Judgment :- These two revision petitions are directed against a common order of the Principal Judge, City Civil Court, Madras dismissing two appeals filed against the orders of the trial Judge staying the trial of O.S. No. 3967 of 1967 on the file of the City Civil Court, Madras. The petitioner herein filed the above silt against the respondents directing them to render accounts of the partnership firm of P. Muniratnam Naidu and Sons as on 12th December 1963, for ascertainment of the amount due in respect of profits, Interest, loan deposit and capital account for giving credit to Rs. 19,367-83 and other reliefs. The plaintiffs case is that defendants 1 and 2 were originally carrying on the business in partnership under the name and style of P. Munirathnam Naidu and Sons at No. 10 Stringers Street, Madras, between 1st April 1957 and 30th June 1960, that when the plaintiff who was originally manager was elevated to the position of a partner, the firm was dissolved and a new firm was constituted taking him and others as partners, that he was given 1/8th share, that a partnership deed dated 10th January 1960 was drawn up embodying the terms of agreement between the parties, that by the end of 1963 the plaintiff wanted to retire from the partnership, that a release deed dated 13th December 1963 was drawn up, that the plaintiff was paid Rs. 3,000 for his share of the goodwill of the business inclusive of the quota rights as on the date of retirement, that the plaintiffs stare in the profits was left to be ascertained later on, that the said ascertainment did not take place In spite of demands, and that the present suit is filed for the aforesaid reliefs. The defendants catered appearance, but did not file written statements. The second defendant filed I.A. 11905 of 1967 and defendants 1 and 3 I.A. No. 13120 of 1967, under S. 34 of the Arbitration Act for stay of the trial of the suit pending arbitration as per clause 16 of the partnership deed which provided for settlement of disputes between the parties by arbitration. The second defendant filed I.A. 11905 of 1967 and defendants 1 and 3 I.A. No. 13120 of 1967, under S. 34 of the Arbitration Act for stay of the trial of the suit pending arbitration as per clause 16 of the partnership deed which provided for settlement of disputes between the parties by arbitration. They contended that, if the claim of the plaintiff is based on the release deed, it is barred by the terms of the release deed Itself, that the allegation that there was no settlement of accounts is not true and that the present suit is barred. The trial court disposed of both the applications by a common order dated 22nd August 1918 upholding the defendants plea and holding that the suit cannot be proceeded with. The said orders were confirmed by the Principal Judge in C.M.A. 62 and 63 of 1968 and the present revision petitions are filed against the order of the Principal Judge. Clause 16 of the Partnership deed runs as follows: “Any dispute or difference which may arise among the partners or their representatives regard to the construction, meaning, effect of this deed or any part thereof, or respecting the accounts, profits or losses of the business, or the rights and liabilities of the partners under this deed, or the dissolution or winding up of the business or any other matter relating to the firm shall be referred to arbitration”. The partnership was entered into on 10th October 1960 between (1) P. Vasudeva Naidu (2) P. Janakirama Naidu, (3) P.V. Bhoopathy, (4) R. Kuppiswami Naidu and (5) M. Venkatasami Naidu. Clause 8 of the Partnership deed provides for division of profits of the partnership between the partners. The first party is entitled to 9 shares, the second party, 9 share 8, the third party, 6 shares, the 4th party, 4 shares and 5th party, 4 shares. In December, 1963 the plaintiff (M. Venkatersami Naidu, 5th party in the partnership deed) and R. Kuppuswami Naidu went out of the partnership. The first party is entitled to 9 shares, the second party, 9 share 8, the third party, 6 shares, the 4th party, 4 shares and 5th party, 4 shares. In December, 1963 the plaintiff (M. Venkatersami Naidu, 5th party in the partnership deed) and R. Kuppuswami Naidu went out of the partnership. A release deed dated 13th December, 1963 was executed by the aforesaid two outgoing partners in favour of the three continuing partners, in and by which the releasers, the outgoing partners, severed their connection with the partnership firm as from 12th December, 1963, and the remaining partners agreed to continue the partnership business as a going concern taking ever the entire basis ness assets and liabilities with goodwill and import and export quota rights, etc. The release deed states that the releasors have received all tile amounts due to them la their Individual accounts till the date of their retirement from the firm, that they have received a sum of Rs. 3,000 each in lieu of their share of goods will, import and expert quota rights, etc., and that they have relinquished their rights and Interests in the firm in the assets and liabilities and good will Including Import quota rights, etc. In favour of the continuing partners. But, as stated already, one of the outgoing partners, the plaintiff, has filed the suit O.S. No. 3967 of 1967 for directing that account be taken of the partnership firm as on 13th December, 1963 and for the ascertainment of the amount due to the plaintiff in respect of profit, interest, loan deposit and capital account. In the circumstances, the only question is whether Cl. 16 of the Partnership deed precludes the plaintiff from agitating his claim for accounts in the suit filed by him. Mr. Kesava Iyengar, the learned counsel for the petitioner contends, that the release deed supersedes the partition deed, that the outgoing partners under the release deed are no longer partners under the partnership deed dated 10th October, 1960, that Cl. 16 of the Partnership deed cannot apply after execution of the release deed, that the release died contains no arbitration clause, and that, therefore, the trial of the present suit cannot be stayed under S. 34 of the Arbitration Act. On the other hand, Mr. 16 of the Partnership deed cannot apply after execution of the release deed, that the release died contains no arbitration clause, and that, therefore, the trial of the present suit cannot be stayed under S. 34 of the Arbitration Act. On the other hand, Mr. S.K.L. Rattan, learned counsel for the respondents, contends that the partnership deed alone governs the rights of the parties, that Cl. 16 of the Partnership deed precludes the present suit, and that the civil court has no jurisdiction to entertain the salt. The scope of Cl. 16 of the Partnership deed is very wide. Cl. 16 provides that any dispute or difference which may arise among partners or their representatives with regard to the construction, meaning, effect of the deed or any part thereof, or respecting the accounts etc., or any other matter relating to the firm shall be referred to arbitration. of with standing the wide terms used in the partnership deed, a limitation is placed that the dispute should be among the partners or their representatives. In the present case, after execution of the release deed two of the partners, the plaintiff and Kuppuswami Naidu, have gone out of the partnership firm and they are no longer partners of the firm. In the circumstances, the dispute in this case is not among the partners, but among the erstwhile partners, namely the plaintiff and Kuppuswami Naidu, on the one hand and the continuing partners on the other. On execution of the release deed, the firm was reconstituted and the shares of the outgoing partners including all their rights and Interest in the assets and liabilities, import quota rights etc., were taken ever by the continuing partners. By reason of the rele ase deed dated 13th December, 1963, a new contract in substitution of the partnership deed has come into existence and a “novatlo” has taken place. The following passage in Chitty on contracts, 22nd Edn. p. 1141, in paragraph 1143 will be useful: “Novatlo is a generic term which signifies that there being a contract in existence, some new contract is substituted for it, either between the same parties or between different parties; the consideration mutually being the discharge of the old contract”. The above passage is extracted from the speech of Lord Selborne in Searf v. Jardine (1882) 7 A.C 245. The above passage is extracted from the speech of Lord Selborne in Searf v. Jardine (1882) 7 A.C 245. In the same paragraph the learned author states as follows: “In particular, however, it denotes the rescission of one contract and the substitution, of another in which the same acts are to be performed by different parties”. In the present case, there having been a novatio consequent upon the retirement of the plaintiff and Kuppuswami Naidu from the partnership, the partnership deed is superseded by the release deed and no rights could be traced under the old partnership deed. Further, the partnership can be in operation only so long as the partners continue to do the partnership business. When two of the partners, namely, the plaintiff and Kuppuswami Naidu went out of the partnership leaving the other partners to continue the partnership business, any dispute between the plaintiff and the remaining partners cannot fall under the Arbitration clause, namely, clause 16 of the Partnership deed. None of the cases cited by the learned counsel for the respondents is directly in point. Mr. Kesava Alyangar, the learned counsel for the petitioner, in support of his contention that the present suit cannot be stayed, referred to the decision of the Supreme Court in Anderson Wright Ltd. v. Moron and Co. A.I.R. 1955 S.C. 53 at 55 where Mukuerjea, J. (as he then was) laid down the following conditions before stay could be granted under S. 34 of the Arbitration Act. “1. The proceeding must have been commenced by a party to an arbitration agreement against any other party to the agreement; 2. The legal proceeding which is sought to be stayed must be in respect of a matter agreed to be referred; 3. The applicant for stay must be a party to the legal proceeding and he most have taken so steps in the proceeding after appearance. It is also necessary that he should satisfy the court not only that he is but also was at the commencement of the proceedings ready and willing to do everything necessary for the proper conduct of the arbitration; and (4) the court must satisfy that there is no sufficient reason why the matter should not be referred to an arbitration in accordance with the arbitration agreement” Mr. Kesava Aiyangar referred to S. 62 of the Contract Act, and contended that, by reason of the execution of the release deed, the partnership came to an end, that the plaintiff is no longer a partner of the firm, and that the partnership deed will no longer be in operation so far as the outgoing partners, the plaintiff and Kuppuswami Naidu, are concerned. There is a considerable force in this contention. The learned counsel referred to the decision in Padmanabha v. Srinivasa 78 L.W. 681 in support of his farther contention that, where grave charges of fraud and misconduct are alleged against defendants in the plaint, they are too seriouas to be tried by an arbitrator, and in such a case a civil court will be the proper court. Mr. Ratan, the learned counsel for the respondents, referred to Printers (Mysore) Private Ltd. v. P. Joseph A.I.R. 1 1960 S.C. 1156, 1158 and contended that the grant of stay is discretionary and, when once the trial court has exercised that discretion, the High Court ought not lightly set aside the order of the trial court. The following passage from the judgment of Gajendragadkar J. (as he then was) therein was referred by the learned counsel: “S. 34 of the Act confers powers on the court to stay legal proceedings where there is an arbitration agreement subject to the conditions specified in the section, the conditions thus specified are satisfied in the present case, but the section clearly contemplates that, even though there is an arbitration agreement and the requisite conditions specified by it are satisfied, the court may nevertheless refuse to grant stay if it is satisfied that there are sufficient reasons why the matter should not be referred in accordance with the arbitration agreement. In other words, the power to stay legal proceedings is discretionary, and so a party to an arbitration agreement against whom legal proceedings have been commenced cannot by relying on the arbitration agreement claim the stay of legal proceedings Instituted in a court as a matter of right. It is, however, clear that the discretion vested in the court must be properly and judicially exercised. It is, however, clear that the discretion vested in the court must be properly and judicially exercised. Ordinarily where a dispute between the parties has by agreement between them to be referred to the decision of a domestic tribunal the court would direct the parties to go before the tribunal of their choice and stay the legal proceedings instituted before it by one of them. As in ether matters of judicial discretion, so in the case of the discretion conferred on the court by S. 34, it weald be difficult, and it is Indeed inexpedient, to lay down any inflexible rules which should govern the exercise of the said discretion. Ne test can indeed be laid down the automatic application which will help the solution of the problem of the exercise of judicially discretion. As was observed by Browea, L.J. In Gardiner v. Jay (1885) 29 Ch. D. 50 at 58 ‘that discretion, like other judicial discretion, must be exercised according to common sense and according to justice.’. In exercising Its discretion under S. 34 the court should not refuse to stay the legal proceedings merely because one of the parties to the arbitration agreement is unwilling to go before an arbitrator and in effect wants to resale from the sold agreement, nor can stay be refused merely on the ground that the relations between the parties to the dispute have been embittered or that the proceedings before the arbitrator may cause unnecessary delay as a result of the said relations. It may not always be reasonable or proper to refuse to stay legal proceedings merely because same questions of law would arise in resolving the dispute between the parties. On the other hand, if fraud or dishonesty is alleged against a party it may be open to the party whose character is impeached to claim that it should be given an opportunity to vindicate Its character in any open trial before the court rather than before the domestic tribunal, and in a proper case the court may consider that fact as relevant for deciding whether stay should be granted or not. If there has been a long delay In making an application for stay and the said delay may reasonably be attributed to the fact that the parties may have abandoned the arbitration agreement, the court may consider the delay as a relevant fact in deciding whether stay should be granted or not. Similarly, If complicated questions of law or constitutional Issues arise In the decision of the dispute and the court is satisfied that it would be Inexpedient to leave the decision of such complex Issues to the arbitrator, it may, in a proper case refuse to grant stay on that ground; Indeed, in such cases the arbitrator can and may state a special case for the opinion of the court under S. 13(b) of the Act. Thus, the question as to whether legal proceedings should be stayed under S. 34 must always be decided by the court in a judicial manner having regard to the relevant facts and circumstances of each case.” To the same effect are the decisions in Hodson v. Railway Passengers Assurance Co. (1904) 2 K. B. 833 and W. Bruce Ltd. v. J. Strong (1951) 2 K. B. 447. Mr. Ratan drew my attention to the recent decision of the Supreme In Erach F.D. Mehta v. Minco F.D. Mehta C.A. No. 2535 of 1969, (unreported). The facts therein are that there was a partnership agreement between two brothers, namely the appellant and respondent which provided an arbitration for resolving the dispute between them relating to the partnership. Soon after commence of the partnership business, disputes between the partners arose on 17th January, 1968, the respondent claiming that an oral agreement was reached between them to the effect that the appellant shall retire from the partnership and assign his interest against payment of money fixed by a named person. The appellant denied the agreement. Soon after commence of the partnership business, disputes between the partners arose on 17th January, 1968, the respondent claiming that an oral agreement was reached between them to the effect that the appellant shall retire from the partnership and assign his interest against payment of money fixed by a named person. The appellant denied the agreement. He filed an application under S. 33 of the Arbitration Act (a) for a declaration that there was no existing arbitration agreement in regard to the dispute in petition as to whether or not agreement was entered Into between the parties on 17th January 1968 as stated in the statement of claim filed by the respondent before the arbitrators on 8th August 1969, (b) for a declaration that even if the deed of partnership contained an arbitration agreement the dispute before the umpire fell outside the scope of the arbitration clause, (c) for a declaration that the arbitration agreement, if any, relating to the said dispute was invalid and (d) for a declaration that the umpire had no jurisdiction to enter upon an adjudication of the said dispute between the parties. The aforesaid petition was heard by Kanawala, J. In the Bombay High Court. The learned Judge rejected all the contentions of the appellant and dismissed the application. With special leave the appellant appealed to the Supreme Court. In the Supreme Court their Lordships dismissed the appeal, without expressing any opinion en the question whether a dispute a which is agreed to be submitted to arbitration, a reference to arbitration cannot be made merely because subsequent to the arbitration agreement the parties have agreed that a part of the dispute shall be referred to or decided by same person other than the arbitrator. The questions which arose before the Supreme Court in that case for determination are different from those which arise for determination in the instant ease. In the present case the release deed was admitted to be true, whereas in the case before the Supreme Court the existence of the subject agreement was itself in question. The question whether the subsequent release deed subsequent the earlier partnership deed did not fall to be decided by the Supreme Court in that case. In the present case the release deed was admitted to be true, whereas in the case before the Supreme Court the existence of the subject agreement was itself in question. The question whether the subsequent release deed subsequent the earlier partnership deed did not fall to be decided by the Supreme Court in that case. I am, therefore, of opinion that clause 16 of the partnership deed cannot be invoked in the present case on two grounds, namely, that the controversy in the present suit is not in dispute between partners, qua partners as the plaintiff and Kuppuswami Naidu have severed their connection with the partnership and they are no longer partners, and (2) that the release deed in question has superseded the partnership deed and there is no arbitration clause in the release deed, the rights of the parties to the suit flowing only from the release deed. In the result, the orders of the courts below are set aside and the revision petitions are allowed. No order as to costs.