K. KANNAN, J.

I. Genesis of Action

The defendants in a suit, filed at the instance of a partner of a firm seeking for dissolution, moved an application under Section 8 of the Arbitration and Conciliation Act, 1996 seeking for a reference to arbitration on the basis that the subject-matter of suit was governed by an arbitration agreement. The application was dismissed and the aggrieved parties are the civil revision petitioners before this court.

II. Cure Reason for Dismissal of the Petition

While dismissing the application, the court below took note of the averments in the plaint regarding the so-called mismanagement and fraud practiced by the defendants and interpreted them to mean that disputes arising out of such a situation would not be governed by the relevant clause in the partnership deed though provided with an arbitration clause.

III. The Relevant Clause for Consideration

The partnership deed provided as follows :

"Any disputes arising out of this partnership or as to interpretation, operation or enforcement of terms of this partnership between the parties or their legal representatives shall be referred to the arbitration of a person appointed by the partners whose decision shall be final and binding on all partners and their legal representatives."

IV. Principal Grounds of Challenge

It is contended by the counsel for the revision petitioners that the interpretation given by the court below was clearly wrong and that any issue relating to winding up and the entitlement of any party to resort to the provisions of Section 44 are squarely governed within the term disputes and amenable to arbitration by the operation of the clause referred to above.

V. Reference to Arbitration - Factors Against, as Urged in CRP

The learned senior counsel for the respondent has difficulties to support the line of reasoning adopted by the court below but sets out his objections as follows :

(a) The reference to arbitration will be an exercise in futility since it will be barred by limitation.

(b) The original or a duly certified copy of arbitration agreement has not been filed along with the petition under Section 8 and hence the petition is liable for rejection.

VI. Examination of the Issue of Limitation

The suit had been instituted in the year 1999 and even before filing the written statement, the defendants had filed an application under Section 8 with a copy of the partnership deed containing the arbitration clause. On 13.07.2000, the suit had been subsequently transferred to the District Munsif Court at Coimbatore and the petition was pending all along without any orders of the court.

A. Plaintiff's Objections

(a) Initiative for arbitral process not taken by defendants

The argument unfolds on the premise that Section 8(3) of the Arbitration and Conciliation Act, 1996 allows for the commencement of arbitration proceedings, its continuance and rendering of an arbitral award, notwithstanding an application filed under Section 8(1). The petitioners ought to have taken steps to have an arbitrator appointed by resort to Clause 18 of the partnership deed and if there was no concurrence in the appointment of an arbitrator, they ought to have applied under Section 11 of the Act by an application before the Chief Justice for appointment of an arbitrator.

(b) The commencement of the dispute - Relevant period for computing limitation

The learned senior counsel relied on Section 21 of the Arbitration and Conciliation Act, 1996 to state that the arbitral proceedings in respect of a particular dispute would commence on the date on which a request for the dispute to be referred to arbitration is received by the respondent. This request must be read into the application under Section 8(1) and if such a construction is made, it would mean that the cause of action had arisen on 13.07.2000 when the petition had been filed. The petitioners are bound to have taken steps within 3 years for appointment of the arbitrator by an application of rule und