Case Note & Summary
The dispute arose from a partnership firm, Respondents, involved in developing 'Ventura Commercial Hub'. The petitioner, was admitted as a partner in 2015 with a 20% share after investing Rs.2,46,99,000. On 16 October 2017, he retired via a Retirement-cum-Partnership Deed, and a Memorandum of Understanding (MOU) was executed, wherein the continuing partners agreed to pay Rs.17,60,00,000 and allot 5000 sq.ft. in the project. Documents were kept in an escrow account. The petitioner alleged non-payment and filed a Commercial Arbitration Petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim measures such as execution of a sale deed, furnishing a bank guarantee, and injunctions against creating third-party rights. He also filed a Commercial Arbitration Application under Section 11 for appointment of an arbitrator. The respondents denied the existence of an arbitration agreement in the MOU. The court had previously passed ad-interim orders, including earmarking units and appointing a Court Receiver. The core legal issues were whether an arbitration agreement existed and whether interim measures should be granted. The petitioner argued for the existence of an arbitration agreement based on the MOU, while the respondents contended otherwise. The court analyzed the MOU and found no arbitration clause, concluding that no arbitration agreement existed. Consequently, the court dismissed the Section 11 application for arbitrator appointment and the Section 9 petition for interim measures, as such reliefs cannot be granted in the absence of an arbitration agreement. The decision turned on the strict requirement of an arbitration agreement under the Act, and the court did not delve into the merits of the partnership dispute.
Headnote
A) Arbitration Law - Arbitration Agreement - Existence of Arbitration Clause - Arbitration and Conciliation Act, 1996, Section 11 - Dispute pertained to whether the Memorandum of Understanding dated 16 October 2017 contained an arbitration clause - Respondents denied existence of arbitration agreement - Court examined the MOU and found no arbitration clause - Held that no arbitration agreement exists, thus appointment of arbitrator under Section 11 cannot be made (Paras 1, 6, 10). B) Arbitration Law - Interim Measures - Grant of Interim Relief - Arbitration and Conciliation Act, 1996, Section 9 - Petitioner sought interim measures including execution of sale deed, furnishing bank guarantee, and injunctions - Court considered the lack of arbitration agreement and the nature of reliefs sought - Held that interim measures under Section 9 cannot be granted in absence of arbitration agreement (Paras 1, 5, 10). C) Partnership Law - Retirement and Settlement - Enforcement of MOU - Partnership Act, 1932 - Petitioner retired from partnership firm via Retirement-cum-Partnership Deed dated 16 October 2017 - MOU dated 16 October 2017 provided for payment of Rs.17,60,00,000 and allotment of 5000 sq.ft. area - Dispute arose over non-payment and non-execution of agreements - Court noted the dispute but did not grant relief due to absence of arbitration agreement (Paras 2-4). D) Civil Procedure - Court Receiver Appointment - Interim Protection - Code of Civil Procedure, 1908 - Petitioner sought appointment of Court Receiver for 5000 sq.ft. area in 'Ventura Commercial Hub' - Court had passed ad-interim order earmarking units and later appointed Court Receiver - However, final relief not granted as arbitration application dismissed (Paras 5, 7-8).
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Issue of Consideration: Whether an arbitration agreement exists between the parties under the Memorandum of Understanding dated 16 October 2017 and whether interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 should be granted.
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Final Decision
Court dismissed the Commercial Arbitration Application (L) No.12427 of 2025 under Section 11 and the Commercial Arbitration Petition (L) No.8173 of 2025 under Section 9, holding that no arbitration agreement exists.
