Sushil Kumar vs Ganga Devi

Ghose, J.—This is an application u/s 34 of the Arbitration Act for stay of the suit No. 172 of 1969. The suit has been filed by the Respondent No. 1 against the Petitioner and the Respondents Nos. 2, 3 and 4, inter alia, for a decree for dissolution of the partnership mentioned in the plaint, accounts alternatively a declaration that this partnership stood dissolved with effect from June 30, 1964, decree for accounts, receiver, injunction, costs and further other reliefs.

The grounds on which the Plaintiff is claiming dissolution of the partnership firm has been stated in para. 8 of the plaint.

The ground in Clause (a) of the said paragraph is u/s 44(c). The ground pleaded in Clause ''(b) is u/s 44(d) and the ground pleaded in Clause (c) is u/s 44(g) of the Indian Partnership Act.

The parties used to carry on the said partnership under the name and style of Imperial Optical Industries at No. 50A Satcowrie Mitra Lane, Calcutta, under an instrument of partnership dated April 21, 1960, and on the terms and conditions mentioned in the said instrument of partnership. The said instrument of partnership contains an arbitration clause to the following effect:

That all disputes and questions whatsoever which shall either during the partnership or afterwards arise between the partners or their--respective representatives or between any partners or partner and the representatives of any other partner touching this deed or the construction or application thereof or any clause or thing herein contained or any account valuation or division of assets debts or liabilities act deed or omission of any partner or as to any other made hereunder or as to any matter in any way relating to the partnership business or the affairs thereof or the rights duties or liabilities of any person under this deed shall be referred to a single Arbitrator in case the parties agree upon one otherwise to two Arbitrators one to be appointed by each party to the difference in accordance with and subject to the provisions of the Indian Arbitration Act or any statutory modification thereof for the time being in force.

The writ of summons in the suit had been served upon the Petitioner but the Petitioner has not filed written statement nor has taken any other step in the matter. The subject-matter of the suit it is admitted are matters agreed to be referred under the said arbitration agreement.

Mr. Jayanta Mitter in opposition to the instant application has urged before me that the Applicant was not ready and willing to proceed with arbitration at all material times. In support of the contention Mr. Mitter has relied on the correspondence that passed between the parties prior to the institution of the suit, copies whereof have been annexed to the affidavit of Bhim Sen Sharma affirmed on March 11, 1969.'' The said letters are letters dated March 14, 1963, October 8, 1965, October 21, 1965, and July 28, 1967, written by the Respondent''s Advocate and the Applicant''s lawyer''s reply thereto by letter dated August 21, 1967.

By the letter dated March 14, 1963, written by the Petitioner''s lawyer, the Petitioner threatened to file a suit for accounts and dissolution of partnership firm.. In spite of request made by the Respondent, the Petitioner did not refer the disputes between the parties to arbitration. The letter dated October 8, 1965, was written by the Petitioner to Sri Radha Mohan Johri, Sri Ram Prakash Agarwala and Sri Bhim Sen Sharma. The last paragraph of the said letter shows that the Petitioner wrote to the Arbitrators to settle the account within a week of the receipt of the said letter and to arrange for execution of a deed of dissolution regarding Imperial Optical Industries by Ganga Debi, otherwise the Petitioner threatened to institute a suit for accounts and dissolution of the firm. In answer to the said letter Ganga Debi wrote, letter dated October 21, 1965, threatening to file a suit for dissolution and accounts in respect of the said firm. Thereafter, the Petitioner by his lawyer''s letter dated June 17, 1967, gave notice to Ganga Debi that the Petitioner had recorded the dissolution of the firm in the records of the Registrar of Firms. The factum of dissolution, as alleged in the said letter of the said firm, was denied by the Plaintiff''s lawyer''s letter dated July 28, 1967, and accounts were demanded of the Petitioner in respect of the said firm. Therefore, according to Mr. Mitter, such correspondence between the parties and/or their lawyers show conclusively that the Petitioner was not ready and willing to proceed with the arbitration and, as a matter of fact, abandoned the proceedings before the Arbitrators mentioned in the aforesaid letter. Mr. Miter relied on the case of W. Wood and Son Ltd. Vs. Bengal Corporation, . In the said case it was held that readiness and willingness u/s 34 of the Arbitration Act is readiness and willingness at the time when the proceedings sought to be stayed were commenced and subsequently the suit in the instant case was filed on January 2, 1969. The aforesaid letters were written between 1963 and 1967. They are unable to show the intention of the Petitioner or the state of mind of the Petitioner vis-a-vis the suit at the time when the suit was instituted.

Mr. Mitter then relied on the case of Shalimar Paints Ltd. v. Omprakash Singhania AIR 1967 Gal. 373 (376, para. 12), decided by A. N. Sen J.. Mr. Mitter relied on the observation of his Lordship and submitted that here also no intention to go to arbitration by the Petitioner was expressed in any of the letters that passed between the parties or their, lawyers. The said observations of Sen J. were on the basis of the facts of that case. In that case, no reply was given to the Solicitor''s letter threatening institution of legal proceedings for the recovery of dues of the Plaintiff. That letter was written on August 23, 1963, and the suit was filed soon after the said letter was written. The said case was decided on the peculiar facts of that case and specially in view of the following as noted in the judgment of. his Lordship:

In any event in the facts of this case and particularly taking into consideration that the claim of the Plaintiff if referred to arbitration will be completely barred, I do not consider that it will be just for me to exercise my discretion in favour of the Applicant.

Section 34 of the Arbitration Act states that the Petitioner must show his readiness and willingness "to do all things necessary for the proper conduct of the arbitration" at the time when proceed1 ings was commenced. In the instant case, there is nothing to show that the Petitioner was not ready and willing to do all things necessary for the purpose of proper conduct of arbitration at the time when the suit was instituted. There is no obligation to make the request for reference before this suit was filed. Reference in this connection may be made, besides the aforesaid, to the decision of the Division Bench of this Court in the case of Chhabildas Nandlal and Co. Vs. Damodar Khetsey and Co., wherein it was decided that although prior to the institution of a suit by the Plaintiff, the Defendant No. 1 claimed the right to cancel the contract which contained the arbitration clause, the Defendant was not precluded from relying on the arbitration clause and applying for stay. In the said case the Plaintiff''s Solicitor by letter dated December 4, 1941, called upon the Defendant to inform whether the goods sold to the Plaintiff by the Defendant No. 1 had arrived. The Defendant''s Solicitor by his letter dated January 24, 1942, informed that the Defendants considered the contract as cancelled. The Defendant''s Solicitor by letter dated January 7, 1942, stated that if proceedings were taken up they would defend. The suit was filed on March 29, 1942. Even on the aforesaid facts it was held that the said letter did not show that the Defendant was not ready and willing to go to arbitration at the commencement of the proceedings. In N.C. Padmanabhan and Others Vs. S. Srinivasan, it was held by Rammurti J. when a Plaintiff instituted a suit seeking dissolution of a partnership- firm on the grounds contemplated u/s 44(f) and Section 44(g) of the, Indian Partnership Act, the suit should not be stayed inasmuch as under the aforesaid provisions of the Indian Partnership Act discretion was conferred upon the Court to be exercised by it as to whether the partnership should be dissolved on those grounds or not. The learned Judge noted the case of Oliver v. Hiller (1959) 2 All E.R. 220 where it was held that the exercise of discretion u/s 35(f) of the English Partnership Act which is in identical terms as Section 44(g) of our Act should conveniently be left to the Court. In Oliver v. Hiller Roxburgh J. refused to stay the action applying the ratio in Joplin v. Postletuwaite (1889) 61 L.T. 629. The aforesaid principle to refuse stay of an action where dissolution was claimed on the ground of existence of circumstances which render it in the opinion of the Court, just and equitable that the partnership should be dissolved is a proposition although not of absolute right but of good sense as has been observed in Russel''s Law of Arbitration (17th ed., p. 91). Although in the instant case dissolution has been claimed not only on the ground of existence of circumstances which render it just and equitable to dissolve the firm and there is an express alternative for a declaration that the firm had already stood dissolved. But inasmuch as a part of the cause of action for dissolution is based on Section 44(g) as mentioned above I do not think that this is a fit case where I should exercise my discretion in granting a stay of the action. In Joplin v. Postletuwaite (1889) 61 L.T. 629 the Plaintiff instituted an action against the Defendant for accounts of the business carried on in co-partnership by the Plaintiff and Defendant and to have the affair of the partnership wound up, on the basis of an arbitration agreement contained in the Articles of Partnership. The Bench consisted of Cotton, Bowen and Fry L.J J. All the learned Judges were of the opinion that the action should not be stayed. It is contended on the basis of Vawdtey v. Simpson (1896) 1 Ch. 166 that the arbitration agreement was wide enough to include the question of dissolution and other questions in dispute and stay was granted in an action for dissolution of partnership between two medical men. It is contended that the arbitration clause in the instant case is in wide terms and similar to that in Vawdrey v. Simpson. It does not appear from the report that in Vawdrey v. Simpson that the ground for dissolution as claimed in the instant action was, inter alia, existence of circumstance that in the opinion of the Court would render it just and equitable to dissolve the firm. Section 44(g) of the Indian Partnership Act is in identical terms with Section 35(f) of the English Act.

It appeals from the said section itself that the power of deciding whether on certain facts it is just and equitable to dissolve a firm has been conferred on the Court. This power cannot be exercised by the Arbitrator in the absence of conferring the said power upon the Arbitrator by express words. It is true that the Arbitrators derived their power not from the Partnership Act but from the Arbitration Act: See Ballavdas Acharya v. Shyamsundar Halwasia ILR (1946) Cal. 203. But that power is to adjudicate upon. The reliefs to be granted by the Arbitrator has not been provided for by the Arbitration Act.

Taking into consideration the facts and circumstances in the instant case specially the abandonment of the previous reference by the party, I am of the view that the discretion conferred upon the Court by Section 34 of the Arbitration Act should not be exercised in favour of the Applicant. This application must, therefore, fail and is dismissed.

Costs of this application shall be costs in the cause.