Prapti and Param, both close friends, constituted a partnership firm for construction of a shopping complex on Prapti's land and executed a deed of partnership. Clause 5.2 of the partnership deed envisaged that the Prapt

The authority of a partner relates to his ability to bind the firm by his acts. This could be express or implied. Authority is said to be express when it is given by words spoken or written. The firm is bound by all acts of a partner done within his express authority even if the acts are not within the scope of the partnership business. The partner also has certain implied authority also known as ostensible or apparent authority because of he/she being a partner. Section 19 and Section 22 of the Indian Partnership Act define the scope of such implied authority subject to the following: The action must be done in the usual way; The action must be to do business of the kind carried on by the firm; The action must bind the firm Section 19(2) also dealing with details activities which do not form part of such implied authority subject of course to usage or custom or trade indicating the contrary. One of the activities is submitting a dispute relating to the business of the firm to arbitration. In the instant case, Param has not kept Prapti informed of the dispute with a tenant which has now gone to Court. He has no implied authority to refer the dispute to arbitration on his own. Should Prapti be advised of the same and she also desires arbitration (she being the only other partner and interestingly the shopping complex is coming up on land owned by her), then the dispute could be referred to arbitration.