C. M. A. 484/81 ' This is an application filed by the plaintiff for appointment of the receiver of the partnership firm known as Jaffri & Co. The brief facts are that the plaintiff and defendant entered into partnership agreement on 11th July, 1978. The partnership-deed, inter alia, provided that Rs, 4,25,000 would be the capital of the firm and the plaintiff was to contribute Rs, 2,25,000 in the form of machinery, land and tools etc. The profits and losses were to be shared by the plaintiff and defendant in the ratio of 49% and 51% respectively.
2. In terms of the partnership-deed the defendant was the Managing Partner and responsible to maintain the account. On 26th November, 1979 the defendant served a notice alleging that the plaintiff has failed to contribute his share of Rs, 2 lacs and called upon him to pay it within 7 days.
The plaintiff denied the allegation stating that he has contributed more than Rs, 5 lacs and called upon him to refer the matter to the arbitration. It seems that Martial Law Authorities intervened and the parties signed an agreement whereby the defendant acknowledged that the plaintiff has invested Rs, 5,57,000 and the parties agreed that it will be subject to auditing of an auditor appointed by them. The defendant however filed Suit No, 21/80 in this Court for dissolution of partnership and accounts. An application under Order XLIX, rule 1, C. P. C. Was also filed whereby a commissioner was appointed on 4th February, 1980 for preparing the inventory which was accordingly prepared. After the written statement had been filed by this plaintiff in Suit No, 21/80 the defendant by an application dated 12th November, 1980 applied for withdrawal of the suit which in spite of opposition from this plaintiff was granted on the same day and the suit was dismissed as withdrawn. It is to be noted that this plaintiff who was defendant in Suit No, 21/80 did not file an application for stay of the said suit and referring the matter to arbitration. After the suit was dismissed the plaintiff filed the above suit for dissolution of partnership and accounts on 29th January, 1981. This application for receivership arises from this proceeding. It is an admitted position that the partnership was at will and serious disputes between the parties had arisen which has been subject-matter of litigation twice first by the defendant and the second by the present plaintiff. There are allegations and counter allegations against each other about the misappropriation, misuse of partnership business and partnership property and continuance of the business by the defendant with the assets of the partnership. The defendant's contention is that the plaintiff had not contributed his share of the capital and by collusive and fraudulent means the amount over drawn in the account has been shown as capital. The question whether the plaintiff has contributed his share in the partnership will have to be decided by the Court in the suit after recording the evidence. The fact however, remains that there exists a partnership firm under partnership-deed which has been dissolved and the plaintiff has no access to the assets and partnership property which are entirely in the hands of the defendant who is continuing with the business. In cases where the dispute is between the partners for dissolution of partnership-deed and accounts the Court always as a matter of course appoints receiver. Reference can be made to PLD 1977 Kar. 280 and 351. In the present case the defendant has contended that the entire machinery, equipment, land and building belong to him. The fact remains that in terms of partnership-deed the defendant had to invest his share of capital in form of machinery, equipment and land. Considering the balance on either side and also taking into account the undertaking given by the defendant even today, that he will not sell, dispose of or transfer any of the machiney, equipment, land or building it would be proper if Nazir is appointed as a receiver with a limited power to supervise the business of the firm which shall be run by the defendant. The Nazir is, therefore, appointed as a receiver of the properties of firm who shall only supervise and look after the interest of all the parties concerned without in any manner carrying on the business. The business shall be carried by the defendant under the supervision of the Nazir. The undertaking given by the defendant is accepted and any breach of this undertaking shall be treated as a breach of injunction. C. M. A. 793/81 ' This application has been filed by the defendant under section 34 of the Arbitration Act for stay of the suit and for referring the matter to arbitration. It is an admitted position that the plaintiff and defendant had entered into a partnership agreement dated 11th July, 1978. As the disputes between the parties arose the defendant filed Suit No, 21/80 for dissolution of partnership and accounts which was withdrawn on 12th November, 1980. The present suit was filed by the defendant for dissolution of partnership and accounts on 12th November, 1980. In order to prove investment the plaintiff has produced an agreement executed by the parties which is alleged to have been obtained by coercion and undue influence exercised by one Lt. Comdr. Majtaba in the Martial Law Headquarters, who pressurised the defendant to admit and execute the document. In this background and on the basis of these facts it is to be seen whether stay should be granted. Mr. M.
G. Dastagir, the learned counsel for the plaintiff has opposed the application and contended that as defendant by his notice dated 26th November, 1979 had repudiated the agreement it is not open for him to rely upon the arbitration clause. He has referred to PLD 1959 Kar.
750. The contention of the learned counsel is completely erroneous as by notice dated 26th November, 1979 it cannot be assumed that the agreement had been repudiated. It was stated in the notice that if the plaintiff failed to pay the amount of Rs, 2 lacs within 7 days the agreement will stand automatically terminated. The existence of the agreement is admitted by the defendant and the question of repudiation does not arise.
' The next contention of the learned counsel was that as the defendant had filed Suit No, 21/80 he was not ready and willing to refer the matter to arbitration. In this regard reliance has been placed on the case of W. Wood & Sons Ltd. v. Bengal Corporation and others. In this case defendant had instituted a case in England and had obtained a decree. On the date when the suit was being decreed at London the plaintiff had filed a suit at Calcutta. In these facts the Court observed : "An action in a Court of law is inconsistent with readiness and willingness to go to Arbitration." In this regard reliance was placed on the following passage from Russel on the Law of Arbitration, XIVth Edition, page 56 : "that the plaintiff by bringing an action in respect of a matter agreed to be referred shows that he is not at the time when proceedings are commenced ready and willing to do all things necessary to the proper conduct of the arbitration and, therefore, is not entitled subsequently to apply for a stay."
Under section 34 of the Arbitration Act stay of the suit will be granted provided there is an arbitration agreement and the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration. The readiness and willingness to go to the arbitration is to be considered at the time of commencement of the proceedings and not before. In this regard the learned counsel for the defendant has referred to PLD 1972 Kar.
515. Earlier acts of the applicant from which inference can be drawn to show that he was not ready and willing for arbitration cannot be pressed in service for rejection of the stay application. The learned counsel for the plaintiff has relied on AIR 1956 Cal. 238 which has been referred above. This decision does not support the plaintiff as in that particular case the suit at Calcutta was filed at the time when the applicant's suit was pending in London. It was, therefore, held that at the time of commencement of the Calcutta suit the applicant was not ready and willing to refer the matter to arbitration. In the present case, the applicant's suit was withdrawn on 12th November, 1980 and the present suit was filed on 29th January, 1981, therefore, it cannot be inferred that at the commencement of the proceedings i. e. On 29th January, 1981 the application was not ready and willing to refer the matter to arbitration.
' I am however not inclined to grant this application for other reasons. If the dispute is referred to arbitrator the question for consideration will be whether the agreement dated 17th December, 1969 was fraudulently obtained under coercion, undue influence and pressure exercised by Lt.-Commdr.
Mujtaba in the Martial Law Headquarter. The consideration of such a question in my opinion will not be a proper matter for determination by an arbitrator.
The second reason which has heavily weighed against the defendant though not raised by the plaintiff, is that the application under section 34 of the Arbitration Act filed by the defendant does not disclose the dispute between the parties. It is a bare application stating that as the partnership agreement provides for arbitration the proceedings in the suit may be stayed. Even the affidavit filed in support of the application does not state the dispute. In this regard reference is made to the case of Novelty Cinema, Lyallpur v. Firdous Mills and another where the following observation was made :- "The second reason for the dismissal of this application is that it mentions no dispute. I have already experienced a difficult in deciding some other cases under section 34 of the Arbitration Act because in the application for stay the dispute was not specified... . When a person applies under section 34, he has to satisfy the Court firstly that there is an agreement to refer and secondly that the suit relates to any matter agreed to be referred, that is, there is a dispute between the parties which is covered by the agreement. Unless that is shown the suit cannot be stayed. The defendant must state, though not in detail, the matters which the other party allege and which he denies or he alleges and the other party denies and the decision of which would affect the rights of the parties. When the defendant thus states the dispute, the Court will determine whether it falls under the arbitration agreement."1 2 ' For reasons stated above the application under section 34, Arbitration Act is dismissed. A 1 R 1956 Cal. 238 PLD 1958 Lah. 208