MUTHAVARPU VENKATESWARA RAO Vs. N SUBBARAO

JUDGEMENT

(1.) THE question that falls for consideration in this appeal relates to the power of the Court to grant stay under Section 34 of the Arbitration Act. 1940 in cases involving allegations of fraud or allegations affecting professional reputation.

(2.) THE respondent filled the suit D. S. No. 580 of 1982 in the Court of the Subordinate Judge, Vijayawada for settlement of accounts of the 1st defendant firm " Sri Venkateswara Estates" and for rendition of accounts and for allotting to the respondent his share of 10 paise in the property and in amounts that may be found due on settlement of accounts. He also alternatively claimed for dissolution of the said firm and settlement of accounts and for the appointment of a receiver. Originally there was a registered partnership deed dated 27-11-75 which is marked as Ex. B. 1 in these proceedings. THE partnership was at will and consisted of 17 partners. One of the partners gave site of 6000 square yards for the purpose of construction of a commercial complex at Vijayawada. THE plaintiff owned a Share of 10 paise while the remaining shares were owned by the other partners. On 1-10-1976 the partner who gave the site for the partnership relinquished his right. He also died subsequently on 8-10-1976. THEreafter a new partnership was formed on 21-10-76 under Ex. B.2 Which also consisted of 17 partners. It is stated that subsequently there were disputes between the partners. It is the case of the appellant who is the 2nd defendant that the plaintiff expressed his desire to retire form the business as per his letter Ex. A.4 dated 26-2-1982 and that there was a resolution passed by the partnership on 7-3-1982 accepting the said resignation. It also the case of the appellant that as per the receipt Ex. A.5. dated 31-3-1982 the respondent -plaintiff received a sum of Rs. 82,270-80 towards the amount due to him from the partnership was thereafter reconstituted on 7-4-1982 under another deed Ex.14 and that in the new partnership the plaintiff was not a partner. THE plaintiff has disputed the letter Ex. A.4 as well as the resolution dated 7-3-1982 and the receipt Ex. A.5. According to him, he never retired from the business and he never executed any receipt. It is also his case that the minutes of the meeting dated 7-3-1982 were introduced into the minutes book by tampering and introducing fresh pages in replacement of certain pages in the book. THE plaintiff wrote a letter Ex. B.4. on 8-5-1982 complaining that he was not furnished with any accounts and that the plaintiff was thinking of getting the firm dissolved. On 2-11-1982 under Ex. A.2. the plaintiffs lawyer issued a notice of dissolution of the firm with effect from 7-11-1982 the plaintiff was informed by the appellant that the plaintiff was paid a sum of Rupees 82,270-8- as per Ex. A.5. and the firm was reconstituted on 7-4-1982 as per Ex. A.14. It was stated that the plaintiff has bear the consequences in case he resorted to any proceedings. THE plaintiff sent a rejoinder on 20-11-1982 as per Ex. B.6. denying the various allegations contained in Ex. A.15. thereafter the plaintiff filed the present suit on 30-11-1982.

(3.) THE respondent-plaintiff filed a counter-affidavit stating that the arbitration clause was introduced into the partnership deed dated 21-10-1976 i.e. Ex. B. 2, without his knowledge and consent. It is further stated that the respondent reiterates the allegations in the plaint and that the defendants were guilty of not maintaining accounts, not convening meetings and was also guilty of malfeasance. It is averred that dissolution under Section 44 (g) of the Indian Partnership Act can be directed only by the Court and not by the arbitrators. It is stated that the plaintiff never expressed his desire to retire from the firm and that therefore Ex. A-4 was not true, that the resolution was concocted and that the plaintiff did not receive any money. It was stated that several disputed questions of fact viz., about the retirement of the plaintiff, about the resolution accepting his retirement and about the payment of money arose in the case, that the arbitrators were not fit to decide the genuineness of signatures and whether the partnership was liable for dissolution. It was therefore contended that the arbitrators were not fit to decide these issues. It was also contended that the appellant was never ready and willing for arbitration as is clear from his reply Ex. A. 15 dated 17-11-82. It is also stated that as the stakes involved were very heavy the matter should not go to arbitrators. THE allegation of the 2nd defendant that the appellant orally informed the plaintiff that they were ready and willing for arbitration was denied and for that purpose the reply notice issued by the appellant dated 17-11-1982 was referred to.