JUDGMENT 1. THIS rule obtained by defendants 1-3 is directed against an appellate order passed in Miss. Appeal No. 138 of the Court of the ld. Additional District Judge, Alipore, reversing an order of stay of T. S. 90 of 1976' of the 2nd Court of Id. Subordinate Judge, alipore, u/s. 34 of the arbitration Act, 1940. Opp. parties 1 and 2 as plaintiffs instituted the aforesaid suit for dissolution of partnership and other reliefs against the petitioners and pro- forma Opp. parties 3 and 4. The case of the plaintiffs in brief may be stated thus : 2. BY a deed of partnership dated may 4, 1974, the plaintiffs and defendants 1,2 and 3 formed a partnership for the purpose of carrying on the business of public exhibition of cinemotograph under the name and style of M/s. Sreemati and Co., under the said deed, the pro- forma defendant No. 4 who is the husband of defendant No. 2 was appointed as Manager of the business and defendant No. 5 who is husband of defendant No. 1 was appointed as Assistant Manager. The plaintiffs contributed Rs. 25,000/- each towards capital. They have one fifth share each in the business. Taking advantage of the appointment of pro- forma defendants 4 and 5 as manager and Asst. Manager, the defendants 1, 2 and 3 with the malafide intention of depriving the plaintiffs of their legitimate benefits out of the partnership business including the right to participate in the business completely ousted the plaintiffs from the business in breach of the terms of the partnership agreement. Manager, the defendants 1, 2 and 3 with the malafide intention of depriving the plaintiffs of their legitimate benefits out of the partnership business including the right to participate in the business completely ousted the plaintiffs from the business in breach of the terms of the partnership agreement. This, they did in conspiracy with each other being actively aided and abetted by the pro- forma defendants 4 and 5 The plaintiff then enumerates several instances of breach of terms of the partnership deed namely how the defendants kept the plaintiffs in the dark about the conduct of business, the number of persons employed, appointment of a Booking agent of their own choice without consultation with the plaintiffs with the object of making illegal gains without the knowledge of the plaintiffs, failure, to open any bank account either at the place of business or at Calcutta where the head office of the business is situate, manipulation of false balance sheets, illegally drawing more remuneration that what was agreed, misappropriation of funds by showing expenditure of huge amounts on account of purchase of machineries and tools but without production of any materials and vouchers in support of such purchases and the like. In the premises, the plaintiffs alleged that the defendants and each of them are guilty of conduct which has materially and prejudicially affected the carrying on of the business effectively in partnership. The plaintiffs therefore are entitled to a decree for dissolution of the partnership under section 44 of the Partnership Act. The prayers made in the suit are (1) a decree dissolving the partnership between the plaintiffs and the defendants 1, 2 and 3, (2) a preliminary decree directing the defendants 1, 2 and 3 to render to the plaintiffs accounts in respect of the business, (3) a final decree after such accounting, (4) Receiver, (5) an injunction and (6) such further or other relief's to which the plaintiffs may be found entitled. Defendants 1 to 3, relying on clause 21 of the partnership agreement relating to reference of disputes to arbitration, prayed for stay of the suit under section 34 of the Arbitration Act. Defendants 1 to 3, relying on clause 21 of the partnership agreement relating to reference of disputes to arbitration, prayed for stay of the suit under section 34 of the Arbitration Act. The relevant clause reads as follows : "All matters including the management and/or disputes or differences of opinion touching the conduct or the affairs of the business and/or interpretation of any of the clauses of this deed shall be firstly decided and settled by the partners. In case of any further dispute the matter shall be referred to a sole Arbitrator nominated by the majority of the partners and such arbitrator will decide the matter and give Award according to the Indian arbitration Act then in force which will be binding on all the parties." 3. THE learned Subordinate Judge negatived the contention put forth on behalf of the plaintiffs that the reliefs claimed were beyond the scope of arbitration and that the reliefs could only be granted by the court. Upon an interpretation of the arbitration clause be found that the arbitrator would have jurisdiction to award dissolution if need be. In coming to this conclusion he relied on a decision in the case of ballavdas Vs. Shyam Sundar ILR (1946) 1 cal. 203. He allowed the prayer for stay. 4. THE plaintiffs preferred an appeal being misc. Appeal no. 138/77. The learned lower appellate court found and we think rightly that an arbitration clause notwithstanding, the court may, in the exercise of its discretion in a proper case, refuse to stay the proceedings instead of leaving the matter to be decided by arbitration. He accepted the view of the learned subordinate Judge, that in this case, the terms of the arbitration clause well covers the dissolution of partnership also but then he refused the prayer for stay on a different consideration altogether. He observed that in terms of the arbitration clause, the arbitrator is to be nominated by the majority partners and since the defendants form the majority, the plaintiffs may have a reasonable apprehension that their interest may not be safe in the hands of an arbitrator so appointed. On this consideration alone, the learned appellate Judge allowed the appeal and set aside the order for stay of the suit. Being, aggrieved, defendants 1 to 3 have moved this court in revision and obtained the Rule. On this consideration alone, the learned appellate Judge allowed the appeal and set aside the order for stay of the suit. Being, aggrieved, defendants 1 to 3 have moved this court in revision and obtained the Rule. The Rule is being opposed by the plaintiff Opposite party No. 1. In the revisional application it is complained that the learned Appellate judge has based his conclusions purely on surmises and conjectures and had not a word to say against Sri Prafulla Kumar chatterjee, Advocate who has been nominated as the arbitrator. It was therefore argued that there is no foundation for the ultimate order passed by the learned appellate court below. . 5. HAVING heard learned Advocates for both sides we find it difficult to support the reasoning of the learned Judge to affirm the impugned order. To uphold such a contention would have the effect of practically rendering the arbitration clause entirely mugatory. The parties had themselves agreed that the majority of the partners would have the option to nominate. The (plaintiffs being two in number, the choice necessarily fell on the defendants. If on that ground the stay is to be refused because of apprehended bias in the arbitrator, then the arbitration clause could never be given effect to because the minority would always complain of bias. The mere fact that the choice of the arbitrator is given to the majority, does not seem to be arbitrary, unwholesome or unworkable. We know from our experience that in many cases of contracts between Government departments and private parties, the arbitration clause provides that a particular officer of the Department concerned or some one nominated by him is to act as arbitrator in case of differences or disputes arising out of: the contract. It is preposterous to suggest that in all such cases, the other party is always at a disadvantage and as such entitled to resist a prayer for stay. In absence of something tangible to indicate a possible bias in the arbitrator, we are unable to agree with the finding of the learned appellate! judge that the terms of the arbitration clause being what it is. the dispute should not be left to the 'arbitrator for decision. In the case of U. P. Co. Op. In absence of something tangible to indicate a possible bias in the arbitrator, we are unable to agree with the finding of the learned appellate! judge that the terms of the arbitration clause being what it is. the dispute should not be left to the 'arbitrator for decision. In the case of U. P. Co. Op. Federation vs. Sundar Bros (A. 1967 SC 249) the Supreme court held that a party may be released from the bargain if he can show that the arbitrator is likely to show bias or it hits sufficient reason to suspect that he will act unfairly or that he has been guilty of continued unreasonable conduct. But in the present case it will bear repetition that beyond alleging that the arbitrator has been nominated by the defendants who form the majority nothing further has been suggested or even hinted at. Therefore we are unable to support the impugned order on the reasoning's given by the learned Appellate judge. 6. BUT then, the order, in our view is supportable for reasons we shall presently discuss. The case of the plaintiffs as made out in the plaint is substantially a case of fraud, suppression of information relating to the conduct of business and misappropriation of business funds and manipulation of false Balance Sheet. The plaintiffs have prayed for a decree for dissolution under section 44 of the Partnership Act. Mr. Roy in opposing the revisional application argued that the arbitration clause contains two essential parts and the reference to arbitration could be invoked only if the first part requiring the parties to try to settle amicably fails. Assuming that an attempt at conciliation by the parties themselves is a condition precedent, there are sufficient indications in the plaint itself that it had failed. In spite of giving of notice by the plaintiffs the defendants had failed or ignored to comply. The preliminary objection therefore fails. But the more substantial ground on which Mr. Roy relied is that the nature of the dispute and the reliefs claimed in the suit are such that they can be granted only by the court and not by the Arbitrator. 7. The preliminary objection therefore fails. But the more substantial ground on which Mr. Roy relied is that the nature of the dispute and the reliefs claimed in the suit are such that they can be granted only by the court and not by the Arbitrator. 7. IN the first place it was argued that the arbitration clause envisages settlement of disputes and differences during the subsistence of the partnership and the partnership in this case being a partnership -at-will stood dissolved on the service of summons in the suit, so that it is beyond the arbitrator now to resolve the differences between the parties. In support of this contention reliance was placed on the decision in the case of Sailendra Vs. Chiller ram A 1955 N. U: C. (Calcutta) 1027. The judgment was made available and we had the advantage of going through the full text of it. There also the controversy arose out of an application for stay in a suit for dissolution of a partnership -at -will. As in this case before us there was nothing in the partnership agreement there by which any party was prevented from dissolving the partnership except by recourse to arbitration. Therefore it was held that there was no reason why the court should stay a suit based on such a dissolution. In that case too, the case of Ballavdas Vs Shaym Sundar (supra) was referred to but the case was distinguished on the ground that in that case the partnership was for a fixed term while in the case before us, the partnership business was a partnership at will (vide clause 15 ). This is one aspect of the matter- and viewed from that point of view there seems to be justifiable ground for refusing to stay the suit. 8. THIS apart, even on the arbitration clause itself, this suit where reliefs have been claimed under section 44 of the Partnership Act, there are enough materials for refusing to stay the action. The allegations of the plaintiffs are primarily and essentially of fraud and misappropriation. Learned advocate for the defendants wanted to argue that the allegations are too vague in nature and therefore not enough to justify refusal to stay the suit or the continuance of the action in court. The allegations of the plaintiffs are primarily and essentially of fraud and misappropriation. Learned advocate for the defendants wanted to argue that the allegations are too vague in nature and therefore not enough to justify refusal to stay the suit or the continuance of the action in court. It is true that a charge of fraud in order to be a ground for refusing stay must be clear and unambiguous and supported by material particulars. In this case we are unable to agree that mere vague allegations have been made. Positive allegations with specific particulars to sustain the charges have been made and instances in support of the charges have been given. It is now well settled that if there are serious allegations of fraud, which may require investigation, the court may, in its discretion refuse to stay the suit. ( See A 1917 P. C. 116, A. 1967 Mad. 201 ). Arid in this suit there are indeed such allegations of a serious nature requiring investigation. Learned Advocate for the petitioner however referred to the case of Printers Private Ltd. vs. P. Joseph, A. 1960 S. C 1156 in support of his plea that the suit should remain stayed. In particular our attention was drawn to an observation in paragraph 7 where it is said "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 [proceedings instituted before it by One of them". It is however, further observed in the same judgment that 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 alone claim the stay of the suit as a matter of right. There is indeed no inflexible standard the automatic application of which will solve the problem of the exercise of judicial discretion in this regard, The question whether the legal proceedings should be stayed must always be decided with reference to the relevant facts and circumstances of each case. Considering the nature of the allegations in this case, we feel that it may not be proper to leave the matter to the decision of a lay arbitrator. 9. Considering the nature of the allegations in this case, we feel that it may not be proper to leave the matter to the decision of a lay arbitrator. 9. THE other case referred to, Abdul kladir vs. Madhav Pravakar, A. 1962 S. C. 406, also is not of much assistance to the petitioners. There is an observation in this case that 'there is no doubt that where serious allegations of fraud are made against a party who is charged with fraud desires that the matter should be tried in open court, that would be a sufficient 'cause for the court not to order an arbitration agreement to be filed and' not to make'' the reference. " On the basis of this observation it was argued that the option to have the case tried by the court is with the party charged namely the defendants and since they have themselves asked for stay there is no reason to refuse the prayer. There are indeed many authorities for the proposition that where allegations of fraud are made, the party against whom such allegations are made may successfully resist the reference to arbitration. But this decision) is no authority for the proposition that the converse namely that the party against whom charges are made, may as a matter of right insist upon a preference to arbitration being carried out instead of a full fledged trial in court, is true. The decision in Russet's case (1880)14 Ch. D. 471 there is an observation 'i do not say that in many cases which I will come to in the second branch of the case before the court, the court may not, in the exercise of its discretion, refuse to interfere ; but it does not appear to me to follow of necessity that this clause was not intended to apply to all questions even including questions either imputing moral dishonesty or moral misconduct to one or other of the parties". Therefore, it seems that the party against whom the charges are made is mot the only party who has the option. It may well be for the party making the allegations to ask for, in a given case, adjudication by the court. 10. Therefore, it seems that the party against whom the charges are made is mot the only party who has the option. It may well be for the party making the allegations to ask for, in a given case, adjudication by the court. 10. THE true legal position seems to be that where there is an agreement to submit future disputes to arbitration, and a charge of fraud arises under it, the court has the discretion to order that the agreement shall cease to have effect and to refuse to stay an action brought in breach of the agreement. The material point for consideration is the nature of the allegations and the facts pleaded in support thereof. The question whether a stipulation that the matter involving fraud should be submitted to arbitration is not entirely free from doubt. In the case before us however there is no such express stipulation in the arbitration clause that questions involving fraud should also be submitted to the arbitrator. Considering the nature of the allegations, we are of the opinion that it would be wise to use the discretion in favour of refusing to stay the proceedings in court. Russel on the law of arbitration (18th Ed.) page 167, after quoting the decision in the case of Joplin vs. Postlethwaite (1890) 61 L. T. 629. says "however, the court has a discretion to refuse a stay. This discretion must be exercised upon the facts involved, but when a dissolution is claimed, the facts involved are very apt to be such as to call for refusal". In the case before us the facts verily justify a refusal. Russel goes on to say that "whilst this is not a proposition of law, as the cases previously cited show, it may perhaps he regarded as a 'proposition of good sense' and the principle is frequently found persuasive". In the present case we feel persuaded to abide by the principle. 11. THEN again it is not clear under which particular clause of sec. 44 of the partnership Act, dissolution is prayed for. But upon reading the plaint as a whole, it seems that the case may well come within clause (g) which contemplates a ground that it is just and equitable to dissolve it. The power of deciding such a question is manifestly on the court. In the case of oliver vs. Hillier (1959) 2 All. But upon reading the plaint as a whole, it seems that the case may well come within clause (g) which contemplates a ground that it is just and equitable to dissolve it. The power of deciding such a question is manifestly on the court. In the case of oliver vs. Hillier (1959) 2 All. E. R. 220 the court in the exercise of its discretion permitted the action to continue having regard to the facts that dissolution was claimed on a ground analogous to clause (g) of Sec. 44 and also because appointment of receiver and manager was sought. In our case too receiver and injunction have been prayed, 12. FINALLY it appears that there are parties to the suit who are not parties to the agreement. Ordinarily, in order that a dispute may be covered by the arbitration clause it would be necessary for the parties to the suit being the same as are parties to the arbitration agreement, in this case Performa defendants 4 and 5 are not parties to the agreement. They are husbands of defendants 2 and 1 respectively. True that no relief has been expressly claimed against them. But the specific grievance of the plaintiff is that the principal defendants have been continuing in their misdeeds with the active collaboration and assistance of the pro-defendants. Positive acts of misconduct have been attributed to them. Although no relief in terms has been claimed against them, it does not seem to us that they were added merely to circumvent the ordinary rule that the parties to the agreement and the parties to the suit should be identical. For the reasons aforesaid, we are inclined to and we do hereby dismiss the revisional application and uphold the order refusing to stay the suit though on entirely different considerations. The Rule is accordingly discharged. There will be no order for costs. Leave under Article 134a of the Constitution is prayed for and the same is refused.