An application under Section 34 of the Arbitration Act, 1940, should make out that a dispute, as understood in the law of arbitration, had arisen before the institution of the suit or before the filing of the application, that such dispute was the subject-matter of the suit and that the dispute was within the arbitration clause of the contract.

, J.

1. This appeal has been filed against the judgment of the Senior Subordinate Judge, Kapurthala, dated March 1, 1971, by the plaintiffs.

2. The facts giving rise to the present appeal are that a suit was instituted by the plaintiffs for rendition of accounts of the partnership between the parties. The defendants filed an application under Section 34 of the Arbitration Act, 1940, hereinafter referred to as the Act, for staying the proceedings on the ground that according to the deed of partnership, dated January 4, 1963, it had been agreed between the parties that all disputes between the partners were to be referred to the Arbitrator. It was further stated that the defendants were willing at the time of the institution of the suit and continued to be so to do all things necessary for proper conduct of the arbitration proceedings. The application was contested by the plaintiffs. Inter alia they pleaded that there was no such agreement, that the defendants had taken steps in the proceedings and that the defendants had not disclosed in the application the dispute sought to be referred to the arbitration. It was further stated that the defendants were not ready and willing to refer the matter to the arbitration. The trial Court framed the following issue:-

-

(1) Whether the suit is liable to be stayed under Section 34 of the Arbitration Act?

The trial Court decided the issue in favour of the defendants and stayed the proceedings in the suit. It directed the parties to get the dispute between them referred to arbitration in accordance with the terms of partnership deed, dated January 4, 1963. The plaintiffs having felt aggrieved from the judgment of the trial Court have come up in appeal to this Court.

3. The first contention of the learned counsel for the appellants is that the defendants had taken steps in the proceedings and therefore, the matter could not be referred to the arbitration under Section 34 of the Act. In order to substantiate the contention the learned counsel for the appellants has referred to the orders of the Court passed on various dates.

4. The suit was registered on April 29 1970. The service could not be effected on the defendants except defendant No. 1 till July 25, 1970. On that date counsel for defendant No. 1 appeared and the Court ordered that the service on the other defendants be effected for August 29, 1970. On August 29, 1970, it was ordered that the other defendants had not been served and fresh notice be issued for October 21, 1970. On October 21, 1970, the defendants were served except Chaman Lal. The counsel, however, appeared on behalf of all the defendants, and the case was adjourned to November 16, 1970 for written statement. The order of the Court dated October 21, 1970 is as follows:-

-

"Present: Counsel for the parties. Order For written statement to come up on November 16, 1970."

On November 16, 1970, the parties requested the Court for adjourning the case for compromise. The Court passed the following order on that date:-

-

"Present: Counsel for the parties. Order Counsel for the parties request for adjournment for effecting compromise. The parties to attend on December 24, 1970."

On December 24, 1970, the Court passed the following order:-

"Present: Counsel for the parties. Order Compromise not effected. For written statement to come up on January 1, 1971"

5. From the perusal of the aforesaid orders, it is clear that the counsel for the defendants never requested for an adjournment for filing the written statement. It was the Court who adjourned the case for filing the written statement. From the orders, dated October 21, 1970 and December 24, 1970, it cannot be assumed that the case was adjourned for filing the written statement on the request of the counsel for the defendants.

6. Mr. Bhagirath Dass has very vehemently urged that from the aforesaid orders no other inference can be drawn except that the case was adjourned for written statement on the request of the counsel f