Arbitration Agreement Not Discharged By Death Of A Party And Is Enforceable Against The Legal Representatives: Calcutta High Court
The Calcutta High Court has ruled that an arbitration agreement will not be discharged by the death of a party and it will be enforceable by or against the legal representatives of the deceased party. The Single Bench of Chief Justice Prakash Shrivastava held that though the legal representatives were not signatories to the arbitration agreement, but being the legal...
The Calcutta High Court has ruled that an arbitration agreement will not be discharged by the death of a party and it will be enforceable by or against the legal representatives of the deceased party.
The Single Bench of Chief Justice Prakash Shrivastava held that though the legal representatives were not signatories to the arbitration agreement, but being the legal representatives of the signatory to an arbitration agreement, they were bound by the agreement.
The applicant Papiya Mukherjee executed a partnership deed for running a pathological laboratory. The co-partner executed a power of attorney in favour of his wife/respondent Aruna Banerjea. After the death of the co-partner, certain disputes arose between the applicant and the deceased co-partner's legal heirs with respect to the partnership. The applicant invoked the arbitration clause. The respondents/ legal heirs of the deceased co-partner refused to appoint an arbitrator on the ground that there was no valid arbitration agreement between the parties. The applicant filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) before the Calcutta High Court for appointment of an arbitrator to resolve the dispute between the parties.
The applicant Papiya Mukherjee submitted before the High Court that the respondent Aruna Banerjea, being the legal heir of the deceased co-partner, was bound by the arbitration agreement contained in the partnership deed executed by the applicant and the deceased co-partner.
The Court noted that the respondents were the legal heirs / successors of the deceased co-partner. The Court held that Section 40 of the A&C Act clearly provides that an arbitration agreement will not be discharged by the death of a party and it will be enforceable by or against the legal representatives of the deceased party.
The Court observed that the Supreme Court in the case of Ravi Prakash Goel versus Chandra Prakash Goel and Another (2007) had held that under Section 35 of the A&C Act, an arbitral award shall have a binding effect on the parties as well as the persons claiming under them. The Supreme Court had ruled that persons claiming under the rights of a deceased person are the personal representatives of the deceased party, and they have the right to enforce the award and are also bound by it. The Supreme Court had added that the arbitration agreement is enforceable by or against the legal representative of a deceased party, provided the right to sue in respect of the cause of action survives.
The High Court ruled that though the respondents were not signatories to the arbitration agreement executed between the applicant and the deceased co-partner, but being the legal representatives of the co-partner, they were bound by the arbitration agreement.
The Court thus held that an arbitration agreement in the form of partnership deed existed and after the death of the co-partner, who was a signatory to the agreement, the respondents being his legal representatives were bound by the agreement to the extent provided by law.
The Court, therefore, allowed the application filed by the applicant and appointed an arbitrator.
Case Title: Dr. Papiya Mukherjee versus Aruna Banerjea and Anr.
Case Citation: 2022 LiveLaw (Cal) 125
Counsel for the Petitioner: Mr. Arik Banerjee, Mr. Ayan Dutta, Mr. Rajib Mullick, Ms. Shreyashi Maity
Counsel for the Respondents: Mr. Rajarshi Dutta, Mr. Munir Ahmed, Mr. Shounak Mukhopadhyay, Mr. Anurag Ghosh