Safiya Malik

The High Court of Kerala Single Bench of Justice S. Manu has held that one partner of a partnership firm cannot, without express authorisation from the other partners, invoke an arbitration clause or seek appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, in relation to disputes of the firm. In an arbitration request filed by one partner of a petroleum dealership firm against a public sector oil corporation, alleging breach of a dealership agreement and claiming damages after the outlet was given to another dealer, the Court found that the applicant lacked explicit authority from the other partner. Holding the request hit by Section 19(2)(a) of the Partnership Act, the Court dismissed it as not maintainable.

The arbitration request was filed by M/s. P.K. Chandrasekharan Nair & Co., represented by one partner, K.C. Anilkumar, against Hindustan Petroleum Corporation Ltd. The firm had been a dealer of the respondent since 1970, operating a petroleum retail outlet on land owned by a third party. An agreement between the firm and HPCL was renewed periodically, with the latest renewal on 01.07.2019.

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In 2013, the landowner filed a civil suit for recovery of possession. The suit was dismissed, and the dispute was referred to arbitration based on the lease deed between HPCL and the landowner. Subsequently, the landowner refused to renew the lease, resulting in the outlet’s closure on 21.02.2021. The landowner again initiated proceedings in 2022, which were dismissed for default.

Amidst these developments, HPCL issued a letter on 29.06.2022 instructing the firm to find an alternate site due to pending litigations, followed by replies and subsequent installation of another dealer. The petitioner claimed breach of the 2019 dealership agreement, which was stated to be valid until 30.06.2029. A demand notice seeking Rs. 2,51,60,000 was issued, followed by an arbitration notice dated 19.02.2025, nominating an arbitrator.

HPCL opposed the arbitration request, submitting that the partnership consisted of two partners—K.C. Anilkumar (51%) and Ganga Sreekumar (49%)—and no express authority had been given by the latter to initiate arbitration. The respondent invoked Section 19(2)(a) of the Partnership Act, 1932, asserting that one partner cannot submit disputes to arbitration without express authorization from the co-partner.

The petitioner relied on Section 11 of the Arbitration Act and the partnership deed, particularly clause 8, to argue maintainability. The respondent cited precedents including Kripa Fuels and decisions of the Bombay High Court to support its objections. The Court heard both sides on the preliminary issue of maintainability.

The Court recorded that the petitioner argued that under Section 11, the Court’s role is limited to verifying the existence of an arbitration agreement and that “it is not within the domain of this Court to look into any other aspects.”

The Court noted the petitioner’s reliance on Ajay Madhusudan Patel and Shreegopal Barasia. It also recorded reliance on clause 8 of the partnership deed, which states that a partner “shall represent the firm before the government, semi-government, statutory, judicial authorities or others on behalf of the firm and all such acts shall be binding on the firm.”

The Court stated that the proposition that maintainability cannot be examined “cannot be accepted,” observing that accepting such a view “would lead to absurd results.” It recorded that the Court, while exercising power under Section 11, must conduct “primary scrutiny” regarding competency and statutory bars.

On Section 19(2)(a) of the Partnership Act, the Court quoted: “the implied authority of a partner does not empower him to submit a dispute relating to the business of the firm to arbitration.”

The Court recorded that clause 8 of the partnership deed is “obviously general in nature” and that “express conferment of authority would be necessary.” It held the petitioner’s contention “untenable.”

The Court discussed the Bombay High Court decisions and stated that Shreegopal Barasia was distinguishable because it dealt with the validity of an agreement itself, whereas the present case involves the competency of a partner to invoke Section 11 without express authority.

On the meaning of “submit a dispute,” the Court observed that in legal parlance it means “to place/present something formally for consideration before an authority.” It further stated:
“filing an application under Section 11(6) …would also fall within the ambit of Section 19(2)(a) … Consequently, express authority is essential.”

The Court recorded that even though the arbitration notice was issued on behalf of both partners, “requirement of express authority cannot be ignored,” and that the present request was made by only one partner.  It concluded that the request was “submitted by one of the partners without the explicit authority of the other partner.”

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The Court ordered: “this arbitration request is not maintainable as it is submitted by one of the partners without the explicit authority of the other partner. It is, therefore, dismissed as not maintainable.”

Advocates Representing The Parties

For the Petitioner: Shri. Reji George, Shri. Saisankar S., Shri. Joseph Raju Mathews

For the Respondent: Shri. M. Gopikrishnan Nambiar, Shri. K. John Mathai, Sri. Joson Manavalan, Sri. Kuryan Thomas, Shri. Paulose C. Abraham, Shri. Raja Kannan, Smt. Nayanpally Ramola, Smt. Pooja Menon, Sri. E.K. Nandakumar (Sr.)

Case Title: M/s. P.K. Chandrasekharan Nair & Co. v Hindustan Petroleum Corporation Limited
Neutral Citation: 2025: KER:90639
Case Number: AR No. 96 of 2025
Bench: Justice S. Manu