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Allahabad High Court · body

1966 DIGILAW 155 (ALL)

Moti Ram Agarwal v. Raja Ram Agarwal

1966-03-31

B.DAYAL, D.D.SETH

body1966
JUDGMENT B. Dayal, J. - This is an appeal against an order by the plaintiff-appellant, who made an application under Sec. 20 of the Arbitration Act. The facts of the case are not in dispute. The parties to the suit were partners in a firm. The plaintiff gave notice for dissolution of the partnership. In the partnership agreement there was clause (12) which runs as follows: - "That the partnership business may be dissolved by any of the partners by giving three months notice in writing to all the other partners but the party giving notice of dissolution shall have to seek dissolution by arbitration by giving a prior notice in writing to all the partners for appointment of one arbitrator each and to name his own arbitrator within one month from the date of notice of appointment of arbitrator and no suit for dissolution of partnership shall be filed unless the dissolution by appointment of arbitrators has failed." 2. After giving notice of dissolution of the partnership, the plaintiff asked the defendants to appoint one joint arbitrator on their behalf. The defendants, on the other hand, insisted upon appointing one arbitrator each, to which the plaintiff did not agree. He, therefore, filed the present application under Sec. 20 of the Arbitration Act in the court of the First Civil Judge of Kanpur. In his application, he prayed that the defendants be asked to file the arbitration agreement in court and an arbitrator be appointed to adjudicate upon the dispute between the parties. He further prayed, "If the parties do not agree on one name, one for the plaintiff and one for the defendants may please be got appointed by the court, the award be got filed in court and be made a rule of the court." The defendants reiterated in their written statement that each of the parties had a right to appoint its own arbitrator. 3. The court below, after reading Cl. (12) of the agreement, came to the conclusion that the allegation of the defendants was right and each of them was entitled to appoint as arbitrator. Having come to that conclusion, the court dismissed the application with costs. Against that order the present appeal has been filed. 4. From the circumstances mentioned above, it is clear that the parties could not get the firm dissolved through arbitration themselves out of court. Having come to that conclusion, the court dismissed the application with costs. Against that order the present appeal has been filed. 4. From the circumstances mentioned above, it is clear that the parties could not get the firm dissolved through arbitration themselves out of court. When the plaintiff had filed an application under Sec. 20 of the Act, it was the duty of the court to act under that section and the court could not dismiss the application simply because it came to the conclusion that the plaintiff was wrong in insisting upon two arbitrators only. Whether the plaintiff was wrong or the defendants were wrong, the result was that the parties failed to agree to the appointment of an arbitrator or arbitrators,who could decide the dispute. It was then the duty of the court under sub-Sec. (4) of Sec. 20 of the Act to appoint an arbitrator for deciding the dispute. The court could have appointed either one or more arbitrators. Sub-Sec. (4) of Sec. 20 of the Act is as follows: - "Whether no sufficient cause is shown, the court shall order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the court." Applying this section to the present case, there being no arbitrator or arbitrators appointed by the parties, the court should have first tried to get some agreed name or names of the arbitrator or arbitrators from the parties and if they failed to do so, the court should have appointed an arbitrator or arbitrators itself and should have referred the dispute to such arbitrator or arbitrators. 5. The order of the court below dismissing the application of the plaintiff was, therefore, wholly unjustified and is hereby set aside. The appeal is accordingly allowed and the case is sent back to the court below for deciding the application according, to law. Parties will bear their own costs of this Court. Costs of the court below will abide the result.