RAMPA DEVI Vs. BISHAMBHAR NATH PURI

JUDGEMENT

(1.) THIS appeal arises in the following circumstances.

(2.) THE appellants, before instituting the suit which has given rise to this appeal, had filed an application under Section 20 of the Arbitration Act for appointment of an arbitrator in terms of the arbitration agreement contained in the deed of partnership. That application was rejected by the Court below on the ground that the partnership deed was not duly registered under Section 58 of the Indian Partnership Act and therefore the petition was barred by the provisions of Section 69 of that Act. The matter was brought to this Court in appeal. The order of the court below was upheld with the observations that the petition under Section 20 was not maintainable because of the bar created by Section 69 of the Act. The plaintiff-appellants thereafter filed the suit for rendition of accounts and, in the alternative, for dissolution of the firm in which the defendants were the partners. The defendants before filing the written statement filed an application under Section 34 of the Arbitration Act for stay of the suit on the ground that there subsisted an arbitration agreement between the parties whereunder the matter in dispute should have been referred to arbitration and that the defendants had been ready, and willing to refer the matter to arbitration on the date of the institution of the suit and were still ready and willing to do so. In reply to that application the plaintiffs stated, inter alia that "if the defendants are still ready to get the dispute decided through the forum of arbitration, the plaintiffs agree that in this very suit an application be made under Section 21 of the Arbitration Act and get the dispute decided by the arbitrator appointed by this Hon'ble Court". It was also urged before the Court below that in view of the decision given in the petition under Section 20 of the Arbitration Act, the arbitration agreement was void and unenforceable. Hence the defendants were not entitled to invoke the provisions of Section 34 of the Arbitration Act. In support of their contention they had placed reliance mainly on the decision of this Court given in their petition under Section 20 of the Arbitration Act. The court below did not accept that contention and held that the arbitration agreement was not void but was valid. Since it did not find that the defendants had were not ready and willing to go in arbitration or that the defendants taken part in the proceedings before filing an application under Sec. 34 of the Arbitration Act, the court below exercised its discretion in staying the suit by its impugned order. The plaintiffs have now come up to this court in first appeal.

(3.) IT was next contended that the plaintiffs had filed an application under Section 20 of the Arbitration Act before instituting the present suit and as the defendants had resisted that application, it was not necessary for the plaintiffs to give another notice for arbitration before filing the present suit. This contention, in our view, is also meritless. True, it is that the plaintiffs had commenced an action under Section 20 of the Arbitration Act in which they failed mainly on the ground that the petition was barred by the provisions of Section 69 of the Partnership Act, but it was nowhere laid down that the arbitration agreement was void. It was merely held that because of the non-registration of the partnership deed, the remedy to file a petition under Section 20 of the Arbitration Act to enforce the arbitration agreement was not available. But this did not mean that the plaintiffs and the defendants could not refer the dispute to arbitration without the intervention of the court. They had agreed that "in case of any dispute between the partners relating to partnership, the matter shall be referred to arbitration and the award of the arbitrator will be binding on all the partners." In terms of this agreement the parties thereto could appoint an arbitrator and refer the dispute to him. This they could do outside the court and without seeking any help of the court. The defendants pleaded in their application under Section 34 of the Arbitration Act that "even at the time of the commencement of the proceedings in the abovenoted suit and also at present the applicants are ready and willing to settle the dispute or disputes, if any, through arbitration as laid in the partnership agreement dated 23-10-1952". The plaintiffs having failed to give any notice to the defendants to appoint an arbitrator and to refer the dispute to an arbitrator so appointed, could not, in our view, resist the claim set up under Section 34 of the Arbitration Act by the defendants. In our view the court below did not commit any error in exercise of its discretion under Section 34 of the Arbitration Act in staying the suit.