Arbitrability of partnership account disputes: vague fraud allegations did not bar arbitration or appointment of an arbitrator.

An undisputed arbitration clause in a partnership deed was held sufficient for reference of a dispute over partnership accounts and alleged fraud to arbitration. The Section 11 enquiry was confined to the existence of an arbitration agreement and a live dispute, and not to a detailed merits review. The allegations of fraud and mismanagement were treated as vague and not so serious or complex as to require a civil trial. The court therefore regarded the dispute as relating to the firm's accounts and affairs, which did not exclude arbitration, and appointed an arbitrator.

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Issues: Whether the dispute arising out of the partnership accounts and allegations of fraud was fit to be referred to arbitration, and whether an arbitrator could be appointed under Section 11 of the Arbitration and Conciliation Act, 1996.

Analysis: The arbitration clause in the partnership deed was not denied. The Court held that its enquiry under Section 11 was confined to whether an arbitration agreement existed and whether there was a live dispute, and that it was not open at that stage to enter into a detailed examination of the merits of the controversy. The allegations of fraud and mismanagement were found to be vague and not of such a serious or complicated nature as to require a civil trial. The dispute was treated as one concerning the accounts and affairs of the firm, which did not by itself exclude arbitration.

Conclusion: The dispute was arbitrable and the petitioners were entitled to appointment of an arbitrator.

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