Food Corporation Of India Petitioner, v. Rama Mills, Shahbad Markanda .

S.P Goyal, J. — This judgment will dispose of two petitions (C. R. Nos. 144 and 800 of 1980) which have arisen out of similar circumstances and are between the same parties.

2. The respondents filed suit for rendition of accounts against the petitioner concerning an agreement of paddy shelling entered into on behalf of the respondents by Rakesh, one of the partners. The petitioner on appearance filed an application under section 34 of the Indian Arbitration Act that there was an arbitration agreement existing between the parties relating to the dispute, subject matter of the suit and so the suit was liable to be stayed. One of the objections raised in reply by the respondents was that the alleged arbitration agreement would not bind the firm and the partners other than Rakesh as he had no authority to enter into the said agreement. The petitioner to controvert the plea relied on Exhibit A. 4 the power of attorney executed by the six partners in favour of four persons Ram Kishore, Sham Kishore, Anand Kishore and Rakesh. This power of attorney has no legal value to sustain the plea that Rakesh had the power to enter into arbitration agreement on behalf of the other partners. The power of attorney had been executed in favour of four persons. It is not stated that they could act severally.

3. Again the power of attonery Exhibit A. 4 does not contain any clause which authorises the attorney to enter into an arbitration agreement relating to the business of the firm. According to section 19(2) (a) of the Indian Partnership Act, a partner has no implied authority to submit a dispute relating to the business of a firm to arbitration which necessarily means that there has to be an express authority in favour of the partners to enter into an arbitration agreement. A similar view was taken by Sultan Singh. J. in National Small Industries Corporation Ltd. New Delhi v. Punjab Tin Printing & Metal Industries Ajraunda, Faridabad (Haryana) and others, No decision to the contrary has been brought to my notice by the learned counsel for the petitioner. There is thus no escape from the conclusion that Rakesh had no authority to enter into the alleged arbitration agreement on behalf of the remaining five partners and the said agreement, therefore, would not bind him. There being thus no valid agreement of arbitration binding all the partners the order rejecting the application under section 34 has to be sustained. There revision petitions are accordingly dismissed but without any order as to costs.

Petition dismissed.