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1996 DIGILAW 469 (KAR)

B. RAGHAVA MENDON v. RAMA S. MENDON

1996-08-12

M.F.SALDANHA

body1996
JUDGMENT M.F. Saldanha, J. - I have heard the petitioner's learned Advocate and the respondents' learned Advocate. 2. The first point which the petitioner's learned Advocate canvassed was that both the courts have erred in law with regard to the requirement to stay the proceedings pending before the Civil Court under Section 34 of the Arbitration Act and to refer the dispute to arbitration since Clause 16 of the partnership deed does make provision for the reference of all disputes of whatsoever nature to arbitration. The learned Advocate has demonstrated to me at some length that both the Courts have gone wrong in law in so far as they came to the conclusion that merely because defendants 2 and 3 did not express their readiness and willingness to go to arbitration when the plaintiff served the original notice, that the court will have to come to the conclusion that there is no readiness and willingness on their part to refer the matter to arbitration. Secondly, the learned Advocate has seriously assailed the reasoning on the part of both the Courts below whereby they have upheld the plaintiff's contention that in so far as defendants 2 and 3 resisted and argued the application for appointment of Receiver, that they have demonstrated their willingness to proceed with the civil proceeding and not to refer the dispute to arbitration. The respondent's learned Advocate sought to support the two orders on the ground that Section 34 has been interpreted by various courts and that the courts have settled the law on the point which requires that the party asking for the reference to arbitration must demonstrate the readiness and willingness to not only take the matter before an arbitration, but also participate in the arbitration. The learned Advocate submits that the willingness is to be demonstrated not at the stage when the suit has been filed, but price to it and if this has not been done, that the only inference is that there is no such desire. 3. The learned Advocate submits that the willingness is to be demonstrated not at the stage when the suit has been filed, but price to it and if this has not been done, that the only inference is that there is no such desire. 3. It is true that Section 34 has been interpreted by the various courts and that the readiness and willingness is required to be demonstrated at all times, It would however, be too technical a view to hold that when the defendants 2 and 3 immediately after the proceedings came to the Civil Court, drew the attention of the Court to Clause 16 and applied for a reference to arbitration, that this application would have to fail on the ground that it is belated. Undoubtedly, it is highly desirable for the partners or their representatives to demand a reference to arbitration prior to the matter reaching the Civil Court, but if this is not done, it would be wrong to hold that the parties would thereafter, be disqualified from applying for a reference to arbitration. The reason for this is because, such a view would do violence to Section 34. The petitioner's learned Advocate is right in law when he points out that it is equally permissible for a party at the earliest point of the litigation to pray for a reference to arbitration and to indicate readiness and willingness to co-operate in those proceedings. Had the scheme of the law been that the reference to arbitration must be demanded or implemented prior to the commencement of the litigation, Section 34 would have been totally unnecessary in so far as it makes provisions for a court to direct an arbitrator to stay the proceedings in the meanwhile. To my mind, I.A. III praying for a reference to arbitration which was filed even before the W.S. was put in, was perfectly justified and the view taken by the two Courts below is certainly erroneous. Normally, since the scheme of the law is that where, by agreement of partners, disputes are required to be referred to arbitration, I would have straightaway referred the dispute to an Arbitrator in keeping with the provisions of Clause 16 and as of necessity, the proceedings before the Civil Court would have to be stayed until the Arbitrator disposes of the proceedings. 4. 4. However, there is one other unusual angle to this partnership dispute which has been referred to by the respondents' learned Advocate. The mother of plaintiff No. 2 who was a partner, had passed away and plaintiff No. 2 contends that he has stepped into her shoes by virtue of a Will executed by his late mother. There is a serious dispute with regard to this aspect of the case because, defendant No. 3 has disputed the genuineness of that Will and he contends that by a Will dated 17.6.1983, the deceased has be queathed all her assets and interests to the mother of the third defendant. The respondents' learned Advocate submitted that the validity and genuineness of both these Wills will have to be examined and adjudicated upon by the Trial Court as this is crucial to the settlement of the partnership dispute. He demonstrates that plaintiff No. 2 will be non-suited if the subsequent Will goes and that consequently, this is one aspect of the case which undoubtedly an arbitrator cannot adjudicate upon. To this, the petitioner's learned Advocate points out to me that neither of the courts have addressed themselves to this aspect of the matter, and that he himself is taken by surprise that this point is now canvassed before this Court. Normally, I would have refused to permit the respondents' learned Advocate to raise this issue at this stage, but the fact is that D3 had in fact, specifically pleaded this aspect of the case in his reply before the Trial Court and it is, therefore, clear that unfortunately, neither of the Courts have looked into this aspect of the case. Since however, it is integrally connected with the question as to whether at all the dispute should be referred to Arbitration, it would be within the province of this Court to look into that aspect of the matter. Though the petitioner's learned Advocate is entitled to succeed on both the points raised by him, the fact still remains that it since this is a partnership dispute with one unusual feature in namely, that the Trial Court would have to examine the issue concerning the Will, I refrain from upholding the contention that the partnership dispute be referred to arbitration because. It is outside the jurisdiction of an arbitrator to examine and adjudicate on the inter-connected issue. It is outside the jurisdiction of an arbitrator to examine and adjudicate on the inter-connected issue. It would also be inappropriate to direct that the other aspects of the matter be examined by the arbitrator and that the issue concerning the Will should alone be looked into by the Court, because this would lead to a piece-meal decision by two separately Forums which is incorrect and improper. 5. Having regard to the aforesaid situation, though the C.R.P. partially succeeds, it is necessary to direct the Trial Court to hear the parties and decide the dispute at the court level itself without referring the same to arbitration. The suit is of the year 1991 and has obviously, not been taken up for hearing because of the pendency of this proceeding. The trial court shall endeavour to take up the suit for hearing at the earliest and to dispose of the same according to law. As the dispute concerning the appointment of Receiver is concerned, the petitioner's learned Advocate informs me that the same is pending in appeal and therefore, the Appeal Court will decide that issue. Also, since the appeal is pending the Trial Court will obviously have to await the decision of the appeal before proceeding with the suit on merits. 6. The C.R.P. partially succeeds and stands disposed of. No order as to costs. Petitioner partly allowed. *-*-*-*-*