- 1 - IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.8807 OF 2007 ... M/s.Unity Hotels ...Petitioner v/s. Managing Director, WNS Global Services Pvt.Ltd. & ors. ...Respondents ... Mr.M.S.Bhandari i/b MNs.P.M.Bhandari for the Petitioner. Mr.Vivek Kantawala i/b M.M.Legal Associates for Respondent No.1. ... CORAM: D.K.DESHMUKH, J. DATED: 29TH FEBRUARY, 2008 P.C.: 1. By this petition the petitioner challenges the - 2 - order passed by the Joint Civil Judge, Senior Division, Nashik referring the parties to arbitration. The order has been passed under Section 8 of the Arbitration & Conciliation Act, 1996. 2. The suit was filed by the partnership firm, which is the Petitioner here, by name M/s.Unity Hotels claiming following prayers: 10. The Plaintiff therefore prays for a decree for A) Declaration that the suit agreements are null and void and not binding on the firm and the Plaintiff. B) Possession of the suit premises from the Defendant No.1. C) Perpetual injunction restraining the defendant No.2 from entering into any sort of transaction alienation etc. in respect of the suit partnership property known as Unity Commercial Complex, with any person, Organization, Company, Firm etc. without the - 3 - consent of all the partners, in any manner whatsoever. By prayer clause (A), a declaration was sought that the suit agreements are not binding on the plaintiff-firm. Perusal of the plaint shows that the suit agreements are agreements entered into between the Defendant No.1 and the Plaintiff-firm. On behalf of the plaintiff-firm the agreements have been signed by Defendant No.2, who admittedly is the partner of the Plaintiff-firm. Therefore, in short, the case of the Plaintiff in the suit is that because the Defendant No.2 does not have the authority to bind the firm, he could not have entered into the agreements with the Defendant No.1. In that suit, an application was filed on behalf of the Defendants that there is an arbitration clause contained in the partnership deed. There is also an arbitration clause contained in the suit agreements and therefore, the matter should be referred to arbitration. The trial court has accepted that case and referred the parties to arbitration. 3. The learned Counsel appearing for the Petitioner submits that so far as arbitration clause in the - 4 - partnership deed is concerned, it will cover disputes between the partners of the Plaintiff-firm, to those disputes the Defendant No.1 cannot be a party, and therefore, as the disputes between the parties are in relation to the agreements entered into by the Defendant No.2 with the Defendant No.1, the disputes cannot be referred to arbitration. So far as arbitration clause contained in the suit agreement is concerned, the learned Counsel submits that the implied authority of the Defendant No.2 to bind the firm does not extent to permit him to enter into the arbitration agreement. In support of this proposition, he relied on judgment of the Delhi High Court in the case of M/s.National Small Industries Corporation Ltd. New Delhi v/s. M/s.Punjab T.P. & M. Industries Ajraunda and ors., AIR 1979 Delhi 58. 4. Now, it is an admitted position that there is an arbitration clause contained in the partnership deed. There is also admittedly arbitration clause contained in the suit agreements. The trial court has relied on both the agreements to refer the parties to arbitration. The principal question that will arise in the arbitration is, "Did the Defendant No.2 have an authority to enter into the agreement with the - 5 - Defendant No.1 on behalf of the firm?". If the answer to the question is "Yes", then even the arbitration agreement contained in the suit agreements would be binding on all the partners of the plaintiff/firm. The suit agreements, on the face of it, are entered into between the Plaintiff-firm and the Defendant No.1. Therefore, prima facie, all the partners of the firm would be parties to the arbitration agreements. Therefore, when the matter is referred to arbitration, it is open to the other partners of the firm to claim that because the Defendant No.2 did not have authority to bind them, they are not parties to arbitration agreement contained in the arbitration clause in the suit agreements. On the other hand, if the arbitrators find that the Defendant No.2 had the authority to enter into the agreements with Defendant No.1 on behalf of the firm, even the arbitration clause contained in the suit agreements would be binding on other partners of the firm. The suit is filed in the name of the firm. When the suit is filed on behalf of the firm, it is supposed to have been filed on behalf of all the partners of the firm. Therefore, in that suit Defendant No.2 who is admittedly a partner of the firm could not have been joined as a - 6 - Defendant. But this is the confusion which the Plaintiff ultimately will have to resolve. In my opinion, considering that there is admittedly arbitration clause in the partnership deed and also in the suit agreements, no fault can be found with the order passed by the trial court. Petition is devoid of any substance. It is rejected. ...