P V JAGATHEESAN Vs. VEERAMMAL

JUDGEMENT

(1.) This appeal raises a simple but an interesting question. The respondents herein filed a suit for dissolution of partnership against the appellant herein, originally, in the District Munsif's Court, Salem, in O.S.No.1384 of 1968. In that suit, summons was issued to the defendant, the appellant herein, and he entered appearance through his counsel and took time for filing a written statement. Thereafter, a written statement was filed wherein he questioned the pecuniary jurisdiction of the District Munsif's Court to entertain and try that suit. The objection based on pecuniary jurisdiction was ultimately upheld by the District Munsif's Court and the plaint was directed to be returned to the plaintiffs for presentation to the proper Court. Thereafter, the plaintiffs took the plaint and presented the same before the Sub Court, Salem, which had the requisite pecuniary jurisdiction and the same was taken on file as O. S No. 25 of 1976 When summons in that suit was served on the appellant, he came forward with an application for stay of the suit under section 34 of the Arbitration Act, hereinafter referred to as the Act, on the ground that the subject-matter of the dispute is covered by arbitration clauses, namely, clauses 14 and 16 of the partnership deed, Exhibit A-1, dated 23rd September, 1961, and, therefore, the suit should stand stayed.

(2.) The said application for stay under section 34 was opposed by the plaintiffs on various grounds. One ground is that, the defendant not having taken the objection based on the existence of an arbitration clause at the earliest opportunity when he was served with the summons in the suit before the District Munsif's court he should be deemed to have participated in the legal proceedings, and this will disentitle him to file an application under section 34 of the Act. The next objection is that, having regard to the fact that the issues involved in the suit are both of law and fact, the matter cannot be directed to be decided by the arbitrators. Another contention is that clauses 14 and 16 of the Partnership Deed did not, in terms, refer to the Arbitration Act and, therefore, an arbitration as contemplated in the Arbitration Act was not meant by the parties. The Court below has dismisses the application for stay under section 34 of the Act, accepting the said three grounds urged by the plaintiffs in answer to the appellant's request for the stay of the suit. As against the dismissal of his application for stay, the present appeal has been filed by the defendant in the suit.

(3.) It is contended that all the three reasons given by the Court below for dismissing the application for stay cannot be sustained in law. On a due consideration of the matter, I am inclined to agree with the learned counsel for the appellant that the lower Court is not right in holding that, as the partnership deed does not refer to the Arbitration Act, section 30 of the Act cannot be invoked in this case. The Partnership Deed specifically refers to the disputes between the parties being referred to panchayatdars. It is true that the word "Arbitrator" has not been used in the Partnership Deed but one has to see what the parties contemplated as the time of entering into the partnership. If the obvious intention between the parties was to refer the matters in dispute between them to Pancnayatdars without resort to Court, then it can easily be assumed that the intention of the parties was to settle the matters in their entirety by arbitration. Therefore, so long as the parties wanted to have the disputes determined by approaching the Panchayatdars outside the Court, the intention that the disputes must be referred to arbitration under the Act can easily be inferred. Similarly, the other reason given by the Court below that, as the suit involves complicated questions of law, it is a fit matter to be decided by the Court and not by arbitration under section 3 is equally untenable. I do not see how in this suit for dissolution of partnership, any complicated question arises so as to say that the matter should be decided only by the Court and not by an arbitrator.