Arbitration clause challenge fails where the contract was authorised, ratified by conduct, and the petition was time-barred.

A petition under section 33 of the Arbitration Act, 1940 could not be used to assail the underlying lease transactions as a whole merely because they contained an arbitration clause; the challenge was treated as directed at the contract containing the clause rather than as a separate bar to maintainability. The petition was also time-barred, since the agreements had been acted upon for years and the challenge was brought more than three years after knowledge of the dispute, attracting article 137. On validity, the court relied on the company's articles, express authorisation, subsequent ratification through conduct, and the doctrine of indoor management to hold that the lease agreements and arbitration clause were valid and binding.

---

---

Issues: (i) Whether a petition under section 33 of the Arbitration Act, 1940 was maintainable where the challenge was directed substantially against the underlying lease agreements and the arbitration clause therein. (ii) Whether the petition was barred by limitation. (iii) Whether the lease agreements and the arbitration clause were invalid for want of authority and for being executed by the same person on behalf of both parties.

Issue (i): Whether a petition under section 33 of the Arbitration Act, 1940 was maintainable where the challenge was directed substantially against the underlying lease agreements and the arbitration clause therein.

Analysis: The existence and validity of an arbitration agreement may be challenged independently, but a petition under section 33 cannot be used to assail the contract as a whole merely because it contains an arbitration clause. The prayer clauses and the tenor of the challenge showed that the attack was primarily on the validity of the lease transactions themselves, with the arbitration clause being questioned as a consequence of that broader challenge.

Conclusion: The objection to maintainability did not succeed as a separate bar, though the petition was treated as a challenge to the contract containing the arbitration clause.

Issue (ii): Whether the petition was barred by limitation.

Analysis: The lease agreements were executed in the 1980s and were acted upon for years. The petitioner had knowledge of the agreements and the claims at least when notice and reference to arbitration were received, and the petition was filed more than three years thereafter. On that footing, the residuary period under article 137 applied and the application was out of time.

Conclusion: The petition was barred by limitation.

Issue (iii): Whether the lease agreements and the arbitration clause were invalid for want of authority and for being executed by the same person on behalf of both parties.

Analysis: The articles of association empowered directors to enter into contracts, and the chairman had specifically authorised execution of agreements. The agreements were thereafter acted upon and rentals were paid, amounting to ratification, waiver, and acquiescence. The doctrine of indoor management supported reliance on the apparent authority, and execution by the same individual for two distinct legal entities did not by itself invalidate the transactions.

Conclusion: The lease agreements and the arbitration clause were valid and binding on the petitioner.

Final Conclusion: The challenge to the arbitration arrangement failed on merits and on limitation, and no relief was available to the petitioner.

Ratio Decidendi: Where a company's articles or express authorisation empower a director to contract, subsequent conduct amounts to ratification, and the transaction is acted upon over time, the agreement and its arbitration clause remain binding; a section 33 challenge cannot be used to invalidate the entire contract merely by attacking the arbitration clause.

---