NOORMOHAMED AND SONS Vs. INDIAN OVERSEAS BANKS

JUDGEMENT

(1.) THIS is second defendants motion to the effect that pending the hearing and final disposal of the arbitration proceedings between the plaintiffs and the second defendant, further proceedings relating to the present suit should be stayed under section 34 of the Arbitration Act (hereinafter, the Act) and the plaintiffs should be directed to refer the subject matter of this suit to arbitration.

(2.) IT is undisputed that between the plaintiffs and the second defendant there is in fact a subsisting arbitration agreement which covers the dispute raised by the plaintiffs against the second defendant in this suit. There is also no dispute that pursuant to this agreement reference has already been made to the arbitrators and the arbitrators are in fact seized of the arbitration proceedings at New Delhi. Certain legal questions having arisen in the said proceedings, the same, I understand, have been referred for their determination to the Delhi High Court. There is thus a subsisting arbitration agreement between the plaintiffs and the second defendant, the said agreement covers the dispute between the plaintiffs and the second defendant in the present suit, the matter in fact has been referred to arbitration and the arbitration proceedings have commenced before the arbitrators at New Delhi. In all the circumstances, I see no good reason why relief of stay prayed for in the present motion should not be granted at least as against the second defendant.

(3.) TAKING up the first contention, we have the recent judgment of the Supreme Court in (Rachappa Guruadappa v. Gurusidappa Nuranjappa) A.I.R. 1989 Supreme Court 635, wherein its earlier rulings have been referred to. Now, an application for stay under section 34 of the Act has to be filed obviously before the filing of the written statement or taking any other step in the proceeding. In the context of any other step in the proceeding, the Supreme Court has held that any other step must undisputably be such step as would manifestly display an unequivocal intention to proceed with the suit and to give up the right to have the matter disposed of by arbitration. The step must be such as would clearly and unambiguously manifest the intention to waive the benefit of arbitration agreement. It is imperative to determine whether a party has evinced or indicated any intention to proceed with the arbitration. Again, after entirely examining both on principle and precedent the meaning to be given to the expression taking steps in the proceedings, the Supreme Court held thus in (Food Corporation of India v. Yadav engineer & Contractor) A.I.R. 1982 S.C. 1301 at 1313--- ...