The Gujarat High Court dismissed a writ petition filed under Articles 226 and 227 of the Constitution challenging the arbitral tribunal’s jurisdiction in a partnership dispute, holding that such interference would “dismantle the efficiency and autonomy of arbitration.”
The petitioner had challenged an order of the arbitral tribunal rejecting his Section 16 application under the Arbitration and Conciliation Act, 1996 (“A&C Act”), which had questioned the tribunal’s jurisdiction to adjudicate disputes relating to the dissolution and distribution of assets of a partnership firm.
The Partnership firm is “at will”, and therefore it stood dissolved pursuant to a joint notice dated May 4, 2018. Disputes concerning winding up and distribution of assets were proceedings in rem, and hence non-arbitrable, the petitioner submitted. He relied on decisions including Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. (2011) 5 SCC 532, Vidhya Drolia v. Durga Trading Corporation (2021) 2 SCC 1, and Haryana Telecom Ltd. v. Sterlite Industries (1999) 5 SCC 688, asserting that the arbitral tribunal lacked jurisdiction as the dispute is non-arbitrable.
Opposing the petition, the respondent contended that the writ was barred by Section 5 of the A&C Act, which restricts judicial intervention in arbitration, and therefore it is not maintainable. It was argued that the dispute was inter se between partners, not a winding-up action involving third parties, and therefore remained in personam and arbitrable. Relying on Deep Industries Ltd. v. ONGC Ltd., (2020) 15 SCC 706, Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd., (2022) 1 SCC 75, and SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 INSC 532, respondent submitted that the arbitral tribunal was competent to rule on its own jurisdiction under Section 16 of the Act and that challenges could only be raised post-award under Section 34.
Justice Mauna M. Bhatt, after examining the record, observed that the partnership deed’s Clause 12 expressly provided for arbitration of disputes relating to the business or terms of the partnership, while Clause 13 applied only to matters outside that scope. Given that the partnership’s dissolution itself was disputed and several communications, bank records, and filings indicated ongoing business activity, the Court held that there exists a dichotomy with regard to whether the partnership firm has in fact been dissolved or not, and hence the arbitral tribunal’s jurisdiction could not be ruled out.
On the issue of maintainability, the Court referred to Serosoft Solutions Pvt. Ltd. v. Dexter Capital Advisors Pvt. Ltd., (2025) SCC OnLine SC 22, reiterating that writ jurisdiction can be exercised only in exceptional rarity, where an order is completely perverse or a party is left remediless under the statute. The petitioner’s challenge, it held, did not meet the criteria, as any adverse award could still be assailed under Section 34 of the A&C Act.
Concluding that judicial interference at this stage would undermine the autonomy of the arbitral process, the Court dismissed the petition. The Court also rejected a plea to stay its judgment.
Appearances
Mr. Parth Contractor for the petitioner
Learned advocate Mr. N. M. Kapadia for respondent
