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1990 DIGILAW 389 (BOM)

KONKAN KRISHI VIDYAPEETH v. RAVANKAR CONSTRUCTIONS

1990-09-25

H.SURESH

body1990
JUDGMENT 1. H. Suresh, J. - This is an appeal filed by the plaintiffs as against an order granting stay of their suit filed in the Ratnagiri Court, under Section 34 of the Arbitration Act. 2. The dispute relates to a certain contract given to the respondents for the purpose of carrying out construction of agricultural faculty buildings of the plaintiff-university. The agreement was of November 3, 1977. On or about March 24, 1980, the plaintiffs purported to terminate the said agreement. After the termination on or about September 15, 1980, they invited fresh tenders for the purpose of carrying out the remaining work which had to be done in respect of the said contract. As soon as the respondents came to know of the fact that the plaintiffs were inviting fresh tenders, they rushed to the Court and filed a suit being suit No. 47 of 1980. That was on October 23, 1980. In that suit, they obtained on order of injunction restraining the present plaintiffs from interfering with the possession of the respondents herein until certain conditions were fulfilled. It appears that that injunction was confirmed on December 5, 1980. Against the said order of injunction the plaintiffs had to file an appeal in the Court of the District Judge at Ratnagiri and the appeal filed by the plaintiffs was allowed. Later on the suit was allowed to be dismissed for default. 3. In the meanwhile, the respondents filed a suit in this High Court, Arbitration Petition No. 511 of 1982 as against the present plaintiffs under Section 20, of the Arbitration Act for referring the dispute to arbitration as provided under the said agreement dated November 3, 1977. In that petition, the present plaintiffs contended that the High Court had no jurisdiction to entertain and try the suit. That contention was upheld and the petition was ordered to be returned to the respondents herein for presentation in a proper Court. 4. Thereafter the plaintiffs filed the present suit in the Court of Civil Judge, Senior Division, Ratnagiri, being Special Civil Suit No. 1 of 1983 claiming damages in the sum of Rs. 43,00,000/- and odd. It is in that suit the present respondents made an application on April 12, 1983 for stay of the said suit under Section 34 of the Arbitration Act. 43,00,000/- and odd. It is in that suit the present respondents made an application on April 12, 1983 for stay of the said suit under Section 34 of the Arbitration Act. The learned Judge by an order dated October 19, 1985, allowed the said application and ordered the stay of the said suit. Present appeal is against the said order passed by the learned Judge. 5. In the meanwhile, the respondents presented the said petition under Section 20 of the Arbitration Act in the same Court at Ratnagiri and it appears that the same was decreed on or about February 24, 1986. It is against the said order and decree the plaintiffs herein have filed an appeal being appeal No. 90 of 1986. Both these matters are being heard together. 6. In suit No. 1 of 1983, filed by the plaintiffs, the defendants had appeared on February 9, 1983 and they applied for an adjournment for the purpose of filing a written statement which was granted, up to March 9, 1983. Thereafter again, it was adjourned for the same purpose to April 2, 1983. On April 2, 1983, it was again adjourned to April 29, 1983 for the purpose of enabling then to file their written statement. In between, on April 12, 1983, they took out the present application under Section 34 of the Arbitration Act. 7. Before the learned Judge, two contentions were raised viz., that the defendants had taken steps in the suit itself and, therefore, it could be said that they were not ready and willing to go on with the arbitration and that, therefore, the Court should not exercise any discretion in favour of the defendants. The other contention was that the defendants had filed an earlier suit No. 47 of 1980 which gives a clear indication that there was no intention on the part of the defendants that they were willing to go for arbitration but, on the contrary their conduct shows that they were intending to have the rights decided in the Court itself, and there could not have been any question of referring the matter of arbitration. Both the contentions were negatived by the learned Judge. 8. Both the contentions were negatived by the learned Judge. 8. Under Section 34 of the Arbitration Act one of the important considerations, which the court has to take into account is whether the applicant was, at the time when the proceedings were commenced, and even thereafter, ready and willing to do all things necessary for the purposes of the arbitration. If that is so, he could make an application at any time before filing a written statement or taking any other steps in the proceedings. In the present case, they had applied for dates for the purpose of filing a written statement and, therefore, the argument was that they had taken steps in the proceedings and, therefore, the application was not maintainable. However, it depends upon their intention whether it could be said that they had unequivocally intended to submit themselves to the jurisdiction of the Court and not to go for arbitration. In the present case, it is not very clear if one could take only three dates into account whether they had expressed any such intention or not. 9. But Mr. Tulzapurkar has rightly argued that as regards the disputes, the respondents themselves had preferred to go to the Court of law by filing suit No. 47 of 1980. Not only they filed the suit for injunction but they also obtained leave under Order 2 Rule 2 for preferring money claim and they persisted with the said matter till, of course, the said suit was dismissed for default. 10. I have seen a copy of the plaint in suit No. 47 of 1980. The plaint proceeds on the footing that the termination of the agreement was unlawful, and that the present plaintiffs were responsible for the delay in completing the work of construction and that they had committed breaches of the contract. It further says that they were entitled to recover from the defendants, the present plaintiffs, a sum of Rs. 13.32 lacs as per the particulars set out in the said plaint itself. They have also referred to the fact that they had called upon the present plaintiffs to pay the said sum of Rs. 13.32 lacs within a period of one month failing which they had stated that further proceedings would follow. 13.32 lacs as per the particulars set out in the said plaint itself. They have also referred to the fact that they had called upon the present plaintiffs to pay the said sum of Rs. 13.32 lacs within a period of one month failing which they had stated that further proceedings would follow. They also stated that on their being furnished with the measurements of the work done and the materials lying at the site they would prepare the final bill and submit the same to the defendants, the present plaintiffs, for payment. They have further stated, after referring to the correspondence, that till their final bill was paid they would not hand over the possession of the site. The plaint then says that despite their assertion, the present plaintiffs were inviting tenders and, therefore, they submit that they have a lien and charge on the said building and the site, for recovering the dues and unless the dues are paid, they were not liable to vacate the building and the site. That is how they seek an order of injunction as against the present plaintiffs from disturbing their possession of the site. Thereafter they say that in respect of their claim of Rs. 13.32 lacs and their claim of the final bill which was yet to be made out, they would file a separate suit and for that purpose they sought leave of the Court under Order 2 Rule 2 which leave was granted. They say that they could not include their monetary claim as the final bill was yet to be made out. 11. They sought a declaration that they were in possession of the suit site and they were not liable to vacate till they were paid and for an order of injunction and temporary injunction on the same terms. 12. Mr. Tulzapurkar submitted that this clearly shows that they, themselves, had abandoned the arbitration agreement and had rushed to the Court for the purpose of asserting their rights under the said agreement. He, therefore, submitted that the learned Judge could not have ignored the fact that the respondents had filed the said suit No. 47 of 1980. The learned Judge thought that suit was a simple suit for injunction for the purpose of protecting the interests of the respondents and, therefore, it could not be said that they were not willing to go for arbitration. The learned Judge thought that suit was a simple suit for injunction for the purpose of protecting the interests of the respondents and, therefore, it could not be said that they were not willing to go for arbitration. I wish the learned Judge had taken into account the various averments in the plaint, which clearly show that as far as the respondents were concerned, they had shown no willingness to go for arbitration. Instead they rushed to the Court not merely for the purpose of getting protection with regard to the material on the site, but also for the purpose of asserting their rights and liabilities against the present plaintiffs. If that is so it cannot be said that they were ready and willing to go for arbitration at all. In this connection Mr. Tulzapurkar has drawn my attention to the case of W. Wood and Sons v. Bengal Corpn. (AIR 1956 (43) Cal 238) which is also confirmed by a division bench of the same High Court as reported in AIR 1959 Calcutta 8. The proposition is that a party by bringing an action in respect of a matter agreed to be referred to arbitration shows that he is not at the time when proceedings are commenced, ready and willing to do all things necessary to the proper conduct of the Arbitration and therefore, is not entitled subsequently to apply for a stay under Section 34. The Court had observed that action in a Court of law is inconsistent with readiness and willingness to go to arbitration. This point is well settled and it is not necessary to discuss any authorities on the subject. 13. Mr. Kotwal submitted that this is a proper case which ought to have gone for arbitration. He also submitted that the respondents have filed their suit under Section 20 and hence it is proper that in that matter the dispute should be referred to arbitration. As the dispute relates to the work of a contractor it is always better to refer the dispute to the arbitration than being decided by the Court of law. 14. I am not inclined to accept the submissions made by Mr. Kotwal at this stage. The question is one of principle which has to be taken into account while granting an application under Section 34. 14. I am not inclined to accept the submissions made by Mr. Kotwal at this stage. The question is one of principle which has to be taken into account while granting an application under Section 34. The principle is, if the party has already rushed to the Court on the rights and liabilities arising out of the agreement, in that case, there cannot be any question of application under Section 34, at his instance. 15. I may observe that the disputes have been pending since about 1980 between the parties. The initial suit was of 1980. Thereafter the present suit has been pending since 1983, and ten years have gone without any decision on merits. I, think, it is too late in the day to say that the matter should be referred to arbitration at this stage. It is well known how arbitration matters linger on in this country, very often defeating the very purpose of arbitration. On the other hand it is proper, that the matter should go back to the Court with suitable directions that the suit itself should be disposed of by a certain date. It is easier in such cases of inordinate delay, to modulate the proceedings in a Court of law, than seeking to control the untrammelled vicissitudes of an arbitration proceedings. In the result, I pass the following order: Impugned order is set aside. Consequently, the application made by the respondents under Section 34 of the Arbitration Act being Ex. 15 stands dismissed. The respondents are directed to file their written statement within a period of eight weeks from today. Both the parties must complete discovery and inspection within a period of four weeks thereafter. Suit stands expedited. The learned Judge is directed to have the suit placed on board on January 21, 1991. The learned Judge is also directed to have the suit disposed of as early as possible and in any event not later than March 31, 1992. Appeal is allowed with costs. Writ of this Court to go down forthwith. At this Stage Mr. Kotwal applies for stay of the operation of my order. Mr. Tulzapurkar opposes the application. I find no reason as to why I should stay the operation of my order inasmuch as I have given the respondents eight weeks' time for the purpose of filing their written statement. The application made by Mr. Kotwal is, therefore, rejected.