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1993 Supreme(Cal) 251
High Court of Calcutta
M.G. Mukherji & N.K. Bhattacharya, JJ.
Sabyasachi Dasgupta – Appellant
Versus
Swapan Dasgupta – Respondent
Decided On: May 28, 1993
Advocate Appeared:
Asoke Ganguly, Pratap Chatterji, S.M. Mukherjee, Somenath Roy, Subrata Talukdar.
The existence of a dispute covered by the relevant arbitration clause in question is an essential condition and pre-requisite for assumption of jurisdiction by an Arbitrator.
Headnote:
ARBITRATION - Section 34 - Stay of Suit - Arbitration Clause - Designated Arbitrator - Refusal to Act - Vacancy - Supply of Vacancy - Readiness and Willingness to Arbitrate - Dispute Covered by Arbitration Clause - Exercise of Discretion by Trial Court.
Fact of the Case:
Plaintiffs filed a suit for recovery of money and injunction against the defendants. The defendants filed an application under Section 34 of the Arbitration Act, 1940, praying for a stay of the suit on the ground that there was an arbitration agreement between the parties and the dispute was covered by the arbitration clause. The Trial Court rejected the application, holding that since the named arbitrator had refused to act, the plaintiffs were not bound by the arbitration agreement. The defendants appealed.
Finding of the Court:
The Court held that the Trial Court was right in rejecting the application for stay of suit. The Court found that the arbitration clause in the partnership deed did not cover the dispute in the suit. The Court also found that the defendants were not ready and willing to go in for arbitration, as they had not taken any steps to supply the vacancy upon refusal of the named arbitrator to enter the reference.
Issues: 1. Whether the arbitration clause in the partnership deed covered the dispute in the suit. 2. Whether the defendants were ready and willing to go in for arbitration.
Ratio Decidendi: 1. The arbitration clause in the partnership deed only covered disputes relating to the meaning of any words, phrases, or clauses in the deed. The dispute in the suit was not covered by this clause. 2. The defendants were not ready and willing to go in for arbitration, as they had not taken any steps to supply the vacancy upon refusal of the named arbitrator to enter the reference.
Final Decision: The appeal was dismissed.
1. THIS is an appeal filed by the defendants Sabyasachi Dasgupta and Sinclair and Company a firm registered under the Indian Partnership Act impugning an order dated June 30, 1992 passed by the learned Assistant District Judge, 10th Court at Alipore in Title Suit No. 19 of 1992 whereby an application filed by the defendants under Section 34 of the Arbitration Act, 1940 praying for stay of the suit stood rejected.
2. ON March 7, 1992 the plaintiffs, Swapan Das Gupta and Satyajit dasgupta instituted Title suit No. 19 of 1992 in the court of the 10th assistant District Judge at Alipore against the appellants Sabyasachi dasgupta and Sinclair and Company praying inter alia for a decree for recovery of Rs. 2,88,901/- by plaintiff No. 1 and Rs. 35,000/- by the plaintiff No. 2 on a declaration of charge on the available assets of Sinclair and Company. The defendant No. 2 also charged interest from February 16, 1992 till realisation of the claim. The plaintiffs prayed for permanent injunction restraining the defendants from disposing of or transferring or otherwise encumbering the assets of Sinclair and Co. without leave of the court. They also prayed for the Receiver, attachment, injunction and further reliefs which they may be entitled to tin law and equity. In the said suit an application was also make under Order 39 Rule 1 and 2 C. P. C. read with Section 151 C. P. C. which is pending. On March 7, 1992 the Trial court passed an order inter alia to the effect that there should be an injunction upon the defendants restraining them from disposing of the assets of the partnership firm as described in the schedule of the petition till the hearing of the injunction matter.
The contention of the defendant appellants is the effect that there is already an arbitration agreement in between the parties. On June 15, 1989 Swapan Dasgupta and Satyajit Dasgupta on the one hand and sabyasachi Dasgupta on the other entered into an agreement whereby swapan Dasgupta on the other entered into an agreement whereby Swapan dasgupta and Satyajit Dasgupta as retiring partners decided to retire from the Sinclair and Company with effect from 15th June, 1989 in accordance with Clause 21 of the partnership Deed dated 5th January, 1989. Sabyasachi Dasgupta was to continue the business of M/s. Sinclair and company either as the sole proprietor or by inducting partners according to his choice and convenience. The retiring partners also agreed not to have any right, interest, goodwill and assets on the ongoing business or prospects of further business of the Firm M/s. Sinclair and Co. The retiring partners were absolved of the liabilities of the said firm and it was decided that the liabilities of all the creditors or any contingent liabilities of the obligations and liabilities of any of the employees of the said firm on any account whatsoever should be borne by the continuing partners.
3. THE continuing partner is to cause a balance sheet of the said Firm m/s. Sinclair and Company to be prepared upto 15th June, 1989 and have the same audited by the M/s. K. C. Bose and Co. and shall give an audited balance sheet to the retiring partners. The continuing partners shall be obliged to file all returns with the Income Tax Authorities and other authorities in regard to obligations of the said firm and those of the retiring partners for their association with the said firm upto 15th June, 1989 and shall in due course make over certificates from the said authorities discharging the retiring partners from their obligations to the revenue and other authorities. The continuing partners paid to Mr. Swapan Dasgupta a sum of Rs. 1,00,000/- and a sum of Rs. 25,000/- to Satyajit Dasgupta before the signing of the deed and undertook to pay Mr. Swapan Dasputa a further sum of Rs. 1,25,000/- and a further sum of Rs. 25,000/- to both within five months from June 15, 1989 and the final payment of Rs. 2,00,000/- to Mr. Swapan Dasgupta and the final payment of Rs. 25,000/-to Mr
