JUDGMENT :

(Prayer: The Civil Miscellaneous Appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 against the Order dated 02.03.2021 in an Application filed by the first respondent dated 24.01.2021.)

1. This appeal raises an important question of law namely under what circumstances an Arbitration Agreement binds a non-signatory to the said agreement.

2. Certain disputes arise between the parties of a registered partnership firm by name Asvini Foundations. Under the Partnership Deed dated 24.04.2000, the Appellant S. Sivagurunathan and the second respondent Aarti Razee were the partners. Thereafter under the Partnership Deed dated 01.06.2006, Narendra Srisrimal and Surendar Srisrimal were inducted as partners. Thereafter, the partnership firm was reconstituted under a Deed of Reconstitution of Partnership dated 01.04.2009 under which, Sandeep Mehta was inducted as a partner. On 01.04.2011, Narendra Srisrimal and Surendar Srisrimal retired from partnership firm under a Retirement Deed dated 01.04.2011 and on the same date, another Deed of Reconstitution of Partnership was executed by the remaining partners namely the Appellant S. Sivagurunathan, the second respondent Aarti Razee and Sandeep Mehta. Thereafter, on 01.10.2016, under an amendment of Partnership Deed, the first respondent R. Mennan was inducted as a partner and Sandeep Mehta retired from partnership. After the execution of the Amendment of Partnership Deed dated 01.10.2016, the Appellant S. Sivagurunathan and the respondents namely R. Mennan & Aarti Razee became the partners of M/s.Asvini Foundations.

3. The Amendment of Partnership Deed dated 01.10.2016 under which the first respondent was inducted as a partner does not contain an arbitration clause, whereas the original Partnership Deed dated 24.04.2000, Partnership Deed dated 01.06.2006 under which Narendra Srisrimal, and Surendar Srisrimal were inducted as partners, the Deed of Reconstitution of Partnership dated 01.04.2009 under which Sandeep Mehta was inducted as a partner, the Deed of Reconstitution of Partnership dated 01.04.2011 under which, Narendra Srisrimal and Surendar Srisrimal retired from partnership and the Appellant S. Sivagurunathan, the second respondent Aarti J. Razee and Sandeep Mehta remained as partners contained an arbitration clause.

4. There arose disputes between the partners who are the Appellant and the respondents herein. The dispute was referred to arbitration by the second respondent who is one of the partners and she has sought for the following reliefs before the Arbitral Tribunal:

(a) For a declaration to pay a sum of Rs.1,00,00,000/- (Rupees One Crore Only) to the claimant towards costs;

(b) For a declaration to seek for rendition of true and proper accounts to be crystallised and thereafter to sell the properties and the goodwill held by the firm and the sister concern Asvini Foundations Pvt. Ltd be sold by public auction or like wise and thereby defray the monies so obtained to clear the debts if so found and pay the partners in the ratio as agreed in the partnership agreement;

(c) For a declaration to dissolve the partnership firm Asvini Foundations forthwith.

5. Since the amendment of Partnership Deed dated 01.10.2016, under which the first respondent R. Mennan was inducted as a partner did not contain an arbitration clause, the first respondent filed an application under section 16 of the Arbitration and Conciliation Act, 1996 before the Arbitral Tribunal challenging the jurisdiction of the Arbitral Tribunal to decide the dispute as there is no arbitration clause in the amendment of Partnership Deed dated 01.10.2016 and sought for dismissal of the claim petition filed by the second respondent.

6. By order dated 02.03.2021, the Arbitral Tribunal allowed the application filed by the first respondent and terminated the arbitration on the ground that the Arbitral Tribunal has no jurisdiction to proceed with arbitration, since the first respondent was neither a party t