Judgment:
Motilal B. Naik, J.
1. This miscellaneous appeal is directed against the order and decretal order dated 1.3.1993 in I.A. No. 125 of 1992 in O.S. No. 4 of 1992 on the file of the court of the Subordinate Judge, Srikalahasti.
2. Respondent filed O.S. No. 4/92 seeking a declaration that the partnership firm 'Sri Ramasudha Oil Mills' at Panagal, Srikalahasti has been dissolved with effect from 20.12.1991 and for taking of the accounts of the firm; alternatively a direction is sought dissolving the said firm the date to be fixed by the court and for taking of the accounts of the said firm. The respondent plaintiff also sought a direction appointing him as the Receiver of the firm during dissolution till the winding up of the business is complete. The appellant who is the defendant in the suit, filed a written statement contesting on various counts, including maintainability of the suit.
3. Appellant-defendant also filed I.A. No. 125/92 under Section 34 of the Arbitration Act, 1940 read with Section 151 of the Civil Procedure Code before the court below seeking stay of all further proceedings in the suit. The grounds urged therein by the appellant-defendant were that in terms of Clause 13 of the partnership deed dated 1.11.74 and dispute arising out of the partnership is referable to arbitrator and, therefore, the suit is not maintainable. It was also contended that arbitrators have also been appointed by both the parties; that the date 21.12.1991 was fixed for the arbitrators to meet at a particular place and decide the dispute; that when the partnership is at will, in terms of Section 43 of the Arbitration Act, no suit is maintainable and that, therefore, till the arbitrators settled the entire dispute, proceedings in the suit cannot be allowed to be continued.
4. Respondent-plaintiff filed a counter to the I.A. admitting the fact of the partnership being at and also the fact of a Clause being contemplated in the partnership deed for referring to the arbitrator any dispute touching the affairs of partnership. It was, however, contended in the counter that the arbitrator so appointed by the respondent-plaintiff has colluded with the appellant-defendant, which act would work against the interest of the respondent-plaintiff; that though notice dated 20.12.1991 was issued by the respondent-plaintiff indicating dissolution of the firm with effect from that date, the appellant-defendant question the authority of the respondent-plaintiff in seeking dissolution of the firm, through reply letter dated 27.12.1991 and that, therefore, the respondent-plaintiff was forced to approach the Civil Court by filing the suit.
5. The Court below, after hearing the contentions raised by the parties and referring to few decision, has come to the conclusion that no prejudice would be caused to the appellant-defendant if further proceedings are not stayed in the suit. The Court below felt that the suit is filed under the provisions of Sections 44(c), (d), (f) and (g) of the Arbitration Act; that there are serious allegations levelled against the arbitrator; that it would be better to decide the matter by the Civil Court and that, therefore, rejected the application seeking stay of all further proceedings in the suit.
6. Sri C. V. Nagarjuna Reddy, learned counsel for the appellant, contends that when the partnership is at will, it is not open to the parties concerned to approach the Civil Court and seek dissolution of the partnership under Section 44 of the Arbitration Act. It is also contended that Clause 13 of the partnership deed is categorical of the effect that 'if at any time, there is any dispute either in regard to business or connected matters, the same shall be referred to arbitration each party appointing one, the decision of the arbitrator shall be binding on the parties.' It is also contended that clause 3 of the partnership deed indicates that the partnership is at will and that, therefore, when the deed itself provides for dissolution of partnership at will and for referring any dispute to the arbitrators, there is no necessity for carrying the matter to the Civil Court for adjudication on any aspect governing the affairs of the partnership firm. Sri Nagarjuna Reddy has taken us through various decisions viz., I.T. Commr. Bombay v. Nandlal : [1960]40ITR1(SC) , Michael Golodetz v. Serajuddin & Co. : [1964]1SCR19 , F. F. D. Mehta v. M. F. D. Mehra : [1971]2SCR99 , Ram Singh v. Ram Chand (AIR 1924 PC 2), P. Subba Rao v. M. Veeraiah (1979 (2) ALT 380), and Venkateswara Rao v. Subba Rao (1984 (1) ALT 326), and contended that when the words used in Clause 13 of the deed are so exhaustive which would include contingency of dissolution of the firm and that when the respondent-plaintiff by notice dated 20.12.1991, has categorically stated that the firm has been dissolved with effect from 20.12.1991, it is not open to the respondent-plaintiff to seek recourse to Civil Suit.
7. Sri M. S. R. Subrahmanyam, learned counsel for the respondent on the contrary, states that though the respondent-plaintiff issued a notice making clear his intention to dissolve the firm with effect from 20.12.1991, he has taken recourse to civil suit seeking dissolution of the firm on the basis of reply letter dated 27.12.1991 of the appellant-defendant, who has disputed the power of competency of the respondent-plaintiff in dissolving the firm. It is also urged that the arbitrator appointed by the respondent-plaintiff has joined hands with the appellant-defendant; that the respondent-plaintiff, realising the conduct of the arbitrator, sought recourse to filing the suit seeking declaration of dissolution of the firm or in the alternative a direction dissolving the firm; that in the application filed under Section 34 of the Arbitration Act, a discretionary order has been passed by the court below and that it is not open to the appellant court to interfere in such a discretionary order unless otherwise the appellate court finds that the discretion exercised by the court below is perverse.
8. In view of the submissions, we have examined the entire gamut of the arguments and the issues raised in the appeal. Insofar as Clause 13 of the partnership deed is concerned, we are not at this stage inclined to go into the question whether the words used in that clause have wider meaning or not as in our view, the scope is very much limited as to the question of the Lower Court exercising the discretion. The suit is not for declaration of dissolution of the firm and for appointing the respondent-plaintiff as the Receiver till the disposal of the suit. The allegations are made against the arbitrator chosen by the respondent-plaintiff. Therefore, it is to be seen whether in such a contingency, a party to the partnership deed, though partnership is at will, is entitled to approach the Civil Court.
9. Section 43 of the Partnership Act, 1932 reads as under :
'Dissolution by notice of partnership at will :
Where the partnership is at Will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm.
(2) The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice.'
A plain reading of the section makes it clear that in a partnership at Will, the firm may be dissolved by any partner giving notice in writing. Thus, option is given to either of the parties. He may seek dissolution of the firm by giving notice in writing. But nothing is indicated in the section to say that a partner is prevented from approaching the Civil Court seeking appropriate remedy suffice it to say that Section 43 does not bar initiation of civil suit. Section 44 of the Partnership Act contemplates grounds before the court seeking dissolution of the firm. We are of the view, if grounds for dissolution of the firm sought by a particular party are numerous, it could be open to such party to approach a competent Civil Court, so that the entire matter could be decided by that court on the basis of oral and documentary evidence. No doubt Clause 13 of the partnership deed envisages choosing of arbitrators in case of disputes arising out of the dealings of the partnership. In our considered view, if allegations are levelled by a party to the partnership deed against a chosen arbitrator, it would not be proper to prevent such party from approaching the Civil Court solely on the ground that one of the clauses of partnership deed envisages referring the disputes to named arbitrators. We are not inclined to accept the submission made by the learned counsel for the appellant that where the partnership deed provides for referring the matter to arbitrators, seeking recourse to civil suit is prohibited. We are afraid, if this proposition is accepted, the clause providing reference to arbitrator any dispute arising out of the partnership is connection with their business, would run contrary to Section 44 of the Act. What is needed to the examined is whether in given circumstances a particular party has prima facie made out a case seeking recourse to civil suit for appropriate relief or not. When a suit is filed, the defendant is not prevented from taking an objection on the question of maintainability of the suit. The fact that the arbitrators are chosen by both the parties and a date was also fixed for the arbitrators to decide the matter, cannot be a ground for seeking stay of further proceedings in the regular suit filed for a comprehensive relief.
10. Therefore, the only question, in our view, to be considered is whether the order passed by the court below in the application filed under Section 34 of the Arbitration Act is proper or not.
11. In Printer (Mys.) Pvt. Ltd. v. P. Joseph : [1960]3SCR713 , the Supreme Court observed (at para 9) as under :
'Where the discretion vested in the court under Section 34 has been exercised by the Trial Court the appellate court should be slow to interfere with the exercise of the said discretion. In dealing with the matters raised before it at the appellate stage the appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the Trial Court reasonably and in a judicial manner the fact that the appellant Court would have taken a different view may not justify interference with the Trial Court's exercise of discretion. As is often said, it is ordinarily open to the appellate court substitute its own exercise of discretion for that of the trial Judge; if it appears to the appellate court that in exercising its discretion the Trial Court has acted unreasonably or capriciously or has ignored relevant facts and has adopted an unjudicial approach this it would certainly be open to the appellate court and in many cases it may be its duty to interfere with the Trial Court's exercise of discretion. In cases falling under this class the exercise of discretion by the Trial Court in law wrongful and improper and that would certainly justify and call for interference from the appellate Court.'
12. Therefore, any discretionary order passed by the court below would be interfered with only when the appellate court finds that the discretion exercised by the court below is in law wrongful and improper. In the instant case, we do not find that the discretionary order passed by the Court below is improper and unreasonable. Therefore, we are not inclined to sail with the submissions made by the learned counsel for the appellant-defendant.
For the foregoing reasons, we find no merits in the miscellaneous appeal. It is accordingly dismissed. No order as to costs.
13. Appeal dismissed.