The court established that disputes arising from partnership agreements, including claims against both signatories and non-signatories, must be referred to arbitration under the Arbitration and Conciliation Act, 1996.

JUDGMENT :

Sabyasachi Bhattacharyya, J.

1. The present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the 1996 Act”) arises out of an order passed in CS (COM) 544 of 2024 dismissing the application filed by the defendant nos.1 to 4 (present appellant nos.1 to 4) under Section 8 of the 1996 Act, bearing GA (COM) 4 of 2024, for referring the matter to arbitration.

2. The appellants rely on Clause 12 of a deed of partnership dated August 23, 1994 entered into between defendant/appellant no.2 and plaintiff/respondent no.1, thereby forming M/s Exchange, the defendant/appellant no.1-partnership firm. Clause 12 is an arbitration clause, providing that in case of any dispute arising between the partners or their representatives, the same shall be referred for decision of the Chief Divisional Manager of Bharat Petroleum Corporation Limited (BPCL), the defendant no.5/respondent no.2, under whose jurisdiction the subject retail outlet is situated, for arbitration either by him or his nominee and that the decision of the said Arbitrator shall be conclusive and binding on all the partners. The partnership firm was formed for the purpose of running a petrol pump business from a retail outlet under licence from the BPCL.

3. The dispute in the suit, as per the appellants, arises out of the said partnership deed of 1994 and hence, being covered by the arbitration clause therein, the matter ought to be referred to arbitration.

4. The learned Single Judge dismissed the application under Section 8 of the 1996 Act primarily on the premise that defendant nos.3 to 5 in the suit, against whom claims have been made in the plaint, were not parties to the arbitration agreement and as such, there cannot be any reference under Section 8.

5. Learned senior counsel for the appellants argues that BPCL is not a necessary party to the suit, since it has already deleted the name of the plaintiff/respondent no.1 from its records as a partner of the appellant no.1-firm, which is the main relief sought against BPCL. As to the deletion of the name of respondent no.1 from the records of other departments, statutory authorities, bodies and/or institutions, it is submitted that those authorities have not been impleaded in the suit and the BPCL is not empowered to effect such deletion, even if required.

6. It is submitted that defendant nos. 3 and 4, also appellants herein, the subsequently added partners after re-constitution of the partnership firm on the retirement of respondent no.1, have given their express consent to be subject to arbitration and, thus, the matter ought to have been referred to arbitration. The deed by which the partnership was reconstituted also contains an arbitration clause.

7. It is submitted that the name of the respondent no.1 as partner has already been removed from all departments, statutory authorities, bodies and, or institutions, although there was a slight delay in issuing new selling license by the Department of Food and Supplies, Government of West Bengal. In any event, the said Government department having not been impleaded as a party to the suit, such delay cannot have a material bearing on the present lis.

8. The cause of action in the suit is primarily against the defendant/appellant no.1-firm and its partners, and defendant no.5/respondent no.2, the BPCL, was impleaded in the suit merely to avoid the applicability of Section 8 of the 1996 Act.

9. It is further submitted by the appellants that the respondent no.2- BPCL had already taken steps and deleted the name of the plaintiff from its records much prior to the institution of the present suit, as borne out by the trail-mail annexed to