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K. Yusuf Sheriff and ors. Vs. K. Akbar Sheriff and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtChennai High Court
Decided On
Reported in(1975)2MLJ107
AppellantK. Yusuf Sheriff and ors.
RespondentK. Akbar Sheriff and ors.
Cases ReferredPrinters (Mys.) Private Ltd. v. P. Joseph
Excerpt:
- .....and there is no dispute about it, was known to all the parties concerned at the time the partnership agreement was entered into. notwithstanding the arbitration clause, the plaintiffs-respondents instituted a suit for partition and also dissolution of the partnership. the appellants have no objection to the suit being proceeded with so far as it related to partition, but resist the suit in respect of the relief for dissolution of the partnership on the ground that it should be dealt with in arbitration. the subordinate judge declined to grant stay, as, in his view the arbitrator's wife, who was one of the partners, according to the plaintiffs, was responsible for expelling the plaintiffs from the firm and the arbitrator was not likely to be impartial and also that the suit was.....
Judgment:

K. Veeraswami, C.J.

1. This appeal is by defendants 1 and 3 to 8 from an order of the Subordinate Judge of Vellore. He declined to grant stay under Section 34 of the Arbitration Act of 1940. On 5th March, 1972 a partnership deed was entered into between the parties which provided for settlement, by arbitration, of all disputes arising between the parties in the partnership. The husband of one of the partners was named as the Arbitrator. This relationship, and there is no dispute about it, was known to all the parties concerned at the time the partnership agreement was entered into. Notwithstanding the arbitration clause, the plaintiffs-respondents instituted a suit for partition and also dissolution of the partnership. The appellants have no objection to the suit being proceeded with so far as it related to partition, but resist the suit in respect of the relief for dissolution of the partnership on the ground that it should be dealt with in arbitration. The Subordinate Judge declined to grant stay, as, in his view the Arbitrator's wife, who was one of the partners, according to the plaintiffs, was responsible for expelling the plaintiffs from the firm and the arbitrator was not likely to be impartial and also that the suit was a composite one since there was also the relief for partition asked for.

2. In our opinion, the order of the Subordinate Judge cannot be supported. As we already indicated, the partners knew full well when the partnership-agreement was entered into the relationship between the Arbitrator and one of the partners. Nothing has been said or proved against the named Arbitrator either by his conduct or by expression or other circumstances that he would be partial or would act with bias as Arbitrator. The allegation that the Arbitrator's wife, as a member of the partnership, was responsible for expelling the plaintiffs, could not reasonably give rise to the inference that her husband would not act impartially when he was called upon to serve as an Arbitrator. U.P. Co-operative Federation Ltd. v. Sander Bros. Delhi : AIR1967SC249 , relied on by the respondents is distinguishable. In that case, the Registrar of Go-operative Societies himself was the ex-officio President of the society and it was with his approval the. agreement in dispute there war terminated. That being so, the Supreme Court was of opinion that the Registrar would not possibly be impartial as he was a party to the cancellation of the agreement. The relationship, here was already known, there is nothing to point to the Arbitrator being likely to be biased in any way against the plaintiffs. We cannot assume from the mere relationship of the Arbitrator with one of the members of the partnership that the Arbitrator would act otherwise than impartially. Printers (Mys.) Private Ltd. v. P. Joseph : [1960]3SCR713 to which our attention was invited for the respondents, lays down the general principle which should govern exercise of the discretionary power under Section 34. of the Arbitration Act. In that case, the following observation is pertinent to the view we have taken in this case:

In exercising its discretion under Section 34 the Court should not refuse to stay the legal proceedings merely because one of the parties to the arbitration agreement is unwilling to go before an arbitrator and in effect wants to resile from the said agreement nor can stay be refused merely on the ground that the relations between the parties to the dispute have been embittered...

In this case, there is not even an allegation that there was any such embitterment. The parties have, with open eyes and knowing the fact of the relationship, named the husband of one of the partners as Arbitrator, and we do not see why the plaintiffs-respondents should be allowed to get out of the agreement. If any foundation had been laid for their alleged apprehension that the Arbitrator might not be impartial, one can understand that. But that is not the case here.

3. The other ground is that the suit is a composite one and, therefore, no stay should be granted. But that circumstance, in our opinion, will not help the plaintiffs. As already mentioned, the appellants have no objection to the suit being proceeded with in so far as it relates to partition If there should be any difficulty in making partition without the dissolution of the partnership decided upon and the rights are arbitrated, that part of it will, of course, have to wait. On this ground, we do not see why stay, should be refused. The appeal is allowed with costs.


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