SAT PAL ANAND Vs. R K AHUJA

JUDGEMENT

(1.) THIS is a defendants' appeal against an order of the trial Court whereby their application under Section 34 of the Arbitration Act, 1940, for stay of proceedings in a suit filed by the plaintiff-respondents for dissolution of a partnership-at-will rendition of accounts and other consequential reliefs was dismissed on the ground that the appellants had asked for an adjournment for filing a written statement and had hereby taken a step in the proceedings. A few other submissions made by the plaintiff-respondents in support of the argument that the dispute should not be referred to arbitration had, however, been negatived by the order under appeal.

(2.) IN the trail Court, the main controversy appears to have centered round the question whether the appellants had really taken a step in the proceedings. The parties had never come to the stage of admission or denial of documents or the examination of any evidence. The appellants had not filed their written statements and the facts of the case as alleged by the plaintiff-respondents in their plaint were that the terms and conditions of the partnership had been incorporated into an agreement dated 28-4-1966 marked 'a' which had been duly registered the same day. The appellants were in possession of the account books of the firm. The business was described to be a partnership-at-will even though it was initially for a period of two years and could be dissolved at the end of this term at the sweetwill of any of the partners. Two days after the expiry of this term of two years, the plaintiff-respondents had served the appellants with notices dated 30-4-1968 of their intention to dissolve the firm on a number of grounds. These notices had been sent by registered post acknowledgment due and exhibits R-1 to R-3 are the postal receipts. It is mentioned in these notices as well that the partnership was at will and that it could not be dissolved during its initial term of two years in spite of certain acts of omission and commission of the appellants and that the partnership, therefore, stood dissolved with immediate effect. It was also mentioned in these notices that the initial term of two years had expired on 28-4-1968 and this may appear to have been given as a ground for the dissolution of the partnership with immediate effect. According to the plaintiff-respondents' averments in the plaint, it had become impossible to carry on the business of the partnership as defendant No. 2 had been guilty of conduct which prejudicially affected the partnership business and that it could not, therefore, be carried on save at a loss. An averment was also made that it was just and equitable that the firm should be dissolved and that the defendants should render accounts and agree to a partition of the immovable property and render unto the plaintiffs whatever was found due to them in cash or kind out of joint assets. The partners were described to be in joint possession of the cinema building and equipment and material which were the main assets of the business and the plaintiffs claim to be entitled to a division and partition of all these assets. The cause of action was described to have accrued on 15-3-1971 when the defendants had refused to accept the notices sent to them by registered post. In these notices, the plaintiffs intention to dissolve the firm with immediate effect had been expressed and in case if a partnership-at-will, the services of this notice on the defendants would determine the date of dissolution of the firm in view of the provisions of Section 43 (2) of the Indian Partnership Act, 1932 (hereinafter briefly referred to as 'the Act' ).

(3.) TO be in a position to properly appreciate the contention, it would be necessary to mention briefly how the proceedings had progressed in the trial Court up to the stage of the filing of the stay application by the defendants. The suit was registered on 27-4-1971 and summons for filing of written statement by defendants and settlement of issues in the case had been sent for 24-5-1971. Defendant No. 1 was personally served with a copy of the summons but no copy of the plaint had been delivered to him as required by Order V. Rule 2 of the Code of Civil Procedure. The other two defendants or the inmates of the house were reported to have evaded or obstructed service of summons which were, therefore, affixed on the outer door of the house through there was no compliance with the provisions of Order V. Rule 17, Civil Procedure Code, and the requirements that somebody should identify the house and the defendants and attest the report were not carried out by the Process server. The Court had not, up to that stage, permitted substitution of a concised statement for a full copy of the plaint and no description of the nature of the suit filed against the defendants had been given in the summons. It cannot, therefore, be said that any of the defendants had been served strictly in accordance with the provisions of law for 24-5-1971 or could be presumed to know the nature of the proceedings filed against them. On the said date, Shri S. M. Anand put in appearance for defendant No. 1 alone and filed a vakalatnama which was in favour of the said counsel and his father Shri J. C. Anand. As service on defendants Nos. 2 and 3 which purported to be under Order V, Rule 17, Civil Procedure Code, was not in accordance with the provisions of law and was rightly not declared by the Court as due service of summons under Order V, Rule 19 of the Code, summons were directed to be issued again to defendants Nos. 2 and 3 for 28-6-1971. Service for this date had been effected on these defendants by affixation but as copies of the plaint had already been utilised in an attempt to serve the process for an earlier date, it may appear that no copies of plaint were affixed on the house with the summons served on defendants Nos. 2 and 3 for 28-6-1971. On the said date, Shri J. C. Anand put in appearance for all the three defendants. The order recorded by the Court does not say that the defendants' counsel had asked for the copy of the plaint or an adjournment for filing a written statement. The observations in the order under appeal that Shri J. C. Anand had appeared for defendant No. 1 on 24-5-1971 or that he had made a request for a copy of the plaint on 28-6-1971 do not appear to be accurate as these are not borne out by the record. The Court's order dated 28-6-1971 does not rule out the possibility that the copy was supplied and adjournment granted out of a feeling that the Process Serving Agency and the subordinate staff of the Court had been guilty of certain acts of omissions or defaults and that it was necessary to apprise the defendants of the nature of the suit and to given them time to file a written statement. The defendants' counsel is not recorded to have made any request on 28-6-1971 or to have conducted himself in a manner which could be described as a step taken by him in the proceedings. If the copy of the plaint was being supplied to the defendants' counsel for the first time that day, it cannot be said that he was aware of the alternative mode of settlement of the dispute by arbitration or of the fact that his accepting the copy of the plaint or the adjournment in the case was likely to prejudice the defendants' right to have resort to that alternative mode of the settlement of the dispute.