MANIBHAI SHANKERBHAI PATEL Vs. SWASHRAY CONSTRUCTION CO

JUDGEMENT

(1.) The appellant is the original plaintiff. He filed a suit in the Court of the learned Civil Judge (Senior Division) Baroda for dissolution of the partnership and accounts. On the service of the summons of that suit respondent No. 2 filed an application under protest and without submitting to the jurisdiction of the Court for stay of proceedings under sec. 34 of the Arbitration Act on the basis of Clause 16 of the partnership deed (mark-4/3 ) That application was resisted by the present appellant by his reply Exhibit 26. The learned Judge however came to the conclusion that Clause 16 of the partnership deed was wide enough to take into its fold any and every dispute between the partners and accordingly directed stay of proceedings. It is against this order passed by the learned trial Judge that the present appeal is filed under sec. 39 of the Arbitration Act.

(2.) It transpires from the averment made in the plaint that a part- nership firm under the name and style of Swashray Construction Company was floated some time in October 1967 and thereafter there were changes in the constitution of the firm on two occasions and with every change a new partnership deed came to be executed. The last deed of partnership is dated 27/10/1973. Clause 16 of the said document which is in Gujarati language provides that if there is any dispute in regard to any matter concerning the firm the same shall be resolved under the provisions of the Arbitration Act without resort to Court and the decision of the arbitrator on such dispute shall be binding on all the partners. The plaintiff-appellant contends that before the institution of the suit efforts were made to resolve the disputes concerning accounts between the partners through arbitration but because of the non-co-operation of respondent No. 2 even though two precious years were lost the dispute could not be settled one way or the other and hence the plaintiff-appellant was constrained to sue for dissolution of the partnership and rendition of accounts. Allegations have been made in the plaint to the effect that respondent No. 2 who was in the management of the business of the firm was guilty of misappropriation of partnership funds and had also resorted to forgery for the purpose of defeating the rightful claims of the appellant. On the basis of these allegations which need not be set out in detail the suit was instituted in October 1976 for the dissolution of the firm and for taking accounts particularly from respondent No. 2.

(3.) As stated earlier immediately after the summons of the suit was served on respondent No. 2 he filed an application Exhibit 16 under protest and without submitting to the jurisdiction of the Court for stay of proceedings under sec. 34 or the Arbitration Act on the basis of clause (16) of the partnership deed dated 27/10/1973. In that application Exhibit 16 respondent No. 2 has referred to the earlier efforts made to resolve the disputes by arbitration. These averment are to be found in clauses (c) to (i) of the application Exhibit 16. It was therefore contended by respondent No 2 that the appellant having alre- ady submitted to arbitration twice before the institution of the suit was not entitled to have recourse to Court and hence the proceedings in the suit were required to be stayed under sec. 34 of the Arbitration Act. It may however be mentioned that in the application Exhibit 16 respondent No. 2 has nowhere stated that he is ready and willing to do everything that is necessary for the proper conduct of arbitration proceedings if any issue is referred to arbitration.