SHEOBABU Vs. UDIT NARAIN

JUDGEMENT

(1.) THIS is a second appeal by a plaintiff whose suit has been dismissed by both the Courts below, on the ground that ho is debarred from maintaining it by reason of the fact that he is bound by an agreement with the defendants to allow the matter in dispute to be settled by arbitration. It is an admitted fact that an agreement to refer this matter to arbitration was entered into between the parties on the 18th of June 1909, and that nothing had been done by way of enforcing that agreement when the plaintiff filed the present suit on the 11th of August 1911. The suit was brought independently of the agreement : that is to say, the plaintiff did not ask the Court to take action in the direction of constituting an arbitration tribunal in accordance with the agreement. He gave the agreement the go by altogether, and brought his suit upon his alleged title. When the defendants objected on the ground of the agreement, one or two objections were taken by the plaintiff with respect to the same which have been decided against him by the Court below and need not be further considered.

(2.) I must take it as settled that the agreement to refer to arbitration is valid and binding, on the parties to the present suit. The question, however, remains whether, under the law as it now stands, in view of the provisions of Clauses 18 and 22 of the second Schedule to the Code of Civil Procedure (Act V of 1908), the order of the Courts below dismissing the present suit was a right order for them to have passed. On this point the appeal must prevail. The case should have been dealt under the provisions of Clause 18 aforesaid, which provisions, being new, have apparently been overlooked by the Courts below. When the defendants objected that the plaintiff was bound by an agreement to submit this dispute to arbitration, the Court had to inquire, in the first place, whether there was any sufficient reason why the matter should not be so referred according to such agreement. This in substance appears to have been done, with the result that it was found that there was no such reason. The Court should then have inquired of the party raising the objection, that is to say, of the defendants in the present case, whether they were, at the time when the Suit was instituted, and still remained ready and willing to do all things necessary to bring the matter to trial before the arbitration tribunal to which the parties had covenanted to refer it. If satisfied on this point, the order to be passed should have been one staying the suit, so as to give these defendants an opportunity of moving the Court in the proper manner to take action to bring the dispute before an arbitration tribunal properly constituted in accordance with the agreement. The intention of the changes effected in the law by the enactment of Clause 18 of the second Schedule to the Code of Civil Procedure, and the repeal of a portion, of Section 21 of the Specific Relief Act effected by Clause 22 of the same Schedule, appears sufficiently clear. A plaintiff in a case like the present is not debarred from bringing a regular suit upon his title. If he does so, after having agreed to refer the matter to arbitration, the Court is bound to allow the party who pleads this agreement as a bar to the suit what it considers a reasonable opportunity of enforcing the agreement. If that party takes proper steps within reasonable time, the regular suit will remain suspended while the arbitration proceedings continue, and if those proceedings eventuate in a decree of the Court, the suit would naturally be dismissed in the long run upon a finding that the matter in issue has been otherwise disposed of between the parties. If, on the other hand, the defendants, after pleading the agreement to refer to arbitration as a bar to the plaintiff s suit, themselves neglect to take any action in respect of it within such time as the Court may prescribe the presumption will be that, though they were ready to obstruct the plaintiff s suit by pleading the agreement, they are nevertheless as dissatisfied as the plaintiff himself evidently was with the agreement to refer to arbitration, and have no real desire or intention of getting that agreement enforced. In that case the Court will hold that the agreement has become a dead letter, in view of the fact that neither party has any desire to enforce it, and it will proceed with the trial of the suit in the ordinary manner. I must, therefore, accept this appeal, set aside the decrees of both the Courts below and remand the suit to the Court of first instance, with orders to re-admit the same on to its file of pending cases and to proceed with it in accordance with the law as above explained. The costs here and hitherto will abide the event and should be dealt with by the Court of first instance in whatever final order it may eventually pass disposing of the suit before it.