ANANDKUMAR PARMANAND KEJRIWALA Vs. KAMALADEVI HIRALAL KEJRIWAL

JUDGEMENT

(1.) THE question in this appeal is whether the suit should have been stayed under Section 34 of the Indian Arbitration Act (hereinafter referred to as the Act ). A few facts leading to the present appeal are as follows: the plaintiff and the defendants were partners. The suit was filed by the plaintiff for a declaration that the Firm was dissolved and for taking accounts of the partnership. This suit was filed on January 20, 1969. On the same day the plaintiff made an application for receiver and for injunction, An ex parte order was granted appointing the Court Receiver to take charge of all books of accounts, vouchers, papers etc. , connected with the partnership and in possession of the mediator, K. M. D. Thakersey. An interim injunction was also granted, one particular direction being In a mandatory form regarding the continuance of the supply of steam from the boiler to the plaintiff. The papers of the motion and the plaint were served on the defendants on the same day. The certificate of the Prothonotary was served on them on January 27, 1969 which indicated that liberty was reserved to the defendants to move the Court regarding the interim order. The defendants filed their appearance on the same day under protest. The defendants also wrote a letter to the Attorneys for the plaintiff on January 28, 1969 intimating that they had filed their appearance under protest and that they would make an application to the learned Judge on January 30 for vacating and/or modifying the ex parte interim order. On January 29, 1969 an affidavit sworn by appellant No. 1 was served on the Attorneys for the plaintiff and an application was made to the learned Judge on January 30, 1969 to vacate and/or modify the interim order. Mr. Joshi appearing for the plaintiff stated that his client would deposit the amount of Rupees 3,000/- in Court on the next day. On the next day i. e. , January 31, 1969, the defendant's counsel applied for adjournment of the notice of motion for a week, and thereafter 'on a similar motion it was adjourned to February 22, 1969. It was again adjourned to February 25 and ultimately on February 27, 1969 a consent order was made therein. In the meantime, on February 27, 1969, the appellants took out the present motion for staying of the suit under Section 34 of the Act on the ground that in the agreement of partnership there was a clause which required the dispute of the partnership to be referred to arbitration. After hearing this motion the learned Judge rejected the same. By this appeal the said order is being challenged.

(2.) SECTION 34 of the Act has been so often canvassed that we do not think that it is necessary to reproduce the same. In the present case, no written statement has been filed and the question, therefore, is, whether the conduct of the defendants amounts to taking any steps in the proceedings.

(3.) UNDER the Arbitration Act the arbitrator is given the power to decide the dispute if there is an agreement to this effect in a contract. The disputes may be referred to arbitration in various ways as provided therein i. e. , independently of Court or at the direction of the Court or in a pending suit. The arbitrator, however, is not vested with supplemental powers provided by Part VI of the Code of Civil Procedure. These powers are vested in Civil Courts by Section 41 of the Arbitration Act read with the Second Schedule of the Act. The Second Schedule refers to (1) the preservation, interim custody or sale of any goods which are the subject-matter of the reference, (2) securing the amount in difference in the reference, (3) the detention, preservation or inspection of any property or which is the subject of the reference and other incidental matters, (4) interim Injunctions or the appointment or a receiver, and (5) the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitration proceedings. It is in this context of the division, of the proceedings into suits and supplemental proceedings both in the Code of Civil Procedure and the Arbitration Act that we have to construe the word "proceedings" used in Section 34 of the said Act. It is, therefore, clear that when Section 34 of the Act uses the" word "proceedings", it means the suit or the proceeding in the nature of a suit relating to the dispute. This is the meaning that must be assigned to the word "proceedings". The requirement of the section is that such party must make the application for stay before taking any step in the suit or proceeding by proceeding being meant the proceeding which relates to the dispute. We do not think that an analysis of the various cases which have been decided leads to any other conclusion.