Bombay High Court
Saleh Najmuddin Mithiborwala vs A H Mistry And Co on 27 November, 2025
2025:BHC-OS:22560
CARAPL-7197-2025
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION APPLICATION (L) NO.7197 OF 2025
1. Saleh Najmuddin Mithiborwala
2. Mumtaz Iqbal Ratansi
3. Zaheer Iqbal Ratansi
4. Mohamed Javid Rafique Qureshi
5. Irshad Rafique Qureshi
All Partners of
M/s Associated Construction Co. ....Applicants
Versus
1. M/s A.H. Mistry & Co.
2. Mohammed Ramzan Abdullah Mohammed
3. Abdul Khalique Chauhan
4. Jehangir Haji Ramzan Chauhan
5. Rizwan Haji Ramzan Chauhan
6. Zubair Hussain Haji Ramzan Chauhan
7. Wasim Anwar Siddique
8. Mohammed Usman Mohammed Islam Qureshi
9. Mohammed Islam Abdul Salam Qureshi
10. M/s E.M. Bros. ....Respondents
Mr. Shoaib Memon, for Applicants.
Mr. Mayur Khandeparkar a/w Vikramjit Singh Garewal,
Dhwani Mehta Desai, for Respondent Nos.1 to 8.
Mr. Karl Tamboly a/w Aadil Parsurampuria, i/b Grishma Dalvi,
for Respondent No.9.
Digitally
signed by
AARTI
AARTI GAJANAN
GAJANAN PALKAR
PALKAR Date:
2025.11.27
16:54:17
+0530
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CARAPL-7197-2025
CORAM : SOMASEKHAR SUNDARESAN, J.
DATE : November 27, 2025
JUDGEMENT:
Context and Factual Background:
1. This is an application filed under Section 11 of the Arbitration and Conciliation Act, 1996 ("the Arbitration Act") seeking appointment of an arbitrator to adjudicate disputes and differences in connection with a Development Agreement dated January 6, 2006 (" Development Agreement") read with a Deed of Confirmation cum Modification cum Rectification dated March 13, 2006 ("Confirmation Deed") relating to redevelopment of a property located in Bandra, Mumbai (" Property"), more particularly described in the Application.
2. The Development Agreement identifies Respondent No. 1, A. H. Mistry & Co. ("Mistry"), a partnership firm as the original owner;
Respondent No. 10, M/s E. M. Bros (" EMB") as the "first developer"
and M/s Associated Construction Co. ("Associated"), a partnership firm that is now dissolved but of which, all the Applicants and Respondent No. 9, Mohammad Islam Abdul Salam Qureshi (" Islam Qureshi") were partners, as a "developer of the other part". The Confirmation Deed is executed among the same parties.
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3. Respondents No. 2 to 8 are partners of Mistry. Associated, which had been constituted by a partnership deed dated January 17, 2005, was reconstituted by another deed dated October 26, 2012, and was dissolved on January 8, 2025.
4. The core grievance of the Applicants is that the Property was meant to be conveyed to Associated by Mistry but it was deceived due to collusion between Islam Qureshi whose son, Respondent No. 8, Mohammad Usman Mohammad Islam Qureshi (" Usman Qureshi") was inducted as a partner of Mistry. Therefore, all the partners of Associated except for Islam Qureshi, seek specific performance, reimbursement of expenses, interest and damages. Towards that end, they have invoked the arbitration agreement contained in Clause 19 of the Development Agreement. Clause 10 of the Confirmation Deed too has an arbitration agreement.
5. It is submitted by the Applicants that the Property had been agreed to be sold to Mistry by the Life Insurance Corporation (" LIC") in 1978, as part of a larger piece of land. Eventually, the Property was to be developed by EMB pursuant to a development agreement dated October 4, 1986, which is said to have been cancelled. The Applicants contend that Mistry induced Associated to enter into the Development Agreement on the strength of the flow of title from LIC. The consideration included payment of Rs. 2.5 crores by Associated to Page 3 of 17 NOVEMBER 27, 2025 Aarti Palkar ::: Uploaded on - 27/11/2025 ::: Downloaded on - 27/11/2025 21:41:02 ::: CARAPL-7197-2025 Mistry, of which a sum of Rs. 50 lakh is said to have been paid in 2005. An escrow agreement is said to have been executed to engage a solicitor firm as the escrow agent, and undated cheques for Rs. 2 crores are said to have been deposited in escrow. The cheques were to be released only once LIC executed a conveyance deed in favour of Associated. Mistry is said to have undertaken to pursue and have the conveyance deed executed, upon which it would receive the balance consideration.
6. The Applicants submit that the Confirmation Deed changed this position to releasing the amount upon execution of the Confirmation Deed. Associated was to provide eight flats to Mistry free of cost. Construction was to be completed by July 31, 2014. The amount was released to Mistry upon stamping of the execution draft of the Confirmation Deed by encashing the cheques on June 8, 2011. However, it is claimed by the Applicants that Mistry and its partners did not show up for execution.
7. It turned out that LIC had denied the rights claimed to be enjoyed by Mistry. The Applicants contend that they even funded Mistry to litigate against LIC and Suit No. 2486 of 2012 was filed. The Applicants contend that they later found that the Suit had sought conveyance of the Property in favour of Mistry and not in favour of Associated. Mistry is said to have assured the Applicants that settlement of the disputes with LIC was imminent. The pleadings and Page 4 of 17 NOVEMBER 27, 2025 Aarti Palkar ::: Uploaded on - 27/11/2025 ::: Downloaded on - 27/11/2025 21:41:02 ::: CARAPL-7197-2025 contents of the Suit are said to have indicated to the Applicants that Mistry all along knew that LIC was denying Mistry's rights and interests and yet Associated had been strung along. The Suit too was eventually withdrawn. Worse, in 2017, it is stated, Mistry issued a legal notice calling on Associated to pay Rs. 1.25 crores in lieu of each of the eight flats that were to be given under the Development Agreement.
8. The Respondents terminated the Development Agreement and the Confirmation Deed by notice dated December 22, 2020 and also filed Commercial Arbitration Application No. 322 of 2019 under Section 11 of the Act seeking appointment of an arbitrator, which was resisted at the time, by the Applicants. Mistry and its partners would contend that LIC indeed executed a Deed of Conveyance in favour of Associated on February 1, 2021, and this led to the cheques for Rs. 2 crores being legitimately encashed.
9. On January 3, 2022, a Learned Single Judge of this Court appointed an arbitrator in disposal of Arbitration Application No. 322 of 2019 for the disputes between Mistry and Associated. However, on January 6, 2022, Associated moved the Court to indicate that the appearance of advocate representing all partners was wrong and not all partners had been consulted and approved handling of the litigation. This led to the order appointing the arbitrator being recalled, and on February 8, 2022. Eventually, the application was withdrawn. Page 5 of 17
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10. It is contended by Mistry and its partners that the invocation of arbitration by Associated's partners is itself illegal since it does not have the unanimous support of all partners. That apart, it is contended that the partners of Associated seek specific performance of a contract with a firm that admittedly does not exist. The pursuit of this cause of action is not for recovery of assets of the firm but for conduct of business by a firm that stands dissolved.
11. Islam Quereshi would contend that Associated has been dissolved. Even if its partners had been desirous of litigating before its dissolution, his consent had not been sought or taken to litigate against Mistry and therefore, the Application is contended as not being maintainable. He would submit that the Development Agreement and the arbitration clause contained therein, was an agreement between Mistry and Associated and not between Mistry and the partners of Associated. It is Associated, he would contend, that could issue an invocation notice, but not the partners of Associated. He would invoke Clause 20 of the Partnership Deed of Associated to point out that the firm could sue and be sued in its name only and all partners had to represent the firm and sign and verify for presenting pleadings to courts and to arbitrators.
12. Islam Quereshi would also contend that notices issued on behalf of Associated had been issued without any consultation with him Page 6 of 17 NOVEMBER 27, 2025 Aarti Palkar ::: Uploaded on - 27/11/2025 ::: Downloaded on - 27/11/2025 21:41:02 ::: CARAPL-7197-2025 and therefore they are untenable. He would also contend that the Development Agreement had been terminated on December 22, 2020 and there had been no whisper of a protest from the Applicants. He would submit that the response to Mistry's arbitration application too had been handled behind his back. He would submit that the disputes had been settled, and that the current application is an attempt to go back on the settlement, despite accord and satisfaction.
13. The Applicants would contend that Islam Quereshi was merely a 5% partner and his son Usman Quereshi is a partner in Mistry. The dissolution of Associated is a counterblast to the enforcement of Associated's interests, and that Islam Quereshi is conflicted and has contrived the situation to frustrate the Applicants. Analysis and Findings:
14. I have heard the parties at length, and examined the record with the assistance of the detailed pleadings and the written submissions filed on behalf of the parties.
15. At the threshold, the scope of examination of this Court's jurisdiction under Section 11 must be noticed. The scope of review under Section 11 is explicitly set out in Section 11(6A) of the Arbitration Act. It is now trite law, with particular regard to the decisions of a Page 7 of 17 NOVEMBER 27, 2025 Aarti Palkar ::: Uploaded on - 27/11/2025 ::: Downloaded on - 27/11/2025 21:41:02 ::: CARAPL-7197-2025 seven-judge Bench in the Interplay Judgement1 followed by multiple others, including SBI General2 and Patel3 that the Section 11 Court ought not to venture beyond examining the existence of a validly existing arbitration agreement that has been formally executed. Even questions of existential substance is a matter that falls squarely in the domain of the arbitral tribunal, in view of Section 16 of the Arbitration Act.
16. Against this backdrop, what is noteworthy is that the opposition to the appointment of an Arbitral Tribunal is primarily founded on the invocation of arbitration not having been unanimous and on the premise that the claim indicated in the Section 11 Application is for specific performance of the Development Agreement, which a dissolved firm is incapable of performing. Reliance is also placed on the absence of implied authority on the part of any partner to litigate, invoking Section 19 of the Indian Partnership Act, 1932 ("Partnership Act").
17. There are multiple references on the part of the Respondents to a contention that just some of the partners cannot invoke arbitration and subject a firm to litigation. On facts, it is noteworthy that it is not 1 In Re: Interplay Between Arbitration Agreements Under Arbitration and Conciliation Act, 1996 & Stamp Act, 1899 - (2024) 6 SCC 1 2 SBI General Insurance Co. Ltd. v. Krish Spinning - 2024 SCC OnLine SC 1754 3 Ajay Madhusudan Patel v. Jyotrindra S. Patel - 2024 SCC OnLine SC 2597 Page 8 of 17 NOVEMBER 27, 2025 Aarti Palkar ::: Uploaded on - 27/11/2025 ::: Downloaded on - 27/11/2025 21:41:02 ::: CARAPL-7197-2025 as if just some partners have sought to invoke arbitration. All the partners of Associated, except Islam Quereshi alone, have invoked arbitration. Islam Qureshi's son Usman Quereshi is a partner in Mistry and the conflict of interest is evident. Islam Quereshi claims to have been unaware of the invocation of arbitration and has dissolved the firm as a partnership at will when he was taken by surprise.
18. In my opinion, not only is the existence of the arbitration agreement in the Development Agreement undisputed, but also Mistry and its partners had invoked arbitration in Arbitration Application 322 of 2019 under the very same arbitration agreement and even obtained an order making a reference to arbitration. Indeed, a recall of the order was sought on the premise that not all partners had been represented.
Be that as it may, what is clear is that the existence of the arbitration agreement cannot be in doubt.
19. That apart, the contention that only some of the partners have sought to enforce the rights under the Development Agreement is inappropriate since the only appropriate way to characterise the facts on hand is that but for one partner, all partners of Associated are desirous of invoking arbitration and it is just one partner who wishes to impose his view on the litigation, on all the other partners. Page 9 of 17
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20. Section 19 of the Partnership Act would bear extraction:
19. Implied authority of partner as agent of the firm.--
(1) Subject to the provisions of section 22, the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm. The authority of a partner to bind the firm conferred by this section is called his "implied authority".
(2) In the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to--
(a) submit a dispute relating to the business of the firm to arbitration,
(b) open a banking account on behalf of the firm in his own name,
(c) compromise or relinquish any claim or portion of a claim by the firm,
(d) withdraw a suit or proceeding filed on behalf of the firm,
(e) admit any liability in a suit or proceeding against the firm,
(f) acquire immovable property on behalf of the firm,
(g) transfer immovable property belonging to the firm, or
(h) enter into partnership on behalf of the firm.
[Emphasis Supplied]
21. Even a plain reading of the foregoing would indicate that the acts of any partner would bind the entire firm by a statutory Page 10 of 17 NOVEMBER 27, 2025 Aarti Palkar ::: Uploaded on - 27/11/2025 ::: Downloaded on - 27/11/2025 21:41:02 ::: CARAPL-7197-2025 implication of authority to so bind the firm under Section 19(1) of the Partnership Act. As a check and balance against such implied authority, Section 19(2) provides subjects on which the implied authority would not empower every partner of a firm to bind the firm, and that too is subject to custom and usage. Litigating and giving up a claim are part of such actions. In the instant case, one partner whose interests are conflicted by his son's partnership in Mistry is not aligned with all the other partners of Associated. But for Islam Qureshi all other partners are unanimous in their desire to prosecute the claim of the perceived rights flowing from the Development Agreement. The legislative policy underlying Section 19 is to prevent one or a few partners ending up binding all the partners whereas the matter in hand involves one partner, accused of conflicted interest holding up all the other partners. What is the custom and usage applicable, how the firm usually conducted itself, and how the implied authority ran its course in past practice, are all matters that pose mixed questions of fact and law, which fall in the domain of the Arbitral Tribunal.
22. This takes one to the issue of whether the dissolution of the firm has any implication for the existence of the arbitration agreement. It is well settled that the dissolution of a partnership firm would not automatically translate into the contracts validly executed during the firm's legitimate subsistence getting evaporated. Whether on the facts Page 11 of 17 NOVEMBER 27, 2025 Aarti Palkar ::: Uploaded on - 27/11/2025 ::: Downloaded on - 27/11/2025 21:41:02 ::: CARAPL-7197-2025 of the case the Development Agreement and the arbitration agreement in it faces an existential threat is a matter for the Arbitral Tribunal to decide.
23. Whether the claim would be for specific performance or for damages is a matter of merits that ought not to be examined by the Section 11 Court. Indeed, the Arbitral Tribunal could be presented with all objections including the objections relating to whether the absence of one single partner's consent to arbitrate would lead to attracting the provisions of Section 19 of the Partnership Act on the subject of implied authority.
24. Islam Qureshi has contended that there are provisions in the Partnership Deed too that fall for interpretation to contend that the invocation of arbitration would necessarily require all the partners to unanimously approve it. This matter too falls within the domain of the Arbitral Tribunal and can well be agitated before the Arbitral Tribunal. It is not permissible for the Section 11 Court to delve into interpreting the Partnership Deed.
25. The Applicants too have placed extensive reliance on Section 69 of the Partnership Act, which too need not detain my attention since this is really for the Arbitral Tribunal to consider. Whether pursuit of damages constitutes pursuit of recovery of dues owed to the dissolved Page 12 of 17 NOVEMBER 27, 2025 Aarti Palkar ::: Uploaded on - 27/11/2025 ::: Downloaded on - 27/11/2025 21:41:02 ::: CARAPL-7197-2025 firm is a question of fact that would be answered by how the pleadings are fashioned by the parties in the arbitral proceedings.
26. The law declared by the Supreme Court interpreting Section 11 of the Arbitration Act is indeed that no matter how tempting it may be to examine and pronounce upon what may be canvassed as being self-evident facets, Parliament has consciously legislated to disable the Section 11 Court from delving into facets outside the "examination" of the existence of an arbitration agreement. The Section 11 Court must have the discipline to follow this requirement and leave such facets for examination by the Arbitral Tribunal. In Interplay, the Supreme Court has distinguished "examination" from "adjudication" and has pointed out that the Section 11 Court should not venture outside the examination of the existence of an arbitration agreement. In multiple judgements the Supreme Court has declared emphatically that the Section 11 Court should examine the existence of the arbitration agreement and nothing else. More recently, in Bihar State Food4, the Supreme Court has pithily declared the law thus:
27. The curtains have fallen. Courts exercising jurisdictions under Section 11(6) and Section 8 must follow the mandate of sub-section (6A), as interpreted and mandated by the decisions of this Court and their scrutiny must be "confine(d) to the examination of the existence of the arbitration agreement".
4 Managing Director, Bihar State Food and Civil Supply Corporation Limited and Anr. Vs. Sanjay Kumar - 2025 SCC OnLine SC 1604 Page 13 of 17 NOVEMBER 27, 2025 Aarti Palkar ::: Uploaded on - 27/11/2025 ::: Downloaded on - 27/11/2025 21:41:02 ::: CARAPL-7197-2025 [Emphasis Supplied]
27. Islam Qureshi and Mistry have also claimed accord and satisfaction of the claim sought to be agitated by Associated. This too, I am afraid, is not within the domain of the Section 11 Court. SBI General holds so in explicit terms, declaring that the issue of accord and satisfaction is a matter to be considered by the Arbitral Tribunal.
28. Bearing in mind the limited scope of examination permissible under Section 11 of the Arbitration Act and to ensure that no pronouncement by me on the implications of partnership law is perceived despite such limited scope of jurisdiction, I make it clear that nothing contained in this judgement is a definitive declaration of the law on partnership since that falls in the jurisdiction of the Arbitral Tribunal, which shall independently examine these issues.
29. The Respondents are free to make their submissions to the Arbitral Tribunal to make out their case about the claim not being maintainable including facets of partnership law. This Court ought not to be drawn into the merits as sought by all parties. The material on record does indicate that there is a lot more than meets the eye in the contentions of all parties, and it is not for the Section 11 Court to adjudicate or to be drawn into commenting on the merits. Page 14 of 17
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30. In these circumstances, in my opinion, it would be appropriate to finally dispose of the Section 11 Application by constituting an Arbitral Tribunal, in the following terms, without any expression of an opinion on the merits of the matter:
A] Justice (Retd.) A.K. Menon a former judge of this Court is hereby appointed as the Sole Arbitrator to adjudicate upon the disputes and differences between the parties arising out of and in connection with the Agreement referred to above;
Office Address:- 411, 4th Floor, Maker Chambers 5, 221 Jamnalal Bajaj Marg, Nariman Point, Mumbai - 400021.
Email ID:- [email protected] B] A copy of this Order will be communicated to the Learned Sole Arbitrator by the Advocates for the Petitioner within a period of one week from the date on which this order is uploaded on the website of this Court. The Petitioner shall provide the contact and communication particulars of the parties to the Arbitral Tribunal along with a copy of this Order;
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D] The parties shall appear before the Learned Sole Arbitrator on such date and at such place as indicated, to obtain appropriate directions with regard to conduct of the arbitration including fixing a schedule for pleadings, examination of witnesses, if any, schedule of hearings etc. At such meeting, the parties shall provide a valid and functional email address along with mobile and landline numbers of the respective Advocates of the parties to the Arbitral Tribunal. Communications to such email addresses shall constitute valid service of correspondence in connection with the arbitration;
E] All arbitral costs and fees of the Arbitral Tribunal shall be borne by the parties equally in the first instance, and shall be subject to any final Award that may be passed by the Tribunal in relation to costs.
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31. Needless to say, nothing contained in this order is an expression of an opinion on merits of the matter or the relative strength of the parties. All issues on merits are expressly kept open to be agitated before the arbitral tribunal appointed hereby. It is clarified for the avoidance of doubt that the Respondents shall be free to make an application under Section 16 of the Arbitration Act before the Learned Arbitral Tribunal. The Learned Arbitral Tribunal, being the master of the proceedings, shall sequence the consideration of issues in the manner it believes is most appropriate.
32. All actions required to be taken pursuant to this order shall be taken upon receipt of a downloaded copy as available on this Court's website.
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