Madras High Court
RAMANUJAM
A.Sankarasadasivam - Appellant
Versus
A.Kumaravel - Respondent
Decided On : 10/11/1976
ARBITRATION ACT, 1940 - SECTION 34 - STAY OF SUIT - EXISTENCE OF ARBITRATION AGREEMENT - DISPUTE - COURT'S JURISDICTION - EVIDENCE - DISCRETION TO GRANT STAY.
Fact of the Case:
Appellants filed an application under Section 34 of the Arbitration Act, 1940, seeking a stay of a suit filed by respondents for partition and maintenance, alleging the existence of an arbitration agreement between the parties. Respondents contested the existence and validity of the agreement.
Finding of the Court:
The lower court dismissed the application without giving a specific finding on the existence or validity of the arbitration agreement, holding that the question could be decided as a preliminary issue in the suit.
Issues: 1. Whether the court has jurisdiction to decide the existence of an arbitration agreement in an application under Section 34 of the Arbitration Act, 1940, when the same is disputed by the other party? 2. Whether the court can dismiss an application for stay under Section 34 without deciding the question of the existence of an arbitration agreement?
Ratio Decidendi: 1. The court has jurisdiction to decide the existence of an arbitration agreement in an application under Section 34 of the Arbitration Act, 1940, even if the same is disputed by the other party. 2. The court cannot dismiss an application for stay under Section 34 without deciding the question of the existence of an arbitration agreement.
Final Decision: The appeal was allowed, and the matter was remitted to the lower court for a fresh disposal after giving an opportunity to both sides to adduce evidence and giving a specific finding on the existence and validity of the arbitration agreement.
JUDGMENT:- This appeal arises out at an order passed by the lower court dismissing an application filed by the appellants herein, who are defendants 1 and 2 in the suit, under S.34 of the Arbitration Act, 1940, for stay of the suit, O. S. No. 82 of 1975 on the ground that there is an arbitration agreement between the parties to the suit.
2. Respondents 1 to 4 have filed a suit for partition and separate possession of threefourth share in the suit properties belonging to respondents 1 to 3 and for recovery of maintenance said to be due to the 4th respondent. Respondents 1 to 3 and the appellants are brothers, being the sons of one Arunachala Chettiar who died leaving considerable properties. The 4th respondent is the widow of the said Arunachala Chettiar while respondents 5 and 6 are the wives of appellants 1 and 2 respectively. The said Arunachala Chettiar had executed a Will on 6-11-1958, bequeathing his properties equally in favour of all his sons. As no provision was made in the said will in favour of his wife, she disputed the Will in O. S. 32 of 1959. However, the said suit was compromised between the parties by the 4th respondent agreeing to receive maintenance at the rate of Rs. 350 per month from the sons. After the death of their father, Arunachala Chettiar, appellants 1 and 2 have been in management of the entire properties. Respondents 1 to 3 and their mother, the 4th respondent have now filed the suit for partition and maintenance, out of which this appeal arises, alleging fraud on the part of the appellants in the course of the management of the business and other properties of the family and complaining that from the income of the joint family, they have acquired properties benaim in the names of their wives, respondents 5 and 6.
3. On receipt of the summons in the suit, the appellants filed an application under S. 34 of the Arbitration Act alleging that there is an arbitration agreement dated 3-1-1971, entered into between all the brothers, that under the said agreement, if any dispute arises regarding the partition and division of the properties between the sharers, the same should be referred to the arbitration of one S. Arumugaswami Nadar, Tirunelveli Jn. for his award and the parties will abide by the same, and that in the face of the said arbitration agreement dated 3-1-1971, the suit has to be stayed under Section 34 of the Arbitration Act. Respondents 1 to 4 resisted the said application for stay contending that the agreement dated 3-1-1971, set up by the appellants is not true and genuine, that the same had been created fraudulently by the appellants to prevent respondents 1 to 4 from getting their legitimate shares in the suit properties, and that even if the agreement dated 3-1-1971, is true and valid, having regard to the subject-matter of the suit and the reliefs claimed therein, the Court will be justified in rejecting the application for stay in exercise of its discretion. Thus, the main contest between the parties in the application under S. 34 of the Arbitration Act is as to the exercise and binding character of the agreement dated 3-1-1971, containing the arbitration clause.
4. The appellants had produced the original of the agreement dated 3-1-1971, which has been marked as Ex. B.4. They have also filed affidavits from two of the attestors wherein they have stated that all the brothers voluntarily signed the agreement. They have also filed an affidavit from Arumugasami Nadar, the arbitrator referred to in the said agreement, wherein he has stated that if reference is made to him by the parties as per the terms of the agreement dated 3-1-1971, he is willing to enter upon his duties and give his award in respect of the disputes between the brothers.
5. As against this, respondents 1 to 4 had filed an affidavit from one of the attestors to the alleged agreement dated 3-1-1971, wherein he has stated that the parties to the agreement have not signed the same in his presence, and that when the a
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