ORDER
Devinder Gupta, J.
1. This is an application under Section 34 of the Arbitration Act moved by the defendant-applicant praying for stay of the proceedings in Civil Suit and to enable the parties to have their disputes settled by having recourse to the arbitration proceedings in accordance with the arbitration clause contained in the partnership deed and dissolution deed.
2. Plaintiff has claimed a decree for Rs. 2,59,689.96 paise on account of principal and interest. It is alleged that he had been running business of medicines at Dharamshala under the name and style of M/s. Deepak Medical Agency with one Smt. Lakshami Devi as a partner in the said firm. It is alleged that the firm was dissolved on 31st October, 1989 and the plaintiff became its sole
proprietor. Defendant K.C. Bhandari subsequently joined the plaintiff as a partner to the tune of 50% on and from 31st October, 1989, but the partnership deed” was executed on 12th Feb. 1990. This partnership firm of the plaintiff and defendant was dissolved on 13th Feb. 1990 and it was agreed that the capital accounts of the plaintiff as on 1stNov. 1989 in the books of the firm shall be treated as loan to the defendant to be repaid by him by 31st March, 1990. A balance sheet was also prepared, which showed a capital of Rs. 1,12,969.96 paise in the name of the plaintiff as on 1st Nov. 1989. In addition to this, Rs. 18.000/- was the loan of one B.P. Bambha and Rs.20,000/- from M/s. B.P. Bambha and sons. The balance sheet was duly signed by the defendant after admitting the contents to be true. The two loans of Shri B.P. Bhambha and M/s. B.P. Bambha and sons were later on purchased by the plaintiff by way of assignment on 11th Feb’. 1991. Thus, the total amount due to the plaintiff from defendant as it stood on 31st Oct. 1989 was Rs. 1,50,969.96. This amount was agreed to be paid by the defendant on 31st March, 1990. In part performance of the terms and conditions of the deed of dissolution, defendant gave an account payee cheque dated 31st March, 1990 from the account of the firm. This cheque was presented by the plaintiff to the banker’s for collection, but the same was returned on 25th April, 1990 with the remarks ‘refer to drawer’. That dispite demands thereafter the defendant has faile to pay the amount. In this background, plaintiff has claimed a decree for the amount along with interest at the rate of 24% per annum till the date of suit and also a future interest from the date of filing of the suit till payment.
3. Defendant was duly served for 27th July, 1993. Nobody put in appearance on his behalf and he was ordered to be proceeded against exparte. The case was directed to be posted for 10th Sept. 1993 for ex parte evidence.
4. When the case was taken up on 10th Sept. 1993, for recording plaintiffs evidence and then his witnesses were present, Mr. S.S. Kanwar put in appearance and stated that exparte evidence be not recorded since he has instructions to put in appearances on behalf of the defendant and appropriate application for setting aside ex parte proceedings would be made. After hearing the learned counsel for the parties, ex parte proceedings were set aside subject to the defendant paying costs of Rs. 1,000/-. Plaintiffs witnesses were discharged. Six weeks time was allowed to the defendant to file written statement.
5. The instant application under Section 34 of the Arbitration Act was presented on 14thOct. 1993, which is being contested by the plaintiff. It is alleged in the application that the plaintiff has unnecessarily instituted the suit for recovery of the amount. The subject matter of the suit and the dispute arising out of partnership deed and dissolution deed on which the plaintiff has laid claim can be settled by invoking the arbitration clause contained in two agreements, The applicant is ready and willing to do whatever is necessary for proper conduct of the arbitration. It is also alleged that the defendant-applicant neither had nor any intention to proceed with the suit and had also no intention to abandon his right to have the matter adjudicated upon through the arbitration. It is stated that there is a named Arbitration in the agreement, after staying the proceedings in the suit, parties can have recourse to the arbitration proceedings.
6. The plaintiff has opposed the application by alleging that the defendant having taken steps in the proceedings is debarred from prosecuting the application. On merits, it is pleaded that since the claim in the suit is not disputed or in any case the suit being for non-payment of the amount of debts, the same is not the subject matter of dissolution. Even the loans purchased by the plaintiff from Shri B.P. Bambha and Ms. B.P. Bambha and sons do not arise out of the agreement of dissolution and are not covered by the arbitration clause. It is a simple suit of money, namely, non-payment of the amount, which cannot be stayed. It has also been pleaded that no dispute had been raised by the defendant-applicant with respect to the original contract. It is only a claim made
by the plaintiff for money for which towards part payment, Cheque was issued by the defendant, which also covers the payment of debt to third party, which the plaintiff had purchased, which is not covered by the arbitration and moreover the named Arbitrator is already in litigation with M/s. Tinfab of which the plaintiff is a partner, therefore, for this reason also the application deserves rejection.
On 2nd December, 1993, following issue was framed:
“Whether the suit is liable to be stayed? O.P. Applicant.”
7. Parties were called upon to lead their evidence on affidavits, which they have done. Defendant-applicant has placed reliance upon the affidavit of Shri K.C. Bhandari and the plaintiff has placed reliance upon the affidavit of Shri Roopak Bambha, the plaintiff.
8. I have heard the learned counsel for the parties and gone through the record. It is contended by Mr. S.S. Kanwar, learned counsel for the applicant that necessary conditions for stay of suit are fully satisfied in the instant case. There is a valid arbitration agreement in existence. The plaintiff has initiated legal proceedings after the said agreement, which proceedings are with respect to the matter, which, as per the terms of the arbitration clause are referable to the sole arbitration of Mr. Joginder Singh Bedi. The defendant has prayed for staying the proceedings in the suit, which step the defendant has taken before filing the written statement or before taking any other stepa in the proceedings. Defendant is also ready and willing to do all things necessary for the proper conduct of the arbitration proceedings. It is also contended that since all pre-requisites are satisfied, there is no sufficient reason why. the proceedings be not stayed. Reliance has been placed by Mr. Kanwar on a decision of the Supreme Court in Anderson Wright Ltd. v. Moran and Co. AIR 1955 SC 54, wherein the aforementioned pre-requisites, which are required to be satisfied before allowing the application have been reiterated.
9. Mr. Chhabil Dass, learned counsel for the plaintiff-non applicant has on the other hand urged that the application moved by the defendant is vague since no dispute had been pleaded by the applicant. It was for the applicant to have pleaded that there was a dispute. In the absence of any averment in that respect that what dispute he is raising, there is no question of staying proceedings in the suit. Plaintiff come forward with the claim of non-payment of money due to him and the suit refers three items, one of which ms the admitted amount due to him, which the defendant had agreed to pay by 31st March, 1990 and the remaining two items are also reflected in the balance sheet, which was agreed to between the parties, which loans to the firm now stands transferred to the plaintiff by way of assignment. Since the balance sheet was not disputed, there is no dispute, which can be adjudicated upon in terms of the arbitration clause. Reference has been made by him to number of decisions, which will be shortly noticed.
10. Before considering the submissions made by the learned counsel for the parties, reference will be made to the contents of the arbitration agreement and dissolution deed, due execution of which is not at all disputed by the parties. Deed of partnership is dated 12th Feb. 1990, which was entered into between the plaintiff and the defendant. As per terms of the partnership deed, the same is stated to have deemed to come into effect from 31st Oct. 1989. Clause 5 states that capital investment of the partners shall be as per books of account. Duration of the partnership was stated at Will. Clause 10 of the deed says:
“That in any case any dispute arises after this partnership of this firm shall be referred to arbitration for which Shri Joginder Singh Bedi son of Shri Daulat Ram Bedi of Ludhiana shall be the arbitrator and his decision shall be final and binding on both the partners i.e. Shri Rupak Bambha and Shri K.C. Bhandari.”
11. The dissolution deed dated 13th Feb. 1990 recites that the partners have been carrying on their business under the name
and style of M/s. Deepak Medical Agencies, Kotwali Bazar, Dharamshala and the first party, namely, Roopak Bambha, the plaintiff had decided to revoke the partnership w.e.f. 1st November, 1989 and then it stated that partnership stands dissolved from 1st Nov. 1989. It stipulates that all assets and liabilities of the firm standing on 1st Nov. 1989 shall be taken over by the defendant Shri K.C. Bhandari. Clause 3 stipulated that the plaintiff Roopak Bambha shall be entitled to the amount standing to his capital account as on 1st Nov. 1989 in the books of the partnership and the same shall be treated as loan due to him to be paid by the defendant and that the amount of loan shall be paid by the defendnat by 31st March, 1990. Clause 5 is the arbitration clause and is worded as:
“That in any case any dispute arises after the dissolution of this firm shall be referred to arbitration for which Shri Joginder Singh Bedi son of Shri Daulat Ram Bedi of Ludhiana shall be the arbitrator and his decision shall be final and binding on the retiring partner and Shri K.C. Bhandari.”
12. In the light of the contents of the two documents, as noticed above, the precise claim of the plaintiff is that he is entitled to the amounts standing to his capital account as on 1st Nov. 1989, which was to be treated as debt and was to be paid by the defendant by 31st March, 1990. In the balance sheet, which was prepared and correctness of which was accepted by the defendant, Rs. 1,12,969.96 paise was the amount standing in the capital account in his name. In addition, Rs. 18,000/-was in loan by Shri B.P. Bambha and Rs. 20.000/- a loan from M/s. B.P. Bambha and sons. Both these loans, according to the plaintiff, were purchased by way of assignment from Shri B.P. Bambha and M/s. B.P. Bambha and sons, therefore, the defendant is liable to pay Rs. 1,50,969.96 paise to him. Towards part performance of the terms of the dissolution deed, a Cheque for Rs.65,000/-on 31st March, 1990 was handed over to him, and when it was presented to the bank the same was bounced.
13. The question arises as to whether there exists a dispute or not, which as per terms of the deed of dissolution should be
“any dispute arising after the dissolution of the firm” and as per the deed of partnership “any dispute arising after the partnership of the firm.” In case there is any dispute either after the partnership came into being or after dissolution, the same is referable to the sole arbitration. Defendant-applicant has in his application stated nothing about the nature of dispute, which according to him has arisen, which can be referred for arbitration. Learned counsel for the defendant-applicant has made reference to para 7 of the application and urged that in this para it is clearly spelt out that the claim of the plaintiff itself is a dispute which is being raised by the defendant, which as per terms of the arbitration clause is referable for arbitration. Para 7 of the application reads and quoted as under:
“That no written statement has so far been filed nor is intended to be filed nor it is or was intended to be filed. The plaintiff has unnecessarily instituted this suit for the recovery of the amount. The subject matter of the suit and the dispute arising out of the partnership deed and the dissolution deed as stated hereinabove, which the plaintiff has raised in the present suit can be settled by invoking arbitration clause contained in the aforesaid two agreements. Both the parties have agreed to refer such disputes to the arbitrator. The applicant is and was ever ready and willing to do everything necessary for the proper conduct of the arbitration. There are no reasons at all as to why matter could not be referred to the arbitrator in accordance with the arbitration clause.”
14. Reading of the contents of para 7 would show that the defendant’s case is that the plaintiff has unnecessarily instituted the suit for recovery of the amount, which can be settled only by invoking the arbitration clause. Whether or not this amount is or is not . payable has not been stated by the defendant-applicant in para 7 of the application. The affidavit sworn on 21st Dec. 1993 filed in the Court on 24th Dec. 1993, by way of evidence by Shri K.C. Bhandari has made reference to the balance sheet of partnership prepared for the period from 1st April, 1989 to 31st October, 1989. It is stated that after the assets and liabilities were taken over, after the
dissolution, it was found that the plaintiff had mentioned some accounts recoverable by the partners from any of the parties. Defendant has not been able to recover from the debtors, which the plaintiff had indicated while preparing the balance sheet. This is a dispute between the parties to the dissolution deed, which is to be decided by the Arbitrator. In case reference is made to the plaint as also to be balance sheet and the averments made in paras 3 and 4 of the affidavit, it would be seen that Shri B.P. Bambha and Ms. B.P. Bambha and sons are the debtors of the firm. In fact the amount is shown against their names by way of loan to the partnership. Defendant-applicant appears to be making grievances about the debtors to the partnership firm of whose names, according to him, were stated by the plaintiff, but after the assets and liabilities were taken over the defendant has not been able to recover amount from them. Neither in the application nor in the affidavit, nor from any other material brought on record it is pointed out by the plaintiff that the amount as shown in the balance sheet as capital of the plaintiff and loans of that Shri B. P. Bambha and M/s. B. P. Bambha and sons is or is not payable. Defendant has also not disputed the endorsement on the foot of the balance sheet which states that “accounts books and balance sheet checked found correct,”
15. In Union of India v. Birla Cotton Spinning and Weaving Mills Ltd., AIR 1967 SC 688, it was held that for enforcement of the arbitration clause, there must exist a dispute and in the absence of a dispute between the parties to the arbitration agreement, there can be no reference. In M s. National Small Industries ‘Corporation Ltd. New Delhi v. M/s. Punjab Tin Printing and Metal Industries Ajraunda, Faridabad (Haryana). AIR 1979 Delhi 58, a single Judge of the Delhi High Court, after referring to number of decisions of Punjab and Haryana High Court held that to stay a suit under Section 34 of the Arbitration Act, there must be an existing dispute between the parties. If there was no dispute, there is nothing to arbitrate. It is for the applicant to plead that there was a dispute and he was ready and willing, at all relevant
times to do all things necessary for the proper conduct of arbitration. For proper conduct of arbitration he has to allege the dispute or disputes, which he was ready and willing to refer for arbitration. The suit cannot be slaved it there was no dispute between the panics, at the commencement of the proceedings. In case reference is made to the application moved by the defendant-applicant in the instant case as also to the affidavit filed in support of the averments therein, it will be seen that absolutely there are no allegations therein as to what dispute or difference was existing between the parties, which the defendant-applicant was ready and willing to refer for arbitration at the time when the suit was filed. He has not mentioned any dispute or difference for which he is ready and willing to refer the same for the arbitration.
16. In Hindustan Copper Ltd. Jhunjhunu v. Assam Bearing Agencies Delhi, AIR 1980 Delhi 238, another Single Judge of the Delhi High Court after referring to the decisions in Birla Cotton Spinning and Weaving Mills’ case (AIR 1967 SC 688) (supra) and that of M/s. Pearl Hosiery Mills Ludhiana v. Union of India, AIR 1979 Delhi 64 declining to stay the proceedings in a suit holding that no dispute or difference is alleged or proved by the defendant therein. It was observed that in the absence of the allegations made in the application under Section 34 of the Arbitration Act regarding dispute or difference between the parties, it is not for the Court to ask the defendant to spell out the same. In fact, it is for the defendant to allege specifically the dispute or difference since one of the essential ingredients of Section 34 is that the defendant must show that he was ever ready and willing to do anything necessary for proper conduct of arbitration. Without specifying the disputes, it cannot be said that the defendant was ready and willing to do everything necessary to refer the said dispute for arbitration. A Division Bench of Madras High Court in M s. Vasanji Navji and Co. M/s. K.P.C. Spinners, AIR 1983 Mad 31 declined to stay the proceedings in a suit under Section 34 of the Arbitration Act by holding that the contract which provided for arbitration agreement had been performed and nothing remained to be done. Liability of defendant was held to be arising out of dishonoured cheque, which had been issued and it was found that the cheque was dishonoured subsequently and there was no dispute as to the price payable in respect of the supply of goods, therefore, there was no question of dispute coming within the ambit of the arbitration clause.
17. In case the facts are seen, which have been alleged that partnership amongst the parties stood dissolved by which defendant took over the assets and liabilities of the partnership firm and agreed to pay to the plaintiff a sum, which as per the books of account of the partnership was the plaintiffs capital account as on 1st November, 1989. This amount in the balance sheet is shown as Rs. 1,12,969.96 paise for which it is not disputed that a cheque for Rs. 65,000/- was handed over by the defendant to the plaintiff. In addition thereto, there are two other items by way of loan to the partnership, which according to the plaintiff stood transferred to him by way of assignment subsequently and now he was making claim for the entire amount. The claim laid by the plaintiff cannot be said to be a dispute within the arbitration clause since it is not disputed on behalf of the defendant either in the application or in the affidavit that this was not the correct amount as per the books of account, referred to in the dissolution deed. Thus, neither it is alleged that any dispute has arisen, nor it is shown that the plaintiffs claim is such a dispute, which is referable to arbitration. Mere nonpayment of admitted amount or liability cannot be termed as a dispute. The issue is decided against the applicant. Otherwise also, I do not consider it to be a fit case for staying the proceedings in the Civil Suit.
18. Consequently, the application is rejected with costs quantified at Rs. 1,000/-.