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1980 DIGILAW 219 (GUJ)

FOOD CORPORATION OF INDIA v. GURUKRUPA TRANSPORT COMPANY

1980-12-16

B.J.DIVAN

body1980
B. J. DIVAN, J. ( 1 ) THE appellant herein is the original defendant and the res- pondent is the original plaintiff. The appeal is against the order of the learned Civil Judge Senior Division Rajkot dismissing the application filed by the defendant under sec. 34 of the Arbitration Act for stay of the suit in view of the arbitration agreement between the parties. ( 2 ) THE facts leading to this litigation are as follows: The plaintiff filed a suit against the Food Corporation of India the appellant before me to recover the amount for the bills for services rendered by the pla- intiff for transport facilities placed at the disposal of the defendant by the plaintiff. These transport facilities were rendered by the plaintiff under a contract and the plaintiff also claimed for damages alleged to have been caused to the plaintiff by the alleged breach of the contract on the part of the defendant. The defendant filed an application under sec. 34 for stay of the proceedings in view of the arbitration agreement. The plaintiff objected to the application being granted and the grounds on which the plaintiff objected were that the defendant was not ready and willing to have the arbitration as per sec. 34 of the Arbitration Act nor was the Food Corporation of India ready and willing to take appropriate proccedings for arbitration. The main contention of the plaintiff was that on 3/05/1977 the plaintiff had requested the Food Corporation to have arbitration in accordance with the arbitration agreement and also to name the arbitrator for the purpose but the Managing Director of the defendant Corporation failed to accede to the proposal. Thereafter requests and reminders were sent on 3/05/ 19/06/1977 /06/ 4 1977 and 19/12/1977 It was the case of the plaintiff that a sister concern of the plaintiff namely Messrs. Thereafter requests and reminders were sent on 3/05/ 19/06/1977 /06/ 4 1977 and 19/12/1977 It was the case of the plaintiff that a sister concern of the plaintiff namely Messrs. Mathurdas Girdharlal had filed Special Civil Suits No. 46 of 1978 and No 49 of 1978 and while the proceedings of those two suits were going on some talks of compromise took place and at that time the defendant came to know that the present plaintiff was also likely to file a suit within a short time and at that time the Corporation designated one Pathak as Arbitrator and that was done on 15/03/1979 As it turned out Pathak had died before 15/03/1979 and thereafter one Saxena was appointed Arbitrator on 17/04/1979 As a matter of fact the suit in which application under sec. 34 of the Arbitration was made was filed on 3/05/1979 that is after the arbitrator had been appointed by the Food Corporation of India. The learned Judge came to the conclusion that there was inaction on the part of the defendant for a period of two years and therefore he came to the conclusion that the defendant was not ready and willing to appoint the arbitrator upto 15/03/1979 and he further came to the conclusion that he appointments of 15/03/1979 and 17/04/1979 were with an oblique motive to have the defence in the suit blocked because the defendant apprehended that a suit would be filed by the plaintiff. According to the learned trial Court judge such inaction or silence in face of repeated requests amounted to unwillingness and unreadiness on the part of the defendant to refer the matter to arbitrators. His final conclusion was that the defendant Corporation was not ready and willing to appoint the arbitrator and hence the provisions of sec. 34 of the Arbitration Act were not attracted. He found that there was not sufficient ground for allowing the application and he therefore dismissed the application. ( 3 ) MR. Shah for the respondent has drawn my attention to the decision of the Supreme Court in Uttar Pradesh Cooperative Federation Ltd. v. Sunder Bros. Delhi A. I. R. 1967 S. C. 249. There the scope of an appeal against an order passed under sec. 34 of the Arbitration Act was considered by the Supreme Court and it was held that where the discretion vested in the Court under sec. Delhi A. I. R. 1967 S. C. 249. There the scope of an appeal against an order passed under sec. 34 of the Arbitration Act was considered by the Supreme Court and it was held that where the discretion vested in the Court under sec. 34 has been exercised by the lower Court the Appellate Court would be slow to interfere with the exercise of the discretion. In dealing with the matter before it at the appellate stage the Appellate Court would normally not be justified in interfering with the exercise of the discretion under appeal solely on the ground that if it had considered the matter at the trial stage it might have come to a contrary conclusion. If the discretion has been exercised by the trial Court reasonably and in a judicial manner the fact that the appellate Court would have taken a different view may not justify such interference with the trial Courts exercise of discretion. If it appears to the appellate Court that in exercising its discretion the trial Court has acted unreasonably or capriciously or has ignored relevant facts then it would be open to the appellate Court to interfere with the trial Courts exercise of discretion. ( 4 ) IN the instant case the facts speak for themselves namely that for nearly two years after the first request was made by the plaintiff for appointment of arbitrator on 3/05/1977 no action was taken by the Food Corporation of India. Requests for appointment of arbitrator were repeated on 23/05/ 19/06/1977 /06/ 4 1977 and 19/12/1977 Therefore it can be argued that at least in the beginning the Food Corporation of India was not ready and willing to take the matter to arbitration. However the crucial date on which the readiness and willingness of the defendant for the purpose of sec. 34 has to be judged is to use the language of sec. 34 applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration. However the crucial date on which the readiness and willingness of the defendant for the purpose of sec. 34 has to be judged is to use the language of sec. 34 applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration. Therefore readiness and willingness of the Food Corporation of India to go to arbitration has to be judged with reference to the date when the suit was filed by the present plaintiff the respondent before me and that date was 3/05/1979 By that time the appointment of Pathak was already made on 15/03/1979 and when it was realised that Pathak was dead by 15th March Saxena was appointed on 17/04/1979 Therefore as of 3/05/1979 it could not be said that the defendant Corporation was not ready and willing to do all things necessary for the proper conduct of the arbitration. Whether the Food Corporation showed its readiness and willingness on 15/03/1979 and thereafter in April 1979 because it came to know that the plaintiff was contemplating filing a suit against the Food Corporation is besides the point because that cannot be said to be an oblique motive on the part of the Food Corporation. If the parties have chosen a forum by an arbitration clause and when the arbitrator is appointed though belatedly or after a considerable time after the request for arbitration was first made it cannot be said that at the time when the suit was commenced the defendant Food Corporation was not ready and willing to go to arbitration. With respect to the learned trial Court Judge he was in error when he took into consideration not the date namely 3/05/1979 when the suit was filed but the earlier period from 3/05/1977 to 15/03/1979 when the Food Corporation did not appoint the arbitrator in accordance with arbitration clause. To use the language of the Supreme Court in Uttar Pradesh Cooperative Federations case (supra) since the relevant facts and relevant legal position has been ignored and overlooked by the learned trial Court Judge. it will be open to me as the appellate Court to interfere with the trial Courts exercise of discretion under sec. 34 of the Arbitration Act. To use the language of the Supreme Court in Uttar Pradesh Cooperative Federations case (supra) since the relevant facts and relevant legal position has been ignored and overlooked by the learned trial Court Judge. it will be open to me as the appellate Court to interfere with the trial Courts exercise of discretion under sec. 34 of the Arbitration Act. ( 5 ) THE learned Judge seems to have been impressed considerably by reason of the delay on the part of the Food Corporation or failure to appoint the arbitrator till 15/03/1979 but if by the time the suit was concerned it was ready and willing to go to arbitration then the requirement of sec. 34 in the last part of that section is satisfied. ( 6 ) THE other part of the requirement so far as sec. 34 is concerned is that the trial Court should be satisfied that there was no sufficient reason why the matter should not be referred in accordance with arbitration agreement. That sufficient reason must be in the nature of things independent of readiness and willingness on the part of the defendant to go to arbitration. Readiness and willingness must be present at the time when the proceedings were commenced and it must continue till the date of the application. That is the time during Which readiness and willingness must be present. Earlier hesitation or the earlier omission on the part of the defendant to go to arbitration is not to be taken into account and it is this delay or what the learned trial Court Judge has designated as inaction on the part of the Food Corporation of India that has led to his conclusion that there was sufficient reason why the matter should not be referred in accordance with the arbitration agreement. In my opinion once the forum of arbitration has been chosen the party should ordinarily be asked to go to that forum of its own choice rather than ask the defendant to have the dispute adjudicated before a regular Court of law. Under these circumstances it cannot be said that the requirement of the last part of sec. 34 regarding satisfaction to be reached was not properly complied with. Hence this Appeal from Order is allowed and the order of the learned Civil Judge Senior Division Rajkot is set aside. The suit will be stayed under sec. Under these circumstances it cannot be said that the requirement of the last part of sec. 34 regarding satisfaction to be reached was not properly complied with. Hence this Appeal from Order is allowed and the order of the learned Civil Judge Senior Division Rajkot is set aside. The suit will be stayed under sec. 34 of the Arbitration Act pending arbitration. There will be no order as to costs of this appeal. .