Appeal No 1677 of 1984
From the Judgment and Order dated 771983 of the Rajasthan High Court in SB Civil Misc
Appeal No 6 of 1983
SK Jain Mrs Pratibha Jain and Sudhanshu Atreya for the Appellant
CK Sucharita Y Prabhakara Rao NP and Ganpathi Iyer Gopalkrishnan for the Respondents
544 The following Order of the Court was delivered This appeal by special leave under article 136 of the Constitution is against the order of the High Court of Rajasthan dated July 7 1983
The appellant a partnership firm consists of nine partners of which Satya Narain is one of the partners
On July 25 1973 Satya Narain submitted a tender to the respondents offering to supply 1000 quintals of Gram Dal at the rate of Rs 185 per bag
This was accepted by the respondents by letter dated August 28 1973 followed by confirmation letter by the firm on August 31 1973
It is the case of the respondents that the appellant committed breach of the contract and as a result the re spondents filed an application under sec
20 of the Arbitra tion Act 1940 for short as the Act  before the District Court for making reference for arbitration in terms of the contract
The Addi
District Judge after considering the evidence and the objections allowed the application and referred the dispute for arbitration
Against that order the appeal was filed and the High Court confirmed the order of the Addi
District Judge
The contention raised by Sri Sushil Kumar Jain learned counsel for the appellant is that by operation of Sec
192a of the for short as the Partnership Act  there is no implied authority given to one of the partners to refer the dispute relating to the business of the firm for arbitration and therefore the reference made by the court pursuant to a contract entered into by Satya Narain on behalf of the firm is without jurisdiction
The High Court found as a fact that none of the partners have entered into the witness box to deny the validity of the contract nor raised any objection that they had not authorised Satya Narain to enter into the contract nor that they were bound by any acts done by him
It is also found that Satya Narain signed the tender and at that time no other partners raised objection regarding the signing of the tender by Satya Narain on behalf of the firm
In view of these facts it is clear that they ratified the contract
It is also further to be noted that
in terms of the contract the corporation had appropriated the security deposit made by the appellant firm and that was not objected to at any time
This itself would fortify
the conclusion that the firm had entered into a binding contract with the corpora tion and contract contained the arbitration clause which binds the partners
The contention raised that the contract is void and that in terms of the contract making a refer ence is without jurisdiction bears no substance
The High Court found that Satya Narain has implied power to con duct business on behalf of the partnership firm and the implied authority 545 binds all the partners
18 of the Partnership Act postulates that subject to the provisions of the Act a partner is the agent of the firm for the purposes of the business of the firm
191 adumbrates that subject to the provisions of Sec
22 the act of the partners which is done to carry on in the usual way the business of the kind carried on by the firm binds the firm
Thus Satya Narain has implied authority to enter into the contract with the corporation to supply the Dal of 1000 quintals at the contracted rate which is the usual course of the business of the appellant
But it is settled law that the operation of Sees
18  191 is subject to the exceptions engrafted in sub sec
2 of Sec provides that in the absence of any usage or custom of trade to the contrary the implied authority of a partner does not empower him to submit a dispute relating to the business of the firm to arbitration
Satya Narain has power to do business on behalf of the firm and in exercise thereof he entered into the contract with the corporation during the usual control of business to supply the Dal
Then crucial question is whether a valid contract which was not repudiated as per law binds the other partners Our answer is yes
It is not in dispute that the contract engrafts an arbitration clause and in terms thereof the dispute is to be referred to the arbitra tion
Therefore the reference made by the Addi
District Judge under Sec
20 of the is perfectly within the jurisdiction and in terms of the contract
It is not the case of the partners that the firm is not carrying on the business of the supply of Dal and that Satya Narain as found by the Trial Court was authorised to do business on behalf of the firm
Under those circumstances the reference is clearly valid
We do not find any illegality to interfere with the order of the High Court
In this view the decisions in Gopal Das vs Bail Nath  Ors AIR 1926 Allahabad 238 Finn Radhakishan Chunnilal vs Finn Ashamal lshardas AIR 1926 Lahore 91 Rajendra Prasad vs Pannalal Champalal  Ors
AIR 1932 Calcutta 343 Mansab dar Khan vs
MT Allah Devi  Ors AIR 1934 Lahore 48S Sohanlal vs Finn Madhoram Banwarilal AIR 19S2 Punjab 240 and Ms Alazappa Cotton Mills vs Indo Bunna Trading Corpora tion  cited by learned counsel are of little assistance to the appellant
In Ms Alazappa Cotton Mills case the original contract does not contain arbitra tion clause
In a separate letter with a rubber stamp facsimile of the firm one of the partners agreed for reference to arbitration
On those facts it was held that the reference does not bind the other partners
The appeal is accordingly dismissed
Since we do not call upon the respondents to argue there will be no order as to costs
VPR Appeal dismissed


Summary:
The appellant landlord filed an application under Section 141b of the Delhi Rent Control Act 1958 for ejectment of the respondents and the three courts concurrently found that the respondent was the sole tenant
Relying on an affidavit filed by tenant s brother before Income Tax au thorities in which he claimed exclusive possession as ten ant the Rent Controller and the Tribunal concluded that the admission made by the tenant s brother was binding on the tenant as a result of which sub letting by tenant was proved and consequently allowed the landlord s eviction petition
But the High Court dismissed the eviction petition by holding that since the admission made by tenant s brother was not binding on the tenant the finding of sub letting by tenant was vitiated in law because it was based on inadmis sible evidence
In appeal to this court it was contended on behalf of the landlord that i the admission made by tenant s brother was binding on the tenant under section 18 of the Evidence Act ii the High Court erred in interfering with the concurrent finding of fact
Dismissing the appeal this Court 538 539 HELD 1
Section 18 of the Evidence Act postulates that statements made by a party to the proceeding or by an agent to any such party whom the Court regards under the circum stances of the case as expressly or impliedly authorised by him to make them are admissions
Equally statement made by a person who has any proprietary or pecuniary interest in the subject matter of the proceedings or persons having derivative interest make statements during the continuance of the interest also are admissions
540 H 541 A B 2
In the instant case admittedly the respondent tenant was not a party to the affidavit signed by his broth er
Therefore the admission made by his brother that he is the tenant in exclusive possession of the demised premises does not bind the respondent tenant
Once it is found that respondent alone is the tenant his brother cannot claim to have any pecuniary or derivative interest in the demised premises
He is not an agent of his tenant brother
Since the admission made by tenant s brother was inadmissible and not binding on the tenant the High Court rightly held that the finding of sob letting or parting with possession of the premises in dispute was vitiated in law as it was primarily based on inadmissible evidence
Consequently it was open to the High Court to re examine and reappreciate the evidence on record
541 B E