Andhra Pradesh High Court
Judges : ALLADI KUPPUSWAMI, K.A.SWAMI
P.Subbarao - Appellant
Versus
M.VEERAIAH - Respondent
C.M.A. 397/79
Decided On : 03-03-79
Advocates Appeared :
.
Held : The fact that the names of the arbitrators were not mentioned in the arbitration clause or that the arbitration clause provided for appointment of an even number of arbitrators cannot stand the way of the arbitration clause being given effect to In the Arbitration Act there are provisions which enable the Court to appoint an arbitrator in case of this agreement by the parties and also the appointment of an umpire when there is a disagreement between an even number of arbitrators
The Court is entrusted with the duty to determine, whether it is just and equitable that the firm should be dissolved or that the business of the firm cannot be carried on save at a loss The Court will not therefore normally stay the proceedings in such a suit and allow such matters left to the jurisdiction of the Court to be decided by an arbitrator
( 1 ) THE appellants are the defendants in O. S. No. 27 of 1979. Subcourt, warangal. The suit was filed by the respondent herein for dissolu tion of partnership, for rendition of" accounts and other consequential reliefs.
( 2 ) THE Plaintiff and the defendants bad executed a partnership deed on 16th July, 1976 and were carrying on the business running a temporary cinema theatre and display of films in the village of Govindaraopet, Mulug taluk, Warangal District. The case of the respondent-plaintiff was that in view of the various facts and circumstances set out in the plaint and the hostile conduct of the defendants, the business of the firm could not be carried on and the firm could not be continued with the plaintiff and defendants as partners, and it was therefore necessary that the firm should be dissolved. The suit was filed on 9-3-1979. On the 19th of March, 1979, the defendants filed I. A. 256 of 1979 praying that the Court may stay all proceedings in the suit in exercise of its power under section 34 of the Arbitration act. The defendants stated that Clause 18 of the partnership deed provided that any dispute arising between the partners in regard to any matter connected with the partnership business or any incidents of the arbitrators elected jointly by all the partners and the Award of the Arbitrators shall be final and binding on all the partners. The defendants therefore submitted that the matter should be referred, in accordance with the arbitration clause in the partnership deed, to arbitration, and as the petitioners, were ready and willing to do all things necessary for the proper conduct of the arbitration, the Court may make an order staying the further proceedings in the suit. The learned Subordinate Judge dismissed the said application and the defendants preferred this appeal against the said order.
( 3 ) THE order of the Court below dismissing the application for stay is rather confusing and it is difficult to understand the exact grounds on which the application was dismissed. In the operative portion of the order, the Court below stated that the petitioners cannot ask the plaintiff to place the matter before the arbitrators under clause 18 when his act is contrary to clause 11 of the partnership deed which provides that no partner shall have the powers to dissolve the partnership without the consent of the others. The Court below therefore held that it was not safe, considering the difficult situation that had arisen in view of Clause 11 of the partnership deed, to leave the matter to be decided by two arbitrators who were not at all named either in the agreement or in the present application by the petitioners. It also added that the petitioners contention to have the matter referred to an even number of arbitrators between rival parties for arbitration, sought for under Clause II of the partnership deed is not a workable one. The learned counsel for the respondent was unable to support the order of the court below on any of these grounds stated in the order. The fact that the names of the arbitrators were not mentioned in the airbitration clause or that the arbitration clause provided for appointment of an even number of arbitrators cannot stand in the way of the arbitration clause being given effect to. In the ARBITRATION ACT, 1940, there are provisions which enable the Court to appoint an arbitrator in case ot disagreement between the parties also the appointment of an umpire when there is a disagreement between an even number of arbitrators, Therefore, the Court below was wrong in considering that the arbitration clause was unworkable on these grounds. The further ground, viz. , that the arbitration clause (No. 18) is opposed to clause 11 is understandable. Merely becaust one of the partners has no powers under Clause 11 to dissolve the partnership without the consent of the other, we fail to see how a partner cannot ask for the appointment of an arbitrator under Clause 18 of
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