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2001 DIGILAW 234 (SC)

State of Andhra Pradesh v. Vandavalli Vijaya Murthy

2001-01-31

S.N.VARIAVA, S.RAJENDRA BABU

body2001
ORDER : 1. A revision petition was filed before the High Court against an order made on an application I.A. No. 71/1989 in original Suit No. 2/1989 rejecting the claim of the appellant that the Civil Court had no jurisdiction to entertain the suit. 2. The trial Court examined the scope of the provisions of the agreement between the parties and the agreement therein provided for reference to an arbitrator of any dispute that may arise between the parties. 3. The appellant having cancelled the agreement without referring the dispute relating to the raising of the coconut trees on the appellant's land the suit was filed and it was in those circumstances the court noticed the appellant was constrained to invoke the jurisdiction of the civil court for declaration that the order of cancellation is illegal and to seek for certain consequential injunction and therefore the trial Court held that the civil court had jurisdiction in the matter. 4. That contention having been upheld by the revisional court there is absolutely no merit in the appeal. The appeal is dismissed. 5. In a suit filed by the appellant, the respondents filed an application under Section 34 of the Arbitration Act, 1940. A contention was raised before the Court that the respondents had invoked the jurisdiction of the court by filing an application to dismiss the suit as not maintainable in view of the arbitration clause available under the lease agreement pursuant to which the dispute between the parties arose. The trial Court dismissed the said application for stay of the suit and the matter was carried in appeal to the High Court. 6. The High Court on a consideration of the entire matter and following the decision of this Court in Food Corporation of India and Another vs. Yadav Engineer and Contractor, 1982 (2) SCC 499 held that no step had been taken by the respondents which would disentitle it to claim for the relief of stay as provided under Section 34 of the Arbitration Act and therefore allowed the appeal and stayed further proceedings in O.S. No. 2/1989 pending decision of the arbitrator to be appointed in terms of clause 11 of the agreement. 7. It is against that order, this appeal is filed. 8. Shri A. Subba Rao learned counsel for the appellant drew our attention to the decision in Navjivan Constructions Co. 7. It is against that order, this appeal is filed. 8. Shri A. Subba Rao learned counsel for the appellant drew our attention to the decision in Navjivan Constructions Co. vs. Kantilal Gandalal Sanghvi and Others, 1978 GLR 357 and contended that in order to enable a person to obtain an order of stay in the suit, he is required to present an application in that regard before filing of the written statement or taking any other step in the suit; that in the present case the State of A.P. having raised the contention that the suit was not maintainable in view of the arbitration clause the respondents had acquiesced in the jurisdiction of the court so as to have adjudication of the court and that step is certainly a step in the proceeding and therefore the High Court ought not to have interfered with the order made by the trial Court. 9. The concept of what would be a step in a proceeding of this nature as contemplated under Section 34 of the Arbitration Act has ben explained by this Court in the FCI case (supra) to mean that the expression “step in the suit” must be read ejusdem generis, filing of the written statement. Filing of the written statement would disentitle the party from seeking enforcement of arbitration agreement by obtaining stay of the proceedings because such an act on the part of the party discloses unequivocal intention to give up the benefit of the arbitration agreement or its right of getting the dispute resolved by arbitration and to acquiesce in the resolution of dispute by courts. 10. The decision of the Gujarat High Court is not consistent with the view taken by this Court in Food Corporation of India & Anr. v. Yadav Engineer & Contractor. Therefore, it is no longer good law. In the present case the plea taken by the respondents in contending that the suit was not maintainable in view of the arbitration claim would really mean that the respondents never wanted to give up that remedy in preference to the suit but on the other hand discloses an intention to pursue with that remedy rather than to defeat their right. 11. 11. In that view of the matter we think that the High Court was justified in applying this principle [in FCI's case (supra)] to the present case and setting aside the order made by the trial Court and grant stay of the proceedings, allowing the appeal. 12. Therefore, we uphold the order made by the High Court. This appeal is therefore, dismissed. No order as to costs.