PUNJAB STATE Vs. FIRM SONI CONSTRUCTION CO.

JUDGEMENT

(1.) IN March 1955 an agreement for construction of a ward in the V.J. Hospital in Amritsar was entered into between the State of Punjab and the respondent Messrs Soni Construction Company. Admittedly clause 25 -A in this agreement enjoined on the parties the necessity to refer all disputed claims to arbitration, except for certain items, in which the decision of the Superintending Engineer was final. Certain variations in this document were affected by a new document on 13th August 1959. Though it was originally pleaded by the plaintiff in the proceedings, from which this revision petition has arisen, that the document dated 13th August 1959 constituted a new contract but that point was subsequently given up and it is no more in dispute that the arbitration clause contained in paragraph 25 of the agreement dated 14th March 1055 would be applicable to the present case. On 30th November 1962 the plaintiff -respondent filed a suit in the Court of the Senior Subordinate Judge, Amritsar, against the Punjab State for rendition of accounts in connection with the said works. Before filing the written statement in the suit the defendant -petitioner filed an application for stay of the suit under section 34 of the Arbitration Act (10 of 1940) (hereinafter referred to as the Act) in view of the arbitration agreement referred to above By order dated 7th November, 1963 Shri T.R. Handa the learned Subordinate Judge who was trying the suit granted the application and stayed the suit. On the point which is material to be decided before me i.e. the question whether the defendant had or had not been ready and willing at the time when the proceedings were commenced and till the time of making the application under section 34 of the Act, to do all things necessary to the proper conduct of the arbitration, the learned Subordinate Judge held that no averment to that effect has been made in the petition for stay but that in view of the fact that the dispute between the parties had already been referred to arbitration by a document which was marked Exhibit A. 3, it was proved that this condition was satisfied. In an appeal by the plaintiff under section 39 of the Act the learned Senior Subordinate Judge, Amritsar reversed the above finding, dismissed the application of State of Punjab for the stay of the suit and held that intact there had been no reference of the subject -matter of the suit to arbitration, that Exhibit A. 3 did not constitute a deed of reference of the matters covered by the arbitration agreement and that in the absence of the averment in the petition for stay to the effect that the defendant had always been and was still ready and willing to do everything necessary for the arbitration proceedings, the suit could not be stayed.

(2.) MR . P.R. Jain the learned counsel for the petitioner who has argued this case very ably has urged that the Subordinate Judge was correct in holding that by document Exhibit A. 3 the dispute in question had in fact been referred to arbitration and that the learned Senior Subordinate Judge was not justified in reversing that finding. It appears that the document in question on the interpretation of which the decision of this point could depend, that is Exhibit A.3, was taken aback by the State of Punjab by an application of the Executive Engineer, Amritsar Provincial Division, and none of the parties are able to state what were the exact contents of that communication. In this view of the matter the finding of fact recorded by the first appellate Court about their having been no reference of the disputes involved in the present litigation to arbitration cannot be interfered with by one.

(3.) THE learned Senior Subordinate Judge has relied on a judgment of the Bombay High Court in Middle East Trading Co. v. The New National Mills Ltd : A.I.R. 1960 Bom. 292, wherein reliance was in turn placed on an unreported judgment of that Court in Rasiklal Mangal Dass v. Bai Savita A.F.O. 30 1955 decided on 27th July, 1955, A.F.O. 35 of 1965, decided by a Division Bench of the Bombay High Court on 27th July, 1955, A quotation from that unreported judgment has been reproduced in Middle East Trading Company case5 and may be quoted verbatim.