RAJA PICTURE PALACE RAJAHMUNDRY Vs. MARINA JAGGA RAO

JUDGEMENT

(1.) THE problem that stands pre-eminently to the fore in this case relates to the limitations and conditions circumscribing the spacious sweep of Section 34 of the Arbitration Act to order stay of legal proceedings where there is agreement for arbitration between the parties.

(2.) THE relevant facts and circumstances giving rise to the legal proceedings are these : THE plaintiff is the elder brother of the second defendant. Defendants 3 and 4 are the sons and the 5th defendant is the daughter of the 2nd defendant. THE 2nd defendant is a double graduate -- B. Sc., B. Ed.

(3.) FOR the construction of the theatre, Raja Picture Palace, a loan of Rs. 2,30,000.00was taken by the Firm from the State Bank of India. Rajahmundry. The theatre was completed in May, 1979 and films were being exhibited since then in the theatre. Ever since the commencement of the cinema business by the first defendant-firm, the second defendant alone has been looking after the entire business. It is the case of the plaintiff that the 1st defendant-firm has been doing good business just like the other theatres in Rajahmundry town. But, it appears, the second defendant with a mala fide intention failed to maintain correct accounts of the first defendant-firm and was not showing the accounts of the 1st defendant-firm to the plaintiff in spite of repeated requests. The 2nd defendant also failed to pay the monthly instalment due on the loan to the State Bank of India, Rajahmundry. with a mala fide intention. He did not also pay the share of profit to each of the partners after rendering true and correct accounts. He could successfully do so because all the other partners are his own children. Though the plaintiff demanded the second defendant to render true and correct account of the profit and loss of the threatre, he never rendered any account for the reasons best known to him. The plaintiff also suggested to the second defendant to lease out the threatre if he was not in a position to run profitably as there were several offers to pay an annual rent of Rs. 1,25,000.00. But the second defendant, it is alleged, with a view to cause loss to the plaintiff and misappropriate the income was not willing to lease out the theatre.