JUDGMENT :- The appellants have preferred this appeal against the order of the learned City Civil Judge, dismissing their application under S. 34 of the Arbitration Act, for stay of all further proceedings in the suit, O. S. No. 3544 of 1962.

2. The parties entered into an agreement of partnership dated 1-6-1961 for carrying on the business of manufacturing chemists. Towards the end of 1962, disputes arose between the parties and the notices issued by the plaintiff show that mutual trust and confidence so essential for a smooth and successful carrying on of the partnership business had ceased to exist, and the plaintiff had made several serious charges of fraud and misappropriation and misconduct against the defendants, and that the plaintiff sought a dissolution of the partnership on the ground that it was no longer possible, to carry on the business of partnership save at a loss. The plaintiff issued the notice dated 14-11-1962 to which the defendant sent a reply on 1-12-1962 followed by a rejoinder by the plaintiff dated 6-12-1962. The suit for dissolution was filed on 10-12-1962 and even before filing the written statement, the defendants filed an application under S. 34 of the Arbitration Act, on 18-1-1962, for stay of all further proceedings in the suit.

3. The learned Judge dismissed the application on two grounds : (a) that the defendants have not established that as required under S. 34 of the Arbitration Act they were ready and willing to resort to arbitration proceedings at the commencement of the suit O. S. 3644 of 1962, and continued to be so ready and willing even thereafter; (b) that clause 36 of the partnership deed providing for arbitration would not apply to the particular dispute in question.

4. At the outset it must be mentioned that in the plaint in addition to levelling charges of fraud, misconduct and misappropriation against the defendants, the plaintiff has sought the relief of dissolution of the firm under Section 44 of the Partnership Act on the ground that the business of the firm cannot be carried on save at a loss. In other words, the plaintiff has asked for the relief of dissolution invoking the court's special jurisdiction and protection on equitable grounds despite the terms by which the rights and obligations of partners may have been regulated. I shall first consider whether defendants have satisfied the requirements of S. 34 of the Arbitration Act, which is substantially on the same terms as S. 4 (1) of the English Act of 1950. It runs as follows :

"Section 34. Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority, may make an order staying the proceedings."

5. In the reply notice dated 1-12-1962 sent by the counsel for the defendants there was no express reference to the arbitration proceedings but it contained only the following statements :

"If on the other hand your client is entitled to any amount, he will be paid the same as already stated and there is no need for any proceedings in court; much less such proceedings in court are not envisaged by the terms of the partnership."

If, in spite of this reply your client chooses to take the law into his own hands he will do so at his risk and cost."

It is obvious that from this statement it cannot be contended that the defe

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