{"id":383618,"date":"2026-05-08T15:00:43","date_gmt":"2026-05-08T09:30:43","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=383618"},"modified":"2026-05-08T15:03:42","modified_gmt":"2026-05-08T09:33:42","slug":"permissive-clause-partnership-deed-arbitration-agreement-section-7-sc-stay","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2026\/05\/08\/permissive-clause-partnership-deed-arbitration-agreement-section-7-sc-stay\/","title":{"rendered":"Can a Permissive Clause in a Partnership Deed be a Valid Arbitration Agreement? Supreme Court Stays Proceedings"},"content":{"rendered":"<div style=\"text-align: justify; line-height: 150%;\">\n<p style=\"margin-bottom: 3%;\"><span style=\"font-weight: bold;\">Disclaimer:<\/span> <span style=\"font-style: italic;\">This has been reported after the availability of the order of the Court and not on media reports so as to give an accurate report to our readers.<\/span><\/p>\n<p style=\"margin-bottom: 3%;\"><span style=\"font-weight: bold;\">Supreme Court:<\/span> In an SLP assailing the Jammu &amp; Kashmir and Ladakh High Court order, whereby the High Court allowed a petition under Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001544910\" target=\"_blank\">11(6)<\/a>, <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002726958\" target=\"_blank\">Arbitration and Conciliation Act, 1996<\/a> and proceeded to appoint a sole arbitrator by exercise of jurisdiction under Section 11 and treating a contractual clause as a binding arbitration agreement, t<span style=\"color: #0e101a;\">he Division Bench of Pamidighantam Sri Narasimha and Alok Aradhe, JJ.<\/span>, stayed the arbitration proceedings before the arbitrator and issued notice.<\/p>\n<p style=\"margin-bottom: 3%;\">The dispute arises out of a partnership deed executed between the parties for carrying on business under the name and style of ETN Services at Srinagar. Clause 14 of the said deed provided that in case of disputes, the parties <span style=\"font-style: italic;\">&#8220;can appoint an arbitrator&#8221;<\/span>, whose decision would be binding. Based on this clause, the respondent preferred a petition under Section 11(6).<\/p>\n<p style=\"margin-bottom: 3%;\">The Jammu &amp; Kashmir and Ladakh High Court treated the said clause at par with a valid arbitration agreement and appointed a sole arbitrator.<\/p>\n<p style=\"margin-bottom: 3%;\">Aggrieved, the petitioner filed the present petition. The primary contention of the petitioner was that the jurisdiction under Section 11 is confined to examining the existence of an arbitration agreement within the meaning of Section 7. At the hearing, it was contended that the said clause was permissive in nature and does not constitute a binding arbitration agreement within the meaning of Section 7.<\/p>\n<p style=\"margin-bottom: 3%;\">Accordingly, the Court granted interim relief to the petitioner by staying the arbitration proceedings before the arbitrator till the next date of hearing.<\/p>\n<p style=\"margin-bottom: 3%;\">[<span style=\"font-weight: bold; color: #632423;\"><span style=\"font-style: italic;\">Mudasir Ahmad Khuroo<\/span> v. <span style=\"font-style: italic;\">Foziya Habeeb<\/span>, SLP No. 12853 of 2026, order dated 30-4-2026<\/span>]<\/p>\n<hr\/>\n<p>Advocates who appeared in this case:<\/p>\n<p style=\"margin-left: 18pt;\"><span style=\"font-weight: bold;\">For the petitioner:<\/span> Akaant Kr. Mittal, Anant Singh, Arun Yadav, Abhishek Sharma, Shashank Shekhar Shukla, Bhavana Garg, Rohit Agarwal, Advocates with AOR Ritu Reniwal<\/p>\n<p style=\"margin-left: 18pt;\"><span style=\"font-weight: bold;\">For the respondent:<\/span> N\/A<\/p>\n<h3 style=\"color: #000080;\">Buy Arbitration and Conciliation Act, 1996 &nbsp; <a href=\"https:\/\/www.ebcwebstore.com\/product_info.php?products_id=382\" target=\"_blank\">HERE<\/a><\/h3>\n<p style=\"margin-bottom: 3%;\"><a href=\"https:\/\/www.ebcwebstore.com\/product_info.php?products_id=382\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996-191x300.png\" alt=\"arbitration and conciliation act, 1996\" width=\"191\" height=\"300\" class=\"aligncenter size-large wp-image-294803\" srcset=\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996-191x300.png 191w, https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996-38x60.png 38w, https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996.png 620w\" sizes=\"auto, (max-width: 191px) 100vw, 191px\" \/><\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p style=\"font-style: italic;\">At the hearing, it was contended that the said clause was permissive in nature and does not constitute a binding arbitration agreement within the meaning of Section 7.<\/p>\n","protected":false},"author":67011,"featured_media":383625,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,9],"tags":[24904,40741,47198,103902,103901,55664,30168,57325,103900,31135,5363],"class_list":["post-383618","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-supremecourt","tag-appointment-of-arbitrator","tag-arbitration-and-conciliation-act-1996","tag-arbitration-proceeding","tag-arbitration-proceedings-stayed","tag-interim-relief-in-arbitration-proceeding","tag-jammu-kashmir-and-ladakh-high-court","tag-justice-alok-aradhe","tag-justice-pamidighantam-sri-narasimha","tag-scope-of-section-11","tag-sole-arbitrator","tag-supreme-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.4 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Can Permissive Clause in Partnership Deed Be a Valid Arbitration Agreement?| SCC Times<\/title>\n<meta name=\"description\" content=\"Supreme Court stays the arbitration proceedings wherein a Permissive Clause in Partnership Deed was treated as a valid arbitration agreement.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2026\/05\/08\/permissive-clause-partnership-deed-arbitration-agreement-section-7-sc-stay\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Can a Permissive Clause in a Partnership Deed be a Valid Arbitration Agreement? 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