Naresh Chand vs Ram Parshad and others

C.S. Tiwana, J.—This revision on behalf of Naresh Chand, the plaintiff, is directed against an order dated January 31, 1979, passed by the Additional District Judge, Kapurthala, whereby he stayed the suit u/s 34 of the Arbitration Act The suit for dissolution of partnership and rendition of accounts was being tried by the Senior Sub-Judge, Kapurthala, who by his order dated October 10, 1977, dismissed the application filed by the defendants for the stay of the proceedings.

The partnership related to the carrying on of an agency business of the Indian Oil Corporation. The business started at a time when the plaintiff was and the arbitration clause as reproduced in the order of the lower appellate Court is to the following effect:

That in case of any dispute, controversy or claim relating to this partnership business the mater shall be referred to the Arbitrators under the Indian Arbitration Act then in force and the decision shall be binding on the parties.

The main contention raised by the (sic) to the suit was that the partnership had already been dismissed with effect from April 1, 1973. The suit was filed on September 28, 1976, in which the application for stay was filed by the defendants on December 6, 1976. It is being contended by the learned counsel for the petitioner that no such dispute had arisen between the parties on the basis of which arbitration could proceed. The most controversial fact is on this score whether the partnership is still a running business or was dissolved on a date alleged by the defendants. A dispute, therefore, certainly exists on account of which reference to arbitrator is required. Furthermore, according to arbitration agreement, when there is any claim in relation to the partnership business it has to be referred to arbitration. The petitioner has sought remedy for obtaining payment of certain sums of money after the rendition of accounts. He has, therefore, claimed some amount and that claim can only be decided by the arbitrator and not the Court.

Another argument on behalf of the petitioner put forward by the learned counsel is that some allegation about embezzlement of funds has been made and he cited some authorities for showing that whenever there are serious allegations about embezzlement o r fraud it is better that the Court should decide the matter and the controversy should not be left to be adjudicated upon by an arbitrator. The lower appellate Court has referred to this aspect of the matter and came to the conclusion that it is not the making of any allegation of fraud or embezzlement which can exclude the jurisdiction of the arbitrator. What we see in this case is that neither the amount embezzled has been made known nor the actual person who embezzled that amount was mentioned by the petitioner. Even the manner adopted for embezzlement has not been shown. It appears that the allegation of embezzlement was made so as to exclude the authority of the arbitrator. Anyway, there is no such serious allegation of fraud of embezzlement on account of which the case has necessarily to be decided by a Court.

The dispute between the parties is squarely covered by the arbitration clause and there is no impropriety in the order passed by the lower appellate Court and consequently the present revision petition is dismissed with costs. Counsel fee Rs. 100/-.