G. B. PATTANAIK, J. ( 1 ) THIS is an appeal under S. 39 of the Arbitration Act (hereinafter referred to as the 'act') against the order of the Subordinate Judge rejecting the application filed under S. 20 of the Act on the ground that there are serious allegations of fraud, misappropriation and inducement against the defendants and accordingly, it would not be appropriate for the Court to refer the dispute for arbitration under S. 20 of the Act. ( 2 ) THE appellant filed an application under S. 20 of the Act for directing the defendants to file the arbitration agreement and to appoint an arbitrator for deciding the dispute arising out of the partnership agreement between the parties. It is alleged in the plaint that the plaintiff entered into a partnership agreement with defendant No. 1 and a registered partnership deed was executed on 7-6-1976. The partnership in question was engaged in the business of fertiliser agency and certain disputes having arisen in the year 1976, invoking the arbitration clause of the partnership agreement, the plaintiff served a notice under S. 8 of the Act, but since the respondents did not take any action, he filed the application under S. 20, which was numbered as Title Suit No. 122 of 1976. ( 3 ) DEFENDANT No. 1 filed a written statement admitting to be a partner of the firm with the plaintiff, but denied the allegations made in the plaint. It was further asserted that it was the plaintiff who was carrying on the entire business relating to receipt and disposal of stocks and back transactions and was also maintaining the accounts. It was also alleged by defendant No. 1 that it was the plaintiff who misappropriated the entire money including the capital of the firm for which defendant No. 1 refused to pay further Capital unless the accounts were settled. The allegation of connivance of defendant No. 1 with defendants 2 to 4 was denied and further it was stated that defendant No. 1 was entitled to Rs. 20,000/- as his share. Defendant No. 1 prayed for dismissal of the suit. ( 4 ) DEFENDANTS 2 to 4 filed a joint written statement challenging the allegations made against them. They also denied the fact of alleged inducement by them to the plaintiff as well as the allegations of fraudulent lifting of stocks of fertilisers. 20,000/- as his share. Defendant No. 1 prayed for dismissal of the suit. ( 4 ) DEFENDANTS 2 to 4 filed a joint written statement challenging the allegations made against them. They also denied the fact of alleged inducement by them to the plaintiff as well as the allegations of fraudulent lifting of stocks of fertilisers. On the other hand, they stated that they never approached the plaintiff or induced him to sign in blank paper and document as alleged in the plaint and further claimed that the plaintiff was to pay a sum of Rs. 39,902. 33 paise to defendant No. 2 towards the loan amount. It was also asserted that the suit was not maintainable as claimed. ( 5 ) IN course of the proceedings, an application was filed by the plaintiff stating therein that he did not press the relief of injunction against defendants 2 to 4 and that defendants 2 to 4 may be treated as only pro forma defendants. In view of the prayer of the plaintiff, the Subordinate Judge accepted the same and the relief of injunction against the defendants 2 to 4 was rejected being abandoned by the plaintiff. But on hearing the learned counsel for the parties, the Subordinate Judge came to the conclusion that in view of the serious allegations of fraud made in the case, it would be just and proper that the matter should be decided in Court and not by an arbitration and this was a sufficient cause within the meaning of Sub-Sec. (4) of S. 20 of the Act not to refer the dispute. Accordingly, he has dismissed the plaintiff's application filed under S. 20 of the Act. It is this order of the Subordinate Judge which is being impugned in the present appeal. ( 6 ) MR. Das, the learned counsel for the appellant, contends that since defendant No. 1 did not take this objection in his written statement, it was not open for the court to consider the point in question and applying the principles of O. 8, R. 2, Civil P. C. , since it is incumbent on the part of the defendant to raise in his pleading all matters which show the suit not to be maintainable, it is not permissible for the Court to take the plea into consideration merely basing on the arguments advanced by the defendant. He also further contends that even if the Court was entitled to entertain the plea of non-maintainability on account of the allegations of fraud in the plaint, it is only where serious allegations of fraud are made against a party, that would be a sufficient cause for the court not to order an arbitration agreement to be filed and not to make a reference. But it is not every allegation imputing some kind of dishonesty in matters of accounting which would be enough to dispose a Court to take the matter out of the forum which the parties themselves have chosen. According to the learned counsel if the allegations of fraud in the plaint are examined from the aforesaid standpoint, it would be crystal clear that the allegations referred to some sort of dishonesty in maintaining the accounts and, therefore, the conclusion of the Subordinate Judge, taking it out of the forum chosen by the parties, namely to refer the dispute to the arbitration cannot be sustained in law. The learned counsel for the respondents, on the other hand, contends that the allegations of fraud in this case are of such a serious nature that the Court was justified in exercising its discretion under Sub-Sec. (4) of S. 20 of the Act not to refer the dispute and in view of the wide discretion conferred on the Court, the same having been exercised, this Court should not interfere with the same in appeal. The rival contentions require careful examination. ( 7 ) COMING to the first contention of Mr. Das, the learned counsel for the appellant, it would be profitable to examine the scope of S. 20 of the Act. S. 20 contemplates that all or any of the parties to an arbitration agreement may apply to have the agreement filed in Court and to make an order of reference to the arbitrator. The three essential conditions necessary to invoke the said Section are : (a) the parties must have entered into an arbitration agreement; (b) the agreement must have been entered into before a suit with respect to its subject-matter is filed in Court; and (c) a difference, contemplated in the agreement, must have arisen. If these conditions are satisfied then the parties may invoke the jurisdiction of court for referring the dispute to arbitration by calling upon the other side to have the agreement filed in Court. If these conditions are satisfied then the parties may invoke the jurisdiction of court for referring the dispute to arbitration by calling upon the other side to have the agreement filed in Court. Sub-Sections (2) to (4) of S. 20 lay down the procedure to be followed by the court and Sub-Sec. (5) makes the provisions of the remaining Sections of the Act applicable to the proceedings under the Section. The scope of enquiry under the Section, therefore, is very much limited. On an application being moved under the Section, all that the Court has to see is whether there is an arbitration agreement as between the parties and whether the dispute disclosed by the parties is covered by the arbitration agreement. If the answer to both these questions is in the affirmative, then the Court is bound to make a reference. Sub-Sec. (4) of S. 20, however, confers a wide discretion not to refer a dispute without sufficient cause being shown notwithstanding the fact that the two of the aforesaid three essential conditions are satisfied and what would be a 'sufficient cause' within the meaning of Sub-Sec. (4) depends upon the facts and circumstances of the case. In the context of the contentions of the parties, interpretation and elucidation of Sub-Sec. (4) become necessary. Sub-Sec. (4) of S. 20 of the Act is quoted below in extenso :-"where 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. Explanation.- Where the arbitration agreement provides for reference to a person by name or designation, the fact that the arbitrator or the umpire so named or designated, is an employee of, or is otherwise connected with, one of the parties, shall not by itself, be deemed to be a reason for not referring the matter to the arbitrator or the umpire so named or designated. "a bare reading of Sub-Sec. (4) would indicate that where no sufficient cause is shown, the court shall order the agreement to be filed. An arbitration agreement is usually binding upon the parties and leave to revoke the same is not easily given. "a bare reading of Sub-Sec. (4) would indicate that where no sufficient cause is shown, the court shall order the agreement to be filed. An arbitration agreement is usually binding upon the parties and leave to revoke the same is not easily given. It is not open to a party to an agreement to revoke the submission except for good cause. A party to an arbitration agreement cannot retire from the same unless if is shown that the scope and object of the agreement cannot be executed or that manifest injustice will be done if the parties are bound by the contract. By judicial pronouncement it has been held that a Court ill refuse an order for filing of agreement if the conduct of the parties shows that they abandoned and cancelled the agreement. It has also been held by high authority that there cannot be a reference for arbitration in regard to the disputes arising out of a document which is assailed on the ground of fraud, misrepresentation or undue influence. Similarly, where the arbitration clause is embodied in a document which contravenes provisions of law that would also be a sufficient cause within the meaning of Sub-Sec. (4) not to make a reference. The term 'sufficient cause' used in Sub-Sec. (4) of S. 20 also brings within its sweep the ground of justice, equity and good conscience on which a Court thinks an agreement should not be ordered to be filed. But it is not possible to lay down exhaustively as to what would be a sufficient cause which would entitle a Court not to make a reference under Sub-Sec. (4) of S. 20 and all that can be said is that Sub-Sec. (4) confers a wide discretion on the Court not to make a reference to an arbitrator. Of course, the discretion in question has to be exercised judicially and not arbitrarily. ( 8 ) THIS being the position, I do not find any substance in the contention of Mr. Of course, the discretion in question has to be exercised judicially and not arbitrarily. ( 8 ) THIS being the position, I do not find any substance in the contention of Mr. Das, the learned counsel for the appellant, that unless an objection with regard to the non-maintainability of a reference to arbitration is taken by the defendant, it would not be open for the Court to invoke its discretion conferred under Sub-Sec. (4) even if it is satisfied on the pleadings of the parties that allowing to make a reference would be wholly inequitable and would cause serious injustice, in view of the allegations of fraud made by the parties. In my view, Sub-Sec. (4) of S. 20 of the Act confers wide discretion and consequently casts certain obligation on the Court to see as to whether in the facts and circumstances of the case, if the dispute is referred to arbitration whether it would be inequitable for the other party and whether it would cause incalculable damage to the other party. If the Court is satisfied on this score, then it would be free to refuse to make a reference and a defendant can also express his desire not to refer to arbitration even if an objection had not been taken in the written statement in this regard. In fact, in the case of Babulal Singhania v. Pirudan Ojha, AIR 1977 Cal 503 , examining the plaint, the Court had come to the conclusion that serious allegations of fraud and misappropriations of loans sanctioned in the name of the partnership business had been made and, therefore, such serious and grave allegations could be properly investigated and decided by the Court in the suit and not by the arbitrator in an arbitration proceeding. Consequently, I would reject the first submission of Mr. Das, the learned counsel for the appellant. ( 9 ) COMING to the second contention of Mr. Das, however, I find sufficient force in the same. True it is, where serious allegations of fraud are made against a party that itself would be a sufficient cause for the Court not to order an arbitration agreement to be filed in Court and not to make a reference. But as has been held by the Supreme Court in the case of Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak, AIR 1962 SC 406 . ". . . . . But as has been held by the Supreme Court in the case of Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak, AIR 1962 SC 406 . ". . . . . . . . BUT it is not every allegation imputing some kind of dishonesty, particularly, in matters of accounts, which would be enough to dispose a Court to take the matter out of the forum which the parties themselves have chosen. . . . . . . . . . . "after quoting a passage from Russell's case (1980) 14 Ch. D 471, the Supreme Court observed :-"we are clearly of the opinion that merely because some allegations have been made that accounts are not correct or that certain items are exaggerated and so on that is not enough to induce the Court to refuse to make a reference to arbitration. It is only in cases of allegations of fraud of a serious nature that the Court will refuse as decided in Russell's case (1880) 14 Ch. D. 471 to order an arbitration agreement to be filed and will not make a reference. . . . . . . . . "keeping in view the aforesaid principles of law, let me now examine the allegations made in this case to find out what is the nature of allegation of fraud. Admittedly, the allegation of fraud is against defendant No. 1 alone since the plaintiff has withdrawn the relief claimed against defendants 4 and 5 and has also abandoned the relief against them. The learned counsel for the respondents states that the allegations of fraud against defendant No. 1 are as alleged in paragraph-11 of the plaint which is quoted hereinbelow :-"that the plaintiff subsequently learnt that the defendant No. 1 in connivance with the Bank and the Ware House Employees, has fraudulently lifted the fertilisers without making the required deposits in the Bank. "in my view the allegations made as aforesaid are not of such serious nature so as to oust the forum chosen by the parties under the agreement, i. e. a reference to arbitration. These allegations are not of such a serious nature on consideration of which a Court would be justified in saying that the trial should be in open court rather than by an arbitrator. These allegations are not of such a serious nature on consideration of which a Court would be justified in saying that the trial should be in open court rather than by an arbitrator. In other words it will not be sufficient cause within the meaning of Sub-Sec. (4) of S. 20 of the Act entitling a Court not to refer the dispute if the court is otherwise satisfied that a dispute exists between the parties and there is an agreement between the parties to refer the dispute to an arbitrator. In Abdul Kadir's case ( AIR 1962 SC 406 ) (supra), the Supreme Court in paragraph 18 of its judgement observed :-". . . . . . . IT seems to us that every allegation tending to suggest or imply moral dishonesty or moral misconduct in the matter of keeping accounts would not amount to such serious allegation of fraud as would impel a court to refuse to order the arbitration agreement to be filed and refuse to make a reference. . . . . . . . . . . "looking to the allegations in the plaint, as quoted earlier, I am of the opinion that there are no such serious allegations of fraud in this case as would be sufficient for the Court to say that there is sufficient cause for not referring the dispute to arbitration. Consequently, the order of the Subordinate Judge cannot be sustained and is accordingly set aside. The matter would now go back to the Subordinate Judge who would examine and find out whether the other pre-conditions of S. 20 are satisfied or not and if he is satisfied then he has no other option than to make a reference to an arbitrator. ( 10 ) IN the ultimate result, therefore, this, Miscellaneous Appeal is allowed, but in the circumstances, there would be no order as to costs. Appeal allowed. .