Introduction
The Himachal Pradesh High Court at Shimla has refused to grant interim relief to Nitin Gupta, who sought immediate closure of operations of Vidhyasha Pharmaceuticals, a firm co-owned with his cousin Arpit Aggarwal. Justice Jyotsna Rewal Dua, delivering the order on August 21, 2025, observed that shutting down a running pharmaceutical unit employing more than 100 workers and holding over 1,100 drug licenses would amount to crippling the very subject of the dispute.
Background
The conflict began after Gupta issued a dissolution notice on May 26, 2025, claiming the partnership was ''at will'' under the Indian Partnership Act. He further publicized the dissolution through newspapers in June. His plea under Section 9 of the Arbitration and Conciliation Act pressed for a complete halt to production, freezing of bank accounts, and appointment of a Receiver. Gupta alleged that Aggarwal was diverting business and misusing firm assets for personal gain.
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Aggarwal, however, countered that the firm was not ''at will'' as claimed. Citing Clause 8 of the partnership deed, he argued that no partner could unilaterally withdraw or dissolve without the other’s written consent. His counsel stressed that closure would cause ''irreparable injury'' by putting more than 100 employees out of work and invalidating over a thousand licenses painstakingly obtained over years.
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Court's Observations
Justice Dua cut through the barrage of allegations and focused on whether interim measures were justified.
''The interim relief prayed for... would virtually paralyse day-to-day functioning of the firm,'' the bench noted.
The judge added that interim protection under Section 9 is intended to preserve the subject matter, not destroy it.
While acknowledging Clause 10 of the deed mentioned ''partnership at will,'' the court emphasized that Clause 8- requiring mutual consent- could not be ignored. This clash of provisions, the court said, must ultimately be decided by an arbitrator, not at this interim stage.
On balance of convenience, the court found that shutting down a profitable running concern would cause disproportionate harm, including risks to employees, clients, and regulatory approvals.
''Freezing of operational account... will block legitimate transactions including payment of salaries, vendor payments, and statutory dues,'' Justice Dua remarked.
Decision
The court declined Gupta’s plea to stop operations or appoint a Receiver. However, it did not leave matters unchecked. To safeguard interests, the court directed that no partner shall alienate or encumber firm assets during the pendency of arbitration. Aggarwal, who is currently managing the firm, was further ordered to maintain accurate accounts of all transactions and file quarterly statements before the court, starting with the September 2025 quarter.
The petition was disposed of with a clear reminder that all substantive issues- including validity of dissolution- must be thrashed out before the arbitral tribunal.
Case Tittle : Nitin Gupta vs. Arpit Aggarwal
Case Number : Arbitration Case No. 116 of 2025
