GANESH CHANDRA DEY Vs. KAMAL KUMAR AGARWALLA

JUDGEMENT

(1.) THIS is an application under Section 34 of the Indian Arbitration Act, 1940 for stay of a suit filed by the respondent Kamal Kumar Agarwal. The petitioners, Ganesh Chandra Dey and Ghanashyam Das and the respondent are the partners of a firm known as "ESBI CYCLE INDUSTRIES" at No. 7, Ganesh Chandra Avenue. Calcutta, under a deed of partnership dated November 2G, 1963. It provides that the capital of the partnership firm shall be as follows: <FRM>JUDGEMENT_317_AIR(CAL)_1971Html1.htm</FRM> It is further provided that in addition to the above capital contribution Shri Kamal Kumar Agarwal shall arrange for further capital required for the business of the firm which shall bear an interest @ 9% per annum. But under the said agreement the profits and losses of the firm are to be determined equally among them that is to say each of the partners will have 1/3rd share in the profits and losses. Sometime in June 1969 disputes and differences arose between the petitioners on the one hand and the respondent on the other as set out in paragraph 9 of the petition. By a letter dated July 22, 1969. the respondent is alleged to have caused First National City Bank, Brabourne Road Branch, Calcutta to stop all payments of the current account in the name of the said partnership firm. The respondent thereafter by his letter dated August 12, 1969 but despatched on August 18, 1969 sent a notice of dissolution of partnership which was received by the petitioners on or about August 22, 1969. By a letter dated September 5, 1969 Ganshyamdas requested the respondent for referring their disputes to arbitration in terms of clause 14 of the agreement. The other petitioner Ganesh Chandra Dey also intimated the respondent by a letter dated September 29, 1969 that the pending disputes should be referred to the arbitration and in fact nominated Shri Narayan Chandra Banerjee of No. 2 Ganesh Chandra Avenue, as arbitrator on his behalf. It is alleged that the respondent with his father and uncle started negotiation for settlement of the disputes between the parties through the intervention of a common friend Shri Vinod Shankar Tiwari. On October 3, 1969 the respondent instituted a suit in this Court for a declaration that the said partnership between the parties stood dissolved on August 18. 1969, for accounts, appointment of a Receiver and injunction. The petitioners came to know oC this fact from the notice of motion which was taken by the respondent for appointment of a Receiver in the said suit on or about October 6, 1969. In fact a Receiver has already been appointed by T. K. Basu, J. over the partnership business. Thereafter the present application has been made by the petitioners on November 27, 1969.

(2.) THE learned counsel for the petitioners bas drawn my attention to clause 14 of the agreement which reads as follows:-- "That in case of any dispute and difference arising amongst tbe parties either in the interpretation of this business or in any matter touching the rights and liabilities of the partners either continuing all the terms or after it has ceased functioning in any other matter relating to in the partnership such dispute shall be referred to the arbitration of as many arbitrators as there may be parties in difference and the Award of the said arbitrators or Umpire selected by the arbitrators shall be binding on all the parties equally." He has submitted that the disputes between the partners should be referred to the arbitration of three arbitrators being the nominees of three partners and the pending suit should be stayed inasmuch as the suit was instituted in respect of the rights and liabilities of the parties in the partnership business.

(3.) THERE is another reason why I am of the opinion that the arbitration clause as agreed upon by the parties would be unworkable inasmuch as there is a bona fide apprehension of the respondent in not getting a fair award after the two petitioners are allowed to nominate two arbitrators and the respondent to nominate one Arbitrator. THERE is no doubt that the parties agreed to such clause and it is the duty of the court to see that three arbitrators should decide the disputes as agreed upon by the respondent. But in the facts of this case the relationship between the parties is very strained and it is alleged that the respondent is not being allowed by the petitioner to take part in the business although his share of the capital is very much in excess of the joint contribution of the petitioners. I therefore, hold that this is a fit and proper case where I should exercise my discretion in not staying the suit under Section 34 of the Act.