B RAGHAVA MENDON Vs. RAMA S MENDON

JUDGEMENT

(1.) I have heard the petitioner's learned Advocate and the respondents' learned Advocate.

(2.) THE first point which the petitioner's learned Advocate canvassed was that both the Courts have erred in law with regard to the requirement to stay the proceedings pending before the Civil Court under Section 34 of the Arbitration Act and to refer the dispute to arbitration since Clause 16 of the partnership deed does make provision for the reference of all disputes of whatsoever nature to arbitration. The learned advocate has demonstrated to me at some length that both the courts have gone wrong in law in so far as they have come to the conclusion that merely because defendants 2 and 3 did not express their readiness and willingness to go to arbitration when the plaintiff served the original notice, that the Court will have to come to the conclusion that there is no readiness and willingness on their part to refer the matter to arbitration. Secondly, the learned Advocate has seriously assailed the reasoning on the part of both the Courts below whereby they have upheld the plaintiffs contention that in so far as defendants 2 and 3 resisted and argued the application for appointment of Receiver, that they have demonstrated their willingness to proceed with the civil proceeding and not to refer the dispute to arbitration. The respondents' learned Advocate sought to support the two orders on the ground that Section 34 has been interpreted by various Courts and that the Courts have settled the law. on the point which requires that the party asking for the reference to arbitration must demonstrate the readiness and willingness to not only take the matter before an arbitrator, but also participate in the arbitration. The learned Advocate submits that this willingness is to be demonstrated not at the stage when the suit has been filed, but prior to it and if this has not been done, that the only inference is that there is no such desire.

(3.) IT is true that Section 34 has been interpreted by the various Courts and that the readiness and willingness is required to be demonstrated "at all times". It would however, be too technical a view to hold that when the defendants 2 and 3, immediately after the proceeding came to the Civil Court, drew the attention of the Court to Clause 16 and applied for a reference to arbitration, that this application would have to fail on the ground that it is belated. Undoubtedly, it is highly desirable for the partners or their representatives to demand a reference to arbitration prior to the matter reaching the Civil court, but if this is not done, it would be wrong to hold that the parties would thereafter, be disqualified from applying for a reference to arbitration. The reason for this is because, such a view would do violence to Section 34. The petitioner's learned advocate is right in law when he points out that it is equally permissible for a party at the earliest point of the litigation to pray for a reference to arbitration and to indicate readiness and willingness to co-operate in those proceedings. Had the scheme of the law been that the reference to arbitration must be demanded or implemented prior to the commencement of the litigation, Section 34 would have been totally unnecessary in so far as it makes provision for a Court to direct an Arbitrator to stay the proceedings in the meanwhile. To my mind, LA. III praying for a reference to arbitration which was filed even before the written statement was put in, was perfectly justified and the view taken by the two Courts below is certainly erroneous. Normally, since the scheme of the law is that where, by agreement of partners, disputes are required to be referred to arbitrator, I would have straightaway referred the dispute to an arbitrator in keeping with the provisions of Clause 16 and as of necessity, the proceedings before the Civil Court would have to be stayed until the Arbitrator disposes of the proceedings.