Whether court can refer dispute to arbitration if one of party to suit is not party to arbitration agreement?

The Plaintiffs admittedly are parties to the arbitration agreement. It does not lie in their mouth to contend that since one of the Defendants whom they have impleaded was not party to the arbitration agreement, no reference can be made to the arbitrator. In the facts of the present case, it cannot be said that merely because one of the Defendants i.e. Defendant No. 6 was not party to the arbitration agreement, the dispute between the parties which essentially relates to the benefits arising out of Retirement Deed and Partnership deed cannot be referred.

27. Learned District Judge has noted that Defendant No. 6 has not inherited any share either in Partnership deed or in the Schedule property and hence there is no question of bifurcation of either cause of action or parties. Relevant findings in this context have been returned by District Judge in paragraph 40 to the following effect:

40...It is only Defendant No. 6 was not the party to either the Retirement Deed or the Partnership Deed where there is an Arbitration Clause to refer all the disputes and differences to the Arbitration. Even according to the Plaintiffs Defendant No. 6 is not a Partner nor she is a party to any of the documents and further as per the Will executed by her father late Shri Prakash Chandra Baktha, she has not inherited any right or share either in the Partnership Deed or in the Schedule property.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 10837 of 2016 (Arising out of SLP (C) No. 31179 of 2014)

Decided On: 15.11.2016

 Ananthesh Bhakta and Ors.

Vs.

Nayana S. Bhakta and Ors.

Hon'ble Judges/Coram:

R.K. Agrawal and Ashok Bhushan, JJ.

Citation:(2017) 5 SCC 185.

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