1. ' The parties to this suit except defendant No, 6 had entered into a partnership in January, 1980. The plaintiff was a sleeping partner and out of her share in the property a sum of Rs, 9,000 p. m. Was paid in cash to her which was to be adjusted against her accounts. The plaintiff demanded Rs, 12,000 p. m. For her maintenance but the request was not acceded to by the defendants. The plaintiffs served notice on defendants Nos. I and 2 claiming the said amount. The defendants replied to it and thereafter the plaintiff alleged that secret profits were being made by the defendants and it was not possible to proceed with the partnership and present suit for dissolution of partnership, rendition of account and appointment of receiver was filed. The defendant filed an application 'A under section 34 of the Arbitration Act for stay of the suit. The Arbitration clause as contained in the partnership deed is as follows :- "14. That if any dispute shall arise in respect of the partnership or about the interpretation, operation or enforcement of the terms of this partnership, among the parties or their legal representatives, the same shall be referred for adjudication to two arbitrators nominated by Mr. Abdul Ghaffar, the Deputy Managing Partner, within one month of the receipt of the written notice from any of the partners. In case, no arbitrators are appointed by Mr. Abdul Gbaffar within one month then the Managing Partner Mr. Abdul Razzak shall appoint two Arbitrators within two months of the receipt of such notice from any of the partners. In case, Mr. Abdul Razzak also fails to appoint two arbitrators within two months then Mr. Abdul Karim shall appoint two arbitrators within three months of the receipt of such notice from any of the partners, and the dispute shall be referred to such arbitrators who shall give their decision and the decision of such arbitrators shall be final and binding on all the parties and their legal representatives. Arbittrators must be from Reputable Business."
2. ' The plaintiff has resisted the stay of the suit on the ground that copy of the partnership deed has not been supplied to her and when copy of accounts and partnership deed was demanded the defendants wanted the plaintiff to sign some documents in lieu thereof. It has also been alleged that the defendants are guilty of fraud, manipulation in accounts and profiteering, therefore, it is a fit case that stay should not be granted. A further ground has been pressed that the arbitration clause is vague and time-consuming, and therefore, the application should be dismissed.
3. ' Mr. Mansoorul Arfin the learned counsel for the plaintiff has contended that the defendants being in possession of the entire accounts have fraudulently manipulated it to the disadvantage of the plaintiff and as there are serious questions of fraud involved, it is a fit case where the discretion to stay the suit should not be exercised. In this regard the learned counsel has referred to paras. 11, 12 and 13 of the plaint to demonstrate that the allegations of fraud have been made against the defendants. In these paragraphs the plaintiff has referred to the various letters that have been exchanged between the parties alleging that the defendants did not disclose the amount credited to the plaintiff's account with the firm and the copies of the accounts and partnership deed have not been supplied to her. In paragraph 12 it has been alleged that the plaintiff apprehends that the defendants have not been showing the entire income in the books of account of the firm and for this reason they are not disclosing the accounts to the plaintiff. In support of this allegation it has been further alleged that in the past also, the defendants had not disclosed correct income in a firm, in which the plaintiff was not the partner, and defendants had to make a declaration under the M.L.R. On the basis of these facts it is stated that fraud has been committed on the plaintiff. It is a true that in cases where allegations of fraud have been made by one party, the Court may exercise its discretion to refuse the stay of the suit. However, it is not in every case where such allegation has been made that the Court would refuse to stay. If the allegation has been made against a party charging it with a fraud and such a party desires a public enquiry, the Court will generally refuse to send the case to the Arbitrator. Where allegations of fraud have been made, without entering into the merits of such allegations, at this interlocutory stage, the Court has to investigate prima facie to ascertain that there is some foundation for such a charge otherwise it will become a practice to make frivolous allegations of fraud and get the application for stay of suit dismissed. In this regard reference can be made to Island Textile Mills Limited, Karachi v. V/o Technoexpert and another (1). Where the plaintiff had resisted the stay application on the ground that defendants have committed fraud. It was observed that as there was no allegation of fraud against the plaintiff the principle that a person charged with fraud is entitled to insist upon, that the above charge should be investigated by a civil Court and not by a private Tribunal cannot be applied. Mr. A. A. Fazeel the learned counsel for the defendant has referred to Russell on Arbitration, 18th Edition, page 156 where it has been observed as follows :- "In no case will the Court, at the request of a party making a charge of fraud, refuse to stay an action where arbitration has been agreed to, unless, at least prima facie case of fraud has been made out to
(1) 1979 CLC 307 ' its satisfaction. The Court, on an application to stay, will consider whether the question of fraud which has arisen is within the terms of the arbitration agreement, for if it is not, a stay cannot, of course be granted."
4. In the present case in my opinion, the plaintiff has not been able to prima facie establish that any fraud has been committed by the defen-B dants. According to her in para. 12 of the plaint she apprehends that the defendants are not showing all the income in the account book. No document has been filed to substantiate this allegation. The defendants past conduct in respect of a partnership in which the plaintiff was not a party where a declaration had been made by defendant No, 2, under Martial Law Regulation cannot lead to the presumption that the plaintiff has prima facie established that fraud has been committed by the defendants.
5. ' Mr. Mansoorul Arfin the learned counsel for the plaintiff has contended that the defendants have committed fraud by not disclosing the entire arbitration clause to the plaintiff. This contention is based on the fact that during correspondence between the parties, before filing the suit, the defendants while replying through their Advocate's letter, dated 28th July, 1982 reproduced the arbitration clause in the following manner :- "That if any dispute shall arise in respect of the partnership or about the interpretation operation or enforcement of the terms of this partnership among the parties or their legal representative, the same shall be referred for adjudication to two arbitrators."
6. ' The learned counsel for the plaintiff has contended that as the defendants had not supplied a copy of the partnership deed, they purposely reproduced only a part of the arbitration clause deleting the main portion, which provided the method in which the arbitrators were to be appointed. Mr. A. A. Fazeel, the learned counsel for the defendants has contended that non- production of the entire arbitration clause was due to the mistake of the typist. He typed only the portion which appears on page 3 of the partnership deed and inadvertently the remaining portion which is on page 4 was not typed. No such explanation has been given in the rejoinder. However, the fact remains that the plaintiff has not denied her signature on the partnership deed. Once signature on the partnership deed is admitted, which appears on page 4, which contains the disputed part of the arbitration clause it cannot be alleged that the arbitration clause has been changed. As the plaintiff has not denied her signature on the partnership deed it can be presumed that the arbitration clause was in existence from the very beginning. Therefore, the allegations that a portion of the arbitration clause has been concealed or that a copy of partnership deed has not been supplied to her do not constitute a fraud which may compel the Court to refuse to exercise its discretion.
7. ' Mr. Mansurul Arfin the learned counsel for the plaintiff contended that as suit has been filed for dissolution of partnership and accounts, the Court should in exercise of its discretion decide it and should not stay the proceedings. The learned counsel has referred to Oliver v. Hullier (1) where it was held that : "In an action for dissolution of partnership on the ground it was just and equitable, in view of section 35(d) and ( f ) of Partnership Act (1)(1959)2 AELR 220 ' (1890) the Court would not like such matter to be determined by Arbitration."
8. ' The learned counsel has contended that on this principle as the suit is for dissolution of partnership, they stay application should be dismissed. Reference has been made to Garesh Chandra v. Kamala (1). Mr. Fazeel the learned counsel for the defendant has distinguished both these cases on the ground that in the present suit the question for dissolution of the firm does not arise, and therefore, the only relief left to be sought by the plaintiff's accounts. In these circumstances the question of applicability of section 44(g) and ( f ) of Partnership Act which are similar to section 35(d) and (f) of the English Act will not apply. The admitted position is that partnership was at will and immediately on filing of the suit the partnership stood dissolved. This position was taken by the learned counsel for the plaintiff while arguing application for appointment of receiver. This proposition finds support from PLD 1968 SC 330 that the dissolution will be operative from the date on which the partner receives intimation of the will of the plaintiff to dissolve their partnership. Therefore, from the date of service of summons the Firm stands dissolved. The contention of the learned counsel for the defendants seems to be correct, because section 44(f) and (g) of the Partnership Act, as well as the aforestated two cases cited by the learned counsel for the plaintiff clearly contemplate that the equitable jurisdiction to dissolve the firm vests in the Court and should not be allowed to be exercised by the Arbitrator. The dispute regarding dissolution of the firm as discussed above can hardly be agitated. On this ground the defendant's application cannot be dismissed.
9. ' The next contention of the learned counsel for the plaintiff is that the arbitration clause is not workable and is time consuming. The arbitration clause provides a procedure for appointment of two arbitrators who shall be appointed within one month of the receipt of the notice by any of the partners. The appointment is to be made by Abdul Ghaffar, defendant No, 3 within one month of the receipt of notice. In case he fails to appoint Abdul Razaq defendant No, 2 is to appoint within two months of receipt of such notice and if he also fails then Abdul Karim defendant No, 4 is to appoint arbitrators -within three months of the receipt of such notice. Therefore, in case defendants Nos. 2 and 3 refuse to appoint arbitrator the agreed procedure will consume three months and not six months as contended by Mr. Arfing. In all circumstances the appointment has to be made within one, two or three months from the receipt of notice. This procedure has to be considered in the background of the facts of this case. Defendants Nos. 2, 3 and 4 were carrying on business under the name and style of M/s. Abdul Razzak & Company (Metro Garments Industries).
10. They having retired from that firm constituted a new partnership in which the plaintiff and defendants Nos. 5 to 10 were taken as partners. The plaintiff is a sleeping partner. The entire business seems to be run and looked after by defendants Nos. 2 and 4. The parties had entered into the partnership agreement with open eyes and the signature on the agreement has not been denied by the plaintiff. The arbitration clause is neither vague nor uncertain. In these circumstances it is too late in the day to challenge the arbitration clause on this ground. Moreover three months time if taken in appointment of the arbitration according
(1) AIR 1971 Cal. 317 ' to the agreed procedure will not cause such delay which may vitiate the arbitration clause or compel the Court to refuse to exercise its discretion to stay the suit.
11. A perusal of the defendant's application under section 34 of the Arbitration Act and affidavit filed in support thereof makes it clear that nowhere 2 the defendants have stated the dispute between the parties which may be referred to arbitration. When this was pointed out to Mr. Fazeel he contended that as reference to the suit has been made it is sufficient to indicate that the dispute has been stated in the application. I am unable to agree with the contention of the learned counsel as a party filing an application under section 34 has to state the dispute constituted by a proposition of fact or law. No such dispute seems to have been stated in the application or the affidavit filed by the defendants. In this regard the following observation made in Novelty Cinema v. Firdous Films and another (1) :- "The second reason for the dismissal of this application is that it mentions no dispute. I have already experienced a difficulty in deciding some other cases under section 34 of the Arbitration Act because in the Application for stay the dispute was not specified. There seems to be a general impression that the dispute cannot possibly be specified in the application because the defendant is debarred from filing a written statement if he puts in an application for stay, and a statement as to what is the dispute will amount to the filing of a written statement. This is misapprehension.
12. 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. If a suit is filed on the basis of an agreement which contains an arbitration clause, the mere fact that the defendant is not prepared to pay the amount to which he is liable under the agreement does not mean that there is a dispute between the parties. It is not necessary to quote authorities to show that a dispute does not mean simply is refusal to pay money for which a person is liable. A dispute is constituted by a proposition of fact or law being alleged by one party and denied by the other. The defendant must state, though not in detail, the matters which the other party alleges 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.
13. ' The fact that the defandant states the dispute in his application under section 34 does not mean that he is putting in a written statement although he does state his own version of the facts or law.
14. This does not amount to the taking of a step in the proceedings so as to debar him from securing an order of stay. He is bound to state the difference or dispute in the application.
(1) PLD 1958 Lab. 208 ' In the present case, the application does not mention the dispute at all. It simply says that as there is an arbitration clause in the agreement, the suit should be stayed. The application is, therefore, liable to be dismissed on this ground too. Of course, in view of the act that on account of a misapprehension disputes are generally of stated in the applications under section 34, would haven prepared to consider an application for amendment of the application for stay but no such request has been made. This peal is dismissed with costs."
15. ' The aforesaid servation equally applies to the present case, and therefore, the application is dismissed.