SANGANER DAL AND FLOUR MILL vs F.C.I. AND ORS.

The Supreme Court held that under Section 19(2)(a) of the Indian Partnership Act, 1932, a partner does not have the implied authority to submit a dispute to arbitration unless there is a custom to the contrary. However, since no partner objected to the contract or the authority of Satya Narain to enter into the contract, the court found that the contract was ratified by the other partners. The arbitration clause in the contract was binding, and the reference for arbitration under Section 20 of the Arbitration Act, 1940, was deemed valid and within jurisdiction.