LAXMAN UPENDRA SHANBHOG Vs. MANJUNATH DAMODAR PRABHU

JUDGEMENT

(1.) THE plaintiff and defendant were partners. THE partnership was dissolved by agreement, and it was arranged that the defendant should hand over to the plaintiff all the account books and papers in connection with the partnership. THE plaintiff wan to examine the said amounts and papers, and if he found that any balance was outstanding against the defendant, and if two persons, Murari Govind and Padmanabh Govind, decided as Panahas that that balance should be paid by the defendant, the plaintiff should recover the said amount. In spite of this agreement the plaintiff filed a suit, and thereafter the parties informed the Court that they intended to carry out their agreement and to abide by the decision of Murari and Padmanabh, THE suit was, therefore, stayed under paragraph 18 of the Second Schedule of the Code of Civil Procedure. THEn it appears that difficulties arose. One arbitrator, Padmanabh, sent a letter saying that if four months time was allowed he would dispose of the matter. THEn the other arbitrator, the plaintiff's nominee, stated that he refused to act as an arbitrator. A ease, therefore, had arisen for an application to the Court to remove the stay of the suit if the parties did not come to an arrangement to remove the difficulties which had arisen, so as to enable the arbitration to proceed. THE plaintiff's application that the suit might be proceded with was rejected, for what reason it does not appear. Although the learned Judge said that the plaintiff could not refer to any decided case in which the course which he proposed had been taken, it is always open to the Court to remove the stay of a suit if in the opinion of the Court the stay ought to be removed. Here the suit was stayed to enable the arbitration to proceed, Facts were proved to show that there were difficulties in the way of the arbitration proceedings. THErefore, it was open to the Court to remove the stay. However, although the stay was not removed, the Court proceeded to decide in what manner the suit should be disposed of, and under Order XVII, Rule 3, the learned Judge thought that the Court might order the suit to proceed and be decided upon the materials already before it. As far as I can see, Order XVII does not apply to the case at all, If the Court declined to remove the stay, then obvoiusly the suit could not proceed. Rule 3 of Order XVII applies to cases where a party to whom time has been granted fails to produce his evidence, or to cause the attendance of his witnesses, or to perform any other act necessary to the further progress of the suit, for which time has been allowed. In such cases the Court may, not with standing such default, proceed to decide the suit forthwith. However, it is obvious that the Court ought to have proceeded to deal with the suit and decide it on its merits, as the arbitration had become impossible owing to the parties failing to agree to any particular course being followed after one arbitrator refused to act. THE learned Judge, having determined to decide the suit, then held that the suit was barred by the agreement. That, with all due respect, could not be a right finding, because the suit itself was not barred by the agreement, since under paragraph 22 of Schedule II of the Coda the last 37 words of Section 21 of the Specific Belief Act, 1877, shall not apply to any agreement to refer to arbitration, or to any award, to which the provisions of that Schedule apply. As soon as the stay was removed, the Court should have proceeded to decide the suit on its merits. THE appeal, therefore, must be allowed. THE suit must be restored to the board and be beard according to law. THE appellant to have his costs of the appeal.