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Vijayalakshmi Jayaram Vs. M.R. Parasuram and Others - Court Judgment

SooperKanoon Citation
SubjectCivil;Commercial;Arbitration
CourtAndhra Pradesh High Court
Decided On
Case NumberAppeal Against Order No. 1048 of 1982 and C.M.P. Nos. 5550 and 5551 of 1989
Judge
Reported inAIR1995AP351; 1995(2)ALT32
ActsCode of Civil Procedure (CPC), 1908 - Order 6, Rule 4 - Order 21, Rule 49 - Order 22, Rules 5 and 10; Partnership Act, 1932 - Sections 44; Arbitration Act, 1940 - Sections 13 and 34; Succession Act, 1925; Companies Act - Sections 433
AppellantVijayalakshmi Jayaram
RespondentM.R. Parasuram and Others
Appellant Advocate J.V. Suryanarayana Rao, Adv.
Respondent Advocate T. Anantha Babu, ;E. Manohar, ;M. Deshava Rao and ;M. Rama Rao, Advs.
Excerpt:
(i) civil - consequence of death - order 22 rule 5 of code of civil procedure, 1908 - motto behind resolution of legal representative is only to get him on record - it does not create bar on proceedings - dispute regarding who is legal representative of deceased has to solved out by separate suit. (ii) commercial - application of law - section 44 of partnership act, 1932 and section 13 of arbitration act, 1940 - partnership firm is to be dissolved according to agreement clause and by applying provisions of section 44 and meeting its ingredients. (iii) arbitration - invalid decision - section 34 of arbitration act, 1940 - suit for dissolution of firm stayed by trial court - matter referable for arbitration - arbitrator alleged to have involved in fraud - cannot perform duty of arbitrator.....1. the appellant, who is the plaintiff, filed o.s. no. 103 of 1982 on the file of subordinate court, tirupathi, on 23-6-1982 for dissolution of partnership firm 'pratap talkies' (hereinafter referred to as 'the firm') and preliminary decree for rendition of accounts. the partnership, which was reconstituted with effect from 1-7-1976, is not 'at will'. under clause 17 of the deed, ex. b1, the firm can be dissolved by common consent of all partners and no one person has a right by himself to dissolve the partnership. as per clause 19, 'the partnership shall not be dissolved by reason of death, insolvency or retirement, expulsion of any of the partners and in case of death, retirement or insolvency or expulsion of any of the partners, the retiring partners or the person or the persons in.....
Judgment:

1. The appellant, who is the plaintiff, filed O.S. No. 103 of 1982 on the file of Subordinate Court, Tirupathi, on 23-6-1982 for dissolution of partnership firm 'Pratap Talkies' (hereinafter referred to as 'the firm') and preliminary decree for rendition of accounts. The partnership, which was reconstituted with effect from 1-7-1976, is not 'at will'. Under Clause 17 of the deed, Ex. B1, the firm can be dissolved by common consent of all partners and no one person has a right by himself to dissolve the partnership. As per Clause 19, 'the partnership shall not be dissolved by reason of death, insolvency or retirement, expulsion of any of the partners and in case of death, retirement or insolvency or expulsion of any of the partners, the retiring partners or the person or the persons in whom the estate of such insolvent partner is vested, shall be entitled to or be liable for the share of capital and profits or share of loss of such partner, on the taking of accounts upto the date of death, retirement or insolvency or expulsion as aforesaid and shall be entitled to his share of assets of the firm, as determined by the auditors of the firm taking all circumstances to account and in the event there being any further dispute the same shall be settled by arbitration.' As per Clause 26, 'with regard to any dispute arising out of this agreement or of the interpretation of any clauses hereunder and in any matter of policy or decision, day to day working, administration, finance and future development programme, such dispute shall be referred to the arbitration of Mr. M. R. Pratap and a retired High Court Judge acceptable to both the families whose decision shall be final and binding on the firm'. The partnership deed was executed by the appeltant-Vijayalakshmi Jayaram through her Power Attorney M. R. Pratap, M. R. Rajakrishna, M.R. Parasu-ram, M. P. Ranjit, W. S. Sethunarayana-babu, W. S. Surendraand Kamal Seetharam, Earlier, the parties were carrying on business along with Smt. Padmini Jayaraj under the name and style of 'Pratap Talkies' in purusance of the partnership deed dated 6-11-1972. After Smt. Padmini Jayaraj expressed her desire to leave the partnership, the firm was constituted. The main business of the partnership consists of exhibiting films in Pratap Group of theatres viz., Pratap, Mini Pratap and Ram Raj, situated at Tirupathi. Sethunarayana Babu, respondent No. 3 herein, was managing the affairs of the firm. Later, disputes arose among the partners, the appellant, M. R. Parasuram and M. R. Rajakrishna forming one group and the others forming the opposite group. The suit was filed by the appellant alleging that her then Power of Attorney Mr. M. R. Pratap in collusion with respondents 2 to 5 acted against her interests by raising loans allegedly for the purpose of partnership but for their personal benefit and by manipulating accounts of the firm. On 24-7-1982, respondents 1 to 5 filed I.A. No. 806 of 1982 under Section 34 of the Arbitration Act in the Court below for stay of the suit proceedings on the ground that the matter has to be referred to arbitration under Clause 26 of the partnership deed. Appellant and respondent No. 6 opposed the application contending that the partnership deed does not provide for dissolution at will, that the firm can be dissolved only on the intervention of Court under Section 44 of the Partnership Act andfor the grounds staled therein and hence the arbitrator has no jurisdiction to go into the question of dissolution. The lower Court allowed the LA., and stayed the trial of the suit. Against this order, the appellant has preferred this appeal.

2. Pending appeal, respondent No, 4 died on 11-6-1985 and notice was ordered in C.M.P. Nos. 14170 to 14173 of 1986 to his wife and minor son who are sought to be brought on record as legal representatives. The wife who was served with notice on 15-4-1988 did not choose to file any appearance in the Court or any counter. As the son was shown as minor in the notice, evidently it was not served separately on the son though he became major by the date of service. As none appeared for the wife and son of the fourth respondent, this Court condoned the delay in filing the petition to set aside the abatement and ordered C.M.P. No. 14170 of 1986 on 6-12-1988. In C.M.P. No. 14171 of 1986, 7th respondent was appointed as guardian of 8th respondent. They have subsequently filed petitions C.M.P. Nos. 5550 and 5551 of 1989 contending that the deceased by his will dated 21-3-1985 bequathed his interest in the firm to another firm N.V.K. Enterprises of which C. Krishna Murthy is the managing partner and major shareholder, that they have nothing to do with the suit property and that they were unnecessarily brought on record as legal representatives without notice to them. Notice was ordered on these petitions to C.Krishna Muthy who filed counter supporting the petition and contending that though he is legal representative of the deceased Surendra, as far as suit properties are concerned, he cannot be brought on record now as the appeal abated long back 'due to the appellant not having filed appropriate petition to set aside the abatement. Though the appellant has not filed any counter, learned counsel for the appellant opposed these petitions on the ground that as per Clause 17 of the partnership deed, he cannot be inducted as partner.

3. The averment of the 7th respondent that 'she has no recollection of notice having been served' cannot be accepted as the Court record shows that she was served with notice on 15-4-1988. The affidavit is silent as to when she came to know of her being brought on record. Hence, I do not see any reason to allow the C.M.P. No. 5550 of 1989 which is accordingly dismissed.

4. As regards C.M.P. No. 5551 of 1989 filed by the son, it is significant to note that the petition was filed simultaneously with C.M.P. No. 5550 of 1989 filed by his mother and incidentally by the same counsel. In this affidavit also, it is not disclosed when he came to know that he was impleaded as legal representative. As the mother has notice both on her behalf and on behalf of the son who was shown as minor in the notice and as there is no conflict of interest between them, the son must be held to have had constructive notice of the petition and cannot raise the technical plea that he became major even by the date of service of notice on mother. Accordingly, C.M.P. No. 5551 of 1989 is dismissed.

5. Now the plea of Mr. C. Krishna Murthy thai he is the legal representative of the deceased and that he cannot be impleaded now as the appeal has abated long back has to be considered. Under Order, 22 Rule 10A of the Code of Civil Procedure, in the case of death of any party, it is the duty of the counsel appearing for such party to inform the Court about the death of his client whereupon the Court will give notice of such death to the other party to take necessary steps. Order 22, Rule 10A, C.P.C. has been interpreted by this Court in Food Corpn. of India v. Rama-chandra B. & R. Rice Mill, : AIR1985AP23 by Ramaswamy, J. (as he then was) that the counsel of the person who dies has not only duty to inform the Court about the date of death but must also furnish the particulars of legal representative. As the counsel of !ate Surendra failed to inform the Court about the date of death, much less furnish particulars of legal representatives, Mr. Krishna Murthy claiming to be legal representative cannot say now that the appeal has abated and that he cannot be brought brought on record now. It is also significant to note that no steps were taken by Krishna Murthy to get himself impleaded as legalrepresentative in connected C.M.A. No. 1136 of 1982, where the fourth respondent is one of the appellants. Moreover, 7th and 8th respondents were impleaded as legal repre-sentatives and abatement was set aside in C.M.P. No. 14170 of 1986. For the purpose of this appeal, the question as to who are the correct legal representatives of the deceased Surendra need not be gone into. The legal representatives, according to the appellant are already impleaded and the person who claims to be legal representative has also notice of these proceedings. After all,, bringing of legal representatives on record is to see that estate of the deceased is represented effectively by somebody. A Full Bench of Punjab and. Haryana High Court in Mohinder Daur v. Piara Singh, has held that determination of the point as to who is the legal representative of the deceased plaintiff or defendant under Order 22, Rule 5 of the Code of Civil Procedure is only for the purposes of bringing legal representatives on record for the conducting of those legal proceedings only and does not operate as res judicata and the inter se dispute between the rival legal representatives has to be independently tried and decided in separate proceedings. Following this decision another Judge of Punjab and Haryana High Court in S, Charanjit Singh v. Bharatinder Singh, held that proper course to follow is to bring all the legal representatives on record so that they vouchsafe the estate of the deceased for ultimate benefit of the real legal representatives. In view of this, I hold tht the dismissal of C.M.P. Nos.5550 and 5551 of 1989 does not prevent Mr. Krishna Murthy from claiming that he is the legal representative as far as suit pro-perties are concerned, in the Court below.

6. Sri J. V. Suryanarayana Rao, learned counsel for the appellant raised the following contentions:

(1) In the case of dissolution of partnership through intervention of Court under Section 44 of the Partnership Act, any stipulation in the partnership deed that disputes arising out of the deed have to be referred to arbitration cannot cover dissolution since it is the Court only that has got power to decide the dispute under Section 44 which has overriding effect on the contract.

(2) Even assuming that the matter can be decided by arbitrator, this is a fit case to be decided by the Civil Court.

FIRST CONTENTION :

7. Sri J. V. Suryanarayana Rao, learned counsel for the appellant, contends that as the dissolution is sought under Section 44 of the Partnership Act and as it is not provided for otherwise under the partnership deed, it is only the Court that has jurisdiction to try the dispute and the arbitrator cannot decide it. He submits that as the appellant has alleged fraud against M/R. Pratap, it is only the Court that has jursidiction under Section 44 of the Partnership Act to dissolve the firm. He further submits that right of any partner to get the firm dissolved on any of the grounds mentioned in Section 44 of the Partnership Act is a statutory right and will prevail over any stipulation to the contrary in the partnership deed and that as under the partnership deed, the partner has no right to get the firm dissolved, arbitration clause is ineffective as regards the question of dissolution and hence it is only the Civil Court that has jurisdiction.

8. Mr. T. Ananta Babu, learned, counsel for the respondents I and 2, on the other hand contends that though the statutory right of any partner under Section 44 of the Partnership Act can be exercised even though there is specific bar in the partnership deed, this cannot be stretched to mean that the arbitrator cannot decide the question of dissolution applying Section 44 of the Partnership Act.. He also contends that the just and equitable clause is not invoiced in this case and no details of fraud alleged are mentioned in the plaint as required by Order 6. Rule 4 of the Code Of Civil Procedure. To appreciate the rival contention, it is necessary to read Section 44 of the Partnership Act.

'44. Dissolution by the Court -- At the suit of a partner, the Court may dissolve a firm onany of the following grounds, namely :--

(a) that a partner has become of Unsoundmind, in which case the suit may be brought as well by the next firend of the partner who has become of unsound mind as by any other partner;

(b) that a partner, other than the partner suing, has become in any way permanently incapable of performing his duties as partner;

(c) that a partner, other than the partner suing, is guilty of conduct which is likely to affect prejudicially the carrying on of the business, regard being had to the nature of the business:

(d) that a partner, other than the partner suing, wilfully, or persistently commits breach of agreements relating to the management of the affairs of the firm or the conduct of its business, or otherwise so conducts himself in matter relating to the business that it is not reasonably practicable for the other partners to carry on the business in partnership with him;

(e) that a partner, other than the partner suing, has in any way transferred the whole of his interest in the firm to a third party, or has allowed his share to be charged under the provisions of Rule 49 of Order XXI of the First Schedule to the Code of Civil Procedure, 1908, or has allowed it to be sold in the recovery of arrears of land-revenue or of any dues recoverable as arrears of land-revenue due by the partners;

(f) that the business of the firm cannot be carried on save at a loss; or

(g) on any other ground which renders it just and equitable that the firm should be dissolved.'

As already seen, the partnership is not 'at will' and the deed does not provide for dissolution except with the consent of all partners. The grounds on which suit was filed are: '

(a) the firm has been, according to the defendants running at a loss for the last several years;

(b) the firm is involved in huge liabilities;

(c) Attempts are made by one or other of the defendants to sell the properties of the firm or taking a new partner without the consent of all the partners contrary to the terms and conditions of the partnership;

(d) the accounts of the firm are not maintained and not furnished for scrutiny; and

(e) there is no mutual confidence between the parties.

9. In support of the first contention, the learned counsel for the appellant relied on decisions in Olver V. Killer, (1959) 2 All ER 220; V. Venkata Swami v. G. Venkata Swami, : AIR1954Mad9 ; Padmanabhan v. Srini-vasan, : AIR1967Mad201 ; Ganesh Charndra v. Kamal Kumar, 0065/1971 : AIR1971Cal317 and Nitya Kumar v, Sukhendu Chandra, : AIR1977Cal130 , In Olver v. Killer (1959 (2) All ER 220) (supra), the arbitration clause was:

'All disputes and questions whatsoever which shall either during the partnership or afterwards arise between the partners or their respective representatives or between either partner and the representative of the other partner touching this agreement or the construction or application thereof or any clause or thing herein contained or any account valuation or division of assets debts or liabilities to be made hereunder or as to any act deed or omission of either partner or as to any other matter in any way relating to the partnership business or the affairs thereof shall be referred to a single arbitrator...'

One of the partners filed suit for dissolution of firm under Section 35(d) and (f) of the^ Partnership Act, 1890 (England) which are analogous to Section 44(d) and (g) of the Indian Partnership Act, 1932. The defendants contended that the matter has to go to' arbitration and accordingly sought for stay of the proceedings. Rejecting that plea; Roxburgh, J. of the Chancery Division held as follows:

'It appears 10 me that the dissolution of a partnership which involves the exercise of a judicial discretion under Section 35(f), and which may involve the appointment of areceiver and manager, is again a matter which perhaps is more conveniently left in the handsof the Court...... I decide not to grant a stay inthis present case.'

Thus in this case, the question whether arbitrator has jurisdiction in view of Section 35 of the British Partnership Act was not decided by the Court was of the view that discretion must be exercised in favour of Court deciding the issue. It is obvious that exercise of discretion arises only if two forums have jurisdiction. Considering, this question, another Judge of Chancery Division, Sir Geginald WilJiam Goff in Phoenix v. Pope, (1974) 1 All ER 512 held as follows:

'It is there (Supreme Court Practice 1973, Vol. 2, p. 1060, para 3723) said under the heading 'Dissolution of Partnership' at the end of a review of the cases:

'On the other hand, where there is a claim for the dissolution of the partnership on the ground that it is just and equitable to dissolve it, so that the exercise of judicial discretion under Section 35(b) (which I think be a misprint for (0) of the Partnership Act, 1890, is involved and the appointment of a receiver and manager is sought, a stay will be refused (Olver v. Hiller) (1959 (2) All ER 220)'.

That is perhaps ambiguous. If it means a stay must be refused as a matter of law because the arbitrator cannot deal with it then following my judgment it is wrong. If however it means that the Court will in such a case always exercise its discretion that way, it is probably at least put too high, because it is difficult to see how there can be an inevitable exercise of discretion.'

The other decisions cited by the learned counsel for the appellant in Padmanabhan v. Srinivasan : AIR1967Mad201 (supra), Ganesh Chandra v. Kamal Kumar 0065/1971 : AIR1971Cal317 (supra) and Nitya Kumar v. Sukhendu Chandra : AIR1977Cal130 (supra) proceed on the assumption that arbitrator has also jurisdiction and hold that judicial discretion must, however, be exercised in favour of Court deciding the dispute instead of leaving it to the arbitrator.

10. All these cases have been reviewed by a Division Bench of this Court in P. Subba Rao v. M. Veeraiah, (1979) 2 Andh LT 380. In that case, Clause 18 of the Partnership Deed provided that any dispute arising between the partners in regard to any matter connected with the partnership business or any incidents may be decided by an arbitrator. One of the partners filed suit for dissolution on the ground that the business of the firm could not be carried on. The defendant partner claimed that the matter has to go to arbitration and that under Clause 11 of the Partnership Deed, no partner has right to dissolve the partnership firm without the consent of the other. The Division Bench held as follows:

'As stated earlier, Clause 18 provides for reference to an arbitration of any dispute arising between the partners in regard to any matter connected with the partnership business or any incidents thereof. These words are, in our view, are wide enough to cover a case of dissolution of partnership. As pointed out by Russel in his book on 'Arbitration' 18th Edition, at page 166, there is nothing in law to prevent an arbitrator awarding a dissolution of partnership if the submission is sufficiently wide to enable him to do so. This is in accordance with the general proposition that question should be left to the tribunal selected by the parties. As a matter of fact, one of the decisions relied upon by the respondent Padmanabhan v. Srinivasan, : AIR1967Mad201 proceeded on the footing that it is open to the parties to provide for arbitration even in cases of dissolution of partnership. The learned counsel for the respondent did not seriously persist in pressing this contention.'

If any Special Court is given exclusive jurisdiction to decide a dispute like granting of probate under Section 213 of the Succession Act or winding up of limited company under Section 433 of the Companies Act, it is possible, to argue that the parlies cannot provide for reference of the dispute to the arbitrator. For example in Charanjilal Shrilal Goenka v. Jasjit Singh, : [1993]2SCR454 , the Supreme Court held in the matter of grant of Probate under Succession Act, 1925, the Court of Probate has exclusive jurisdiction and this cannot be decided by arbitrator. Similarly, under Sec-tion 433 of the Companies Act, it is only the High Court or if the power is so conferred, the notified District Court that has power to wind up any limited company. It is obvious that arbitrator cannot be conferred with such a power even by consent of parties. But the question here is not of such an exclusive jurisdiction. In fact, it is open to the parties to provide in the partnership deed a clause for dissolution at the instance of any partner either at will or on any of the grounds stated in Section 44 of the Partnership Act, After all, the arbitrator has to decide the issue not only in accodance with the clauses in the agreement but also applying the law applicable and governing rights and liabilities of partners. Thus the ingredients mentioned in Section 44 of the Partnership Act are also to be taken into account by arbitrator while deciding the point whether the firm is to be dissolved or not. Thus, I hold that under Clause 26 of the partnership deed, the arbitrator has power to decide whether the Firm can be dissolved even though there is no specific provisions in the partnership deed providing for dissolution of firm at the instance of one of the partners.

SECOND CONTENTION:

11. The next question is whether this is a fit case for the arbitrator to decide. Mr. Suryananrayana Rao, learned counsel for the appellant, submitted that the relief sought for is based on allegation against one M. R. Pratap, who is one of the named arbitrators and thus it is not desirable that the matter is decided by arbitration. Relying on decisions in Padmanabhan v. Srinivasan : AIR1967Mad201 (supra) and Nitya Kumar v. SukhenduChandra, : AIR1977Cal130 (supra), he submits that in view of the allegations of fraud made, it is desirable that the Court may decide this issue instead of arbitrator. Sri Ananta Babu, learned counsel for the respondents, on the other hand opposed this contention saying that details of fraud are not mentioned in the plaint as required by Order 6, Rule 4 of the Code of Civil Procedure and hence the question of desirability of the Court deciding the question of fraud does not arise and as the Court below has exercised its judicial discretion in favour of staying of the suit, it may not be interferedwith.

12. In 20th edition of Russal on Arbitration at page 198 it is stated as follows:

'However, the Court has a discretion to refuse a stay. This discretion must be exercised upon the facts involved, but when a dissolution is claimed, the facts involved are very apt to be such as to call for refusal. This had led to the opinion of the Court in Joplin v. Postlethwaite, (1890) 61 LT 629 that a question of dissolution was not a suitable one to be left to arbitrators to decide. Whilst this is not a proposition of law as the cases previsouly cited show, it may perhaps be regarded as a 'proposition of good sense' and the principle is frequently found persuasive.'

In 28 Halsbury Simond's (3rd) Edn. page 567,it is stated:

'Therefore if charges of fraud or dishonestly or of want of good faith are made bona fide by one partner against the other, or if questions of law are likely to arise which are more fit for the Court than a lay tribunal or if the action claims dissolution on a ground the power of determining the existence of which is expressly within the discretion of the Court, or if the attempted reference is made vexati-ously, a stay of the action for dissolution may, and generally, will be refused.'

Referring to these, the Madras High Court in Padmanabhan v. Srinivasan : AIR1967Mad201 (supra) held that where a suit is filed by one partner alleging grave charges of fraud and misappropriation on other partner and sought dissolution of the firm under Section 44, clauses (f) and (g) of the Partnership Act, the Court must try the suit and riot leave it to the arbitrator.

13. In Nitya Kumar v. Sukhendu Chandra : AIR1977Cal130 (supra); a Division Bench of Calcutta High Court had occasion to consider similar question. After referring to decision in Olver v. Hiller (1959 (2) All ER 220) (supra), Padmanabhan v. Srinivasan : AIR1967Mad201 (surpa) and decision of single Judge in Ganesh Ch.Dey v, Kama] Kumar 0065/1971 : AIR1971Cal317 (supra), the Division Bench held that the lower Court was justified in refusing stay of trial of suit filed for dissolution of partnership under S. 44 of the Partnership Act. In P. Subba Rao v. M. Veeraiah (1979 (2) Andh LT 380) (supra), a Division Bench of this Court following decision in Padmanabhan v. Sri-nivasan : AIR1967Mad201 (supra) and 0065/1971 : AIR1971Cal317 (supra) held that it is better the suit for dissolution of partnership under S. 44 of the Partnership Act is decided by the Civil Court instead of by arbitrator.

14. Mr. Ananta Babu, learned counsel for the respondents, relying on Printers (Mys.) Pvt. Ltd. v. P. Joseph : [1960]3SCR713 submitted that as the discretion has been exercised by the lower Court in favour of stay, the appellate Court may not normally interfere. In Printers (Mys.) Pvt. Ltd. case, the Supreme Court held as follows (para 7):

'The discretion vested in the court must be properly and judicially exercised. Ordinarily where a dispute between the parties has by agreement between them to be referred to the decision of a domestic tribunal the court would direct the parties to go before the tribunal of their choice and stay the legal proceedings instituted before it by one of them. As in other matters of judicial discretion, so in the case of the discretion conferred on the court by S. 34 it would be difficult, and it is indeed inexpedient, to lay down' any inflexible rules which should govern the exercise of the said discretion. No test can indeed be laid down the automatic application of which will help the solution of the problem of the exercise of judicial discretion. As was observed by Bowen L.J. in Gardner v. Jay (1885) 29 Ch D 50 at p. 58, 'that discretion, like other judicial discretion, must be exercised according to commonsense and according to justice.'

Again at para 9:

'Where the discretion vested in the court under S. 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 matter raised before it at the appellate stage the appellatecourt would normally not be justified ininterfering with the exercise of discretionunder appeal solely on the ground that if ithad considered the matter at the trial stage itwould have come to a contrary conclusion. Ifthe discretion has been exercised by the trialcourt reasonably and in a judicial manner thefact that the appellate court would have takena different view may not justify interferencewith the trial court's exercise of discretion. Asis often said, it is ordinarily not open to theappellate court to substitute its own exerciseof discretion for that of the trial Judge; but ifit appears to the appellate court that inexercising its discretion the trial court hasacted unreasonably or capriciously or hasignored relevant facts and has adopted anunjudicial approach then it would certainly beopen to the appellate court -- and in manycases it may be its duty -- to interfere with thetrial court's exercise of discretion. In casesfalling under this class the exercise of discretion by the trial court is in law wrongfuland improper and that would certainly justifyand call for interference from the appellatecourt. These principles are well established;but, as has been observed by Viscount SimonL.C. in Charles Osenton & Co. v. Johnston,(1942) AC 130 at p. 138 'the law as to thereversal by a court of appeal of an order madeby a Judge below in the exercise of hisdiscretion is well established, and any difficulty that arises is due only f o the applicationof well settled principles in an individualcase.'

I am afraid, I am not able to agree with his contention. In fact, the later observations support the appellant. The other two decisions relied upon by Mr. Ananta Babu in Renusaga Power Co. Ltd. v. General Electric Company : [1985]1SCR432 and Union of India v. D, N. Revri & Co. : [1977]1SCR483 do not throw any light on the question of interference with the discretion exercised by the trial court. The lower Court while exercising its discretion has proceeded on [he assumption that prima facie there is no case made out regarding fraud on the part of M. R. Pratap, one of the proposed arbitrators. In my view, the lower Court erredin going into this question at this stage which was not necessary for it to go into. As the appellant has made certain allegations against Pratap, the lower Court ought to have seen that the very same Pratap cannot act as arbitrator. The offer of the learned counsel for the respondents referred to in the last para of the judgment of the lower Court viz., that in the place of Mr. M. R. Pratap, another retired Judge of the High Court can be appointed cannot be a relevant factor while exercising discretion. That question arises only after parties are relegated to arbitration forum. Thus, in my view, the lower Court has erred in exercising discretion in staying the suit. There are two other reasons as to why it is desirable that the Civil Court may decide this issue. The suit was filed in the year 1982 and already nearly 12 years have passed. If the parties are relegated to the forum of arbitration now, there is likely to be another round of litigation regarding appointment of arbitrator. Then there is the question of who the legal representatives of Surendra are, with reference to the will alleged to have been executed by the deceased. Thus the adjudication of the matter effectively by arbitrators may take long time followed by challenge to the award by the aggreived party in the Civil Court, which thus is likely to prolong the litigation. For these reasons, I am of the view that it is better that Civil Court proceeds with the suit.

15. In the result, I hold that the lower Court has erred in staying the suit under Section 34 of the Arbitration Act and I accordingly direct the lower Court to proceed with the suit and dispose it of as expeditiously as possible preferably before 9-10-1995. When the Courts reopen after Dasara Vacation. The lower Court' is also directed to decide the question of who the legal representatives of late Surendra are and try this issug along with other issues. The CMA is accordingly allowed with costs.

16. Order accordingly.


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