Research › Browse › Judgment

Madhya Pradesh High Court · body

1999 DIGILAW 879 (MP)

Rakshawati Burman v. Jasumati w/o Akhai Bhai

1999-10-28

V.K.AGARWAL

body1999
ORDER V.K. Agarwal, J. 1. This revision is directed against the order dated 6-5-1996 in M.C.A. No. 8/94 whereby the order dated 27-4-1994 of IInd Civil Judge, Class-II, Mahasamund in Civil Suit No. 86-A/94 allowing the application of defendant/respondent for appointment of arbitrator under section 34 of the Arbitration Act, 1940 (hereinafter mentioned as the 'Act' for short). 2. The facts leading to the present revision in brief are that, on 18-10- 1993 the plaintiff/petitioner filed a Civil Suit No. 86-A/94 in the Court of IInd Civil Judge Class-II, Mahasamund for obtaining possession of Saw Mill leased out by him to defendant/respondent. The plaint of the said suit is document No. 1. The defendant/respondent in the said Civil Suit filed an application (document No. 2) under section 34 of the Act, alleging therein that the parties had agreed to refer their dispute to the arbitrators and the arbitrators have also given their award on 3-8-1992. The application was opposed by the petitioner. However, the said application under section 34 of the Act was allowed by the trial Court by its order dated 27-4-1994. An appeal under section 39 of the Act was preferred by the petitioner/plaintiff, which however was dismissed by the impugned order and the order of the trial Court dated 27-4-1994 was affirmed. 3. Learned Counsel for petitioner/plaintiff has submitted that in the application under section 34 of the Act (document No. 2) it has been stated that there was arbitration agreement between the parties and an award was given by the 'Panchas' on 3-8-1992. It has therefore been contended that in view of the averment of the applicant that the award was already given by the 'Panchas'; the application under section 34 of the Act was not maintainable and if at all, the respondent could only pray that the award allegedly given by the arbitrators be made rule of the Court. It has also been urged that the alleged award of the said 'Panchas' was also not filed in the Court. It has therefore been contended that there was no justification for granting the prayer made in the said application ostensibly under section 34 of the Act. Petitioner's Learned Counsel relied upon Anderson Wright Ltd. vs. Moran & Company, AIR 1955 SC 53 and B. Raghuveeriah vs. National Small Industries Corporation Ltd., 1970 Lab.I.C. 493. 4. It has therefore been contended that there was no justification for granting the prayer made in the said application ostensibly under section 34 of the Act. Petitioner's Learned Counsel relied upon Anderson Wright Ltd. vs. Moran & Company, AIR 1955 SC 53 and B. Raghuveeriah vs. National Small Industries Corporation Ltd., 1970 Lab.I.C. 493. 4. In view of the contentions as above it has to be considered whether in the facts and circumstances of the case an application under section 34 of the Act was maintainable and as to whether the Courts below were justified in allowing the prayer made therein. It would be useful to reproduce section 34 of the Act, which reads: "Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the 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 such authority may make an order staying the proceedings." 5. Thus in order that a stay may be granted under this section, it is necessary that the following conditions should be fulfilled: (1) The proceeding must have been commenced by a party to an arbitration agreement against any other party to the agreement; (2) The legal proceeding which is sought to be stayed must be in respect of a matter agreed to be referred; (3) The applicant for stay must be a party to the legal proceeding and he must have taken no step in the proceeding after appearance. It is also necessary that he should satisfy the Court not only that he is but also was at the commencement of the proceedings ready and willing to do every thing necessary for the proper conduct of the arbitration; and (4) The Court must be satisfied that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement. 6. Therefore, as observed by the Apex Court in Anderson Wright Ltd. (supra) the first and essential requisite to making an order of stay under section 34 is that there is a binding arbitration agreement between the parties to the suit which is sought to be stayed. The question whether the dispute in the suit falls within arbitration clause really pre-supposes that there is such an agreement and involves consideration of two matters, viz. (1) What is the dispute in the suit and (2) What dispute the arbitration clause covers. 7. Therefore, in order to decide the application under section 34 of the Act, it has first to be considered as to what is the nature of the arbitration clause and whether the same provides for a binding agreement between the parties to refer the dispute involved in the suit to arbitration. If that be so, the proceedings in the suit could be ordered to be stayed if other conditions of section 34 of the Act, as noted above are fulfilled. However, in the instant case, the arbitration agreement, itself was not filed and the averments in the application (document No. 2) filed by the defendant/respondent regarding the arbitration agreement between the parties are general and vague. In view of above, the proceedings of the suit could not be ordered to be stayed under section 34 of the Act. 8. It may further be noticed that the respondent in his application (document No. 2) under section 34 of the Act has averred that the award has already been passed by the 'Panchas'. If that be so, there was no question of referring the dispute for arbitration. If at all the respondent could have taken appropriate steps for filing the award in Court with a prayer to make it a rule of the Court. That has not been done. Moreover, as already noticed, the arbitration agreement was also not filed by the respondent/defendant. If that be so, there was no question of referring the dispute for arbitration. If at all the respondent could have taken appropriate steps for filing the award in Court with a prayer to make it a rule of the Court. That has not been done. Moreover, as already noticed, the arbitration agreement was also not filed by the respondent/defendant. Therefore, it was not possible to ascertain as to what was the arbitration clause in the said agreement and whether it was in respect of the subject matter of the present suit. Hence, section 34 of the Act could not be invoked by the defendant/respondent, as he did. 9. In B. Raghuveeriah's case (supra) it has been held: "The language of section 34 is entirely inapplicable to a situation where the arbitration proceedings have come to a close and culminated in an award. The institution of a suit in respect of a matter covered by the arbitration agreement, without referring the matter for arbitration in accordance with the terms of the agreement, or during the pendency of the arbitration proceedings covering the matter, does not affect the maintainability of the suit or the jurisdiction of the Court to deal with it or dispose it of. The only remedy available to a party to the arbitration agreement and against whom the suit has been filed, not desiring the suit to be proceeded with, but wishing the matter to be dealt with by arbitration in accordance with the terms of the agreement, is to apply for stay of proceedings in the suit under section 34 of the Act. The object of such stay is to force the plaintiff to respect and act up to the terms of the agreement and refer the matter for arbitration. If, at the time the Court is required to pass an order staying further proceedings in the suit, the arbitration proceedings have terminated and resulted in an award, the object for the achievement of which alone further proceedings can be stayed is no longer available." 10. Therefore the application (document No. 2) ostensibly filed under section 34 of the Act for staying the suit was misconceived and could not have been allowed. The impugned order of the learned Appellate Court as well as that of trial Court in that regard is therefore palpably erroneous. It cannot be permitted to stand. 11. The revision is therefore allowed. Therefore the application (document No. 2) ostensibly filed under section 34 of the Act for staying the suit was misconceived and could not have been allowed. The impugned order of the learned Appellate Court as well as that of trial Court in that regard is therefore palpably erroneous. It cannot be permitted to stand. 11. The revision is therefore allowed. The impugned order is set aside. The parties shall however bear their own costs of this revision. Application allowed