ANGLO PERSIAN OIL, CO, LTD Vs. PSPANCHAPAKESA AYYAR

JUDGEMENT

(1.) This is an interlocutory appeal from the order of j?imaraswami Sastriar, J., refusing to stay an action on an application made under the Arbitration act, the suit being on a contract which contains an arbitration clause referring any question or dispute which may arise under the contract to two European merchants resident in Mad and in the event of their disagreeing to an umpire chosen by the arbitrators before commencing the reference.

(2.) The view expressed by the learned Judge in his judgment is that as the defendants had been threatened with legal proceedings for a considerable time and had not then called the attention of the plaintiffs to the arbitration clause or said that they were willing to refer to arbitration and objected to the litigation, that is a ground for refusing to stay on an application on the part of the defendants after the action was brought. I do not agree. The re is no authority in support of the proposition which has been adduced before us and I am satisfied that the reason is that there is no such authority and I see no ground on principle for so holding. The law provides that if there is a submission for a reference to arbitration, and a party chooses to bring his suit, the other party can then decide whether or not he will remain before the Court, which he indicates by taking some step in the action, or whether he will a vail himself of his contractual rights to have the dispute referred to arbitration. If he had misled the plaintiff in some way into bringing the suit, it might be a good ground for punishing him in costs; and if the misleading had been definite enough to amount to a particular statement that he would not apply to have the matter referred to arbitration and would submit to the jurisdiction of the Court, it might even amount to an estoppel, so as to prevent him from making an application thereafter. But I, can see nothing of the kind in this case.

(3.) The question then remains as to whether or not this is a case where the discretion of the Court under Section 19 of the Arbitration Act should be exercised in favour of the defendants by referring to arbitration or whether this is a case which should be kept before the Court. In that matter the lea rued Judge has not exercised any discretion out on appeal as we are disagreeing with the grounds which he has given, it is open to the unsuccessful party to ask ns to exercise the discretion which he could have asked the learned Judge to exercise there. We, therefore, consider it for ourselves. As I understand the principle in -England and here, the Court, where there is a submission to arbitration in order to refuse to stay the proceedings must be satisfied that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the submission, that is, really saying in other words that the onus is on the party resisting the application for stay to show some sufficient reason why in the particular case the parties should be relieved from the obligation which they have contracted, namely, that their case should go before the arbitrators selected by them and not before the ordinary tribunals of the land There are some well defined instances where a Court almost invariably refuses to stay such as a case where there are serious allegations of fraud, There are cases where the point involved is a novel or difficult point of law, which the Court is satisfied is bound to come back by way of a special case 10 it to decide, or where if comes to the conclusion that the sending of the case to the arbitrators will involve a waste of time and expense.