Partnership firms remain a common business structure in Tamil Nadu, especially among family businesses and traders. Partnership deeds frequently include an arbitration clause, and disputes between partners are among the most emotionally charged commercial disputes.
Typical disputes include rendition of accounts, sharing of profits and losses, retirement or expulsion of a partner, the value of a retiring partner's share, use of firm assets, and dissolution of the firm.
These disputes are generally arbitrable. An arbitral tribunal can direct accounts to be taken, determine each partner's share, and decide how assets and liabilities are to be divided on dissolution. Arbitration keeps business and family financial information private.
Accounting evidence is central. Books of account, bank statements, tax returns and capital accounts decide most partnership disputes. Tribunals often appoint or rely on chartered accountants to examine the accounts, and parties should preserve complete records from the moment a dispute arises.
Interim relief is often needed to protect the business during the dispute — for example, to prevent a partner from withdrawing funds or diverting business. Such relief can be sought from the court under Section 9 or from the tribunal under Section 17.
Where the partners want to preserve the relationship, mediation before arbitration is often worthwhile, especially in family partnerships.