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1992 DIGILAW 87 (HP)

H. P. STATE FOREST CORPORATION v. KISHORI LAL MAHENDRA

1992-08-10

D.P.SOOD

body1992
JUDGMENT S. P. Sood, J. - The instant suit is for the recovery of Rs. 5,27,799.00 against the defendants No. 1 and 2 on the basis of an agreement between the parties. Notice was served on the defendants on 15th January, 1992 with a direction to appear before the court on 7th April, 1992. 2. The defendants through Shri Subhash Sharma, Advocate appeared before the court on 7th April, 1992. Power of Attorney on behalf of the defendants was filed on that date. They had engaged Shri Arvind Kumar, 86, Lawyers Chambers, Supreme Court of India, New Delhi and Shri Subhash Sharma, Advocates on their behalf. The instant O.M.P. seeking the stay of the suit under Section 34 of the Arbitration Act had been filed on 26th June, 1992. It would be proper to detail the order passed on 7th April, 1992 in verbatim : "Shri Subhash Sharma, Advocate, is stated to have filed power of attorney on behalf of both the defendants. As prayed for, let written statement on behalf of defendants be filed within four weeks. No. further opportunity shall be granted in the context. Replication, if any, be also filed during the following four weeks and then the matter be listed for the purpose of admission and denial of documents on 22.6.1992 Sd/- Registrar (V)". The matter was again put up before the learned Registrar (V) on 22nd June, 1992. As written statement was not filed despite four weeks' time having been given to the defendants, the following order was passed : "Written statement not filed though final opportunity in the context was granted on 7.4.1992. It being so, let the matter be listed before the Hon'ble Court in due course for orders. Sd/- Regr. (V)". Ultimately, the matter was put up before this court on 30th June, 1992 when the defendants through Shri Subhash Sharma, Advocate, showed their reluctance to file the written statement in view of arbitration clause by filing an application under Section 34 of the Arbitration Act. In the application, the defendants sought the relief by praying that the proceedings of the suit before this court be ordered to be stayed and the subject matter of the suit be referred to Arbitration as per the Arbitration clause. 3. In reply, the plaintiff vehemently opposed the application though they admitted the arbitration clauses as recorded in the arbitration agreement. 3. In reply, the plaintiff vehemently opposed the application though they admitted the arbitration clauses as recorded in the arbitration agreement. It was contended that the defendants took time for filing the written statement. The above-said facts should be taken as a step to abandon the right to have the suit stayed. The contention between the parties is whether the non-filing of the written statement despite the opportunity having been sought for, amounts to a step consciously taken with a view to submit to the jurisdiction of the court for the purpose of adjudicating the controversy on the merits. 4. I have heard Shri Arvind Kumar counsel appearing on behalf of defendant-applicants and Shri Prem Goel, learned counsel applying on behalf of plaintiff-respondent at length. They have also taken me through the record. Reliance has been placed by the parties on the observations made in the case of Sadhu Singh Ghuman v. Food Corporation of India and others (AIR 1990 SC 893), and Rachappa Gurudappa v. Gurusiddappa Nuraniappa (AIR 1989 SC 635). 5. Section 34 of the Arbitration Act requires that the application for stay of legal proceedings must be filed before the filing of the written statement or taking any other step in the proceedings. In order to be entitled for stay under Section 34 of the Act, it is imperative upon the court to see whether the conditions envisaged by it are fulfilled. Those conditions are elaborately detailed and dealt with in the case of Rachappa Gurudappa (supra) as under : "(i) the proceedings must have commenced by a party to an arbitration agreement against any other party to the agreement; (ii) the legal proceeding, in this case the suit, which is sought to be stayed must be in respect of a matter agreed to be referred; (iii) the applicant for stay must be a party to the legal proceedings, the suit in this case; (iv) The applicant must have taken no steps in the proceeding after appearance; (v) The applicant must satisfy that only the applicant was at the time when the proceedings were commenced, ready and willing to do everything necessary for the proper conduct of the arbitration; and (vi) The Court must also be satisfied that there was no sufficient reason why the matter should not be referred to arbitration." 6. There is no dispute as to the above said principles but its applicability has to be considered in view of the peculiar facts of the instant case. At this stage, it may be pertinent to deal with other authorities relied upon in both the cases cited by the learned counsel for the parties, namely, State of Uttar Pradesh v. Janki Saran Kailash Chnndra (AIR 1973 SC 2071), and Food Corporation of India v. Yadav Contractor (AIR 1982 SC 1302), which cases have been decided by a larger Bench. Both these cases have been considered in the cases relied upon by the parties. In the abovesaid cases, it is worth while to note that the expression "a step in the proceedings" which would disentitle the defendant from taking benefit of Section 34 of the Arbitration Act is not every step taken by him in the suit. It should be a step to abandon the right to have the suit stayed. It should be a step in aid of the progress of the suit. The step must have been consciously taken with a view to submit to the jurisdiction of the court for the purpose of adjudicating the controversy on merits. 7. In the case of M/s. Sadhu Singh Ghuman (supra), after service of notice, the defendant put in appearance on December 10, 1984. On the next hearing, that is, 4th January, 1985, an application was filed stating therein that the photostat copy of the original agreement and other documents which had been produced by the plaintiff in their evidence were not visible and clear and it was very difficult for the defendants to inspect and file the written statement. Further it was specifically written that the original documents be produced in the court which are in possession of the plaintiff and are essential for the defendant to inspect so that they may file the written statement. 8. In the circumstances, it was observed that in the application filed by the defendants in this case, they only sought a direction to the plaintiff to produce the original agreement and other documents so that they may file written statement, the original agreement and other documents. It was not stated that they would file the written statement. They never took any other step submitting to the jurisdiction of the Court to decide the case on merits. It was not stated that they would file the written statement. They never took any other step submitting to the jurisdiction of the Court to decide the case on merits. The right to have a dispute settled by the Arbitrator has been conferred by the agreement of the parties and that right should not be deprived of by technical pleas. The Court must go into the circumstances and intention of the party in the step taken ...." 9. In the instant case, the order passed by the court on 7.4.1992 specifically shows that date was sought for filing the written statement within four weeks with a stop order and the opposite party was directed to file the replication and in case of the written statement having been filed during the next four weeks. In other words, the defendants had indicated their intention to submit this to the jurisdiction of the Civil Court for the adjudication of the lis in question. Once it had been done, then as per the principle laid down in Rachappa's case (supra), the defendants are to be deemed to have abandoned their right to have the suit stayed under Section 34 of the Arbitration Act. The instant case is fully covered by the principles laid down in the cases relied upon by the learned counsel for the plaintiff. In that view of the matter, the application entails dismissed, and is dismissed, with no order as to costs. Application dismissed.