S.B. Wad, J.
1. This is an appeal against the order of the Additional District Judge dated 26-8-85, dismissing the objections filed by the appellants under sections 30 and 33 of the Arbitration Act, challenging the award dated 13-7-83. The Arbitrator had made an award in a sum of Rs. 36,785. 67 against the appellants and M/s. Talwar Greeze Manufacturing Company. The award was made the rule of the Court by the impugned order.
2. The appellant No. 1, M/s. Shakti Automobiles is alleged to have subscribed a chit of the value of Rs. 90,000. 00. It was auctioned in favour of Shakti Automobiles for Rs. 58,500. 00 and after deducting Rs. 30,300. 00, being the outstanding instalments, a sum of Rs. 28,200. 00 was paid to the said Shakti Automobiles through cheques. The submission of the appellants is that the respondent M/s. Lord Chit and Trading (Pvt.) Ltd. had in collusion with M/s. Talwar Greeze Manufacturing Company cheated the appellants by taking signatures on the blank forms of agreement and promissory notes for the sum of Rs. 90,000. 00. It is further asserted that the sum of Rs. 28,200. 00 was received by M/s. Talwar Greeze Manufacturing Company and not by the appellants. It may be noted that M/s. Shakti Automobiles is the principal debtor and M/s. Talwar Greeze Manufacturing Company and M/s, Kalra Glue Traders are the guarantors. The award was made ex-parte against the principal debtor and the guarantors. M/s. Talwar Greeze Manufacturing Company did not file any objections under sections 30 and 33 of the Arbitration Act and their Managing Director appeared as a witness supporting the respondent M/s. Lord Chit and Trading (Pvt.) Ltd. M/s. Talwar Greeze have also not prefered any appeal against the impugned order. Since M/s. Talwar Greeze have not filed any objections and have not preferred any appeal, the decree against them has become final.
3. In the appeal it was contended by the appellants that both the appellants are partnership firms, The alleged agreement which contains an arbitration clause, was not signed by all the partners. Relying on Section 19 (2)a of the Partnership Act, it is contended that a partner has no implied authority under the said section to bind a partnership firm or other partners by means of an arbitration agreement signed only by such a partner. There were three partners in M/s. Shakti Automobiles, viz. Ram Lubhaya (R. K. Setbi), Raj Kumar (R K. Sethi) and Sheila Devi. The alleged agreement was signed by Raj Kumar (R. K. Sethi) alone. So also, one Darshan Kumar, Partner of Kalra Glue Traders had alone signed the agreement. In his evidence he has stated that the admitted the signatures, but the forms were blank when he signed them and were filed afterwards. The appeal was admitted by me only on the question as to whether the arbitration agreement, the reference and the award were vitiated in relation to the partnership firm as all the partners had not signed the agreement.
4. The principal objection on behalf of the respondent Chit Fund Company is that no such objection was raised by the appellants before the learned District Judge. It is contended that the appellants cannot be permitted to raise new objections after the period of 30 days prescribed for the objections under sections 30 and 33 of the Arbitration Act. There is no merit in this submission of the said respondent. Under section 30 of the Arbitration Act if the Court upholds the objections, the Court has the power to set aside the award. This power of setting aside the award can be exercised by the Court even suo moto. There is no mandatory provision of limitation for raising objections is clear from the fact that the Court can exercise the powers suo moto. Where the ground of invalidity is patent illegality and where it goes to the root of the matter, the Court has full power to set aside the award if it is satisfied about the patent illegality. The appellant was allowed to raise this objection in view of this position of law,
5. Section 19 (2) (a) of the Partnership Act reads :-
"19.-Implied authority of partner as agent of the firm : (1) Subject to the provisions of Section 22, the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm. The authority of a partner to bind the firms conferred by this section is called his "implied authority". (2) in the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to :- (a) submit a dispute relating to the business of the firm to arbitration".
6. Counsel for the appellant submits that implied authority of a partner to bind down the firm by his acts relates only to the acts of a partner which are done to carry on, in the usual way, business of the kind carried on by the firm. The submission is that subscribing of a chit in a Chit Fund is not the usual business carried on by the firm. The appellant firm deals in automobile spare parts. Borrowings or drawing of bundles and bills have in certain cases to be an activity necessary for the running of the business and falling within the purview of the "implied Authority", of a partner. It is true that subscribing to a chit is not the usual or the normal way of raising resources for a partnership firm. But, in a general sense it can be included in the concept of borrowings, provided it is otherwise valid and legal. Section 2 (a) lays down that the Implied Authority of a partner does not empower him to submit a dispute relating to the business of the firm to arbitration, unless there is usage or custom of the trade to the contrary. The learned District Judge has observed, "since the agreement Ex. CW/1/1 is signed by R. K. Sethi on behalf of the respondents, he would have been the best person to depose whether he had signed the blank document or when the documents were duly filled. It is important to know that at the time of admission/denial of documents, R. K. Sethi appeard and denied the documents. However, he did not appear in the witness box to deny his signatures on oath, instead Ram Lubhaya another partner was examined as CW/1, who signatures admittedly do not appear on the agreement CW/1/1. Ram Lubhaya, CW/1 simply says that the agreement is not signed by him. " The learned judge has further noted that he has completely denied the execution of any agreement and had pleaded in the cross-examination ignorance as to the subscribing of any Chit. The learned Judge has, therefore, held that it appears that Ram Lubhaya, CW/1 has absolutely no knowledge of the transaction. It is thus clear that neither Ram Lubhaya nor Sheila Devi had singed the agreement for referring the matter to arbitration. Assuming that R. K. Sethi and signed it, he had no Implied or Express Authority to do so on behalf of the other partners or the partnership form, Similar is the case of appellant No. 2 M/s. Kalra Glue Traders, the guarantors.
7. This Court in AIR 1973 Delhi, 37 (38, 39)1 held that through in the absence of specific agreement usage or custom or trade, a partner has no authority to refer a dispute to arbitration. Nevertheless, the award in such an arbitration will be binding on the referring partner though not on the other partners and on the guarantor. The position that emerges is that R. K. Sethi had borrowed the amount and Darshan Kumar stood the guarantor for him. Neither of the two partnership forms of the two appellants nor other partners can be saddled with any liability. Apparently, the respondent Chit Fund Company does not want to recover the decretal amount from M/s. Talwar Greeze Manufacturing Company against whom the decree had become final, for reasons best known to them. In the normal course the creditor would have recovered the decretal amount from the guarantor against whom the decree has become final leaving it to him to pursue his legal remedies against the principal debtor and other guarantor.
8. For the reasons stated above, the appeal is allowed, The impugned order and the award in relation to Shakti Automobiles, M/s. Kalra Glue Traders and the partners other than those who have signed the agreement are set aside. The respondent No. 1 M/s. Lord Chit and Trading (Pvt.) Ltd. shall pay the costs of the appellants in this Court.