1. The plaintiff has filed the present suit for rendition of accounts, dissolution of partnership firm and appointment of Receiver for distribution of business assets. The defendants after service of summons filed application under section 34 of Arbitration Act (X of 1940) for staying the proceedings in the suit and for referring the matter for arbitration on the ground that as per clause 19 of the Partnership Deed dated 14-11-1997 (which agreement is titled as Deed of Reconstitution of Partnership). Wherein it is provided that the dispute between the partners will be referred to arbitration . It was also pleaded that the plaintiff had committed an act of gross misconduct and on the admonition he had voluntarily retired from the partnership and had also undertaken to return the car and that the entire suit is based upon the Deed of Partnership. The learned counsel for the plaintiff filed counter-affidavit to this application wherein the plaintiff has submitted that the defendants have filed the application under section 34 of the Arbitration Act with ulterior motives to avoid the execution of decree and that clause 19 of the Partnership Deed dated 14-11-1997 contemplates for referring the dispute to arbitration during the subsistence of partnership and it has no relevance with regard to the dissolution of partnership at will, which. On the notice of a partner, can be dissolved as provided under the Partnership Act as well as in the Partnership Deed.
2. The plaintiff further stated that the plaintiff has done nothing wrong but the defendants tried to exclude the plaintiff from his rightful share in the profit, management and assets of the firm and further stated that the plaintiff has not retired from the partnership, but has served notice for dissolution of partnership and the plaintiff has not given any undertaking regarding any car.
3. ' I have heard Mr. Tahir Mehmood, learned counsel for the plaintiff and Mr. Abrar, learned counsel for the defendants.
4. ' The learned counsel for the defendants in support of his application under section 34 of the Arbitration Act submitted that there is a partnership which provides for reference of any dispute about the Partnership business as to interpretation or enforcement of the terms of the Partnership agreement between the parties or their legal representatives as is provided in the Arbitration Act for the time being in force. The learned counsel also referred to clause 16 of the Partnership Deed which provides that the duration of the Partnership shall be at will and all the provisions of Partnership Act shall apply to it unless until a specific provisions exists in this agreement contrary to the provisions of Partnership Act. The learned counsel referred to Article 5 of the agreement.
5. Which says that the management of the business of partnership shall be carried on jointly by the parties. However, in the event of a different of opinion between the parties hereto in any manner relating to the affairs of the partnership firm including the manners of its administration, financial control and other related matters the issue would be resolved mutually and majority decision would prevail, the learned counsel submits that in view of the illegal withdrawal of amount from the partnership account the plaintiff on admonition voluntarily retired from the business and to substantiate this plea the learned counsel referred to Annexures A and B letters of the plaintiff filed alongwith the application.
6. ' The learned counsel submitted that he has filed the present application immediately before taking any steps in the suit and that there is an agreement between the partners for reference of dispute to arbitration and the defendants being a party to the legal proceedings have satisfied the necessary ingredients of section 34 of the Arbitration Act. According to Mr. Abrar Hassan, the dispute relates to the terms and conditions of the partnership agreement and the dissolution is also governed by the terms and conditions of the Arbitration Agreement. In support of his contention, the learned counsel for the defendants has referred to a judgment of this Court.
7. Namely Ghulam Mohiuddin Paracha and another v. Ahmed Naseer Khawaja, reported in 1996 CLC
405. The learned counsel referred to relevant portion of judgment at page 407, wherein this Court has taken the view that the dispute, therefore, has to be resolved is whether the aforesaid account was that of the partnership firm as alleged in the plaint. The dispute being thus, relatable to the partnership. The arbitration clause contained in the partnership is attracted, despite the fact that the partnership firm has been dissolved. The authorities relied by the learned counsel for the plaintiff cannot be stretched to a general proposition to the effect that in case a partnership has been dissolved, the dispute between the parties although relates to the account of the Partnership would still be beyond the purview of the arbitration clause contained in the Partnership Deed merely because of the fact that the partnership firm stands dissolved. The learned counsel also referred to a judgment of the Hon'ble Supreme Court reported as Director Housing A.G's Branch, Rawalpindi v. Messrs Makhdoom Conspltant Engineers and Architects in 1997 SCM R 988; the learned counsel referred to paragraph 9 at page 988, which provides that the respondents at the time they entered into contract were fully aware that in the event of the dispute arising between them and the appellant in the contract, the same is to be referred to A.G. Or a person nominated by him as the sole arbitrator. The respondents having entered into arbitration agreement voluntarily and knowing fully well the consequences of the arbitration clause could not be allowed to resile from it lightly.
8. ' The learned counsel for the plaintiff contended that the arbitration clause contained in the partnership deals with the matter/dispute during the subsistence of partnership and has no relevancy with regard to dissolution of partnership at will which is dissolved on the notice of a partner as provided under section 43 of the Partnership Act. As such according to the learned counsel for the plaintiff the application submitted under section 34 of the Arbitration Act is liable to be dismissed. The learned counsel for the plaintiff further contended that the plaintiff acted within his powers as provided under Article 11 of the Partnership Deed which provides that in anticipation of profits, the partners may by way of advances draw from the firm any such amount as may be fixed or otherwise determined by the partners by mutual agreement. All such sums so drawn by the partners shall be debited to their respective personal accounts and necessary adjustments shall be made at the time of closing of accounts. The learned counsel further submits that Annexure A filed alongwith the application, is a forged document, whereas as regards Annexure B, he submits that the said letter is signed by him as the defendants undertook to amicably settle the dispute. Therefore, he withdrew certain letters sent to the bank by him and it has no reference to dissolution of settlement of accounts of the partnership.
9. It is admitted fact that there is a partnership agreement between the partners and as per clause 19 of the Partnership Deed any dispute about the partnership business as to interpretation or enforcement of the terms of this agreement between the parties or their legal representatives shall be referred for adjudication to arbitration as provided for in the Arbitration Act. It is evident from the facts there is a dispute between the parties regarding the terms of Partnership Deed and the disputes regarding the dissolution of Partnership Deed and the dispute regarding the dissolution of partnership is one of the matters in respect of the partnership business. The defendants have satisfied the necessary ingredients of section 34 of the Arbitration Act, i,e, that there exists an agreement which provides for reference of dispute between the partners to arbitration, secondly that the defendants have filed the present application before taking any steps in the proceedings and thirdly that the proceedings are between the same parties. The submission of the learned counsel for the plaintiff is that clause 19 of the Partnership Deed (Ides not apply to the partnership, which has been dissolved by the plaintiff by serving a notice under section 43 of the Partnership Act. In view of the judgments cited above the submissions of the learned counsel for the plaintiff have no force as such the same are overruled. In view of clause 19 of the Partnership Deed and the law cited above I have no hesitation in allowing the application filed by the defendants under section 34 of the Arbitration Act and consequently the suit. The parties are directed to refer the matter as provided under clause 19 of the Partnership Deed .