Sabyasachi Dasgupta v. Swapan Dasgupta — 1993 DIGILAW 252 (CAL)

JUDGMENT 1. THIS is an appeal filed by the defendants Sabyasachi Dasgupta and Sinclair and Company a firm registered under the Indian Partnership Act impugning an order dated June 30, 1992 passed by the learned Assistant District Judge, 10th Court at Alipore in Title Suit No. 19 of 1992 whereby an application filed by the defendants under Section 34 of the Arbitration Act, 1940 praying for stay of the suit stood rejected. 2. ON March 7, 1992 the plaintiffs, Swapan Das Gupta and Satyajit dasgupta instituted Title suit No. 19 of 1992 in the court of the 10th assistant District Judge at Alipore against the appellants Sabyasachi dasgupta and Sinclair and Company praying inter alia for a decree for recovery of Rs. 2,88,901/- by plaintiff No. 1 and Rs. 35,000/- by the plaintiff No. 2 on a declaration of charge on the available assets of Sinclair and Company. The defendant No. 2 also charged interest from February 16, 1992 till realisation of the claim. The plaintiffs prayed for permanent injunction restraining the defendants from disposing of or transferring or otherwise encumbering the assets of Sinclair and Co. without leave of the court. They also prayed for the Receiver, attachment, injunction and further reliefs which they may be entitled to tin law and equity. In the said suit an application was also make under Order 39 Rule 1 and 2 C. P. C. read with Section 151 C. P. C. which is pending. On March 7, 1992 the Trial court passed an order inter alia to the effect that there should be an injunction upon the defendants restraining them from disposing of the assets of the partnership firm as described in the schedule of the petition till the hearing of the injunction matter. The contention of the defendant appellants is the effect that there is already an arbitration agreement in between the parties. On June 15, 1989 Swapan Dasgupta and Satyajit Dasgupta on the one hand and sabyasachi Dasgupta on the other entered into an agreement whereby swapan Dasgupta on the other entered into an agreement whereby Swapan dasgupta and Satyajit Dasgupta as retiring partners decided to retire from the Sinclair and Company with effect from 15th June, 1989 in accordance with Clause 21 of the partnership Deed dated 5th January, 1989. Sabyasachi Dasgupta was to continue the business of M/s. Sinclair and company either as the sole proprietor or by inducting partners according to his choice and convenience. The retiring partners also agreed not to have any right, interest, goodwill and assets on the ongoing business or prospects of further business of the Firm M/s. Sinclair and Co. The retiring partners were absolved of the liabilities of the said firm and it was decided that the liabilities of all the creditors or any contingent liabilities of the obligations and liabilities of any of the employees of the said firm on any account whatsoever should be borne by the continuing partners. 3. THE continuing partner is to cause a balance sheet of the said Firm m/s. Sinclair and Company to be prepared upto 15th June, 1989 and have the same audited by the M/s. K. C. Bose and Co. and shall give an audited balance sheet to the retiring partners. The continuing partners shall be obliged to file all returns with the Income Tax Authorities and other authorities in regard to obligations of the said firm and those of the retiring partners for their association with the said firm upto 15th June, 1989 and shall in due course make over certificates from the said authorities discharging the retiring partners from their obligations to the revenue and other authorities. The continuing partners paid to Mr. Swapan Dasgupta a sum of Rs. 1,00,000/- and a sum of Rs. 25,000/- to Satyajit Dasgupta before the signing of the deed and undertook to pay Mr. Swapan Dasputa a further sum of Rs. 1,25,000/- and a further sum of Rs. 25,000/- to both within five months from June 15, 1989 and the final payment of Rs. 2,00,000/- to Mr. Swapan Dasgupta and the final payment of Rs. 25,000/-to Mr. Satyajit Dasgupta within eight months from 15-6-89. Such payments should be received by the said Swapan Dasgupta and Satyajit dasgupta in full and final settlement of all their claims demands rights and actions against the said firm of M/s. Sinclair and Company in its goodwill and assets and such payments have been agreed upon after taking into consideration all the obligations of the said firm of M/s. Sinclair and Co. and of the retiring partners. and of the retiring partners. The payments as mentioned hereinbefore outstanding shall form a first charge in favour of the recipients on all the assets of the said firm of M/s. Sinclair and Company. In default of payment of the amounts hereinbefore undertaken by the continuing partner, the retiring partners shall be entitled to interest at the then current banks lending rate of interest. The retiring partner Mr. Swapan Dasgupta who was in possession and control of a motor vehicle being Fiat Padmini bearing Registration No. WME 5990, was declared entitled to retain the said motor vehicle and the book value of the said motor vehicle is to be executed against the money receivable by the said motor vehicle is to be executed against the money receivable by the said retiring partner Mr. Swapan Dasgupta. It was also agreed by and between the parties that in case any dispute or difference arose between the parties hereto on any account whatsoever relating to the meaning of any words, phrases or clauses in the said agreement the same shall be referred to the arbitration of Mr. Sunil Kumar Mitra whose decision shall be final and binding on the parties. 4. AFTER filing of the suit by the plaintiff respondents the present appellants before their written statement or taking any step, applied before the learned Trial Judge under Section. 34 of the Arbitration Act praying for stay of the suit. It was stated in the said application that despite the specific arbitration clause contained in the partnership deed, the plaintiffs have filed that suit without referring the dispute to arbitration. Furthermore the claim of the plaintiffs is disputed by the defendants and they further contended that the claim was fully covered by the arbitration clause as contained in the partnership deed dated 5. 1. 89. In that context it was prayed that the suit should not be proceeded with and was liable to be stayed pending the disposal of the decision of the arbitrator. It was also claimed that not only further proceedings of the suit should be stayed in view of the arbitration agreement as contained in the partnership deed dated 5. 1. 89 but also the dispute ought to be referred to arbitration. This application was opposed by the respondents contending inter alia that the named arbitrator has refused to act in the matter. 1. 89 but also the dispute ought to be referred to arbitration. This application was opposed by the respondents contending inter alia that the named arbitrator has refused to act in the matter. It was not true that the plaintiffs have filed the suit without referring to the arbitrator in terms of the partnership deed. When the plaintiffs referred the matter to arbitration, the defendants were served with a notice in this context. But the appellant no. 1 avoided taking full knowledge of the content of the letter and by his conduct he unequivocally demonstrated that he is ready and willing to get the matter adjudicated upon by the arbitrator and he is estopped from challenging the present proceeding before the Civil Court and was not entitled to stay of the suit. The letter of Sri Pritwish Bagchi issued to Sri kumar Mitra, solicitor and advocate for arbitrator and the reply given by the said Sri Sunil Kumar Mitra, Solicitor and Advocate to Mr. Pritwish bagchi, advocate with copy to the plaintiff and the defendants were annexed to the petition of objection. It was averred by the plaintiffs that alter dissolution of the partnership the rights of the parties were covered by a novated contract and there was no scope of arbitration therein. A xerox copy of the letter issued by the defendant No. 1 admitting his liability was also annexed to the application. That apart it was contended by the plaintiffs that on the execution of the deed of retirement there were no anomaly with regard to consideration of the deed of retirement and there was no scope for an arbitration too. It was further submitted that just because a defendant raised a plea that there was an arbitration clause and disputed the claims of the plaintiffs, it could not be said that the claim was fully covered by the arbitration clause as per the deed dated 5. 1. 89. The provisions of Section 34 of the Arbitration Act could not be invoked in the facts and circumstances of the case and it was immaterial as to whether the defendants were ready and willing to do all things necessary for the proper conduct of arbitration. The plaintiffs therefore denied that the instant suit could not be proceeded with or that the same was liable to be stayed because an arbitration agreement being already there. The plaintiffs therefore denied that the instant suit could not be proceeded with or that the same was liable to be stayed because an arbitration agreement being already there. They also disputed the bonafide character of the application and contended that it was any filed so as to prolong the litigation and defer the payment of the admitted liability. The main contention raised by the plaintiff was that in view of the named arbitrator not willing to act, there was no future scope lot referring the disputes to arbitration. The learned Trial Judge after hearing the contentions of both the parties was of the view that since in reply to Sri Prithwish Bagchi, advocate's dated 19. 8. 91 addressed to Sri Sunil Kumar Mitra, advocate and solicitor requesting him to enter upon the reference calling upon the parties to submit their arbitration statement and to pass an award, Sri sunil Kumar Mitra having given out a candid reply to the letter dated 22. 8. 91 that it was no longer possible for him to act as Arbitrator in the dispute between Mr. Swapan Dasgupta and Mr. Satyajit Dasgupta on the one hand and Mr. Sabyasachi Dasgupta on the other, it appeared that the plaintiffs were ready and willing to get the disputes between the parties settled through the named arbitrator Sri Sunil Mitra and the arbitrator having refused to act as such in the dispute between the parties, the plaintiffs filled the instant suit for relief and as such the defendants could not invoke the provisions of the Arbitration Act any more. The application filled by the plaintiffs under Section 34 of the Arbitration Act, 1940 was liable to be rejected as not tenable. 5. MR. Mukherjee appearing for the appellants submitted before us that it would appear from the arbitration agreement itself that the said agreement was silent with regard to filling up the vacancy if the named arbitrator refuses to act or is incapable of acting as Arbitrator. Mr. Mukherjee proceeded however on the assumption that there is an existing dispute between the parties since the plaintiff respondents called upon the named Arbitrator Sri Sunil Kumar Mitra to enter the reference by giving a letter to him on this score wherein they expressly mentioned inter alia that there was a dispute. Mr. Mr. Mukherjee proceeded however on the assumption that there is an existing dispute between the parties since the plaintiff respondents called upon the named Arbitrator Sri Sunil Kumar Mitra to enter the reference by giving a letter to him on this score wherein they expressly mentioned inter alia that there was a dispute. Mr. Mukherjee contended that the respondents are bound by the recitals of that letter and are estopped from contending anything to the contrary. Admittedly when the named Arbitrator has refused to act or was incapable of acting, it is a settled position in law that if the arbitration agreement is silent with regard to the supplying of vacancy, it is to be presumed that parties intended to fill up the vacancy. 6. MR. Mukherjee cited two decisions on the point as reported in AIR 1971 SC 2298 in Prabhat General Agencies vs. Union of India and AIR 1980 sc 103 in Union of India vs. M/s. Raghunath Singh and Co. in support of this proposition. In Prabhat General Agencies vs. Union of India (ibid) there was an arbitration clause to the effect that in case of a dispute it should be referred for arbitration to the Judicial Commissioner, Himachal Pradesh and his decision shall be final and binding. Disputes having arisen between the appellants and respondents in respect of some of the claims arising from the contracts, the appellants requested the respondents to refer the disputes to the arbitration of the Judicial Commissioner, himachal Pradesh. The respondents declined to agree to make the reference in question. Thereafter, the appellants moved the Senior sub-Judge under Section 20 of the Arbitration Act for ordering the respondents to file the agreements in question in court and for referring the disputes to the Judicial Commissioner. Himachal Pradesh for arbitration. The learned Sub-Judge accepted these applications and directed the respondents to file the agreements in question in his court. Thereafter he referred the disputes to the arbitration of the Judicial commissioner, Himachal Pradesh. The Judicial Commissioner, Himachal pradesh expressing an opinion declined to act as an arbitrator. Thereafter the learned Subordinate Judge was moved to appoint some other arbitrator in place of the Judicial Commissioner. The respondents opposed that prayer on the ground that arbitration clause did not provide for such an appointment The learned Subordinate Judge accepted that contention and dismissed the. application. Thereafter the learned Subordinate Judge was moved to appoint some other arbitrator in place of the Judicial Commissioner. The respondents opposed that prayer on the ground that arbitration clause did not provide for such an appointment The learned Subordinate Judge accepted that contention and dismissed the. application. As against the decision the appellants went up in a revision to She Judicial Commissioner, Himachal Pradesh. The Judicial commissioner. Himachal Pradesh having also dismissed the revision petitions holding that under the agreement no reference for arbitration could be made to anyone other than the named authority, the matter came before the Supreme Court. The Supreme Court held that where in an agreement the Judicial Commissioner of the state of Himachal Pradesh was appointed an arbitrator by his designation and not by his name, the fact itself did not afford any indication that the parties to the agreement intended not to supply the vacancy if the Judicial Commissioner refused to act or was incapable of action. The Supreme Court in this context sought to distinguish the Calcutta High Court Division Bench Judgment in Bharat construction Co. Ltd. vs. Union of India reported in AIR 1954 Calcutta 606 where it was observed inter alia that it was doubtful whether Clause (b) of section 8 (1) of the Arbitration at all applied to a case where a named arbitrator, obviously chosen for the possession of qualifications special to him, has become unavailable or refused to act, but any way the applicability of this clause in a particular case, must be determined by the test laid down in the section itself and the test is that the arbitration agreement must not show that it was intended that the vacancy should not be supplied, in other words however, individual the original choice may appear to be, if the agreement itself contains sufficient indication that the parties nevertheless intended that, in default of their original nominee, they would be prepared to fill up the vacancy by choosing another arbitrator, the section will apply and a new appointment may be made either by the parties or by the court, as the case may be. 7. 7. IN Union of India vs. M/s. Raghunath Singh (ibid) it was a case where there was an arbitration clause to the effect that on a dispute or difference arising between the parties or their representatives and the Controller of rationing, Delhi at any time hereafter and of whatever nature arising out the dispute or in respect of the Chief Commissioner/director of Storage, ministry of Food, Government of India and its decisions shall be final and binding. The post of Director of Storage, Ministry of Food, Government of india was abolished and no person holding that post was available for arbitration. The Chief Commissioner, however, was available but he refused to act. That led the respondent company to apply to the Court under section 8 of the Act for appointment of another arbitrator. The argument put forward on behalf of the appellant was that when there was a named arbitrator, even though he was named by office, it was not open to the court to supply the vacancy in his place under Section 8 (1) (b) of the act. The Supreme Court did not find any substance in this argument. The supreme Court held on the other hand that the court had no power to supply the vacancy under Section 8 (1) (b) only if the arbitration agreement did show that the parties did not intend to supply the vacancy. If no such intention could be culled out from arbitration clause, the court should supply the vacancy. The Supreme Court chose to follow in this context the earlier Supreme Court decision in Prabhat General Agencies vs. Union of india. 8. HE further contended that it is also a settled position in law that if the named Arbitrator refused to act or became incapable of acting as arbitrator that itself is no ground for refusing the prayer for stay of suit in an application under Section 34 of the Arbitration Act. He cited the decision in Governor General in Council vs. Associated Live Stock Farm reported in AIR 1948 Calcutta 230 in support of his proposition In that case in each of the contracts there was an arbitration clause reading as follows :- "Any dispute or difference arising out of the contract, settlement of which is not hereinbefore provided for, shall be referred to the arbitration of the officer sanctioning the contract, whose decision shall be final and binding. " The particular officer who held the post of q. M. G. in India at the date of these contracts and who finally sanctioned these contracts was transferred to or had already retired and was found in British India. On 15. 8. 1946 the plaintiff filed this suit claiming a particular sum of money for the supply at the market rate as per particular provision of the contract which sum included damages and losses suffered by the plaintiff company as per certain terms as contained in the contracts as also the deposits, the details of the said damages and losses being given in schedule 'c' to the plaint. There was an alternative prayer as per schedule 'c' below or such other sum as may be found due to the plaintiff company. The defendant applied to the court on the ground that the matters in dispute were covered by the Arbitration Clause and that the defendant was at the date of the suit and was still then ready and willing to go for arbitration and that there was no reason why the matter should not be referred to arbitration. S. R. Das, J. then silting singly observed inter alia that the legal proceedings which are sought to be stayed must be in respect of matters which the parties have agreed to refer, that is to say, which come within the terms of the arbitration agreement. If a party brings an action in respect of any matter not agreed to be referred, the court has no jurisdiction at all to stay the proceedings and the court will refuse a stay. Further the court will exercise its discretion and refuse to stay the action in cases where a substantial part of the disputes does not fall within the arbitration agreement and cannot be conveniently separated. It is however, not sufficient to induce the court not to stay the action to show that only a small part of the disputes is outside the arbitration clause. In order to arrive at a conclusion as to whether the action is in respect of matters agreed to be referred, the court has to examine the arbitration clause and ascertain its ambit and scope. It takes two to make a dispute. If one party basses his claim outside the contracts but the other bases his defence on the contracts, the resulting disputes certainly arise out of the contracts. It takes two to make a dispute. If one party basses his claim outside the contracts but the other bases his defence on the contracts, the resulting disputes certainly arise out of the contracts. As regards the principal on which the stay might be refused, it was observed by S. R. Das, J. that the court should stay the action when there are disputes within the meaning of the arbitration agreement and where the party applying for stay is not precluded from raising it even if he did not raise it before action and refuse stay only when there is no dispute or when a party, by reason of agreement, express or implied, is precluded from raising it. A mere omission to raise dispute before action cannot be inferred, as a ground for precluding a party from raising it and is no justification for the court assuming jurisdiction to decide questions in respect of which its jurisdiction is ousted by statute. Likewise a mere omission to raise disputes before action, without more, ought not by itself to be any ground for refusing a stay under the Arbitration Act, although it may be taken into consideration along with other facts in exercising the discretion of the court in the matter or a stay of the suit. 9. AS regards non-availability of named arbitrator, whether by itself is a ground for stay of suit, it was held that having regard to the provisions the Arbitration Act for appointment of an Arbitrator in place of a appointed Arbitrator dying or refusing to act, there cannot be said to any insuperable impediment to arbitration. It cannot be contended that the non-availability of named arbitrator by itself ipso facto provides a ground for refusal of stay of suit brought in contravention of an arbitration agreement. In the absence if anything in the arbitration clauses suggesting that the parties agreed that any vacancy in the officer of Arbitrator should not be filled up, the vacancy can be easily supplied and there is no reason of thank that the arbitration will be infructuous at all. If the particular offer sanctioning the contracts refuses to act or id capable of doing it by reason of his absence or otherwise there are provisions in the Arbitration act, for the appointment of another Arbitrator in his place then the arbitrator appointed will be quite competent to process with the arbitration. If the particular offer sanctioning the contracts refuses to act or id capable of doing it by reason of his absence or otherwise there are provisions in the Arbitration act, for the appointment of another Arbitrator in his place then the arbitrator appointed will be quite competent to process with the arbitration. 10. MR. Mukherjee further argued that the defendants in the suit who are the appellants are not required to take arty proceeding under Section 8 of the Arbitration Act, 1940 if the named Arbitrator refused to act. Inaction in this regard on the part of the appellants cannot lead to an inference that the appellants were not ready and willing to do all things necessary acting under Section 8 of the Arbitration Act, 1940 does not arise till such time as the plaintiffs respondents issued in accordance with Section 8 of the arbitration Act, 1940 a notice on the appellants. He supported his point by referring to two decisions, one reported in AIR 1944 Allahabad 253 India steel and Wire Products Ltd. vs. Debi Prasad Malaviya and the other reported in 1981 Allahabad Law Journal 1268 in Abid Khan and anr. vs. M/s. Escorts Farm. In India Steel and Wire Products Ltd. vs. Debi Prasad Malaviya (ibid) a single Judge of Allahabad High Court held that even though the defendants did not in their notice mention anything about arbitration they did not put an end to their right to claim that the matter could be decided by the arbitrators as provided for in the Arbitration Clause. Thus failure of defence to insist on arbitration clause in reply to plaintiffs notice of claim before suit did not preclude him from relying on the Arbitration Clause. In abid Khan vs. M/s Escorts Farm (ibid) a Division Bench Judgement of allahabad High Court was of the view that a party who seeks to get the proceedings in the suit stayed, must be willing to get the matter adjudicated through arbitration. The readiness and willingness to do all things necessary for the arbitration cannot be presumed from the mere fact that the defendant moved an application for stay of proceedings. Instead of the defendant must make a clear statement that he was ready and is still willing for the adjudication of the dispute through arbitration. The readiness and willingness to do all things necessary for the arbitration cannot be presumed from the mere fact that the defendant moved an application for stay of proceedings. Instead of the defendant must make a clear statement that he was ready and is still willing for the adjudication of the dispute through arbitration. The readiness and willingness must exist not only when the application for stay was made but also at the commencement of the legal proceedings. Where the defendant in his application far stay of the suit under Section 34 did not make any averment that he was ready and willing to do all things necessary to the proper conduct of the arbitration at the time the suit was filed as well as a the time when the application was made, the suit could not be stayed because of failure to satisfy the necessary condition required by Section 34. However, mere inaction on the part of the defendant to take recourse to Section 8 for appointment of arbitrator or to supply vacancy occurred due to refusal of the sole arbitrator to act as arbitrator, does not justify a finding that the defendant was not ready or willing to get the matter adjudicated through arbitration. Thus this judgment does not fully satisfy the proposition as propounded by Mr. Mukherjee. 11. MR. Mukherjee further argued that the onus is on the plaintiff respondents herein to show that there is sufficient cause for the suit not to be stayed since the court generally stayed the suit, if the dispute is covered by arbitration clause. He referred to the decision Dinabundhu Jana vs. Durga Prasad Jana reported in 23 CWN 716 for the proposition that the burden was on the plaintiff to show sufficient reason as to why the matter should not be referred to arbitration and not on the defendants to show that no such reason existed. A mere arbitration agreement was no bar to a suit, but the court had, on being apprised of it, a discretion to stay the suit. 12. IN Union of India vs. Bharat Charcoal Co. Ltd. reported in AIR 1962 calcutta 510 it was held by P. C. Mallick J. of Calcutta High Court sitting singly that mere omission to raise dispute prior to institution of the suit is no impediment to grant of stay order under Section 34 of the Arbitration act. 12. IN Union of India vs. Bharat Charcoal Co. Ltd. reported in AIR 1962 calcutta 510 it was held by P. C. Mallick J. of Calcutta High Court sitting singly that mere omission to raise dispute prior to institution of the suit is no impediment to grant of stay order under Section 34 of the Arbitration act. The object of Section 34 is to enforce the agreement between the parties and to prevent any party to the agreement committing a breach of that agreement. It operates by way of an injunction to prevent the plaintiff, who contrary to the arbitration agreement, has instituted a suit. Therefore, once it is shown that the dispute is covered by an arbitration clause, no matter whether the dispute was brought to the notice of the plaintiff who instituted the suit in breach of the arbitration agreement, the defendant is entitled to a stay provided the other conditions are satisfied. Mr. Mukherjee drew our attention to the pleadings made by the plaintiffs in this context that they had always been ready and willing to go in for arbitration which also stands recorded in the impugned judgment. Mr. Mukherjee further contended that it was a fit case for the appeal being allowed and suit being stayed and all interim orders in the suit should be vacated. No prejudice would be caused to the plaintiffs in the suit by referring the matter to Arbitration. 13. IT is indeed true that in most of the cases cited by the learned advocate for the appellants references were made to a designated person to be appointed as an arbitrator and the agreement did not indicate that the vacancy should not be supplied where there was no real impediment before the court to refer the matter to arbitration. However, the facts of the present case are clearly distinguishable from the facts of the reported decisions where the arbitrators specifically named in the said cases were all designated persons particularly by virtue of the offices held by them. Consequently in the event of a particular officer dying or refusing to act and the agreement remaining silent on supplying of the vacancy, it could be reasonably inferred that there is no real impediment before a court while appointing his successor Arbitrator. Whatever as observed by Mitter, j. in Ladha Singh us. Consequently in the event of a particular officer dying or refusing to act and the agreement remaining silent on supplying of the vacancy, it could be reasonably inferred that there is no real impediment before a court while appointing his successor Arbitrator. Whatever as observed by Mitter, j. in Ladha Singh us. Jyoti Prasad ILR (1939) 2 Calcutta 181 corresponding to 43 CWN 879 that the real impediment to arbitration and consequently to interference by a court shall arise by the parties merely on the ground to refer to a designated person who in the present appeal is Sri Sunil Kumar mitra. The above observations of Mitter J. have been quoted with approval by the Hon'ble Judge in Governor General in Council vs. Associated Live stock India Ltd. reported in AIR 1948 Calcutta 230. Upon the refusal of the arbitrator designated by name to act it is sufficient to how inter alia that the agreement did not intend the vacancy to be supplied since no successor can be deemed to step into the shoes of the designated arbitrator. 14. ON behalf of the respondents it was contended that Clause 11 of the deed of Retirement merely stated that in the event of any "dispute or difference arising between the parties hereof on any account whatsoever relating to the meaning of any words, phrases or clauses herein the same shall be referred to the arbitration by Sri Sunil Kumar Mitra whose decision should be final and binding on the parties". That there is no such dispute and or difference as alleged or at all in respect of the meaning of any words, phrases or clauses in the Deed or Retirement. On 9th August, 1989 and 26th December, 1989 the appellant No. 1 duly paid the first and second instalments of payments in accordance with the deed of retirement dated 15th June, 1989. The third and final instalment receivable by the respondent Nos. 1 and 2 fell due on 15th February, 1990 whereupon the respondent No. 1, Swapan Dasgupta wrote to the appellant No. 1 reminding him to pay the final instalment. The appellant No. 1 replied stating that the third and final instalment shall be paid in due course and the respondents shall be entitled to receive interest on the delayed payment by virtue of clause 9 of the Retirement Deed dated 15th June, 1989. The appellant No. 1 replied stating that the third and final instalment shall be paid in due course and the respondents shall be entitled to receive interest on the delayed payment by virtue of clause 9 of the Retirement Deed dated 15th June, 1989. Having failed to secure timely payment of instalment receivable by him and apprehending that the appellant No. 1 was trying to change the nature and character of the firm Sinclair and Company to dispose off its assets upon which the outstanding payment constitute a. first charge by virtue of Clause 8 of the deed of Retirement, the respondents sought legal advise about securing their claims and in the process the advocate of the respondent No. 1 wrote to Sri Sunil Kumar Mitra on August 19, 1991 calling upon him to enter reference by virtue of Clause 11 of the Deed of Retirement. However, by his inability to enter reference. Strangely the appellant No. l denied having received the letter dated August 19, 1991 written by the advocate for the respondent No. 1 which was sent by registered post at the residential address of the appellant No. 1. It was averred by the respondents that at no point in time the appellants showed any readiness and willingness on their part to initiate arbitration proceedings then the respondents filed the suit. Obviously a serious question of law arises as to whether on the face of the admitted liability, there having been a presumed refusal to pay as in present case, whether there is any real dispute which can at all be referred to arbitration. The second question which obviously does arise is whether the arbitration Clause in the Deed of Retirement really covers the dispute in the suit. The third question which would obviously arise whether the conditions precedent to this invocation of Section 34 of the arbitration Act is as to whether even after retirement of the respondents from the partnership, any clause of the partnership agreement still survives and can the appellants rely on the partnership agreement for staying the suit in an application under Section 34 of the Arbitration Act so as to make the arbitration clause in the original partnership agreements alive. Last but not least we have to decide whether at all we should interfere over the exercise of discretion make by the Trial Judge in disallowing an application under Section 34 of the Arbitration Act. 15. AS regards the first question we cannot ignore the fact that the final instalment having fallen due in February 1990 the respondent No. 1 wrote to the appellant No. 1 reminding him to pay the said instalment money and the appellant No. 1 replied on 6th March, 1991 stating that the question of non-payment of the subject amount be made to him in due course as per clause 9 of the Deed of Retirement" as would be evident from the said letter dated 6th March, 1991. In response to a further reminder by the' respondent No. 1 the appellant No. 1 once again postponed payment of the final instalment on raising a plea that the interest clause in the Deed of retirement would be operative. The said letter dated 1st April, 1991 is marked as Annexure L-4 of the Affidavit-of-Documents. It would thus be evident from the correspondence outlined above that the appellant No. 1 has admitted his liability to pay the third instalment but he sought to delay the payment on the ground inter alia that the interest clause in the Deed of retirement would be operative. It was rightly submitted by the learned advocate for the respondent, Mr. Ashok Ganguly that where there is default simplicitor and there is no repudiation or denial of the liability to pay, no dispute is said to be there which can be referred to arbitration. 16. IN Halsbury' s Laws of England, 3rd Edition, Volume 2 page 7, it has been specifically given out "there is no dispute within the meaning of an agreement to refer dispute where there is no controversy being as when a party admits liability and simply fails to pay. In a Division Bench judgment of this Hon'ble Court in Nanalal M. Varma and Company Ltd. vs. Alexandra Jute Mills Ltd. reported in AIR 1989 Calcutta 6, Chief Justice, chittatosh Mukherjee speaking for the Bench distinguished between different kinds of non-payment arising out of an agreement. In a Division Bench judgment of this Hon'ble Court in Nanalal M. Varma and Company Ltd. vs. Alexandra Jute Mills Ltd. reported in AIR 1989 Calcutta 6, Chief Justice, chittatosh Mukherjee speaking for the Bench distinguished between different kinds of non-payment arising out of an agreement. It was observed inter alia by their Lordships that it is more or less a settled law that the existence of a dispute covered by the relevant arbitration clause in question is an essential condition and pre-requisite for assumption of jurisdiction by an Arbitrator A dispute implies an assertion of a right by one party and repudiation therefore by another. There is no repudiation or denial of liability of a simplicitor non-payment or default if payment is there since it may not give rise to a dispute which can be referred to arbitration. On the other hand when there is a denial of liability and by reason thereof, payment is not made by a party from whom demand by the other party, the same would be a case of repudiation. The Andhra Pradesh high Court also in M/s. Rai and Sons Pvt. Ltd. vs. M/s Poysha Industries company Ltd. reported in AIR 1972 Andhra Pradesh 302 held that where a purchaser admitted his liability and only sought postponement of payment, there was no dispute for which a stay could be sought under Section 34 of the Arbitration Act. It would be evident from the correspondence between the parties revealed in the Affidavit of Documents that the appellants never repudiated or denied their liability to pay but merely sought postponement of payment on account of the interest Clause. Such an admitted liability does not constitute a dispute relating to the construction of a word, phrase and/or clause. It is consequently not covered within the scope of the arbitration Clause and in effect the suit cannot be stayed under Section 34 of the Arbitration Act. As regard the second point of legal import which we referred to earlier regarding the subject matter of the suit being covered as alleged or at all by the Arbitration Clause 11 of the Deed of Retirement, we are quite aware of clause 11 of the meaning of any words, phrase and/or clauses", for arbitration. As regard the second point of legal import which we referred to earlier regarding the subject matter of the suit being covered as alleged or at all by the Arbitration Clause 11 of the Deed of Retirement, we are quite aware of clause 11 of the meaning of any words, phrase and/or clauses", for arbitration. The conditions precedent which are to be satisfied before an order of stay under Section 34 of the Arbitration Act could be granted have already been set out in the judgment of the Supreme Court in Anderson wright Ltd. vs. Moran and Company reported in AIR 1955 SC 53 . Following the ratio of the said decision we are of the view that there is no dispute relating to words, phrases and/or clauses in the Deed of Retirement specified in Clause 11 of the said agreement which requires arbitration. Liability to pay each of the three instalments including the final instalment has never been disputed by the appellants and no real controversy exists regarding the sums payable to the respondents. Moreover payment of admitted liability with interest does not constitute any dispute relating to construction of words, phrases, and/or clauses within the scope of arbitration under Clause 11 of the Deed of Retirement. 17. AFTER the appellant no. 1 twice sought time for delayed payment, respondent no. 1 wrote to the appelant no. 1 on 14th May, 1991 drawing his attention to the Arbitration Clause of the Dead of Retirement and further gave out that the appellant no. 1 may take the advice of the arbitrator, Sri Sunil Mitra in the matter. The said letter dated 14th May, 1991 is marked as Annexure L-5 of the Affidavit-of-Documents submitted on behalf of the respondents. The appellant no. 1 however remained silent and even then did not pay up the third and final instalment. Thereafter the respondents sought legal advice about securing their claims and their learned advocate wrote to Sri Sunil Mitra on 19. 8. 91 calling upon him to enter the reference as stated earlier. Sri Sunil Kumar Mitra replied through his letter dated 22. 8. 91 de-cling to act as Arbitrator. Thereafter the respondents sought legal advice about securing their claims and their learned advocate wrote to Sri Sunil Mitra on 19. 8. 91 calling upon him to enter the reference as stated earlier. Sri Sunil Kumar Mitra replied through his letter dated 22. 8. 91 de-cling to act as Arbitrator. It is thus evident from the entire correspondence that the appellant No. 1 failed to take any steps to go in for arbitration, at any stage of the course of events or at any time prior to the filing of the suit by the respondents by expressing his readiness and willingness to refer the mailer to arbitration. In Anderson wright vs. Moran and Company, supra it has been clearly stated that an essential condition precedent to any of the parties invoking section 34 of arbitration Act for applying for stay of suit must satisfy the court that he is and also was, at the commencement of the proceedings, ready and willing to do everything necessary for the proper conduct of the arbitration. Relying on the parent principles established by the Anderson Wright judgment the Supreme Court in Food Corporation of India vs. Thakur shipping Company and ors. reported in AIR 1975 SC 469 has given out that the readiness and willingness must exist not only when the application for stay is made but also at the commencement of the legal proceedings. 18. THE respondent however stressed much on the decision in Union of india vs. M/s. Jaimspex Wires Traders, reported in AIR 1983 Bombay 169 when the government failed to reply to a notice and also failed to indicate at any stage till the filing of the suit its willingness to go in for arbitration, where the Bombay High Court held that it was not a fit case where the stay should be granted. It was further contended by the respondents that since when Sri Sunil Kumar Mitra declined to act, the appellants still did not take any steps to supply the vacancy upon refusal of Sri Sunil Mitra to enter the reference till the respondents filed the instant suit and it would be evident from the facts stated above that the appellants failed to go in for arbitration. There was no readiness and willingness on the part of the appellants to go in for arbitration and as such the well known tests we not satisfied for staying the suit. There was no readiness and willingness on the part of the appellants to go in for arbitration and as such the well known tests we not satisfied for staying the suit. However this aspect of the matter not finally clinch the issue. The fourth question we are to answer in this context as to whether the original partnership deed which contained an arbitration agreement is still called into play in a dispute between the retiring partners and the continuing partner, where the original partnership deed does not any more subsist. The respondent contended by citing the decision of Keshavlal vs. Bhailal, reported in AIR 1968 Gujarat 157 at page 161 that the relationship based on a partnership agreement does not subsist between the retiring partner and the continuing partner, which stood severed even though the partnership firm could still be in existence. However, it would not be necessary for us to answer this question for finally deciding the present appeal. 19. LAST but not least we could answer the question as to whether we should sit upon the judgment on the exercise of discretion of the Trial judge in disallowing the prayer for slay in an application under Section 34 of the Arbitration Act. Stay is mot a matter of right and the Hon'ble supreme Court in Printers (Mysore) Pvt. Ltd. vs. Pothan Joseph, reported in air 1960 SC 1156 at paragraph 9 held that the appellate Court should not normally substitute the discretion exercised by the Trial Court for its own while dealing with an application under Section 34 of the Arbitration Act. This view was also affirmed by the Supreme Court in 17. P. Cooperative federation Ltd. vs. Sunder Bros. (Delhi), reported in AIR 1967 SC 249 at page 253. We should definitely be circumspect and cautions in disturbing the exercise of discretion made by the Trial Judge. Since we find nothing perverse in the same, we are reluctant to interfere. 20. IN the facts and circumstances of the present case we are of the view that the application under Section 34 of the Arbitration Act was rightly rejected by the Trial Court and we are not inclined to interfere. The appeal accordingly stands dismissed. There will be no order as to costs. 21. 20. IN the facts and circumstances of the present case we are of the view that the application under Section 34 of the Arbitration Act was rightly rejected by the Trial Court and we are not inclined to interfere. The appeal accordingly stands dismissed. There will be no order as to costs. 21. THE Trial Court is directed to dispose of the suit with utmost expedition, preferably within three months from the date of communication of this order. Appeal dismissed.