Arbitration Agreement Enforceable Against Legal Representatives Of Deceased Party : Supreme Court

The Supreme Court has reiterated that an arbitration agreement is enforceable against the legal representatives of a deceased partner of a partnership firm.

"An arbitration agreement does not cease to exist on the death of any party and the arbitration agreement can be enforced by or against the legal representatives of the deceased," the Court stated, referring to the judgment in Ravi Prakash Goel v. Chandra Prakash Goel & Anr., reported in (2008) 13 SCC 667.

The bench comprising Justice JB Pardiwala and Justice R Mahadevan also referred to the Delhi High Court's judgment in Jyoti Gupta v. Kewalsons & Ors., reported in 2018 SCC OnLine Del 7942 which held that an arbitration agreement does not stand discharged on the death of a partner and it can be enforced by the legal heirs of the deceased-partner.

The Court was deciding an appeal against a judgment of the Gauhati High Court which referred the legal heirs of a deceased partner to arbitration. The appellants contended that the arbitration clause cannot be enforced against them as they are non-signatories of the agreement.

Rejecting the appeal, the Court held :

"It is a well-established position of law that the term 'partners' extends to and would include their legal heirs, representatives, assigns or legatees, etc. Persons claiming under the rights of a deceased person are the representatives of the deceased party, and therefore, both the parties to the agreement and their legal heirs are entitled to enforce an arbitral award and are bound by it. In light of Section 40 of the Act of 1996 the existence of an arbitration agreement is not affected by the death of a party to the arbitration agreement. As a consequence, the right to sue for rendition of account also survives, ensuring that the legal representatives can assert or defend claims arising from the partnership agreement."

Ms. Shagufa Salim, Advocate, appeared for the petitioners and Mr. Pavan Kumar Chaturvedi, Advocate, appeared for the respondents.

Case : Rahul Verma and others vs Rampat Lal Verma and others

Citation : 2025 LiveLaw (SC) 269

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