Patna High Court
Shree Madhav Mills Pvt. Ltd. vs Union Of India (Uoi) And Ors. on 30 July, 1982
Equivalent citations: AIR1983PAT38, 1982(30)BLJR493, AIR 1983 PATNA 38, (1982) PAT LJR 432, (1982) BLJ 493, (1982) BLJ 676
ORDER B.P. Jha, J.
1. The plaintiff-petitioner has moved this Court against an order dated 10th August, 1977, passed by the Additional District Judge VII, Patna.
2. By the impugned order the court below held that according to Clause 10 of the agreement, the matter is required to be referred to the arbitrator, namely, the Joint Secretary to the Government of India, Ministry of Food and Agriculture (Department of Food), New Delhi. The Appellate Court also held that under Section 34 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act') the court below was justified in staying the suit.
3. It is relevant to quote at this stage Section 34 of the Act which runs as follows:
"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."
On a perusal of this section, it is clear that before passing any order of stay, the court is required to be satisfied (1) that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement, and (2) 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. If the court is satisfied about these two conditions, then only the court or the authority may make an order staying the proceedings. In the present case, there is no such finding about the satisfaction of any of these two elements. It is a matter of great surprise that though the suit is pending since 1969, the alleged dispute has not been referred by the court under Clause 10 of the agreement to the arbitrator, that is the Joint Secretary to the Government of India, Ministry of Food and Agriculture (Department of Food), New Delhi.
4. The scheme of the Act is that ordinarily a suit should be tried by the court. There is only one exception and that is that, if there is an arbitration clause in an agreement, then the court will refer the dispute to the arbitrator provided the court is satisfied in respect of the two elements, mentioned above. If the court is not satisfied in respect of the two elements, the court shall not grant any stay, specially when the dispute has not at all been referred to the arbitrator. In my opinion, in the present case, the court below has not followed the procedure which is mentioned in Section 34 of the Act.
5. I, therefore, hold that the order passed by the appellate court is without jurisdiction. Before passing an order under Section 34 of the Act, the court below is required to be satisfied at respect of the above two elements which has not been done in the present case.
6. According to the Learned Counsel for the petitioner, a payment order was also issued in the present case by defendant No. 2. If it is so, then the question of arbitration does not arise, learned Counsel for the respondents states that defendant No. 1 has no jurisdiction to pass such an order. Then, defendant No. 1 ought to have filed a written statement and resisted the claim of the plaintiff which has not been done in the present case. He can take the plea only when a written statement is filed and not before that. Therefore, I am unable to accept this plea at this stage.
7. In the result, the impugned order is set aside and the court below is directed to proceed with the case according to law. The parties shall bear their own costs.
8. Let the records of the court below be sent down immediately.