K. YUSUF SHERIFF Vs. K. AKBAR SHERIFF

JUDGEMENT

(1.) THIS appeal by defendants 1 and 3 to 8 is from an order of the Subordinate Judge, Vellore. He declined to grant stay under Section 34 of the Arbitration Act, 1940. On 5 -3 -1972, a partnership deed was entered into between the parties which provided for settlement, by arbitration, of all disputes arising between the parties in the partnership. The husband of one of the partners was named as the Arbitrator. This relationship, and there is no dispute about it, was known to all the parties concerned at the time the partnership agreement was entered into. Notwithstanding the arbitration clause, the plaintiffs -respondents instituted a suit for partition and also dissolution of the partnership. The appellants have no objection to the suit being proceeded with so far as it related to partition, but resisted the suit in respect of the relief for dissolution of the partnership, on the ground that it should be dealt with in arbitration. The Subordinate Judge declined to grant stay, as, in his view, the arbitrator's wife, who was one of the partners, according to the plaintiffs, was responsible for expelling the plaintiffs from the firm and the arbitrator was not likely to be impartial and also that the suit was a composite one since there was also the relief for partition asked for.

(2.) IN our opinion, the order of the Subordinate Judge cannot be supported. As we already indicated, the partners knew full well when the partnership agreement was entered into the relationship between the Arbitrator and one of the partners. Nothing has been said or proved against the named Arbitrator either by his conduct or by expression or other circumstance that he would be partial or would act with bias - as arbitrator. The allegation that the arbitrator's wife, as a member of the partnership, was responsible for expelling the plaintiffs, could not reasonably give rise to the inference that her husband would not act impartially when he was called upon to serve as an arbitrator. U.P. Co -operative Federation v. Sunder Bros, Delhi, AIR 1967 SC 249 relied on by the respondents is distinguishable. In that case, the Registrar of Co -operative Societies himself was the ex -officio President of the Society and it was with his approval the agreement in dispute there was terminated. That being so, the Supreme Court was of opinion that the Registrar could not possibly be impartial as was a party to the cancellation of agreement. The relationship, here was already known, there is nothing to point to the Arbitrator being likely to be based in any way against the plaintiffs. We cannot assume from the mere relationship of the Arbitrator with one of the members of the partnership that the Arbitrator would act otherwise than impartially. Printers (Mys) Pvt. Ltd. v. P. Joseph, AIR 1960 SC 1156, to which our attention was invited for the respondents, lays down the general principle which should govern exercise of the discretionary power under Section 34 of the Arbitration Act. In that case, the following observation is pertinent to the view we have taken in this case :