and allotment letter kept in Escrow
Account vide letter dated 9 August 2024. However, the Advocate with
whom the documents and allotment letters were kept in escrow,
informed the Petitioner by letter dated 27 August 2024 that the same
were handed over to Respondent No.5 under instructions of Respondent
No.7. Petitioner issued notice dated 10 September 2024 followed by
another notice dated 7 October 2024. Continuing partners (Respondent
Nos.2, 5 and 6) sent reply dated 21 October 2024. Petitioner thereafter
filed Criminal Complaint with the police. According to the Petitioner, the
continuing partners have entered into arrangement with M/s. Real
Infrastructure for development of the project.
5) In the above background, the Petitioner first filed
Commercial Arbitration Petition (L) No.8173 of 2025 seeking interim
measures in terms of the following prayers:
a. Pending the hearing and final disposal of the Arbitration
Proceedings, this Hon’ble Court be pleased to pass an Order directing
the Respondents, to execute or arrange to execute a registered
Agreement/Deed for Sale, for transfer of the Premises, admeasuring
5000 square leet (carpet area) as per the Allotment letter l6’h
October, 2017, in the building, “Ventura Commercial Hub”. which has
been constructed in the building comprising of Petition Property, in
lieu of the part amount of Rs.10,50,00,000/-, to be paid by the
Respondents to the Petitioner, under the MOU dated l6th October
2017, wherein the Petition Premises, was given as security.
i. Pending the hearing and final disposal of the Arbitration
Proceedings, this Hon’ble Court be pleased to pass an Order directing
the Respondents, to furnish Bank Guarantee of a Nationalized Bank
or an Scheduled Bank in favour of the Petitioner, for the entirePage No.5 of 36
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Lakhs Lakhs Only), which the Respondents are liable to pay to the
petitioner, under the Memorandum of Understanding dated 16 th
October, 2017, pursuant to the Deed of Admission and partnership
dated 11th December 2015, Retirement cum Partnership Deed dated
l6th October, 2017, Agreement dated 16 th October, 2017, Deed of
Cancellation dated l6th October, 2017.
j. Pending the hearing and final disposal of the Arbitration
Proceedings, this Hon’ble Court be pleased to pass an Order and
Injunction restraining the Respondents, their servants and agents
from parting with possession of or creating any third party rights in
respect of the Petition property or any part thereof.
k. Pending the hearing and final disposal of the Arbitration
Proceedings, this Hon’ble Court be pleased to pass an Order and
Injunction directing the Respondents, their Office Bearers, servants
and agents to reserve and keep reserved a carpet area equivalent to
5000 square feet in the building comprising of the Petition Property.
l. Pending the hearing and final disposal of the Arbitration
Proceedings, this Hon’ble Court be pleased to appoint the Court
Receiver, High Court, Mumbai, with all powers under the Civil
Procedure Code, in respect of the Petition Property as per the
Allotment Letter dated l61h October, 2017, or carpet area equivalent
to 5000 square feet in the building “Ventura Commercial Hub”,
comprising of the Petition Property.
m. Pending the hearing and final disposal of the Arbitration
Proceedings, this Hon’ble Court be pleased to appoint the Petitioner
as the agent of the Court Receiver, High Court, Mumbai, in respect of
the Petition Property or a carpet area of 5000 square feet in the
building, “Ventura Commercial Hub”, comprising of the Petition
Property. without payment of any royalty or compensation till the
disposal of the Arbitration proceedings, to be initiated by the
Petitioner.
n. Pending the hearing and final disposal of the Arbitration
Proceedings, this Hon’ble Court be pleased to direct the Respondents
disclose on affidavit all the particulars of third party interest created
in the entire building “Ventura Commercial Hub”, comprising of the
Petition property.
o. Pending the hearing and final disposal of the Arbitration
Proceedings, this Hon’ble Court be pleased to direct the Respondents
to furnish copies of all papers and documents relating to creation of
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third party interest in the entire building, “Ventura Commercial Hub”,
comprising of the petition Property.
p. Interim and ad-interim relief-s in terms of prayers (a) to (o) be
granted;
q. Cost of this Petition be provided for ;
r. Such further and other reliefs in the nature and circumstances of
the case be granted ;
6) Petitioner thereafter filed Commercial Arbitration
Application (L) No. 12427 of 2025 for appointment of Arbitrator.
Respondent Nos.1 to 5 have filed affidavit-in-reply denying existence of
any arbitration agreement in the MOU. Respondent No.7 has filed a
separate affidavit-in-reply also denying the existence of arbitration
agreement.
7) On 28 March 2025, this Court passed ad-interim order in
Section 9 Petition directing Respondents to earmark and keep aside area
of at least 5000 sq.ft. on any floor of the building. Respondent Nos.1 to 5
filed Commercial Arbitration Appeal (L) No.11956 of 2025 challenging
ad-interim order dated 28 March 2025. The Appeal was disposed of by
order dated 23 April 2025 refusing to interfere in the ad-interim order,
but granting liberty to the Appellants therein to raise all contentions for
seeking vacation of ad-interim order. On 10 September 2025, an affidavit
of compliance on behalf of Respondent No.1 has been filed stating that
following flats have been earmarked towards compliance with ad-interim
order dated 28 March 2025:
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1. 1305 1285
2. 1009 605
3. 1110 655
4. 1101 1240
5. 1001 1240
8) Respondent No.1 undertook not to create any third-party
rights in the said 5 earmarked units. This Court passed further interim
order dated 10 July 2025 appointing Court Receiver and directing the
Receiver to take physical possession of the said 5 units. This Court
directed filing of further affidavit indicating precise status of units
available in the project. Accordingly, Respondent No.1 has filed further
compliance affidavit dated 16 September 2025, producing mortgage deed
executed with Abhudaya Bank dated 28 March 2019 for mortgage of the
entire project. It has also produced with the Affidavit, copy of the
Development Agreement / Joint Venture with M/s. Real Infrastructure
Company on 5 March 2018 under which 40% of the sale area is to be
given to M/s. Real Infrastructure Company. Respondent No.1 has also
produced a list of sold and unsold inventory in the project.
9) Both Section 9 Petition as well as Section 11 Application are
taken up for analogous hearing.
10) Mr. Gauraj Shah, the learned counsel appearing for the
Petitioner submits that there clearly exists an agreement to arbitrate
between the parties. That the principal/mother document between the
parties is the Retirement cum Partnership Deed dated 16 October 2017,
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which contains arbitration clause. That the three documents of
Retirement-cum-Partnership Deed, Deed of Cancellation and MOU are
executed on the same day between the same parties. That all the
documents were kept in escrow with the advocate. That therefore the
case involves execution of multiple documents to execute a composite
transaction. That therefore presence of arbitration agreement in the
Deed of Retirement is sufficient to make a reference to arbitration and
mere absence of arbitration clause in the MOU is irrelevant. That all the
three documents make references to each other. That the MOU has been
executed for the purpose of giving effect to the Retirement-cum-
Partnership deed dated 16 October 2017. That the consideration of
Rs.17.60 crores was agreed for the purpose of exit of the Petitioner from
the partnership. That therefore MOU is not the principal/mother
document, nor any independent transaction is effected through the
same. That MOU and Deed of Retirement ultimately constitute a
composite transaction.
11) Mr. Shah further submits that the manner in which the
parties corresponded with each other after execution of the three
documents is also relevant. That in response to Petitioner’s notices
dated 10 September 2024 and 7 October 2024, the firm replied on 21
October 2024 admitting that the premises were allotted under the MOU
in lieu of consideration payable to retiring partners. That Respondent
No. 5 also admitted in the letter dated 28 January 2025 that MOU was
executed for the purpose of reducing in writing the formalities of
monetary adjustments towards retirement from the firm. That it is more
than apparent that parties always intended composite reading of the
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three documents as a part and parcel of one coherent transaction. That
therefore the arbitration clauses in the Admission-cum-Partnership
Deed and Retirement-cum-Partnership Deed govern the disputes
between the parties for which reference needs to be made to arbitration.
12) Mr. Shah further submits that it is repeatedly held that
where multiple documents form part of a single transaction, the
arbitration clause in one extends to other, particularly when there is
close nexus in the subject matter, execution and purpose. He relies on
judgment of the Apex Court in Ameet Lalchand Shah and Ors. vs.
Rishabh Enterprises and Anr.1 and the three Judges Bench decision in
Cox and Kings Ltd. vs. SAP India Pvt. Ltd. and Anr. 2 approving the
judgment in Ameet Lalchand Shah (supra). He also relies on the
Constitution Bench judgment in Cox and Kings Ltd. vs. SAP India Pvt.
Ltd. and Anr.3 and ASF Buildtech Pvt. Ltd. vs. Shapoorji Pallonji and
Company Pvt. Ltd.4
13) Mr. Shah further submits that the allotment letter seeks to
allot one contiguous premises admeasuring 5000 sq.ft. on the second
floor of the building whereas the Respondent-firm has deliberately
created third party interests in second floor premises with a view to
defeat the claim of the Petitioner. He submits that allotment of smaller
and scattered premises throughout the building in favour of the
Petitioner would cause him financial loss and that such premises would
not be sufficient for preserving the amount agreed to be paid to the
1
(2018) 15 SCC 678
2
(2022) 8 SCC 1
3
(2024) 4 SCC 1
4
(2025) 9 SCC 76
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Petitioner under the MOU. He places on record a list of units in respect
of which the Court Receiver can be appointed for preserving the interests
of the Petitioner in a better manner. He alternatively submits that a
reference to the Arbitral Tribunal be made granting liberty to the
Petitioner to press for further interim measures.
14) The Petition is opposed by Mr. Kothari, the learned counsel
appearing for the Respondent Nos. 1, 2, 5 and 6. He submits that the
entire grievance of alleged cause of action flows purely out of the MOU
dated 16 October 2017, which does not contain arbitration clause. That
the MOU in fact records that breaches thereunder would constitute a
default. That MOU contains ‘entire agreement’ clause and therefore no
reference can be made to the other documents even if executed on the
same day. He submits that neither by the principles of incorporation of
reference nor by the principles of intertwined and/or composite
agreements, arbitration agreement can be inferred in the present case.
That the arbitration clause in the Retirement Deed is not specifically
incorporated in the MOU and that therefore, mere reference to the
Retirement Deed in the MOU is not sufficient for inferring existence of
arbitration agreement. In support, he relies on judgment of the Apex
Court in M.R. Engineers and Contractors Pvt. Ltd. vs. Som Datt
Builders Ltd5.
15) Mr. Kothari further submits that by filing the present
Petitions under Section 9 and 11 of the Arbitration Act, the Petitioner
essentially seeks enforcement of Allotment Letter, the inception of
5
(2009) 7 SCC 696
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which is in the MOU. That the Allotment Letter is not referable to the
Admission Deed or Retirement Deed in any manner. That the
principal/mother document in the present case is MOU, which does not
contain arbitration clause. That therefore, the judgment of the Apex
Court in Ameet Lalchand Shah (supra) has no application to the present
case. He also relies on judgment of Division Bench of Karnataka High
Court in B. Prashanth vs. Ganesh S. Poojari6 in support of his
contention that jural relationship between the parties has come to an
end with execution of fresh contract and that the MOU is something
which is now sought to be enforced by the Petitioner. That the judgment
of Karnataka High Court is confirmed by the Supreme Court by dismissal
of the SLP.
16) Mr. Kothari further submits that the doctrine of election
clearly applies in the present case and the Petitioner cannot be
permitted to approbate and reprobate. That under the MOU, breach
caused by Respondent Nos.2 and 6 gave option to the Petitioner to
terminate the MOU, refund the money received by him and be reinstated
as a partner of the firm. That the MOU itself provides for contractual
remedies in the event of non-compliance. The Petitioner on the other
hand has treated MOU as subsisting and has sought for reliefs in
furtherance of performance of the same. That the Petitioner has not
terminated the MOU but has sought its performance. That once
performance of the MOU is sought, Petitioner cannot rely upon any other
document for claiming existence of arbitration agreement. That the
contingency of invoking arbitration agreement under Admission Deed or
Retirement Deed would arise only if the MOU is terminated, which the
6
2025 SCC OnLine Kar 15739
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Petitioner has consciously not elected to do. That Petitioner is bound by
his conscious election. In support, he relies on judgment of the Apex
Court in Union of India and Ors. vs. N. Murugesan and Ors.7
17) Mr. Kothari also raised the issue of arbitrability, submitting
that the Petitioner is seeking enforcement of the Allotment Letter and
the exclusive jurisdiction in respect of Allotment Letter lies with
MahaRERA on account of Sections 13 and 79 of the Real Estate
(Regulation and Development) Act, 2016. In support, he relies on
judgment of this Court in Rashmi Realty Builders Pvt. Ltd. vs. Rahul
Rajendrakumar Pagariya and Ors.8 and order of the Supreme Court
dismissing the SLP. Mr. Kothari would accordingly pray for dismissal of
the Petitions.
18) Mr. Kavyal Shah appearing for Respondent No.8 submits
that Respondent No.8 is not a signatory to the MOU and has no
obligation to pay any consideration to pay to the Petitioner. That there is
no claim against Respondent No.8 and is unnecessarily impleaded in the
proceeding.
19) Rival contentions of the parties now fall for my
consideration.
20) The first broad issue for consideration in the present
Petition is about existence of arbitration agreement between the parties.
Petitioner came to be admitted as partner of Respondent No.1-Firm vide
7
(2022) 2 SCC 25
8
2024 SCC OnLine Bom 3871
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Deed of Admission and Partnership Deed dated 11 February 2015, which
was apparently notarised on 11 December 2015. Petitioner claims to
have invested monies in the project undertaken by the partnership firm.
However, Petitioner decided to exit the partnership firm and on 16
October 2017, four documents came to be executed as under :
(i) Retirement cum Partnership Deed;
(ii) Deed of Cancellation of Admission and Partnership;
(iii) Memorandum of Understanding;
(iv) Allotment Letter in respect of area admeasuring 5000 sq.ft .in
favour of the retiring partners.
21) The four documents of 16 October 2017 were executed
essentially to give effect Petitioner’s exit from the partnership. There is
no dispute to the position that the Retirement-cum-Partnership Deed
dated 16 October 2017 contains arbitration clause no.13 as under :
13. Whenever any doubt difference or dispute shall arise between the partners
or any of them or his or any of their executors or administrators or between
their respective executors or administers touching these presents or the
constructions hereof or any clause or thing herein contained or any account,
valuation or division of assets, debts or liabilities to be made as herein before
mentioned or any other thing in anyway relating to or concerning the
partnership business or the affairs thereof or the rights, duties, liabilities of
either party in connection therewith, the matters in such doubt, difference or
dispute shall be referred to a single arbitrator of common choice of the parties
hereto and in the event of the parties hereto not being in agreement as to
single arbitrator of common choice then to Two Arbitrators one to be
appointed by each of the parties to such doubt differences or disputes in
accordance with and subject to the provisions of Indian Arbitration Act, 1940
or to any statutory modifications or re-enactment thereof for the time being in
force.
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22) However, the MOU dated 16 October 2017 does not contain
arbitration clause. It is on this count that Respondent Nos. 1, 2, 5 and 6
oppose constitution of Arbitration Tribunal and seek dismissal of the
Petition filed under Section 9 of the Arbitration Act.
23) The issue for consideration is whether the MOU is effected
for giving effect to retirement of the Petitioner from the firm. To
paraphrase, whether the Deed of Retirement and MOU are executed for
effecting a common transaction and whether arbitration clause
contained in the Deed of Retirement can be invoked for the purpose of
claiming any rights flowing out of the MOU.
24) Under the Retirement-cum-Partnership deed, Petitioner has
retired from the firm on 31 August 2017. Clause 7.(d) of the Deed of
Retirement talks of settling of accounts and non-pendency of any
liabilities or accounts outstanding to the retiring partners. Clause 7.(d)
of the Deed of Retirement reads thus:
7.(d) The Retiring Partners and Continuing Partners have made and settled the
accounts and that the Continuing Partners confirmed that there is no liabilities
and accounts outstanding to the account of Retiring Partners.
25) Relying on above clause in the Deed of Retirement, it is
contended by Mr. Kothari that the said document is a complete
transaction in itself where the retiring partners specially admitted
settlement of all rights and liabilities under the partnership. However,
on 16 October 2017, a separate Deed of Cancellation is executed by which
the earlier Partnership Deed dated 11 December 2015 came to be
cancelled. The third document executed on 16 October 2017 is the MOU,
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which specifically refers to Retirement cum Partnership Deed in recital
no. “C” which reads thus :
C. The Outgoing Partners, i.e. (1) Shri Rajendrakumar HASTIMAL Singhvi, (2)
Shri Mahindra Mangilalji Jain, have expressed their desire to retire from the
said Partnership Firm by entering into a Retirement cum Partnership Deed
dated _____ and releases all their share, right, title and interest in the business,
of the said partnership firm.
26) The MoU provides for ‘consideration payable for sale of
partnership interest’ under which the outgoing partners were to be paid
consideration of Rs.17.60 crores by the continuing partners. Clause 2 of
the MOU reads thus:
2. Consideration:
The Continuing Partners have agreed and confirmed to pay to the Outgoing
partners as consideration for the sale of the said partnership interest a
mutually agreed full and final amount of Rs. 17,60,00,000/- (Seventeen Crore
Sixty Lakhs Only/-) Payment of the said consideration is to be made as under.
a) Rs.10,00,000/- (Ten Lakhs Only) vide Cheque No. 001441 dated 17-10-2017
drawn on Bank of Baroda, Malad (East), Branch Mumbai, to Mr. Mahindra
Mangilal Jain.
b) Rs. 3,55,00,000/- (Three Crore Fifty FiveLakhs Only/-) to be paid in cheque
on execution of these presents of which by Cheque No. 0001439 dated 17-10-
2017 drawn on Bank of Baroda, Malad (East) branch, Mumbai to Mr. Mahindra
Mangilal Jain.
c) Rs. 3,55,00,000/- (Three Crore Fifty Five Lakhs Only/-) to be paid in cheque
on execution of these presents of which by Choque No. 001440 dated 17-10-
2017 drawn on Bank of Baroda, Malad (East) branch, Mumbai to Mr. Rajendra
Hastimal Singhvi.
d) Rs. 2,00,00,000/- (Tivo Crore Only )is to be paid within three months from
the date of execution of these presents by Cheque No. 674049 dated 17-01-
2018, drawn on Bank of Baroda, Malad (East), Branch Mumbai, to Mr. Rajendra
Hastimal Singhvi.
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e) Rs. 2,43,01,000/- (Two Crore Forty Three Lakhs One Thousand Only) is to be
paid within 3 months from the date of execution of the said Memorandum of
understanding. by Cheque No. 674048 dated 17-01-2018 drawn on Bank
Baroda, Malad (East), Branch Mumbai, to Mr. Mahindra Mangilal Jain
f) Rs.2,46,99,000/- (Two Crore Forty Six Lakh Ninety Nine Thousand Only) to
be paid within 5 months from the date of execution of these presents by
Cheque No.674045 dated 17-02-2017 drawn on Bank of Baroda, Malad (East),
Branch Mumbai, to Manibhadra Developers.
g) Rs. 3,50,00,000/- (Three Crore Fifty Lakhs Only/-) is to be within 5 months
from the date of execution of the said Memorandum of understanding by
Cheque No. 0001436 dated 01-03-2018 drawn on Bank of Baroda, Malad (East),
Branch Mumbai, to Mr. Mahindra Mangilal Jain.
h) The Outgoing Partners have agreed to accept the post dated cheques with
the clear understanding that the payment of the Balance Conalderation of
Rs.10,50,00,000/- (Ten Crore Fifty Lakhs Only/-) shall also be secured by the
Continuing Partners by providing a further security by way of 1 fully paid up
Allotment Letters the value of which aggregates to the Balance Consideration,
allotting 5000 sq.ft. carpet area Commercial Units to the Outgoing Partners, as
more specifically described hereunder. The details of the 1 fully paid Allotment
letters are as below:
i) Allotment letter No. 1 is executed in favour of Outgoing Partner towards
security for Payment of Rs.10,50,00,000/-(Ten Crore Fifty Lakhs Only/-) to allot
in favour of Outgoing Partner one Commercial Unit in the building proposed to
be constructed on a portion of the said property totally admeasuring about
5000 sq. fect of carpet area (“the Commercial Unit”) on or about 2nd Floor of
the building to be constructed on the said property.
j) The Parties hereto agree and confirm that the agreed consideration is
inclusive of capital contribution as well as loan and other capital of the
Outgoing Partners in the said Firm.
27) Thus, under Clause 2 of the MOU, the continuing partners
agreed to pay to the outgoing partners consideration of Rs.17.6 crores for
their retirement from the firm. It appears that certain post-dated
cheques were issued by the continuing partners.
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28) In Clause 2(h) of the MOU, it is agreed that the balance
consideration of Rs.10.50 crores would be secured by the continuing
partners by providing security of an allotment letter, thereby allotting
the premises admeasuring 5000 sq.ft. carpet area and it was agreed to
issue allotment letter allotting area of 5000 sq.ft. (carpet) on or above 2 nd
floor of the building. Clause 7 of the MOU stipulated the consequences
for default and stipulates thus :
7. It is hereby expressly agreed, declared and confirmed by the Continuing
Partners that:
a. Upon any of the default by Continuing Partners on the payments as agreed
herein, then in that event the Outgoing Partner shall at their sole discretion
terminate this MOU and on such termination the said Deed of Retirement cum
Admission of the said Partnership firm executed simultaneously hereto shall
stand terminated and or cancelled and the Outgoing Partners shall be
reinstated as partners with their original Profit and loss ratio which existed
before their retirement from the said Partnership Firm, however on Outgoing
Partner refunding the amount received in the manner as under:
29) Clause 8(a) contained “entire agreement” clause and
stipulates thus:
a. This MOU shall be deemed to contain all of the terms and conditions agreed
upon with respect to the subject matter hereof, it being understood that there
are no outside representations or oral agreements.
30) Petitioner contends that he has not received any
consideration for having retired from the firm and has accordingly filed
the present Petitions for constitution of the Arbitral Tribunal and for
seeking interim measures for preserving area admeasuring 5000 sq.ft. on
2nd floor of the building.
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31) The contesting Respondents have however questioned the
very existence of arbitration agreement between the parties for
adjudication of disputes arising out of the MOU, which admittedly does
not contain arbitration clause. It is contended by the contesting
Respondents that the prayers in Section 9 Petition seek enforcement of
the MOU and no relief is claim under the Retirement Deed.
32) No doubt, the prayers sought in Section 9 Petition
essentially relate to performance of contractual obligations under the
MOU, which does not contain arbitration clause. However, the Deed of
Retirement contains arbitration clause and therefore it is necessary to
examine whether absence of arbitration clause in the MOU would come
in the way of Petitioners seeking adjudication of disputes relating to
non-payment of consideration while exiting the Partnership Firm
through the mechanism of arbitration.
33) All the four documents of Deed of Retirement, Deed of
Cancellation, Allotment Letter and MOU are executed simultaneously on
the same day between the same parties. The MOU and Allotment Letter
are essentially separate documents executed to complete a composite
transaction of exit from the firm upon receipt of consideration.
Ordinarily, the consideration for making exit from the Firm could have
been incorporated in the Deed of Retirement itself. However, parties
decided to execute multiple documents to complete the transaction of
retirement of the Petitioner from the firm. It appears that there have
been many entries and exits from the firm in the past. This could be the
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reason why the continuing partners possibly desired to keep the
commercials of exit outside the Deed of Retirement. This is the reason
why, the Deed of Retirement records only the transaction of exit from
the firm and a separate MoU is executed to record the financial
transaction for such exit. In my view therefore, it can safely be inferred
that all the four documents are executed to complete the composite
transaction of retirement from the firm on receipt of consideration.
Otherwise, the MOU, on its own, has no legs to stand. MOU clearly refers
to the Retirement Deed and has been executed to give shape to the
manner in which the Petitioner was to retire from the Firm.
34) The factum of MoU having direct connection with the Deed
of Retirement is further clear from the fact that clause 7 of the same
provides for the consequence of reinstatement of the outgoing partners.
Thus, the MoU has a direct co-relation both with the Deed of Admission
& Partnership and also with the Retirement cum Partnership Deed. The
MoU thus cannot be treated as a document effecting a standalone
transaction. It has no existence without the Deed of Admission &
Partnership dated 11 December 2015 and Retirement cum Partnership
Deed dated 16 October 2017.
35) It is not uncommon to execute multiple documents to give
effect to a single transaction. A classic example is that of Agreement for
Sale and Deed of Sale/Conveyance. In such cases, additional documents
are executed to give effect to the transaction sought to be executed
under the principal/mother document. In Ameet Lalchand Shah (supra),
a sale and purchase agreement dated 5 March 2012 was executed for
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purchase of products which were to be leased to another company. The
said sale and purchase agreement did not contain any arbitration clause.
A separate Equipment Lease Agreement dated 14 March 2012 was
executed between the purchaser of products and the lessee, under which
the lessee agreed to pay rent in respect of the leased products to the
purchaser. The lessees defaulted in payment of rent. The purchaser filed
a suit in this Court seeking a declaration that the Sale and Purchase
Agreement as well as Equipment Lease Agreement were vitiated by fraud
and that the same were void. The seller of the equipment, who was
defendant in the suit, filed application under Section 8 of the Arbitration
Act for reference of disputes to arbitration contending that the Sale and
Purchase Agreement was the main agreement and that the other
agreements were interconnected. The learned Single Judge of Delhi High
Court dismissed Section 8 application holding that the Equipment Lease
Agreement executed between purchaser-Rishabh Enterprises and lessee-
Dante Energy could not be treated as mother/principal agreement. The
Division Bench dismissed the Appeal holding that the main/principal
agreement was Sale and Purchase Agreement, which did not contain
arbitration clause. The Apex Court however held that though there were
different agreements involving several parties, it was in respect of single
commercial project. Relying upon judgment in Chloro Controls India
Pvt. Ltd. vs. Severn Trent Water Purification Inc. and Ors. 9, the Apex
Court held in paras-22, 23 and 24 as under :
22. In Chloro Controls , this Court was dealing with the scope and
interpretation of Section 45 of the Act, Part II of the Act and in that context,
discussed the scope of relevant principles on the basis of which a non-
9
(2013) 1 SCC 641
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signatory party also could be bound by the arbitration agreement. Under
Section 45 of the Act, an applicant seeking reference of disputes to arbitration
can either be a party to the arbitration agreement or any person claiming
through or under such party. Section 45 uses the expression “… at the request
of one of the parties or any person claiming through or under him…” includes
non-signatory parties who can be referred to arbitration provided they satisfy
the requirements of Sections 44 and 45 read with Schedule I of the Act.
23. In para 73 of Chloro Controls , this Court held as under: (SCC p. 683)
“73. A non-signatory or third party could be subjected to arbitration without
their prior consent, but this would only be in exceptional cases. The court will
examine these exceptions from the touchstone of direct relationship to the
party signatory to the arbitration agreement, direct commonality of the
subject-matter and the agreement between the parties being a composite
transaction. The transaction should be of a composite nature where
performance of the mother agreement may not be feasible without aid,
execution and performance of the supplementary or ancillary agreements, for
achieving the common object and collectively having bearing on the dispute.
Besides all this, the court would have to examine whether a composite reference of
such parties would serve the ends of justice. Once this exercise is completed and
the court answers the same in the affirmative, the reference of even non-signatory
parties would fall within the exception afore-discussed.”
24. In a case like the present one, though there are different agreements
involving several parties, as discussed above, it is a single commercial
project, namely, operating a 2 MWp Photovoltaic Solar Plant at Dongri, Raksa,
District Jhansi, Uttar Pradesh. Commissioning of the Solar Plant, which is the
commercial understanding between the parties and it has been effected
through several agreements. The agreement — Equipment Lease Agreement
(14-3-2012) for commissioning of the Solar Plant is the principal/main
agreement. The two agreements of Rishabh with Juwi India: (i) Equipment and
Material Supply Contract (1-2-2012); and (ii) Engineering, Installation and
Commissioning Contract (1-2-2012) and the Rishabh’s Sale and Purchase
Agreement with Astonfield (5-3-2012) are ancillary agreements which led to
the main purpose of commissioning the Photovoltaic Solar Plant at Dongri,
Raksa, District Jhansi, Uttar Pradesh by Dante Energy (lessee). Even though,
the Sale and Purchase Agreement (5-3-2012) between Rishabh and Astonfield
does not contain arbitration clause, it is integrally connected with the
commissioning of the Solar Plant at Dongri, Raksa, District Jhansi, U.P. by
Dante Energy. Juwi India, even though, not a party to the suit and even though,
Astonfield and Appellant 1 Ameet Lalchand Shah are not signatories to the
main agreement viz. Equipment Lease Agreement (14-3-2012), it is a
commercial transaction integrally connected with commissioning of
Photovoltaic Solar Plant at Dongri, Raksa, District Jhansi, U.P. Be it noted, as
per Clause (v) of Article 4, parties have agreed that the entire risk, cost of the
delivery and installation shall be at the cost of the Rishabh (lessor). Here again,
we may recapitulate that engineering and installation is to be done by Juwi
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India. What is evident from the facts and intention of the parties is to facilitate
procurement of equipments, sale and purchase of equipments, installation and
leasing out the equipments to Dante Energy. The dispute between the parties
to various agreements could be resolved only by referring all the four
agreements and the parties thereon to arbitration.
(emphasis added)
36) The judgment in Ameet Lalchand Shah is sought to be
distinguished by Mr. Kothari contending that the judgment is rendered
by treating the Sale Purchase Agreement as a main/principal agreement,
whereas in the present case, Retirement Deed or Partnership Deed are
not the principal agreements and for the purpose of adjudication of
claim of the Petitioner, the principal agreement is the MOU. I am unable
to agree. The principal/main agreement in the present case is the Deed
of Retirement. The MOU is executed only for the purpose of giving
shape to the Deed of Retirement. The consideration payable under the
MOU flows out of the Deed of Retirement. The intention of the parties is
to effect exit of the partners from the partnership firm upon payment of
consideration and this intention is fulfilled by execution of Deed of
Retirement and MoU. The amount of Rs.17.60 crores is agreed to be
payable as consideration to exit from the partnership firm. The exit is
effected through the Deed of Retirement. Therefore, the Deed of
Retirement is the principal document executed between the parties and
it cannot be contended that the MOU is the principal/main document.
The ratio of the judgment in Ameet Lalchand Shah, in my view, squarely
applies to the present case where parties have executed multiple
documents to give effect to single composite transaction. MOU does not
by itself effect any transaction between the parties. The transaction is
effected through the Deed of Retirement, to which the shape is given by
MOU. There is no dispute to the position that the Letter of Allotment is
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issued in pursuance of the MOU. Thus, all the three documents of Deed
of Retirement, MOU and Letter of Allotment form part of one composite
transaction between the parties.
37) In the Three Judge Bench decision in Cox and Kings Ltd. vs.
SAP India Pvt. Ltd. and Anr.10, while making a reference to the larger
bench, the ratio of the judgment in Ameet Lalchand Shah has been
restated in para-35 of the judgment. The subsequent judgment of the
Supreme COurt in ONGC Ltd. v. Discovery Enterprises (P) Ltd11., also
reiterates the view taken in Ameet Lalchand Shah. The Constitution
Bench in Cox and Kings Ltd. vs. SAP India Pvt. Ltd. and Anr. 12 also
approves the view taken in Ameet Lalchand Shah. It is held in paras-36
and 219 of the Constitution Bench judgment in Cox and Kings Ltd as
under:
36. In Ameet Lalchand Shah v. Rishabh Enterprises, a two-Judge Bench of this
Court was dealing with an arbitral dispute arising out of four interconnected
agreements executed towards a single commercial project. The issue was
whether the four agreements were interconnected to refer all the parties to
arbitration. In that case, all the parties were not signatories to the main
agreement containing the arbitration clause. This Court relied on Chloro
Controls to hold that a non-signatory, which is a party to an interconnected
agreement, would be bound by the arbitration clause in the principal
agreement. It observed that in view of the composite nature of the transaction,
the disputes between the parties to various agreements could be resolved
effectively by referring all of them to arbitration.
10
(2022) 8 SCC 1
11
(2022) 8 SCC 42
12
(2024) 4 SCC 1
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219. The subsequent decision in Ameet Lalchand Shah v. Rishabh
Enterprises is yet another instance where this Court has allowed a non-
signatory to be party to an arbitration agreement, in connected contracts, on
the ground of business efficacy, noting that all agreements were executed for a
single commercial project. This approach was noted in the subsequent decision
of Discovery Enterprises [ONGC Ltd. v. Discovery Enterprises (P) Ltd., (2022) 8
SCC 42] , where the learned Chief Justice has noted : (SCC p. 69, para 28)
“28. … In Ameet Lalchand , the Court did not explicitly invoke the Group
of Companies doctrine to bind a non-signatory, rather it relied on Chloro
Controls to hold that a non-signatory would be bound by the arbitration
clause in the mother agreement, since it is a party to an inter-connected
agreement, executed to achieve a common commercial goal.”
38) Though the Constitution Bench in Cox and Kings Ltd.
(supra) has essentially dealt with application of “Group of Companies”
doctrine for inferring arbitration agreement, it has also considered the
facet of execution of multiple documents to effect a composite
transaction. It is held in para-121 and 122 of the judgment as under:
121. In case of a composite transaction involving multiple agreements,
it would be incumbent for the Courts and tribunals to assess whether
the agreements are consequential or in the nature of a follow-up to
the principal agreement. This Court in Canara Bank [MTNLv. Canara Bank,
(2020) 12 SCC 767] observed that a composite transaction refers to a
situation where the transaction is interlinked in nature or where the
performance of the principal agreement may not be feasible without the aid,
execution, and performance of the supplementary or ancillary agreements.
122. The general position of law is that parties will be referred to
arbitration under the principal agreement if there is a situation where
there are disputes and differences “in connection with” the main
agreement and also disputes “connected with” the subject-matter of
the principal agreement. [Olympus Superstructures (P) Ltd. v. Meena Vijay
Khetan, (1999) 5 SCC 651] In Chloro Controls , this Court clarified that the
principle of “composite performance” would have to be gathered from the
conjoint reading of the principal and supplementary agreements on the one
hand, and the explicit intention of the parties and attendant circumstances
on the other. The common participation in the commercial project by the
signatory and non-signatory parties for the purposes of achieving a common
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application of the Group of Companies doctrine in case of composite
transactions ensures accountability of all parties who have materially
participated in the negotiation and performance of the transaction and by
doing so have evinced a mutual intent to be bound by the agreement to
arbitrate.
(emphasis added)
39) In my view, the ratio of judgments in Ameet Lalchand Shah
and Cox and Kings Ltd. (supra) would squarely apply in present case
where multiple documents are executed by parties to give effect to a
composite transaction. The MOU is inseparably intertwined with
Retirement Deed and does not have its own legs to stand on. The MOU
therefore cannot be separated from the Deed of Retirement,
notwithstanding the ‘entire agreement’ clause. The MOU, on its own,
does not seek to execute any separate transaction and only provides for a
methodology for payment of consideration under the MOU. In my view
therefore, reference to arbitration can be made by invoking arbitration
clause in the Deed of Retirement, even though the Petitioner seeks to
enforce the contractual obligations flowing out of the MOU.
40) Having held that there is an agreement to arbitrate even qua
the disputes flowing out of the MOU, it is necessary to deal with further
objection sought to be raised on behalf of the contesting Respondents. It
is contended that the MOU itself provides for the consequence of default
in clause 7(a). It is contended that upon commission of default of
Respondents/continuing partners, the Petitioners have discretion to
terminate the MOU and accordingly, Admission cum Retirement Deed
would automatically stand terminated and cancelled and outgoing
partners would be reinstated as partners. It is therefore contended that if
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any default under MOU is committed, only agreed consequence is for
reinstatement of the Petitioner as partner and the whole arrangement of
payment of any consideration comes to an end. It is contended that 5000
sq.ft. premises were provided as security only for due observance of
MOU. However, if MOU is broken, Petitioner cannot seek performance
thereof and ought to have treated the same as terminated and insisted
for his reinstatement in the firm.
41) The composite nature of transaction effected by Retirement
Deed, Cancellation Deed and the MOU read with Allotment Letter, all
executed on 16 October 2017, is such that the value of the share of the
outgoing partners was determined at Rs. 17.60 crores. The partnership
firm has undertaken development of commercial building at Malad,
Mumbai and the shares of all the seven partners as per the Deed dated 11
February 2015 were as under:
Sr. Name of Partner Share (%)
No.
i. Rameshkumar Ravjibhai Patel 26
ii. Savitaben Ravjibhai Patel 09
iii. Parun Rameshkumar Patel 10
iv. Bharat Lakshmi Shah 05
v. Viral Rameshkumar Patel 05
vi. Rajendrakumar Hastimal Singhvi 05
vii. Mahindra Mangilalji Jain 20
viii. Ankit Bhogilal Kubadia 20
Total 100
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42) Petitioner claims to have invested total Rs. 2,46,99,000/- in
the project. As a result of four documents executed on 16 October 2017,
only 3 partners continued to remain in the Firm with their shares as
under:
Sr. Name of Partner Share (%)
No.
i. Rameshkumar Ravjibhai 70
Patel
ii. Viral Rameshkumar Patel 20
iii. Bharat Lakhamshi Shah 10
Total 100
43) Thus, Petitioner, Respondent Nos. 3, 4, 7 and 8 have retired
from the partnership Firm. The continuing partners have agreed to pay to
the retiring partners/outgoing partners an amount of 17,60,00,000/- as
consideration for sale of their interest in the Firm. MOU records the mode
of payment of agreed consideration of 17.6 crores through various
cheques indicated in para 2 of the MOU. It appears that on 17 October
2017, cheques of Rs. 10 lakhs and 3.55 crores were drawn in name of
Petitioner whereas cheques of Rs. 3.55 crores and 2 crores were drawn in
name of Rajendra H. Sanghvi. Thereafter some post-dated cheques were
issued to Petitioner and other retiring partners. Petitioner was issued
post-dated cheque of Rs. 2.43 crores and Rs 3.50 crores. As per clause 8
(e) of the MOU, according to the Petitioner, the Retirement Deed, Deed of
Cancellation and MOU dated 16 October 2017 together with Allotment
Letter and 7 cheques referred to in clauses 2(a) to 2(g) of the MOU were
kept in the escrow with advocate. According to Petitioner, he has received
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nothing in terms of MOU dated 16 October 2017. By another MOU
executed in November 2019, Mr Rajendra H. Sanghvi has apparently
released all his rights, title and shares in the three documents of 16
October 2017 in favour of the Petitioner. According to the Petitioner, the
outgoing partner Mr. Rajendra H. Sanghvi has released his rights under
the 3 documents executed on 16 October 2017 in favour of Petitioner vide
MOU dated 20 February 2020. Petitioner claims that he alone has right to
recover 17.6 crores from the continuing partners.
44) There is no dispute to the position that continuing partners
have failed to act in accordance with contractual obligations to pay
agreed consideration of 17.6 crores to retiring partner/Petitioner.
According to the continuing partners, such default would only entail
reinstatement of the pet as partner in the firm.
45) In my view, whether Petitioner can claim recovery of entire
consideration of 17.6 crores with interest or whether he is entitled only to
his reinstatement as a partner is something which the Arbitral Tribunal
would decide while adjudicating the rival claims of the parties. As of now,
this court is considering whether interim measures need to be made to
preserve subject matter of arbitration. It cannot be contended, by any
stretch of imagination, that the premises admeasuring 5000 sq.ft. in the
constructed building do not constitute the subject matter of arbitration.
Those premises are part and parcel of MOU and act as security for due
observance of terms and conditions of the MOU. In my view therefore, till
adjudication of claims of Petitioner in arbitral proceedings, it would be
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necessary to preserve the premises admeasuring 5000 sq.ft. which form
the subject matter of arbitration.
46) By order dated 10 September 2025, this Court has directed
Court Receiver to take physical possession of Unit Nos. 1305, 1009, 1110,
1101 and 1001. It appears that the Court Receiver had appointed M/s.
Amol Bora and Company to carry out measurement of said five units. As
per the report, the area of the said five units is as under:
No. Office No. Floor No. Carpet Area in
Sq.ft.
1 1305 Thirteenth (13) 1261
2 1009 Tenth (10) 598
3 1110 Eleventh (11) 655
4 1101 Eleventh (11) 1215
5 1001 Tenth (10) 1191
TOTAL AREA 4920
47) Petitioner complains that the five units in respect of which
Court Receiver is appointed are spread across three different floors (10,11
and 13) whereas MOU contemplates allotment of contiguous premises
admeasuring 5000 sq.ft. on the second floor. Mr. Shah has submitted a list
of premises apparently available on ground, 1st, 2nd, 3rd, 4th and 5th floors.
In my view, since Court Receiver is already appointed in respect of above-
mentioned five units, the said arrangement needs to be continued during
pendency of the arbitral proceedings rather than undertaking exercise of
finding out availability of other encumbrance-free units, measurement of
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their areas etc. Many times, smaller units are saleable faster and attract
better prices than contiguous large sized premises.
48) Mr. Kothari has submitted that Petitioner is approbating and
reprobating and has relied upon the judgment of Apex Court in Union of
India and Ors. vs. N. Murugesan and Ors. (supra). However in my view,
the doctrine of election would not apply to the present case. Petitioner
does not really have any choice in the facts and circumstances of the
present case and no options are available before him for making the
election. Whether MOU makes him entitled to claim 17.6 crores or
whether he can only get reinstatement as partner is something which the
Arbitral Tribunal would decide while making the final award. As of now,
Petitioner need not elect as to whether he wants to press the claim for
recovery of Rs.17.6 crores or whether he wants reinstatement as partner.
As of now, this Court is only considering the issue of preservation of
subject matter of arbitration. Whether petitioner has treated the MOU as
terminated and whether he is simultaneously seeking performance of the
same, it is something which needs to be decided during final adjudication
of the claims. All that needs to be noted at this juncture is the fact that
the continuing partners issued cheques for payment of consideration of
Rs.17.60 crores and premises admeasuring 5000 sq.ft. were reserved as
security for performance of obligation of payment of Rs.17.60 crores.
Premises admeasuring 5000 sq.ft. broadly represent the consideration
amount of 17.6 crores. In these circumstances, interim measures of
preservation of premises offered as security cannot be denied only
because MOU provides for consequence of reinstatement as a partner in
the event of failure to observe obligations under the MOU. Therefore, the
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argument of approbation and reprobation raised on behalf of continuing
partners is clearly misplaced.
49) Reliance by Mr. Kothari on judgment of Division Bench of
Karnataka High Court in B. Prashanth (supra) is inapposite. In case
before the Karnataka High Court, arbitration clause in partnership deed
was invoked. Under the partnership deed, business of retail fuel outlet of
Bharat Petroleum Corporation Limited was commenced on land owned by
the defendants. Plaintiff was to recover 99% of the profit during first five
years for initial investment made by him. Later, an agreement was
executed under which the defendant agreed to pay 3.74 crores on receipt
of which plaintiff was to exit the partnership. In the suit, defendant filed
application under Section 8 of Arbitration Act relying on arbitration
clause in the deed of partnership. The suit was filed for recovery of
amount as per the agreement dated 10 August 2022 and not for
enforcement of any contractual terms under the partnership deed. It is in
the light of these facts the Karnataka High Court held that execution of
agreement dated 10 August 2022 brought the jural relationship between
the parties to partnership deed to an end and that all terms of partnership
deed stood rescinded. This is the reason why rejection of application
under Section 8 filed by defendant was upheld by the Supreme Court and
the SLP was dismissed. In para 6.3 of the judgment of B. Prashanth
(supra), Karnataka High Court held as under:
6.3 The jural relationship which existed previously between the parties as the
partners, came to an end with execution of a fresh contract. With the jural
relationship having been put to an end by new contract, the partnership
agreement perished. All the terms and conditions of the partnership deed
stood rescinded. The said contract of partnership dated 22 nd June 2020, havingPage No.32 of 36
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Neeta Sawant carapl_12427_25 and carbpl 8173_25.docxbeen replaced by new agreement dated 10 th August 2022, did not survive on
facts and in law.
50) The facts and circumstances of the case in B. Prashanth are
clearly distinguishable and have no application to present case. In the
present case, MOU was executed for the purpose of deciding modality of
payment of consideration payable under the Deed of Retirement.
Therefore, the MOU did not bring to an end the contractual obligations
under the Deed of Retirement. On the contrary, MOU contains a covenant
for restitution of partnership of retiring partners in the event of failure to
pay in accordance with the MOU. Thus, the jural relationship between the
partners and their connection to the business of the firm was not brought
to end by the MOU. It merely provided for the modalities by which
consideration was to be paid arising out of the Retirement Deed.
51) In my view therefore there clearly exists agreement for
arbitration between the parties. It would therefore be just and proper to
constitute Arbitral Tribunal comprising of a sole arbitrator. So far as
interim measures are concerned, it would be appropriate to continue the
arrangement of taking over physical possession of the five units by the
Court Receiver and retaining the same during pendency of arbitral
proceedings and till making of final award. It would also be apposite to
restrain continuing partners from creating any third-party rights in
respect of five units during pendency of arbitral proceedings.
52) So far as Respondent No.8 is concerned, whether he is a
necessary party to arbitral proceedings or not can be decided by the
Arbitral Tribunal. It is for the Petitioner to decide whether to implead
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Respondent No.8 in arbitral proceedings. In the event Respondent No.8 is
impleaded in arbitral proceedings, it would be for Respondent No.8 to
apply for his deletion before the Arbitral Tribunal.
53) Commercial Arbitration Application (L) No. 12427/2025 is
allowed and Arbitral Tribunal is constituted as under:
(A) Smt. Justice Sadhana Jadhav, former Judge of this
Court is appointed as Sole Arbitrator to adjudicate upon the
disputes and differences between the parties arising out of
the Deed of Retirement referred to above. The contact
details of the Arbitrator are as under :
Office Address :- C/o. Adv. Vijay Hiremath, 108, Seksaria
Chamber, Nagindas Master Road, Opp. Commerce House,
Kala Ghoda, Fort, Mumbai – 400001
Email ID :- [email protected](B) A copy of this order be communicated to the learned sole
Arbitrator by the Advocate for the Petitioner/Applicant
within a period of one week from the date of uploading of
this order. The Petitioner/Applicant shall provide the
contact and communication particulars of the parties to the
Arbitral Tribunal alongwith a copy of this order.
(C) The learned sole Arbitrator is requested to forward the
statutory Statement of Disclosure under Section 11(8) readPage No.34 of 36
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Neeta Sawant carapl_12427_25 and carbpl 8173_25.docxwith Section 12(1) of the Act to the parties within a period of
2 weeks from receipt of a copy of this order.
(D) The parties shall appear before the learned sole
Arbitrator on such date and at such place as indicated by her,
to obtain appropriate direction with regard to conduct of the
arbitration including fixing a schedule for pleadings,
examination of witnesses, if any, schedule of hearings etc.
(E) The fees of the sole Arbitrator shall be as prescribed
under the Bombay High Court (Fee Payable to Arbitrators)
Rules, 2018 and the arbitral costs and fees of the Arbitrator
shall be borne by the parties in equal portion and shall be
subject to the final Award that may be passed by the
Tribunal.
54) There shall be interim measures in the following terms:
(i) Pending the arbitral proceedings and till making of final
award, by way of interim measures, the Court Receiver shall
continue to possess office/unit nos. 1305, 1009, 1110, 1101
and 1001 at Ventura Commercial Hub, near Sanjeevani
Hospital, Radha Nagar, Kedarmal Road, Off Rani Sati Marg,
Malad (E), Mumbai – 400097.
(ii) Pending the arbitral proceedings and till making of final
award, Respondents are restrained form alienating,Page No.35 of 36
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Neeta Sawant carapl_12427_25 and carbpl 8173_25.docxtransferring, selling, creating third party rights or parting
with possession of unit Nos. 1001, 1009, 1101, 1110 and
1305.
55) All rights and contentions of parties on merits are kept open
to be agitated before the Arbitral Tribunal.
56) With above directions, both Commercial Arbitration
Application (L) No. 12427 of 2025 and Commercial Arbitration Petition (L)
No. 8173 of 2025 are disposed of. Nothing survives in Interim Application
(L) No. 30822 of 2025, which is also disposed of.
[SANDEEP V. MARNE, J.]
Digitally
signed by
NEETA
NEETA SHAILESH
SHAILESH SAWANT
SAWANT Date:
2026.03.04
19:32:55
+0530
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