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PETITIONER: ABDUL KADIR SHAMSUDDIN BUBERE

       Vs.

RESPONDENT: MADHAV PRABHAKAR OAK

DATE OF JUDGMENT: 20/09/1961

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GUPTA, K.C. DAS SHAH, J.C.

CITATION:  1962 AIR  406            1962 SCR  Supl. (3) 702

ACT: Arbitration All persons interested in the subject matter of dispute  not  made parties-If dispute could be  referred  to arbitration-Asking for accounts-If amounts to allegation  of fraud-Arbitration Act, 1940 (X of 1940), s. 20.

HEADNOTE: An  agreement  with  regard to a  forest  was  entered  into between B the appellant and 0 and A the respondents.   Apart from 0 and A another person was also interested in the  said forest.   The said agreement mentioned other earlier  agree- ments  entered  into with, regard to the said  forest.   The operative part of the agreement was in these terms:--               Should there be a dispute between the  parties               in  connection  with  this  agreement  or   in               connection    with   the   agreements    dated               22.10.1948  and  5.5. 1952 or  regarding  Khan               Babadur Divakar’s money or the jungle  cutting               or  export  or  in ’any other  way,  the  same               should  be got decided in accordance with  the               current  ’law  by appointing  arbitrators  and               through them." Disputes arose between B the appellant and respondents 0 and A.  The respondents filed an application under s. 20 of  the Arbitration   Act   for  reliefs  including   accounts   and appointment of receiver. The  application  was  opposed by B  the  appellant  on  the grounds  inter  alia that as one of the person  who  bad  an interest  in  the forest was not party  to  the  application there  could  be no reference to. the  arbitration,  as  the whole  dispute,  as to the forest would not  be  before  the arbitrator  and further, as there were allegations of  fraud that  was  a  ground  for  not  referring  the  dispute   to arbitration. Held,  that  where  parties  entered  into  an   arbitration agreement, knowing fully well that there was another  person who  was  interested, but leaving, him out, then  the  court should send the parties to the forum chosen by them, even if the  other person who might be interested, and  whose  share was  not  in  dispute, could not be made  party  before  the arbitrator.

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Where  the  share  of  a person,  not  a  party  before  the arbitrator,  was not in dispute, there could not be any  bar to  referring the dispute to arbitration on the ground  that the  whole  dispute  was not  before  the  arbitrator.   The arbitrator  would  decide the dispute  between  the  parties before him and 703 give  an award leaving out the share of the person  who  was not a party before him. Held,  further, that when serious allegations of fraud  were made  against  a party and the party who  was  charged  with fraud desired that the matter should be tried in open court, that would be a sufficient cause for the court not to  order an  arbitration  agreement  to be filed and not  to  make  a reference.   But it was not every allegation  imputing  some kind  of  dishonesty  particularly in  matters  of  accounts alleging  that they were not correct or certain  items  were exaggerated or allegations tending to suggest or imply moral dishonesty  or  moral misconduct in the matter  of  keeping accounts  that would amount to such serious  allegations  of fraud  as  would  impel  a court  to  refuse  to  order  the arbitration  agreement  to  be filed and refuse  to  make  a reference and to take the matter out of the forum which  the parties themselves had chosen. In  the present case, it cannot be said that  the  reference desired was piecemeal and split up the cause of action.  The dispute  raised was covered by the arbitration  clause,  and there  was no such serious allegation of fraud as  would  be sufficient  for the court to say that there  was  sufficient cause for not referring the dispute to arbitration. Obiter.   The  pleadings  in Mufassil courts  could  not  be considered too strictly. Russel v. Russel, [1880] 14 Ch.  ’D. 471, discussed. Charles Osention and company v. Johnston, [1942] A. C.  130, Maharajah  Sir  Manindra Chandra Nandy v. H. V.  Low  &  Co. Ltd.   A.  I.R.  1924 Cal. 796, Narsingh  Prasad  Boobna  v. Dhanraj Mills, I.L.R. (1942) 21 Pat. 544, Union of India  v. Pirm  Vishvadha Ghee Vyopar Mandal, 1. L. R. (1953)  1  All. 423,  Sudhangsu Bhattacharjee v. Ruplekha Pictures,  A  I.R. 1954  Cal. 281 aid Manifia v. The Railway Passengers  Assur- ance Co. (1881) 44 L. T. 552, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 305 of 1958. Appeal  from the judgment and decree dated April  14/15,1955 of  the  Bombay High Court in Appeal from Order  No.  28  of 1955. S.   B. Sukhthankar, S. N. Andley, Rameshwar Nath and P.  L. Vohra, for the appellant.  A.   V.   Viswanatha  Sastri  and  Ganpat  Rai,   for   the respondents.                             704 1961.   September  20.   The  Judgment  of  the  Court   was delivered by WANCHOO,  J. This is an appeal on a certificate granted  by the Bombay High Court.  An application was filed under s. 20 of the Arbitration Act, No. X of 1940. (hereinafter referred to as the Act) by the two respondents against the  appellant praying  that the arbitration agreement dated  February  27, 1953 may be filed in court, arbitration be made accordingly, and  thereafter a decree in terms of the award made  by  the arbitrator be passed. The  circumstances  in which the application was  made  were

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these.  There is a forest in village Done, which belonged to three persons, namely, Madhav Prabhakar Oak, respondent  No. 1, (hereinafter referred to as Oak), Babaji Chandrarao Rane, uncle  of the second respondent (hereinafter referred to  as Babaji),  Gajanan Babaji Rane (hereinafter called  Gajanan). Oka  had six annas share in the forest, Babaji  eight  annas share and Gajanan two annas share.  It may be mentioned that Gajanan’s  share was purchased by the appellant in  November 1944.   On  October 22, 1948, a  partnership  agreement  was arrived at between Babaji, Oak and the appellant for cutting the  forest.  The value of the forest for the  three  owners was fixed at Rs. 60,000/which was to be divided amongst them according  to their shares.  The work of cutting was  to  be done  by  the  appellant who appears to  be  an  experienced forest   contractor.    Any  income  over  and   above   the expenditure  incurred  in the cutting and the value  of  the forest was to be divided equally amongst the three partners; if  there was any loss that was also to be borne equally  by them.   It  appears,.  however, that nothing  was  done  in pursuance  of this agreement, apparently because a suit  had been  filed  by two persons with whom there was  an  earlier agreement of 1939 about the cutting of this very forest.  It appears  also that in March 1951 Gajanan and  the  appellant executed another 705 document in which the price of Gajanan’s share to be paid by the  appellant  was  raised.   In  May  1951  Babaji   died. Consequently  in  May 1952 another  agreement  was  executed between the appellant and the heirs of Babaji, namely, Anant Yeshwant  Rane respondent No. 2 (hereinafter referred to  as Anant),  Ambikabai, widow of Babaji, Gajanan and his  mother Devubai  and  Oak.  This agreement referred to  the  earlier agreement of 1948 and was obviously necessitated on  account of  the  death of Babaji.  It confirmed that  agreement  and stated  that  it was drawn up because of  the  necessity  of Anant,  Ambikabai  and  Devubai being made  parties  to  the settlement  in the agreement of 1948.  The consideration  of Rs. 60,000/- was divided between the owners, and Rs 51,000/- was  to  go  to  Oak,  Anant  and  Ambikabai  and  the  rest represented the price for which the appellant had  purchased the share of Gajanan and his mother Devubai.  Nothing  seems to have been done in pursuance of this agreement either.  In October 1952, another agreement was entered into between the appellant the two respondents and one Khan Bahadur Divkar by which the cutting of the forest was assigned to Divkar for a sum  of  Rs.  1,00,000/-.  This amount  was  to  be  divided between the appellant and the respondents; Anant was to  get Rs.  44,800/-,  Oak  Rs.  35,700/-  and  the  appellant  Rs. 19,500/-.   Divkar was unable to carry out his part of  this agreement.   Eventually on February 27, 1953,  an  agreement was   entered  into  between  the  appellant  and  the   two respondents as Divkar had not carried out his agreement.  It was agreed between the parties that the dispute with  Divkar be got decided and the forest be cut in accordance with  the agreements  of  October  22,  1948 and  May  5,  1952.   The operative  part of this agreement also contained a term  for arbitration in al. 6(4), which in these terms:-- "Should   there  be  a  dispute  between   the  parties   in connection  with  this agreement or in connection  with  the agreements 706 dated 22.10.1948 and 5.5.1952 or regarding   Khan    Bahadur Divkar’s money or the jungle       cutting  or export or  in any other way, the same       should   be  got  decided   in accordance  with the current law by  appointing  arbitrators

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and through them." It  appears  that  thereafter  the forest  was  cut  by  the appellant  ; but disputes appear to have arisen between  the parties   to  the  last  agreement  of  1953;   consequently respondents  Nos. 1 and 2 filed the application under s.  20 of the Act in August 1954. The  case put forward by the respondents in the  application was  that  the appellant, though he carried on the  work  of cutting  the  forest,  did not carry out the  terms  of  the agreement  of  1953 and showed the  statements  of  accounts intermittently to the respondents.  It was alleged that  the accounts  were  not  made up to date,  and  inspite  of  the respondents’  demand that the accounts should be made up  to date,  the  appellant did not do so.  The  respondents  also demanded  that  the  goods remaining to be  sold  should  be disposed  of with the consent of all; but this was also  not agreed to by the appellant.  The statement of accounts shown to  the respondent was not complete and correct.  The  whole stock  of  goods  was not to be found in  the  statement  of accounts and the debit items seemed to have been exaggerated and  were not correct; and consequently it was not  possible to  carry on the business of partnership with the  appellant and  it was necessary to dissolve the partnership  and  take accounts  of  the partnership.  It was also  said  that  the appointment  of a receiver had become necessary in order  to protect  the  interest  of  the  respondents  and  that   an injunction should be granted restraining the appellant  from removing   the   stock   in   balance   so   as   to   avoid misappropriation  thereof  pending  the  appointment  of   a receiver.   The  respondents prayed that  the  agreement  of February 1953 for referring the 707 dispute in connection with the agreements dated October  22, 1948  and February 27, 1953 between them and  the  appellant should  be filed in court and necessary directions  made  by the court. The application was opposed by the appellant.  The agreement of  February 27, 1953 was admitted by the appellant; but  it was  contended  that  no reference should  be  made  to  the arbitrator  and  a  number of grounds  were  urged  in  that connection.’ It is not necessary for purposes of this appeal to  refer to all the grounds in reply to the application  of the respondents.  We shall only refer to those grounds which have been urged before us and they are as below :-               (1)   Ambikabai,  widow of Babaji,  admittedly               had a share in the forest and as she was not a               party  to  the application there could  be  no               reference to arbitration as the whole  dispute               as  to  the  forest would not  be  before  the               arbitrators.               (2)   The  respondents only desired  in  their               application  that the disputes arising out  of               the   agreements  of  October  22,  1948   and               February  27, 1953 be referred to  arbitration               but  did not include the agreement of  May  5,               1952,  and  therefore no reference  should  be               made  as  it would be  a  piecemeal  reference               resulting in splitting up the cause of action.               (3)   The  dispute sought to be  referred  was               not covered by the arbitration clause.               (4)   The respondents had made allegations  of               fraud   against   the   appellant   in   their               application and that was also a ground for not               referring the dispute to arbitration. It  may be mentioned that the respondents later applied  for

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the  appointment  of a receiver, and  that  application  was allowed.  Eventually, however, the trial court dismissed the application under s.20 on two main grounds namely, (1)  that all the                             708 parties who were necessary in the, matter of accounting were not parties to the application under s. 20,   and  (ii) that there  were allegations of fraud against the  appellant  and therefore  this  was  not  a fit case  to  be,  referred  to arbitration. This  was  followed by an appeal to the High  Court  by  the present  respondents.  The High Court held that even  though Ambikabai  had a share in the forest and was not a party  to the  application under a. 20 her interest  was  sufficiently represented by Anant and therefore it could not be said that all the parties interested in accounting would not be before the  arbitrator.  On the question of fraud, the  High  Court took  the view that the allegations made in this  case  were not  allegations  of fraud at all and in any case  were  not such allegations of fraud as would make it incumbent on  the court to exercise its discretion in favour of the  appellant and refuse to refer the dispute to arbitration.  An argument was also raised before the High Court that the appellant was challenging  the very existence of partnership  between  the parties   and  this  question  could  not  be  referred   to arbitration.    The  High  Court,  however,  repelled   this contention  and held that the existence of  the  arbitration agreement was never challenged by the appellant.  It  there- fore  allowed  the appeal and ordered that  the  arbitration agreement  be filed in court and consequent  proceedings  be taken  thereafter.   As the judgment was  of  reversal,  the amount involved was more than Rs. 20,000/- and the order was a  final  order, the High Court granted a  certificate;  and that is how the matter has come up before us. Learned  counsel  for the appellant has  urged  four  points before  us,  which we have already  indicated  earlier.   We propose to deal with these points one by one. Re.(1). It is urged that Ambikabai admittedly has a share in this forest and as she is no party to the, application under s.  20  no reference should be made, as the  entire  dispute arising out of the                             709 agreements of October 22, 1948 and May 5, 1952 would not  be before the arbitrator.  This argument found favour with the trial  court  but the High Court repelled  it  holding  that Ambikabai’s   interest  was  sufficiently   represented   in arbitration  proceedings  by Anant.  If that  is  so,  there could  be no objection on this ground to the filing  of  the arbitration  agreement ; but even if that is not so, we  are of  opinion that  is no ground in the circumstances of  this case  for  not  referring  the  dispute  to  arbitration  in accordance  with the arbitration clause in the agreement  of February 27, 1953.  Babaji had a brother Yeshwant and  Anant is  his  son.  It is not disputed that  Babaji  was  holding eight  annas  share  in the forest on behalf  of  the  joint family  consisting of himself and his nephew Anant, and  his personal  share  in it was half, i.e., four annas.   On  his death  his  personal share would go to his  widow  Ambikabai while  Anant would have the remaining half Anant appears  to be  the  eldest  male  member  of  the  family  now   alive. Therefore,  in a sense the High Court was right  in  holding that Anant would represent the entire interest of the  joint family which consisted of eight annas share in this  forest. But even if this was not so because at one stage at any rate Ambikabai was also a party to the agreement of May 5,  1952,

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we  can  see  no  reason why  the  dispute  as  between  the appellant  and  the respondents should not  be  referred  to arbitration.   The  share of Ambikabai as  we  have  already stated  above is not in dispute.  Ambikabai was not a  party to  the  agreement of February 27, 1953, though  she  was  a party to the agreement dated May 5, 1952.  The appellant was also  a party to the earlier agreement of May 1952 and  knew that  Ambikabai  had a share in this forest.   Even  so,  he entered  into the agreement of February 27, 1953,  with  the two  respondents and agreed to the disputes between him  and the  respondents being referred to arbitration.  We fail  to see how he can now say that the disputes between him and the 710 respondents  should not be referred to  arbitration  because Ambikabai was not a party to the agreement of February 1953. The  reason  why Ambikabai did not join in  the  application under s.20 was that she was not a party to the agreement  of February 1953 and could not therefore apply under s. 20; but that is no reason why the dispute between the appellant  and the  two respondents should not be referred to  arbitration, particularly  when  there is no dispute as to the  share  of Ambikabai  in this forest.  All that would happen  would  be that  the  arbitrator would decide the dispute  between  the appellant and the respondents and give an award leaving  out the  share  of  Ambikabai, the extent of  which  is  not  in dispute.  The matter might have been different if the  share of  Ambikabai was in dispute; but as the share of  Ambikabai and  its  extent are not in dispute, the arbitrator  can  go into accounts and give an award with respect to the  parties before  him, leaving out the four annas share of  Ambikabai. We  see  no  reason  why  where  parties  entered  into   an arbitration agreement of this nature knowing fully well that there was another person who was interested but leaving  her out,  the  court should not send the parties  to  the  forum chosen  by  them,  even if the other  person  who  right  be interested and whose share is not in dispute cannot be  made party  before the arbitrator.  We- are therefore of  opinion that even if Anant may not be able to represent the interest of Ambikabai in the arbitration proceedings that will follow in this case, that is no reason for not giving effect to the arbitration clause in the agreement of February 27, 1953  as between  the  parties  to  that  agreement  The   contention therefore of the appellant on this point must fail. Re.(2).  It is true that in the application under s. 20  the respondents  have  asked for the agreement of  February  27, 1953 to be filed in court and the dispute in connection with that  agreement and the agreement of October 22, 1948 to  be referred to 711 arbitration,  and have not specifically asked for  reference of the agreement of May 5, 1952, even though it was included in   the  agreement  of  February  1953.   But  as   already indicated,   the  agreement  of  May  1952  is   merely   in confirmation   of  the  agreement  of  1948  and  when   the arbitrator goes into the dispute between the parties he will necessarily  have to refer to the agreement of May 1952,  so far as it is relevant.  The agreement of May 1952 had to  be entered  into because of the death of Babaji.  It is  merely supplementary to the main agreement which is of October  22, 1948.  In the circumstances when the dispute is referred  to the  arbitrator  under the agreement of February  1953  with respect  to  the agreement of October 1948,  the  arbitrator will be entitled to look into the confirmatory agreement  of 1952,  for the main agreement was that of October 1948.   We agree  with the view of the trial court in  this  connection

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that  the pleadings in muffasil courts cannot be  considered too strictly; even the trial court was prepared in case  the matter   should  be  referred  to  arbitrator  to  ask   the arbitrator to consider also the agreement of May 1952.   The agreement  of  May 1952 would have to be considered  by  any arbitrator who is going into the dispute arising out of  the agreement  of October 1948.  In the circumstances we are  of opinion  that it cannot be ,said that the reference  desired in  this case is piecemeal and split up the case of  action. The  contention  of the appellant on this  score  must  also fail. Be,.  (3).   The  contention under this  head  is  that  the dispute  sought  to  be  referred was  not  covered  by  the arbitration clause.  We have already set out the arbitration clause and as we read it we find it is of very wide  import. It  provides  for reference to arbitration of  all  disputes arising  out of agreements of October 22, 1948,  May  5,1952 and  February 27, 1953.  It also provides for  reference  of all disputes arising out of the jungle 712 cutting or export or in any other way.  In view of this wide language  of  the arbitration clause it cannot  be  possibly said  that the dispute which has been raised in the  present case  is  outside  the  terms  of  the  arbitration  clause. Reliance  in  this  connection was  however  placed  on  the opening  words of cl. 6 of the agreement of  February  1953, which  say  that  the  agreement  was  arrived  at  "without prejudice  to the contents of the letter sent by  the  first party  (namel y,  the  appellant) to the  second  and  third parties  (namely,  the  respondents)  on  the  date  7th  of February,  1953,  and without the first party  (namely,  the appellant)  withdrawing  the  said  letter".   This   letter contained certain contentions of the appellant based on  the agreements  between the parties.  Those words do not in  our opinion  in  any  way out down the  wide  amplitude  of  the arbitration clause; at the best they can only mean that  the appellant  was  free to raise the contentions which  he  had raised  in this letter for the decision of  the  arbitrator. Nor  do these words confine the agreement of  February  1953 only to the dispute arising out of the agreement with Divkar as  contended  for  on  behalf of  the  appellant.   We  are therefore of opinion that the dispute raised in this case is covered by the arbitration clause, and the contention of the appellant in this behalf must also fail. Re(4). We now turn to the question of fraud.  The contention on  behalf  of  the appellant in  this  connection  is  that serious allegations of fraud have been made against him  and therefore this is not a case which should be  referred  to arbitration.  Sub-section (4) of s. 20 lays down that  where no  sufficient  cause is shown, the court  shall  order  the agreement to be filed and make an order of reference to  the arbitrator.  It is therefore open to a court under this sub- section,  where sufficient cause is shown not to  order  the agreement  to  be filed and not to make a reference  to  the arbitrator.   The  words of this sub-section  leave  a  wide discretion in the court to consider whether an order for 713 filing  the  agreement should be made and a  reference  made accordingly.   It is neither necessary nor desirable to  lay down  in general terms what would be sufficient cause  which would entitle a court to refuse to order the agreement to be filed  and thus refuse to make an order of  reference.   The court will have to decide on the facts of each case  whether sufficient  cause  has been made out for  not  ordering  the agreement to be filed and not making the order of reference.

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Learned  counsel for the appellant, however,  contends  that serious  allegation  of  fraud has been  generally  held  by courts  to  be  a sufficient ground  for  not  ordering  the agreement  to  be filed and not making the  reference’.   He relies  in this connection on the leading case of Russel  v. Russel  (1).   That was a case of  partnership  between  two brothers  containing  an  arbitration clause.   One  of  the brothers  gave  notice  to  the  other  for  dissolving  the ’Partnership.  The other brother thereupon brought an action alleging  various  charges of fraud and  claiming  that  the notice  should be declared void and no announcement  of  the dissolution of partnership should be allowed.  Thereupon the brother who was charged with fraud moved that the matter  be referred to arbitration under the arbitration clause.   That was resisted and the court held that "in a case where  fraud is  charged,  the court will in general refuse to  send  the dispute to arbitration if the party charged with the,  fraud desires  a public inquiry.  But where  to arbitration is  by the   party  charging  the  fraud,  the  court,   will   not necessarily  accede  to it, and will never do  so  unless  a prima facie case of fraud is proved." This  case  certainly lays down that  where  allegations  of fraud are made, the party against whom such allegations  are made may successfully resist the reference to arbitration. (1)  [1880] 14 Ch.D. 471. 714 The  principle of this case was followed in Charles  Osenton and Company v. Johnston (1).  In that case a firm of  estate agents  and surveyors resisted the reference to an  official referee under s.    89  of the Judicature Act of 1925.   The decision of in official  referee  could  not  be  called  in question by    appeal or otherwise except on a point of  law as  provided by s. 1 of the Administration of  Justice  Act, 1932.    The   firm  therefore  contended  that   as   their professional  reputation was involved the matter should  not be  referred to the official referee and the House of  Lords held  that as the professional reputation of the  appellants was involved, that question should not be left to the  final decision without appeal of an official referee but should be tried  before  the normal tribunal of a High  Court  with  a jury. The principal of these cases has also been followed in India with  reference to cases coming under ss. 20 and 34  of  the Act. (See, Maharaja Sir Mahindra Chandra Nandy v. H. V.  Low & Co., Ltd. (2), Narsingh Prasad Boobna v. Dhanraj Mills(3), Union  of  India  v.  Firm  Vishvadha  Ghee  Vyopar   Mandal Sudhangsu Bhattacharjee v. Ruplekha Pictures(5). There  is no doubt that where serious allegations  of  fraud are  made against a party and the party who is charged  with fraud desires that the matter should be tried in open court, that would be a sufficient cause for the court not to  order an  arbitration  agreement to be filed and not to  make  the reference.   But  it is not every allegation  imputing  some kind  of  dishonesty, particularly in matters  of  accounts, which would be enough to dispose a court to take the  matter out  of the forum which the parties themselves have  chosen. This to our mind is clear even from the decision in Bussel’s case   (6).   In  that  case  there  were   allegations   of constructive and (1) [1942] A. C. 130. (2) A. I. R. 1924 Cal. 796. (3) I. L. R. (1942) 21 Patna 544. (4) I.L. R. (1953) 1  All. 423. (5) A.I.R.1954. cal. 281. (6) [1880] 14 Ch.  D. 471.

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715 actual fraud by one brother against the other and it was  in those circumstances that the court made the observations  to which  we have referred above.  Even so, the learned  master of the Rolls also observed in the course of the judgment  at p. 476 as follows :               ",Why  should  it be  necessarily  beyond  the               purview  of  this  contract  to  refer  to  an               arbitrator  questions  of account,  even  when               those   questions   do   involve    misconduct               amounting  even to dishonesty on the party  of               some partner ? I do not see it.  I do not  say               that in many cases which I will come to in the               second  branch of the case before  the  Court,               the Court may not, in the exercise of its dis-               cretion, refuse to interfere; but it does  not               appear to me to follow of necessity that  this               clause was not intended to apply to all  ques-               tions,   even   including   questions   either               imputing moral dishonesty or moral  misconduct               to one or other of the parties." We   are  clearly  of  opinion  that  merely  because   some allegations have been made that accounts are not correct  or that  certain  items are exaggerated and so on that  is  not enough to induce the court to refuse to make a reference  to arbitration.  It is only in cases of allegations of fraud of a  serious nature that the court will refuse as  decided  in Bussel’s  case  (1) to order an arbitration agreement to  be filed  and  will  not  make a reference.   We  may  in  this connection  refer  to  Minifie  v.  The  Railway  Passengers Assurance  Company  (2).   There the  question  was  whether certain  proceedings should be stayed; and it was held  that not  with standing the fact that the issue and the  evidence in  support of it might bear upon the conduct of  a  certain persons and of those who attended him and so might involve a question  similar to that of fraud or no fraud, that was  no ground for refusing stay.  It is (1) [1880] 14 Ch. D. 471. (2) (1881) 44 L.T. 552. 716 only when serious allegations of fraud are made which it  is desirable  should be tried in open court that a court  would be justified in refusing to order the arbitration  agreement to be filed and in refusing to make a reference. Let  us therefore turn to the allegations in this   case  to see  what their nature is.  These allegations are  that  (i) the accounts were not made up to date, and even on demand by the  respondents,  the appellant did not bring them  up  to date;  (ii) the statements of accounts which were  shown  by the  appellant  were not complete and did not appear  to  be correct;  and (iii) the whole stock of goods was not  to  be found therein and the debit items appeared to be exaggerated and incorrect.  These were the only allegations with respect to  the accounts in the application and they do not  in  our opinion  amount to serious allegations of fraud against  the appellant  which  would necessitate that there should  be  a trial in open court.  Such allegation as to the  correctness or  otherwise of entries in the accounts are often  made  in accounts suits; but they in our opinion are not such serious allegations of fraud as to induce a court to order that  the arbitration  agreement should not be filed and no  reference should  be made.  Besides these allegations as  to  accounts the  respondents  also  said that an  injunction  should  be granted restraining the appellant from removing the stock so as to avoid misappropriation thereof pending the appointment

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of  a receiver.  That was not an actual allegation  of  mis- appropriation;  it  merely said that  the  respondents  were afraid that there might be misappropriation in future unless an injunction was issued and a receiver appointed.   Further in   the  affidavit  in  support  of  the  application   for appointment  of  receiver  after  referring  to  their   own conclusions from the state of accounts, the respondents said that they had not received the true and complete account  of the  felling of the jungle, ready goods, the goods sold  and the goods in balance from the appellant. 717 They also said that they suspected that on their conclusions from   the  accounts  supplied  to  them,  there  might   be misappropriation  of the goods and of money.   They  further alleged  that  in the accounts shown to them,  the  sale  of charcoal was shown at a rate much lower than the  prevailing market  rate and under these circumstances  the  respondents apprehended  that if the work of the sale of goods  remained in  the hands of the appellant, the real price of the  goods would  not  be realised.  There is no  allegation,  however, that in actual fact the appellant had made secret profits by selling goods at a higher price and showing a lower price in the account.  The respondents pointed to the entries in  the account  which  showed the lower rate of the sale  price  in support  of their apprehension that if the work of  sale  of goods  remained in the hand of the appellant the real  price would not in future be realised.  A perusal therefore of the application  under s. 20 and the affidavit filed in  support of  the  application for appointment of  receiver  does  not disclose  any  serious  allegations  of  fraud  against  the appellant.   What it discloses is that the respondents  were not  satisfied with the accounts submitted to them and  were suspicious that they did not disclose the true and  complete state  of  affairs.  Such allegations, as  we  have  already remarked are often made in account suits and if they were to be  sufficient ground for not referring an account  suit  to arbitration  on the ground of fraud, hardly any  arbitration agreement in a matter in which accounting would be necessary could be referred to arbitration.  That is why we  emphasise that  even  in the leading case of Russel, (1)  the  learned Master of the Rolls was at pains to point out that it  could not  necessarily  be  said in a case  of  accounts  that  no reference  to  arbitration  should  be  made,  even   though questions   relating  to  accounts  which might   involve misconduct amounting even to dishonesty on the part of  some partner might arise in the arbitration proceedings and  even cases   where  moral  dishonesty  or  moral  misconduct   is attributed to one party or the other might be 718 referred  to  arbitration.   It  seems  to  us   that  every allegation  tending  suggest or imply  moral  dishonesty  or moral misconduct in the matter of keeping accounts would not amount to such serious allegation of fraud as would impel  a court  to  refuse to order the arbitration agreement  to  be filed  and  refuse  to make a  reference.   Looking  to  the allegations  which have made in this case we are of  opinion that there are no such serious allegations of fraud in  this case as would be sufficient for the court to say that  there is  sufficient  cause  for  not  referring  the  dispute  to arbitration.   This  contention of the appellant  must  also therefore fail. The  appeal  therefore fails and is  hereby  dismissed  with costs. Appeal   dismissed.

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