( 1. ) THIS appeal by the defendants is directed against an order of the Additional District Judge, Satna, dated 8th September 1971, rejecting their application for stay of the proceedings in suit, under section 34 of the Arbitration Act.

( 2. ) SHORTLY stated, the facts are that the plaintiff brought the suit for dissolution of partnership and rendition of accounts of the firm styled, "m/s Om builders and Miners" Satna, constituted under the deed of partnership dated 29th October 1966. In the plaint, the plaintiff has levelled various charges of fraud, misappropriation of fund and other acts of misconduct against the defendants, seeking a dissolution of the firm on the ground that it was just and equitable under section 44 (f) and (g) of the Partnership Act. It was alleged that due to the acts of malfeasance and misfeasance on the part of the defendants, as pleaded, the business of the partnership had come to a stand still and, indeed, could not be continued except at a loss.

( 3. ) IT is not necessary for our purposes to go into the allegations in detail. Suffice it to say that specific charges of a serious nature, alleging fraud including acts and omissions, which involve breach of legal or equitable duty, trust or confidence, have been made. It is alleged, for instance, that a sum of Rs. 81,000 withdrawn from the partnership till, which had to be deposited with Raurkela steel Project as earnest money towards a contract, for which a draft was issued on 12th December, 1969, was instead credited by the defendants as earnest money for a tender submitted by their partnership firm styled, M/s Kisan miners", and the amount of Rs. 60,000 deposited by them on that account, was encashed. Similarly, the defendants withdrew an amount of Rs 40,000 from m/s Om Builders and Miners and invested the amount in the business of their firm m/s. Kisan Miners. They also fradulently utilised machines, tools and impliments "of M/s. Om Builders and Miners" in the business of M/s. Kisan miners.

( 4. ) IN their application under section 34 of the Act, the defendants sought stay of the proceedings on the ground that under the arbitration clause, the arbitrators had power to decide whether or not the partnership should be dissolved, and to settle the accounts upon its dissolution and, therefore, the disputes which had arisen, including those which carried such charges of misconduct as had been made, should be decided by the domestic forum which the parties had chosen and, therefore, the proceedings in suit ought to be stayed. Incidently, the defendants, in their application, also joined issue on the various allegations made against them.

( 5. ) THE learned Additional District Judge was convinced that the plaintiff has a substantial and bona fide cause of action and that on the affidavits a sufficient prima facie case of fraud has been made out. He, accordingly, declined to stay the suit, holding that the matter was outside the scope of the arbitration clause. That decision of his must, as it should be upheld not only on the ground stated, but on other grounds as well.

( 6. ) CLAUSE 16 of the partnership deed provides

"16. That, any controversy or claim relating to this partnership or any breach in respect thereof shall be subject to Arbitration under the Indian Arbitration Act then in force. The decision arrived at by the Arbitration or Arbitrators as the case may be, shall be binding on all the partners. "

( 7. ) SHRI Verma, counsel appearing on behalf of the appellants, drew our attention to clause 15 of the partnership deed, which is in the following terms:-

"15. That, in case of death or retirement of a partner the firm shall not be dissolved but shall continue by making necessary revisions and admitting the legal heir of the deceased as may be agreed upon by the remaining partners and the legal heir of the deceased. "

and says, on the strength of Abbott v. Abbott, (1936) 3 All. ER 823. that the partnership not being a partnership at will, the pla