Partnership dissolution and accounts remain with civil court despite arbitration clause, where just and equitable dissolution is sought.

A suit seeking dissolution of a partnership on just and equitable grounds falls within the civil court's substantive jurisdiction and is not stayed merely because the partnership deed contains an arbitration clause. The right to seek dissolution must be examined by the court, and filing the suit does not itself dissolve the firm. The consequential claim for rendition of accounts, arising from dissolution, was also held not to be referable to arbitration in the circumstances described. The stay order was therefore set aside and the suit directed to proceed before the trial court.

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Issues: (i) Whether a suit for dissolution of a partnership on just and equitable grounds could be stayed and referred to arbitration under the arbitration clause. (ii) Whether, after dissolution of the partnership, the claim for rendition of accounts could be decided by arbitrators.

Issue (i): Whether a suit for dissolution of a partnership on just and equitable grounds could be stayed and referred to arbitration under the arbitration clause.

Analysis: A prayer for dissolution on the ground that it is just and equitable to dissolve the firm attracts the substantive jurisdiction of the civil court. The right to seek such dissolution is to be tested by the court, and that question is not one which can be left to arbitrators merely because the partnership deed contains an arbitration clause. A suit for dissolution of a partnership at will does not, by its mere filing, dissolve the firm; dissolution follows from the procedure recognised by law or from a decree fixing the date of dissolution. The contrary view taken by the court below was inconsistent with the governing principles applied from the Supreme Court and the Division Bench decision relied upon.

Conclusion: The issue is answered in favour of the appellant. The stay of the suit under the arbitration clause was not justified.

Issue (ii): Whether, after dissolution of the partnership, the claim for rendition of accounts could be decided by arbitrators.

Analysis: Once dissolution is in question or has occurred, the ancillary relief of rendition of accounts is not displaced by the arbitration clause in the manner assumed by the court below. The accounting dispute is part of the civil consequences of dissolution and, on the facts presented, had to be dealt with by the civil court rather than by arbitrators.

Conclusion: The issue is answered in favour of the appellant. The claim for rendition of accounts was not referable to arbitration in the circumstances of the case.

Final Conclusion: The order staying the suit was set aside and the application for stay was dismissed, leaving the suit to proceed before the trial court.

Ratio Decidendi: A dispute seeking dissolution of a partnership on just and equitable grounds, and the consequential accounting relief, is within the civil court's jurisdiction and is not excluded from adjudication by an arbitration clause merely because the partnership deed provides for arbitration.

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