1984 (8) TMI 357 - HC - Indian Laws

Summary

Issues:
- Validity of agreement for arbitration in partnership deed
- Whether suit proceedings are liable to be stayed
- Relief sought by the plaintiffs

Analysis:
1. The case involved a suit for dissolution of partnership and rendition of accounts. The defendant filed an application under Section 34 of the Arbitration Act, seeking a stay on the grounds that the partnership had already been dissolved and disputes were to be settled through arbitration as per the partnership deed. The trial court framed issues including the validity of the agreement for arbitration and whether the suit proceedings should be stayed. The trial court, after considering evidence, allowed the defendant's application and stayed the suit. The plaintiffs appealed against this decision.

2. The High Court analyzed the appeal and noted that the plaintiffs sought dissolution of the partnership based on just and equitable grounds under Section 44(g) of the Partnership Act. The court emphasized that the decision on whether to dissolve the partnership should be made by the court and not arbitrators, citing relevant case laws. The court also highlighted the distinction between dissolution by filing a suit and dissolution under Section 43 of the Partnership Act, emphasizing that the partnership does not automatically dissolve by filing a suit for dissolution.

3. The court addressed the trial court's reliance on previous judgments regarding dissolution of partnerships and arbitration clauses. The High Court disagreed with the trial court's interpretation and held that even if the partnership had dissolved, the question of rendition of accounts should be decided by the civil court and not arbitrators. The court reversed the trial court's decision and dismissed the defendant's application under Section 34 of the Arbitration Act.

4. Consequently, the High Court allowed the appeal, set aside the trial court's judgment, and directed the parties to appear before the trial court to proceed with the suit. The court concluded by stating that each party would bear their own costs, bringing the matter to a resolution.

5. In summary, the High Court's judgment clarified the distinction between dissolution of a partnership through a suit and dissolution under the Partnership Act. It emphasized the role of the civil court in deciding on dissolution and rendition of accounts, overturning the trial court's decision to stay the suit and dismissing the defendant's application for arbitration.