KISHANDAS PARSRAM AHUJA Vs. BHAGCHAND DWARKADAS NAGDEV

JUDGEMENT

(1.) THE applicants and non-applicants constituted a partnership styled as "Kishanchand Bhagchand". THE non-applicants filed a suit hearing No.C.S. No.18-A of 1982 for accounts of partnership. Applicants were defendants in that suit. THEy filed an application under Section 34 of the Arbitration Act praying for stay of proceedings in suit in view of a term in the contract agreement providing for settlement of disputes through arbitration. That application, however, was not prosecuted and was withdrawn. Consequently, the suit proceeded and is pending adjudication.

(2.) THE applicants then filed a separate application under Section 8(2) of the Arbitration Act for appointment of an arbitrator to settle the disputes arising out of the partnership agreement. That application was registered as C.S. No. 34-B of1982. By the impugned order, dated 6-5-1987, the application has been rejected on the ground that the applicants withdrew their application under Section 34 of the Arbitration Act made in Civil Suit No, 18-A of 1982. THE view taken by the District Judge is that the withdrawal of that application under Sec.34 tantamounts to waiver of their right to get the matter resolved through arbitration. This revision is directed against the rejection of that application under Section 8(2) of the Arbitration Act. .

(3.) THE terms of this section clearly permit a party to the arbitration agreement to oppose adjudication of the matter by a Court if the other party to the agreement approaches that Court. All the same, on receiving notice of the institution of such a suit, the defendant, viz., the other party to agreement, may not exercise the right and option available to it in terms of Section 34 and may allow the suit to continue and thus obtain decision from the Court on the disputed matter and may not insist upon decision by arbitrator. This only means that such a defendant is entitled to waive the right to have the matter adjudicated by arbitrator in accordance with the agreement. That is why Section 34 specifically mentions that the right to choose the forum of choice in terms of the agreement must be enforced before the filing of the written statement or taking any other steps in the proceedings (in suit). Once such a right is waived, it will not be permissible for such a defendant to invoke the terms of the agreement and insist upon the appointment of an arbitrator/ arbitrators in terms of the agreement to resolve the dispute. Under the scheme of the arbitration agreement, a party agreeing to resolve the dispute through arbitrator may enforce that agreement either by making an application under Section 8 or under Section 20 of the Arbitration Act. According to Section 8, the Court intervenes where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties and when on demand by one of the parties to agreement, the other party does not agree to the appointment of arbitrator for settling the dispute. Section 20 enables a party to the arbitration agreement not to proceed in accordance with Sec. 8 falling under Chapter II, but to make an application to the Court directing the opposite party to file the arbitration agreement and for a direction to refer the dispute to arbitrator appointed by the parties and if the parties cannot agree upon an arbitrator then for appointment of an arbitrator by Court and reference of the matter to such arbitrator. Both these sections contain provisions to enforce the arbitration agreement between the parties for resolving their disputes. It can, therefore, be safely inferred that once a party to the arbitration agreement waives his right to enforce that agreement and takes part in proceedings in suit relating to the matter in dispute between them, it cannot invoke the provisions of Section 8 or of Section 20 of the Arbitration Act and obtain a reference to the arbitrator through Court in terms of those provisions. When a defendant in the suit invokes the provisions of Section 34, all that he does is to pray for stay of the trial of the suit leaving the plaintiff to proceed to enforce the arbitration agreement in accordance with the provisions of the Arbitration Act. But, once the defendant waives such a right, it may not be open. for him to otherwise approach and move a Court by separate proceedings either under Section8 or Section20 for reference to arbitrator.