1. This is an application under section 34 of the Arbitration Act for the stay of the suit.
2. On 24-11-1965 a partnership was formed consisting of throe partners, namely, the plaintiff defendant No. I and defendant No. 2, and a partnership deed was executed. The present suit was filed for the recovery of the share of capital profit goodwill of the partnership and interest on the ground that in Jane 1907 the plaintiff had retired from the firm with the consent of the other two partners. The defendant No. 2 made the present application for the stay of the suit on the basis of the arbitration clause in the partnership agreement. Subsequently the defendant ,No. I also made an application adopting the aforesaid application. These applications were resisted by the plaintiff and various pleas were taken. However, at the time of arguments tine learned counsel for the plaintiff confined himself to two grounds (a) that the arbitration clause was vague and uncertain and, therefore, could not ire enforced and, (b) that the defendants were not ready and willing to refer the dispute to arbitration.
3. I have heard the learned counsel for the parties and I am of the view that the present proceedings cannot be stayed for the reasons which I will presently state.
4. Under section 34, Arbitration Act it is entirely a matter of discretion to stay the proceedings or not but all the same the discretion has to be exercised judicially in accordance with the ordinary rules of law. The principles on which the discretion is exercised have been discussed in "Russel on Arbitration" as under :- "Where the parties have agreed to refer a dispute to arbitra--petition, and one of them, not withstandiag that agreement, commences an action to have the dispute determined by the Court, the prima facie leaning of the Court is to stay the action and leave the plaintiff to the tribunal to which he has agreed. If parties choose to determine for themselves that they will have a domestic forum instead of resorting to the ordinary Courts, then, since that Act of Parliament (Common Law Procedure Act, 1854) was passed prima facie duty is cast upon the Courts to act upon such an agreement."
5. Thus the onus is upon the plaintiff to show for some cogent reasons, that the suit filed by him ought not to be stayed. Dealing with the first contention raised by the learned counsel for the plaintiff that the arbitration clause is vague and uncertain I am inclined to accept it. The Arbitration Clause is No. 13 in the partnership deed and it reads as under :- "In case of gifts and disputes between the partners in relation to any matter, whatsoever, concerning the partnership, affairs, or the construction of this deed whether before or after the termination of the partnership shall be referred to arbitration, the mode and manner of which shall be decided by the partners mutually."
6. This clause may be divided into two parts. The first part relates to the agreement of the parties to refer the dispute in connection with the partnership business to arbitration. Second part relates to the mode and manner of arbitration to be decided by the partners mutually. Although in this, time when the decision was to be taken with regard to mode and manner of the arbitra--petition was not fixed but from its terms it can be implied that the occasion for such decision would have arisen only when a dispute might arise between the partners.
7. It may be noted that the parties were partners of a firm who are three in number. The arbitration agreement makes no provision as to the identity of the arbitrators or their number. This has still to be explored and agreed upon. Thus, although the parties agreed that the dispute might be decided by arbitration but the latter clause had made the decision uncertain. Not only the agreement does not lay down the mode and manner of arbitration but it is still to be decided and agreed upon. In the circumstances of the present case such an agreement is hardly possible. As already pointed out that there are three persons involved in this dispute and, therefore, there can be three alternatives for the appointment of arbitrators. One alternative is that the parties may agree to appoint a sole arbitrator and the second alternative is that the plaintiff may appoint one arbitrator while the defendants jointly appoint another arbitrator. The third alternative is that each of the partners may appoint his own arbitrator separately and in that case there will be three arbitrators. The first two alternatives may not present any difficulty but in case of third alternative if each of the defendants insist to choose his own arbitrator, will the plaintiff agree as there would be three arbitrators, one for the plaintiff and two for the defendants and the dispute will have to be resolved by majority. The plaintiff has already indicated his intention against such a course being adopted. Will it then be right to order stay of suit in the expectation that the parties may appoint a sole arbitrator or agree to the appointment one by the plaintiff and one, by both the defendants jointly. There is also uncertain prospect of the Court making the appointment of an arbitrator or umpire, as the case may be, because in view of the arbitration clause, the provisions of sections 8 and 9 of the Arbitration Act cannot be invoked. The arbitration Clause is plainly unworkable or almost certainly will prove to be so, unless the parties agree to the appointment of sole arbitrator or the defendants combine to nominate the same arbitrator when the plaintiff will agree to nominate his own arbitrator.
8. Of course in the case of Subal Chandra Bahur v. Muhammad Ibrahim and another (AIR 1943 Cal.
9. 484), it was observed that the possibility of an arbitration in the terms of the agreement becoming infructuous by itself must not in all circumstances and of necessity be a ground for refusing the stay but it was further observed that such a possibility should not be altogether overlooked in determining whether there is sufficient reason why matters in dispute should not be referred to arbitration. In that case also there was a partnership having three partners. The arbitration clause provided for reference of dispute to a single arbitrator in case the parties agreed to one, otherwise to two arbitrators, one to be appointed by each party to the difference. In considering the contingency, the learned Judge observed that if in this case there are three parties to the agreement and there may conceivably, three parties to the difference that may arise and if in such, circumstances the parties do not agree to a single arbitrator then the alternative provisions for appointment of two arbitrators one by each of the parties to the difference would obviously be inappropriate. So the learned Judge entertained doubt whether in such circumstances and in the exercise of discretion he should stay the suit and drive the parties to an arbitration which would inevitably be infructuous.
10. The constitution of the arbitral tribunal, and the manner in which it is to be appointed, are primarily matters for the arbitration agreement to determine. Of course, in certain cases the Court has power to intervene as provided by sections 8 and 9 of the Arbitration Act and further rule 1 to First Schedule to the same Act embodies the implied condition to meet the contingency, laying down that unless otherwise expressly provided, the reference shall be to sole arbitrator. But the difficulty there is that none of these provisions are applicable. It is not a case of mere omission of the names or the number of the arbitrators but the agreement expressly states that the mode and manner of the arbitration would be settled later. The parties can lay down a special method of appointment and that method must be strictly adhered to. It has been commented upon in "Russel on Arbitration" that the parties to an arbitration may In large degree themselves determine the procedure to be followed and the powers of the arbitrator is to have, as well as the constitution of the arbitral tribunal and while the Act lays down a code governing these matters but many of its provisions may be excluded by agreement between the parties.
11. Thus the arbitration clause is not only uncertain but is beset with difficulties and might never be possible.
12. The second contention raised by the learned counsel for the plaintiff is that the defendants were not ready and willing to refer the matter to arbitration. There is no force in this contention. It is a well settled position needing no authority that the part seeking the stay of the proceedings has to make the choice after the proceedings are commenced and not before. This has been exactly done in the present case. In this connection the authority in the case of Province of East Pakistan v. Nurul Huda and others (PLD 1970 Dacca 699), may be read with advantage.