BABULAL PRABHUDAS MODI Vs. NARAYANBHAI PRABHUDAS MODI

JUDGEMENT

(1.) The petitioner-plaintiff is aggrieved by the judgment and order of 3rd Jt. Dist. Judge, Mehsana in Civil Misc. Appeal No. 43 of 1994, dated 20-1-1995 whereby he allowed the appeal and quashed the order below Exh. 68, dated 4-1-1994 passed in Reg. C. S. No. 301 of 1988. It appears that in the suit instituted by the petitioner-plaintiff for dissolution of partnership being run in the name and style of M/s. Prabhudas Joitaram, the respondent-defendants on the very day filed application-Exh. 10 under Sec. 34 of the Arbitration Act to stay the suit on the ground that the partnership deed contained a clause requiring reference of disputes between the partners to arbitrator. On such application the learned trial Judge passed order fixing same for hearing on 20-7-1988. It appears that thereafter either through oversight of the trial Court or because of lapse on the part of the respondent-defendants no further orders were sought on Exh. 10 and the said application was kept pending without hearing or without any order. It also appears that the applications for interim orders were also heard in between by the trial Court and decided. Thereafter respondent-defendants have even filed their common written statement to the plaint and the applications for temporary injunction at Exh. 17 denying the averments made by the petitioner-plaintiff in their plaint. The Court even proceeded to frame issues at Exh. 61 based on the pleadings of the parties. Till that stage the respondant-defendants and/or their Advocates did not rise from slumber and did not point out to the Court that it should not proceed with the suit in view of application at Exh. 10 already tendered by them. In fact, relief of stay of the suit prayed for by Exh. 10 application appears to have been abandoned. The learned Advocate for the respondent-defendants thereafter filed another application Exh. 68 under Sec. 34 stating that the suit was required to be stayed and that a preliminary issue to that effect is required to be raised. The trial Court after hearing the parties and making reference to the persuasive precedents of various High Courts came to conclusion that the respondent-defendants have already taken steps in the proceedings by filing their written statement and have never pursued their application for stay of the suit at Exh. 10 under Sec. 34 of the Arbitration Act. The trial Court, therefore, dismissed the application on 4-1-1994. Being aggrieved thereby the respondentdefendants preferred the aforesaid Misc. Civil Appeal which came to be allowed by the 3rd Jt. Dist. Judge on the reasoning that the respondent-defendants were vigilant enough to immediately make application at Exh. 10 for stay of suit under Sec. 34 of the Arbitration Act, and when once such an application was given it was the obligation of the Court to decide the same.

(2.) Mr. P. K. Jani, learned Advocate appearing for petitioner-plaintiff submitted that the order of the lower appellate Court is patently against the provision of Sec. 34 as well as against the ratio of the decision of the Apex Court in the case of State of U. P. v. Janki Saran Kailash Chandra, reported in AIR 1973 SC 2071 as well as the decision of the Apex Court in the case of Rachappa Guruadappa v. Gurusiddappa Naraniappa, reported in 1989 (1) GLH 443. He submitted that in the present case the respondent-defendant having given the application-Exh. 10 under Sec. 34 of the Arbitration Act, 1940 did not pursue the application at all. He, on the contrary, filed written statement and thereafter took various steps in the proceedings. He also permitted the trial Court to frame issues based on the pleadings of the parties. Though, therefore, it can be said that he was initially ready and willing to refer the dispute to the Arbitrator, he has by his subsequent conduct waived and/ or abandoned the right of selecting the alternative forum, and he has submitted to the jurisdiction of the Civil Court. On the other hand, Mr. V. C. Desai, learned Counsel appearing for the respondent-defendants submitted that once an application for stay of the proceedings is given under Sec. 34 of the Arbitration Act pursuant to arbitration agreement without taking any steps in the proceedings the requirements of Sec. 34 are satisfied and the Court is required to stay the suit at any stage of the proceedings.

(3.) In order to appreciate the aforesaid rival submissions, it would be necessary, at this stage, to reproduce Sec. 34 of the Act which is relevant for the present purpose and which is as under :