Arbitration – Partnership Dispute Between Brothers is Commercial Not Family

Judgment dated 29.9.2026 of the High Court of Bombay in Commercial Arbitration Application (L) No.17989 of 2026 of Harish Narbheram Thakkar   Vs.  Hemant Narbheram Thakkar and another

The Applicant seeks appointment of a Sole Arbitrator to decide the disputes between the Applicant and the Respondents under Clause 18 of the Partnership Deed dated 9 October 1992. The disputes relate to the alleged wrongful use of partnership funds, failure to give proper accounts and denial of the Applicant’s alleged 50% share in the amount of Rs.25,00,000/- received in connection with Godown No.20, Sewri. According to the Applicant, although a notice invoking arbitration under Section 21 of the Act was issued, Respondent No.1 did not agree to the appointment of an Arbitrator. The Applicant has, therefore, approached this Court seeking constitution of an Arbitral Tribunal to decide the disputes relating to the affairs of the partnership, accounts and his alleged share in the partnership funds.

2. According to the Applicant, the present Application has been filed on the basis of the following facts. Late Narbheram Narsidas Thakkar, who was the father of the Applicant and Respondent No.1, started the warehousing business in and around Sewri, Mumbai in the year 1965 under the name and style of M/s. Narbheram Narsidas. On 9 October 1992, the Applicant, Respondent No.1 and Pratapsinh Narbheram Popat executed a Partnership Deed and constituted Respondent No.2, namely M/s. Narbheram Narsidas, as a partnership firm. Clause 18 of the said Partnership Deed contains an arbitration agreement between the partners.
3. The Applicant suffered a Cerebro-Vascular Accident, resulting in partial paralysis, loss of speech, aphasia and unsoundness of mind in the year 2008. According to the Applicant, because of his condition, he was unable to manage his personal and business affairs. In the year 2017, Pratapsinh Narbheram Popat retired from the partnership and transferred his share equally to the Applicant and Respondent No.1. As a result, the Applicant and Respondent No.1 remained the only partners of Respondent No.2 firm, with each holding a 50% share. 4. In March 2024, the Applicant’s son, Amit Harish Thakkar, came to know about certain legal proceedings relating to Respondent No.2 firm and its assets which were pending before the Small Causes Court, Mumbai. He thereafter filed Writ Petition (OS) No.21218 of 2024 before this Court seeking his appointment as the Legal Guardian of the Applicant. In July 2024, while the guardianship proceedings were pending, Amit Harish Thakkar filed Intervention Applications before the Small Causes Court in RAE Suit No.973 of 2003 and RAE Suit No.1493 of 2009 for protecting the Applicant’s interests. This Court appointed Amit Harish Thakkar as the Legal Guardian of the Applicant on 5 September 2024. 5. In December 2024, the Applicant’s Legal Guardian came to know that settlement discussions were taking place in relation to the tenancy rights of Godown No.20 at Sewri, Mumbai, which was occupied by Respondent No.2 firm. On 10 December 2024, an amount of Rs.25,00,000/- was received by Cheque/DD bearing No.016927 in connection with the surrender or transfer of the tenancy rights of the said Godown No.20 by Respondent No.2. Thereafter, on 11 December 2024, a Deed of Transfer of Tenancy was executed in respect of the said Godown. Under the said transaction, the partnership firm received Rs.25,00,000/- as full and final consideration. 6. The Applicant’s Legal Guardian called upon the Respondent to pay the Applicant’s alleged 50% share, amounting to Rs.12,50,000/-, out of the amount received by Respondent No.2 firm. According to the Applicant, the Respondent neither paid the said amount nor furnished the accounts of Respondent No.2 firm. On 6 January 2026, the Applicant, through his Legal Guardian, invoked arbitration under Section 21 of the Arbitration and Conciliation Act, 1996, relying upon Clause 18 of the Partnership Deed dated 9 October 1992.

Respondent No.1 has taken an objection that the dispute is a “family dispute” and not a partnership dispute. This objection cannot be accepted. Merely because the parties are members of the same family, every dispute between them does not become a family dispute. What is required to be seen is what right is claimed and from which relationship that right is claimed. In the present case, the Applicant claims his rights as a partner of Respondent No.2 firm. He relies upon the Partnership Deed. He claims a share in the money received by the partnership firm and seeks accounts of the partnership firm. Therefore, the dispute has a direct connection with the partnership relationship.

Applicant is not stated to be a deceased partner. He is stated to be alive but unable to manage his affairs and is represented through a person appointed as his Legal Guardian. However, this difference does not change the basic nature of the dispute. The dispute sought to be referred is still concerning the partnership, the partnership funds and the alleged share of one of the partners. Therefore, merely because the parties are related to each other, it cannot be said that the dispute falls outside the arbitration clause.