In the High Court at Calcutta

Commercial Appellate division

Original Side

The Hon’ble Justice Sabyasachi Bhattacharyya

And

The Hon’ble Justice Uday Kumar

A.P.O.T. No.338 of 2024

Arising out of

GA (COM) 4 of 2024

In CS (COM) 544 of 2024

(Old No. CS 194 of 2023)

with

GA (COM) 1 of 2024, GA (COM) 2 of 2024

M/s Exchange and Others

Vs.

Pradip Kumar Ganeriwala and Another

For the appellants : Mr. Surajit Nath Mitra, Sr. Adv.,

Mr. Bratin Kumar Dey, Adv.,

Mrs. Anjana Banerjee, Adv.

For the respondent no.1 : Mr. Rajeev Kumar Jain, Adv.,

Mr. Saunak Sengupta, Adv.,

Mr. Kunal Shaw, Adv.,

Ms. Yamini Mahawar, Adv.

For the respondent no.2 : Mr. Sanjib Kr. Mal, Adv.,

Mr. Bimalendu Das, Adv.,

Ms. Shomrita Das, Adv.

Heard on : 12.02.2025, 19.02.2025

Hearing concluded on : 05.03.2025

Judgment on : 19.03.2025

2

Sabyasachi Bhattacharyya, J.:-

1. The present appeal under Section 37 of the Arbitration and Conciliation

Act, 1996 (hereinafter referred to as “the 1996 Act”) arises out of an

order passed in CS (COM) 544 of 2024 dismissing the application filed

by the defendant nos.1 to 4 (present appellant nos.1 to 4) under

Section 8 of the 1996 Act, bearing GA (COM) 4 of 2024, for referring the

matter to arbitration.

2. The appellants rely on Clause 12 of a deed of partnership dated August

23, 1994 entered into between defendant/appellant no.2 and

plaintiff/respondent no.1, thereby forming M/s Exchange, the

defendant/appellant no.1-partnership firm. Clause 12 is an arbitration

clause, providing that in case of any dispute arising between the

partners or their representatives, the same shall be referred for decision

of the Chief Divisional Manager of Bharat Petroleum Corporation

Limited (BPCL), the defendant no.5/respondent no.2, under whose

jurisdiction the subject retail outlet is situated, for arbitration either by

him or his nominee and that the decision of the said Arbitrator shall be

conclusive and binding on all the partners. The partnership firm was

formed for the purpose of running a petrol pump business from a retail

outlet under licence from the BPCL.

3. The dispute in the suit, as per the appellants, arises out of the said

partnership deed of 1994 and hence, being covered by the arbitration

clause therein, the matter ought to be referred to arbitration.

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4. The learned Single Judge dismissed the application under Section 8 of

the 1996 Act primarily on the premise that defendant nos.3 to 5 in the

suit, against whom claims have been made in the plaint, were not

parties to the arbitration agreement and as such, there cannot be any

reference under Section 8.

5. Learned senior counsel for the appellants argues that BPCL is not a

necessary party to the suit, since it has already deleted the name of the

plaintiff/respondent no.1 from its records as a partner of the appellant

no.1-firm, which is the main relief sought against BPCL. As to the

deletion of the name of respondent no.1 from the records of other

departments, statutory authorities, bodies and/or institutions, it is

submitted that those authorities have not been impleaded in the suit

and the BPCL is not empowered to effect such deletion, even if required.

6. It is submitted that defendant nos. 3 and 4, also appellants herein, the

subsequently added partners after re-constitution of the partnership

firm on the retirement of respondent no.1, have given their express

consent to be subject to arbitration and, thus, the matter ought to have

been referred to arbitration. The deed by which the partnership was

reconstituted also contains an arbitration clause.

7. It is submitted that the name of the respondent no.1 as partner has

already been removed from all departments, statutory authorities,

bodies and, or institutions, although there was a slight delay in issuing

new selling license by the Department of Food and Supplies,

Government of West Bengal . In any event, the said Government

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department having not been impleaded as a party to the suit, such

delay cannot have a material bearing on the present lis.

8. The cause of actio n in the suit is primarily against the

defendant/appellant no.1-firm and its partners, and defendant

no.5/respondent no.2, the BPCL, was impleaded in the suit merely to

avoid the applicability of Section 8 of the 1996 Act.

9. It is further submitted by the appellants that the respondent no.2-

BPCL had already taken steps and deleted the name of the plaintiff

from its records much prior to the institution of the present suit, as

borne out by the trail-mail annexed to the application under Section 8

of the 1996 Act.

10. It is argued that BPCL was never a necessary party and in a previous

order passed in the present appeal, a co-ordinate Bench had granted

liberty to file an application for deletion of respondent no.2 as a party.

11. It is argued that since the claims in the suit arise in respect of disputes

regarding the respective liabilities of the partners of the partnership

firm as it stood prior to re-constitution and induction of defendant

nos.3 and 4, there cannot be any claim against the said defendants.

The plaint claims are on the basis of the position as it was on the date

of the retirement of the plaintiff/respondent no.1 and flows from the

partnership deed of 1994. Thus, the arbitration clause of the original

partnership deed of 1994 is the relevant clause which is to be looked

into.

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12. The appellants have, by way of a supplementary affidavit, also filed a

deed of dissolution dated April 1, 2022 of the erstwhile firm which was

not disclosed by the plaintiff.

13. The plaint prayer of a decree for a sum of Rs.7,97,187.76p is against

the defendants/appellant no.1-firm towards the plaintiff’s capital

balance, which is also argued by the appellants to be a dispute arising

out of the original partnership deed dated August 23, 1994.

14. Learned senior counsel appearing for the appellants places reliance on

Lindsay International Private Limited and others v. Laxmi Niwas Mittal

and others, reported at 2022 SCC OnLine Cal 170 , a judgment of a

learned Single Judge of this Court, where it was observed that the

principle laid down by the Supreme court in Sukanya Holdings (P) Ltd.

v. Jayesh H. Pandya and another, reported at (2003) 5 SCC 531, was

rendered prior to the 2015 amendment to the 1996 Act and the position

has been reversed by N.N. Global Mercantile Private Limited v. Indo

Unique Flame Limited and others, reported at (2021) 4 SCC 379, where

it was clarified that if there is a valid arbitration agreement, the matter

is to be referred to arbitration irrespective of any court order.

15. Learned senior counsel also relies on Ajay Madhusudan Patel and

others v. Jyotrindra S. Patel and others, reported at 2024 SCC OnLine

SC 2597, in support of the proposition that even non-signatories to the

arbitration agreement can be bound by the arbitration agreement if

they consent to do so and if there is a defined legal relationship

between the signatory and non-signatory parties. The conduct of the

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non-signatory parties could be an indicator of their consent, which in

the present case has been given by the defendant/appellant nos.3 and

4, the incoming partners of the re-constituted firm.

16. Learned counsel for the plaintiff/respondent no. 1 controverts such

submissions and argues that the judgment of the learned Single Judge

in Lindsay International Private Limited (supra) ought to be treated as

per incuriam since Sukanya Holdings (P) Ltd. (supra) is still good law

insofar as there cannot be any bifurcation of the suit into two parts,

one to be decided by the Arbitral Tribunal and the other by the Civil

Court, which would inevitably delay the proceedings and defeat the

whole purpose of speedy disposal of dispute and decreasing the cost of

litigation, which would be frustrated by such procedure.

17. Learned counsel for respondent no. 1 cites a three-Judge Bench

decision of the Supreme Court in Thomas Cook (India) Ltd. v. Beach Ark

Hotels Pvt. Ltd. and Another, reported at 2025 SCC OnLine SC 140 ,

wherein the proposition laid down in Sukanya Holdings (P) Ltd. (supra)

was relied on and applied.

18. It is argued that there is no illegality or perversity in the impugned

judgment dated August 9, 2024. It is next argued by the respondent

no.1 that Order I Rule 10(2) of the Code of Civil Procedure applies only

at the juncture of the filing of the suit and subsequent action taken by

the BPCL/respondent no.5 cannot be an occasion for the court to

suo motu delete the name of the said defendant. Since reliefs have been

claimed against the defendant no.5 as well as defendant nos.3 and 4 in

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the suit, none of whom were parties to the arbitral proceedings, there is

no scope of reference to arbitration.

19. Learned counsel for the respondent no.1 further contends that unless a

“party”, as defined in the 1996 Act, is a party to the arbitration

agreement, there cannot be a reference under Section 8 of the 1996

Act. It is argued that there continues to be a cause of action against

defendant no.5/respondent no.2 and in any event, the said question

has to be decided on a full-fledged trial and not at this premature stage.

20. Learned counsel next contends that the judgme nt in N.N. Global

Mercantile Private Limited (supra) relied on in Lindsay International

Private Limited (supra), has been reversed in a subsequent Constitution

Bench decision of a seven-Judge Bench of the Supreme Court in the

matter of Interplay Between Arbitration Agreement Under Arbitration and

Conciliation Act, 1996 and Stamp Act, 1899, reported at (2024) 6 SCC 1.

21. In Ajay Madhusudan Patel’s case the Supreme was considering a case

where the doctrine of group of companies was being considered, as

opposed to the present case.

22. Lastly, it is contended that the appellants are seeking to avoid the

consequences of failure to file their written statement in the suit in time

and having forfeited their defence within the contemplation of the

Commercial Courts Act, 2015, by having a reference to arbitration.

23. Learned counsel for the BPCL contends that the name of the BPCL be

expunged, since even before the filing of the suit, the BPCL had deleted

the name of the plaintiff/respondent no.1 from its records and there is

8

no subsisting cause of action against the said party. Learned counsel

also highlights the liberty given for seeking deletion of its name in the

Order dated November 20, 2024, passed in the present appeal by a co-

ordinate Bench.

24. It is submitted that the defendant no.5-BPCL also entered into an

agreement independently with the partnership firm which carries an

arbitration clause as well.

25. Heard learned counsel for the parties.

26. The issues involved in the case have various facets which are discussed

below.

Scope of Section 8 of the 1996 Act

27. In order to fully appreciate the nuances of the present case, the scope

of Section 8 of the 1996 Act is required to be understood. The only

comparable provision in the 1996 Act is Section 11 of the said Act,

where a reference to arbitration is also contemplated. However, there is

a difference in scope between the two Sections which, though subtle,

cannot be overlooked.

28. In a Section 11 scenario, the scope of enquiry of the High Court is

limited to whether there is a valid arbitration agreement and the

dispute is covered by the same. Of course, in ex facie deadwood claims,

the court might stay its hands in referring the matter since it would be

a futile exercise.

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29. On the other hand, in a Section 8 consideration, the court is not merely

an instrumentality under the 1996 Act, akin to the role of the High

Court under Section 11. There is already a pending civil suit in an

otherwise competent Civil Court which is already in seisin of the suit

when the application under Section 8 is filed. The court, while dealing

with an application under Section 8, apart from considering the validity

of the agreement, also has to read the plaint and the pleadings of the

parties, including the written statement, if filed, and/or the application

under Section 8 itself, in a holistic and meaningful manner to arrive at

the conclusion whether the reliefs claimed in the suit come within the

ambit of the arbitration agreement/clause. It is also to be kept in mind

that Section 8 does not create an absolute legal bar to the court in

taking up and deciding the suit, in the sense that the right to have a

reference under Section 8 can be waived by the defendant simply by not

filing a proper application under Section 8. In such a case, the suit

would proceed, despite the existence of the arbitration clause, in its

normal course.

30. Thus, while exercising its jurisdiction under Section 8 of the 1996 Act,

the Civil Court acts in a dual capacity, as a Civil Court taking up the

suit as well as an authority under the 1996 Act, although if there is a

valid arbitration agreement and the dispute involved in the suit and the

reliefs claimed therein come within the ambit of the arbitration clause,

there is no option of the court to refuse reference to arbitration, if the

10

defendant chooses to file an application under Section 8 in proper

format.

Whether the reliefs claimed against defendant nos.3 and 4 come

within the ambit of Section 8 of the 1996 Act

31. Section 7 of the 1996 Act is wide in its scope. Whereas the term “party”

has been defined in Section 2 (1) (h) of the said Act to be a party to an

arbitration agreement, Section 7(1) provides that “arbitration

agreement” means an agreement by the parties to submit to arbitration

all or certain disputes which have arisen or which may arise between

them in respect of a defined legal relationship whether contractual or

not.

32. Again, Section 8 provides that a reference to arbitration shall be made if

a party to the arbitration agreement or any party claiming through or

under him applies under the said provision.

33. The key word in Section 7(1) is “defined legal relationship” which

broadens the definition of “arbitration agreement” itself beyond the

contract entered into between the parties. The dispute between the

parties need not be confined to disputes arising of the contract alone

but may also arise out of a defined jural relationship between them.

34. In the present case, although the dispute springs up from the partition

deed dated August 23, 1994, it also pertains to the jural relationship

between the plaintiff/respondent no.1 and the defendants/appellant

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nos. 2, 3 and 4, all of whom are partners of the defendant/appellant

no.1-partnership firm.

35. Hence, read in the context of Section 7(1), the dispute involved in the

suit relates to a dispute between the plaintiff on the strength of his

previous status as a partner of the defendant no.1-firm and the relief

sought is against the partnership firm as well as its present partners

after the re-constitution, out of whom defendant nos.3 and 4 were

subsequently inducted and defendant no.2 has continued as a partner

from the pre-reconstitution period. Thus, the expression “a party to the

arbitration agreement or any person claiming through or under him” as

used in Section 8, read in conjunction with Section 7 of the 1996 Act,

takes within its ambit defendant nos.1 to 4, all of whom are either the

partnership firm or parties coming within the defined legal relationship

of partners within the contemplation of the arbitration clause in 1994

the deed.

36. Again, Section 7(4) provides that an arbitration agreement has to be in

writing, which can be in a rainbow of situations. The expression “a

document signed by the parties”, in Clause (a) of sub-section (4) of

Section 7 can also include the application under Section 8 itself as well

as the memorandum of the present appeal and the connected stay

application where, by impleading themselves as parties and seeking a

reference to arbitration on the strength of the arbitration clause

contained in the 1994 document, as well as challenging as co-

12

appellants the refusal to so refer, the defendant nos.3 and 4 have also

subjected themselves to such proposed arbitration.

37. Clause (c) of sub-section (4) of Section 7 includes an exchange of

statement of claim and defence in which the existence of the agreement

is alleged by one party and not denied by the other, which can also

include the plaint, read with the application under Section 8 and/or

the proposed written statement (which was not permitted to be filed by

the defendants but which refusal has been assailed in an appeal which

is now pending).

38. Hence, the defendant nos.3 and 4 have unequivocally consented to

being subject to the arbitration sought in the Section 8 application.

39. Even after the reconstitution of the partnership firm, the defined legal

relationship of partnership continues inter se the defendant nos. 2, 3

and 4 and the claims made in the suit by the plaintiff, who himself was

an erstwhile partner, are based on disputes arising out of such legal

relationship among the parties.

40. The ratio laid down in Ajay Madhusudan Patel (supra), relying on Cox &

Kings Limited v. SAP India Private Limited and another, reported at

(2024) 4 SCC 1, has to be read in the above backdrop. In the said

judgment, the Supreme Court, in unequivocal terms, observed that the

courts and tribunals should not adopt a conservative approach to

exclude all person or entities who intended to be bound by the

underlying contract containing the arbitration clause through their

conduct and relationship with the signatory parties. The mutual intent

13

of the parties, relationship of the non-signatory to a signatory, the

commonality of the subject -matter, composite nature of the

transactions and performance of the contract, it was held, are all

factors that signify the intention of the non-signatory to be bound by

the arbitration agreement.

41. It was further highlighted in the said judgment that the important

determination for courts in case of non-signatory parties is whether

such persons or entities intended or consented to be bound by the

arbitration agreement or the underlying contract and it was held that

the requirement of a written arbitration agreement does not exclude

possibilities of binding non-signatory parties if there is a defined legal

relationship between the signatory and non-signatory parties.

42. The Supreme Court further highlighted, by relying on Cox & Kings

Limited (supra) that by being actively involved in the performance of a

contract, a non-signatory may create an appearance that it is a

veritable party to the contract containing the arbitration agreement,

and secondly, the conduct of the non-signatory may be in harmony

with the conduct of the other members of the group, leading to the

other party to legitimately believe that the non-signatory was a veritable

party to the contract.

43. We may further add to such ratio that in a Section 8 scenario, the

nature of the reliefs claimed in the plaint are to be looked into and

where the relief sought in the suit against non-signatories to the

arbitration agreement is in harmony with the reliefs sought against the

14

signatories, particularly when the legal relationship between the

signatories and the non-signatories are on the same platform vis-à-vis

the cause of action of the suit and the reliefs claimed, the non-

signatories may very well be brought within the purview of the

arbitration agreement. Thus, there cannot be any manner of doubt

that the defendants/appellant nos.3 and 4, although incoming partners

after the re-constitution of the firm, come within the ambit of the

arbitration agreement.

44. The principal relief claimed in the suit, relief (a), is a decree for

declaration that the plaintiff/respondent no. 1 is not a partner of the

defendant/appellant no.1-firm on and from April 1, 2022. April 1,

2022 is chosen as the cut-off date, since the partnership firm created

by the partnership deed dated August 23, 1994 was allegedly dissolved

on that date and subsequently re-constituted. The claim of the plaintiff

in the suit is entirely based on his capacity as a partner during the

period prior to his retirement, thus, solely on the strength of the

partnership deed dated August 23, 1994 and the jural relationship

flowing therefrom.

45. The other ancillary relief sought against the firm and defendant nos.3

and 4 are in the context of the defendant nos.3 and 4 having inherited

the liabilities of the defendant no.1-firm, which is not an independent

liability of the defendant nos.3 and 4 but a carry -over from the

liabilities of defendant no.1-firm and defendant no.2 under the original

partnership deed dated August 23, 1994.

15

46. The two major components of the cause of action of the suit, as per the

plaint, are that the entire reliefs sought are on the basis of the plaintiff

having been a partner of the defendant no. l-firm at the relevant period

on the basis of and during subsistence of the partnership deed dated

August 23, 1994 and the liabilities of the partnership firm arising out of

the said agreement, all of which happened prior to the retirement of the

plaintiff from the said firm.

47. Thus, the pseudo-liabilities of the defendant nos.3 and 4, insofar as the

frame of the suit and its cause of action are concerned, are not new

liabilities springing from any independent contract but are all based on

the rights of the plaintiff as claimed on the strength of the partnership

deed dated August 23, 1994 and during its subsistence and the

liabilities flowing from such deed. The defendant nos. 3 and 4 have

been embroiled in the suit only in the capacity of partners of the firm,

because they have inherited the legacy of alleged liabilities of the

defendant no. 1-firm and the defendant no.2, its continuing partner,

left over from the pre-dissolution era of the partnership firm, which

liabilities and the proclaimed rights of the plaintiff all flow from the

deed of 1994, containing the arbitration clause. Hence, the reliefs

claimed even against the defendant nos.3 and 4 are relatable to the

deed of 1994 and not independent claims arising after the dissolution

of the erstwhile firm or the retirement of the plaintiff therefrom.

48. Hence, defendant nos.3 and 4 squarely come within the ambit of the

dispute covered by the arbitration clause of the 1994 partnership deed.

16

49. In addition, since the re-constitution deed also contains an arbitration

clause, the parties thereto (including the newly inducted defendant nos.

3 and 4) have agreed to submit to arbitration in case of disputes arising

in respect of the defined legal relationship of partners of the defendant

no. 1-firm, without any distinction being drawn in regard to liabilities of

the firm either in its previous form or its reconstituted avatar.

50. Hence, this issue is held in favour of the defendants/appellants. The

defendant nos.3 and 4 are very mu ch amenable to reference to

arbitration under Section 8 of the 1996 Act as well.

Whether the reliefs claimed against defendant no.5/respondent

no.2 come within the ambit of Section 8 of the 1996 Act

51. The respondent no.2-BPCL, impleaded as defendant no.5 in the suit,

has sought the expunging of its name from the array of parties on the

ground that it had deleted the name of the plaintiff/respondent no.1

from its records even prior to the institution of the suit, as evinced by a

trail-mail which is prior to the suit and annexed to the supplementary

affidavit filed by the appellants herein.

52. The matter can be approached from two different perspectives, which

are discussed below:

First perspective:

53. Vide Order dated September 18, 2023 passed in the suit from which

the present appeal arises, the learned Single Judge recorded a

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submission of defendant no.5/respondent no.2-BPCL that the dispute

is inter se between the partnership and its partners and that BPCL has

nothing to do with the license issued by the Department of Food and

Supplies, Government of West Bengal. BPCL only issues licence for the

products which are supplied by it or being sold by the defendant no.1

at the petrol pump. The learned Single Judge observed, considering

the said submissions, that the parties with the assistance of their

respective advocates can, in the meantime, sit and decide on the

modalities by which the plaintiff’s name can be expunged from the

licence issued by the Department of Food and Supplies so that the

plaintiff is not hauled up for any untoward incident despite having

ceased to be a partner of the defendant no.1.

54. In an order dated December 4, 2023 passed in the suit, it was recorded

that the defendant nos.1 to 4 submitted that a fresh licence in the

name of the defendant nos.2 to 4 had been issued by eliminating the

name of the plaintiff who had retired from the partnership and a copy

of the licence issued by the Director, Consumer Goods, Food and

Supplies Department, Government of West Bengal on December 1,

2023 was also placed on record before the court.

55. Even in the present appeal, a co-ordinate Bench, vide order dated

November 20, 2024, had recorded the submission of learned counsel

for BPCL that the name of the plaintiff had been deleted from all

records and the respondent no.2 had approved the re-constituted

partnership firm pursuant to the request made and , as such, the

18

presence of the respondent no.2 was not at all necessary. The co-

ordinate Bench, on the basis of such submission, observed that it

would be open for the said respondent to file an application for deletion

of its name in the proceeding.

56. Thus, even without any bifurcation of the cause of action in the suit,

the learned Single Judge had an option to expunge the name of the

defendant no.5/ present respondent no.2 as a defendant in the suit.

Learned counsel for the plaintiff/respondent no.1 argues that the

power of the court under Order I Rule 10(2) has to be exercised on the

basis of the position as it stood on the date of filing of the suit. Even

from such viewpoint, the BPCL has produced documents and claims

that it had already deleted the name of the plaintiff from its records

before institution of the suit and issued a fresh licence subsequently in

the favour of the re-constituted firm.

57. Even otherwise, a plain reading of Rule 10(2) of Order I of the Code of

Civil Procedure shows that the court may suo motu pass an order

striking out the name of a plaintiff or defendant at any stage of the

proceedings. The parameter for invoking such jurisdiction is that the

said party must be “improperly joined”. The “impropriety” has not been

fixed to the date of institution of the suit, particularly read in

conjunction with the expression “may at any stage of the proceedings”

used in the earlier part of the said sub-rule. Hence, if the court is of

the opinion that a party has been improperly joined and the joinder has

19

been rendered improper even subsequently after filing of the suit, it has

suo motu jurisdiction to strike out the name of the party.

58. Importantly, as opposed to Section 11 of the 1996 Act, where the High

Court acts merely as a functionary under the said Act and not as an

independent civil court, in a Section 8 situation there is already a civil

suit pending before a competent civil court and it is such civil court, in

its dual capacity as such and as a functionary under the 1996 Act,

refers the matter to arbitration. Thus, nothing prevented the learned

Single Judge from expunging the name of BPCL by taking on record the

materials before it, simultaneously with adjudication of the application

under Section 8, which would have eliminated BPCL from the suit

altogether.

59. If we carefully consider the reliefs (a), (b), (d), (e), (f) and (g) of the plaint,

neither of those are against the defendant no.5/respondent no.2 but

against the appellant no.1-firm and its partners. Relief (c) is the only

claim against the defendant no.5 -BPCL which is for perpetual

injunction restraining the defendant no.5 from supply or re-sell

petroleum products and/or licensed essential commodities to the

defendant no.1-firm till the time the name of the Plaintiff is removed

and/or deleted from each and every Determent and/or authority and/or

body and/or establishment where the name of the Plaintiff appears as

the partner of the Defendant No.1.

60. Insofar as the other departments and/or authorities and/or bodies

and/or establishments are concerned, no other authority has been

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impleaded in the suit apart from defendant no.5. Defendant no.5 has

no authority or jurisdiction, and consequentially any liability, to delete

the name of the plaintiff from the records of other authorities. It can at

best take steps in that regard which it has pleaded to have already

taken. Thus, the relief against defendant no.5, as framed in prayer (c)

of the plaint, is a sham relief merely to embroil the defendant no.5 and

avoid arbitration. Notably, the said relief does not claim the deletion of

the name of the plaintiff from the record of the defendant

no.5/respondent no.2 itself but from other departments and authorities

and/or bodies or establishments, which is entirely beyond the authority

of the BPCL. The other such authorities having not been impleaded,

such relief, ex facie, is bad for non-joinder of necessary parties and

cannot be granted. Hence, no cause of action has been shown against

the BPCL in the suit and as such, the BPCL/defendant no.5 ought to

have been expunged/deleted from the array of parties by the learned

Single Judge by exercise of its suo motu powers under Order I Rule

10(2) of the Civil Procedure Code.

Second Perspective:

61. The second viewpoint from which the present issue can be looked at is

that the BPCL agreement with the original partnership, formed by the

deed of 1994, also contains an arbitration clause, being Clause 19 of

the said agreement dated July 30, 2020. Clause 19 provides that any

dispute or difference “whatsoever” arising out or in connection with the

21

said agreement, including any question regarding its existence, validity,

construction, interpretation, application, meaning, scope, operation or

effect of the contract or termination thereof shall be referred to and

finally resolved through arbitration as per the procedure mentioned

thereinbelow.

62. The expressions “application”, “operation”, “effect” and “termination”

are all inextricably linked with the partnership deed by which the

defendant/appellant no.1 was formed on August 23, 1994.

63. The BPCL agreement with the original partnership firm is replete with

references to the partnership deed dated August 23, 1994.

64. For example, Clause 10(s) of the BPCL agreement prevents the change

of constitution of the licensee firm (defendant no.1-firm) or to dissolve

the partnership or admit any new member as partner or allow any

member to withdraw from the partnership without o btaining the

previous consent from the company.

65. Again, Clause 13(b) of the BPCL agreement provides inter alia that on

the retirement of any partner of the said partnership firm, the BPCL

may at its option at once determine the agreement and if the option

shall not be exercised, the agreement shall continue as between the

company and the surviving or continuing partners of the licensees.

66. Thus, as per the contemplation of the BPCL agreement with the

partnership firm, the scope of operation, effect and

perpetuation/termination of the said agreement was intertwined with

and dependent on the dissolution of the partnership firm, admission of

22

new members thereto and even withdrawal of a partner from the said

partnership, all of which are specifically the subject-matter of the

present suit.

67. Also, as per Clause 13(b), the agreement is to continue between the

company and the surviving or continuing partners of the licensee firm,

which covers within its ambit the reconstituted firm and defendant no.2

(surviving partner) and defendant nos.3 and 4 (“continuing partners” in

the sense of deriving liability, as per the plaint case, from the previous

liabilities of the erstwhile firm created by the partnership deed dated

August 23, 1994). Since all of those and the previous consent of the

BPCL for such actions by the erstwhile partnership firm are the

subject-matter of dispute coming within the ambit of Clause 19 of the

BPCL agreement, which is further specified by the use of expressions

such as “application, operation, effect and termination”, the arbitration

clause (Clause 19) of the BPCL agreement with the partnership firm

(defendant no.1) clearly refers to the vital clauses of the partnership

deed dated August 23, 1994, which includes the arbitration clause

therein, and intends the same to be a part of the BPCL agreement as

well. Thus, the provisions of Section 7(5) of the 1996 Act, which

envisage the reference in a contract to a document containing an

arbitration clause to constitute an arbitration agreement if the contract

is in writing and the reference to it is such as to make such arbitration

clause part of the contract, are attracted, thereby bringing the

arbitration clause in the agreement dated July 30, 2020 between the

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BPCL and the erstwhile firm within the ambit of the disputes of the

suit. In such a case, separate references to arbitration between the

plaintiff and the BPCL and the plaintiff and the defendant nos.1 to 4

would be an unnecessary, futile and dilatory exercise, specifically

intended to be curbed by the 1996 Act as expressed in its Statement of

Objects and Reasons. Speedy disposal by alternative dispute resolution

is the spirit of the 1996 Act and as such, the said intention of the

Legislature behind promulgating the statute has to be honoured while

interpreting any of its provisions.

68. Thus, even if we accept the second perspective above, the reliefs sought

in the suit are also covered by the arbitration clause of the BPCL

agreement, thus, facilitating a reference to arbitration of the entire

dispute involved in the suit, be it between the plaintiff and the

defendant nos.1 to 4 or between the plaintiff and the defendant no.5, to

a composite arbitration.

69. Since it is arguable as to whether the first or the second perspective is

more acceptable in law, the only option before the civil court was to

refer the matter to arbitration lock, stock and barrel and leave it to the

arbitral tribunal to decide such questions.

70. Hence, this issue is also decided in the positive, holding that the reliefs

sought against the defendant no. 5/ respondent no. 2 also come within

the purview of Section 8 of the 1996 Act.

71. In view of the above findings, there cannot be any manner of doubt that

the above aspects of the matter were not brought to the notice of the

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learned Single Judge and were not adverted to at all in the impugned

order. Thus, the impugned order is de hors the law and the facts of the

case and as such cannot stand the scrutiny of an appeal under Section

37 of the Arbitration and Conciliation Act, 1996.

72. In such view of the matter, A.P.O.T. No.338 of 2024 is allowed on

contest, thereby setting aside the impugned judgment and order dated

August 9, 2024 passed in respect of GA (COM) 4 of 2024 in CS (COM)

544 of 2024.

73. GA (COM) 4 of 2024 is, thus, allowed, directing the dispute raised in

the suit being CS (COM) 544 of 2024 to be referred to arbitration.

74. The parties shall take necessary steps accordingly.

75. It is, however, made clear that the above observations have been

rendered in the context of the limited consideration under Sections 8

and 37 of the Arbitration and Conciliation Act, 1996 and shall not be

binding on the Arbitral Tribunal taking up the matter. All questions,

including the question of jurisdiction of the Arbitral Tribunal applying

the kompetenz-kompetenz principle, are kept open to be urged before

and decided by the Tribunal independently on merits, without the

Tribunal being unnecessarily influenced in any manner by the above

observations so far as merits are concerned.

76. GA (COM) 1 of 2024 and GA (COM) 2 of 2024, filed in connection with

the present appeal are consequentially disposed of as well.

77. There will be no order as costs.

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78. Urgent certified server copies, if applied for, be issued to the parties

upon compliance of due formalities.

(Sabyasachi Bhattacharyya, J.)

I agree.

(Uday Kumar, J.)