A reference to arbitration by one partner alone is void ab initio and cannot be legalised by subsequent acquiescence and ratification by other partners.

ORDER OF REFERENCE (D/- 8-3-1957)

GURNAM SINGH, J. :- A suit for the recovery of Rs. 6,000/- was instituted in the Court of Subordinate Judge, Muktsar, by Firm Kheturam Bashamberdas through Pritam Das, one of the share-holders, against Firm Kashmirilal-Rattanlal through Rattan Lal son of Kashmirlal. Rattan Lal appeared in the Court of the Subordinate Judge and submitted the written statement. However, the parties agreed to refer the dispute to the sole arbitration of Bawa Niranjan Singh retired Senior Subordinate Judge, Ferozepore. The agreement for reference was signed by Rattan Lal alone on behalf of Firm Kashmirilal-Rattanlal.

During the pendency of the arbitration proceedings, Rattan Lal submitted an application with a prayer that the proceedings be stayed as the Court at Muktsar had no jurisdiction in the matter. This application was rejected first by the trial Court and then by the High Court in revision. The arbitrator then filed the award in Court on 10-2-1954. By means of this award, a decree for Rs. 3,929/6/9, as principal and Rs. 280/- as interest total Rs. 4,209/6/9, with proportionate costs was given in favour of the plaintiff-firm.

The defendant submitted objections against the award. Four sons of Rattan Lal submitted separate objections against the award. Their objections were that besides Rattan Lal, they were also partners in the firm, which was registered. In such a situation, Rattan Lal defendant alone was not competent to refer the dispute to arbitration on their behalf. There was also another objection regarding jurisdiction. The Court below framed the following issues :

(1) Whether the defendant-firm is a registered firm ?

(2) If so, whether Vimal Parshad, Anant Parshad, Chander Sen, Shesh Chandar Sen petitioners were not competent to prefer objections against the award ?

(3) If issue No. 1 is not proved and the defendant-firm is proved to be the coparcenery property of the joint Hindu family of which Rattan Lal is the karta, whether the petitioners Vimal Parshad etc. were competent to file objections against the award, in the presence of the Karta Rattan Lal, who had also filed objections against the award ?

(4) Whether the award of the arbitrator was liable to be set aside for the reasons and on the grounds urged in the objection petition ?

(5) Relief ?

It found that Firm Kashmirilal-Rattanlal was a registered partnership firm. Rattan Lal and his four sons were members of this partnership firm. As the reference to arbitration was made only by Rattan Lal, the award by the arbitrator was liable to be set aside. For this conclusion, reliance was placed on Sec. 19(2) of the Indian Partnership Act. It is clearly said therein that the implied authority of a partner does not empower him to submit a dispute relating to the business of the firm to arbitration. The trial Court, therefore, held that reference to arbitration was invalid. Coming to this conclusion, it set aside the award and the reference to the arbitration. The present appeal is directed against the order dated 30-7-1954 of the Subordinate Judge 1st Class, Muktsar.

2. The fact that the defendant-firm is a registered partnership firm is not seriously disputed before me. The principal contention raised by Mr. Indar Dev Dua, learned counsel for the appellant, is that the act of Rattan Lal referring the dispute to arbitration was later ratified by his sons, who are other members of the partnership. In such a situation, learned counsel argues that the award cannot be set aside on the ground that the dispute was not referred at the outset by all the interested parties. In support of his contention, he has cited a Singly Bench authority of this Court reported in Shankar Das Rup Lal v. Governor-General in Council, 53 Pun LR 231 : (AIR 1952 Punj 234) by Kapur, J. in which it was held -

"Under Sec. 19 of the Indian Arbitration Act, IX of 1932, a partner has no authority to submit a dispute relating to the business of the firm to arbitration. But if the other