BHAGWANDAS ATMASING Vs. ATMASING JESSASING

JUDGEMENT

(1.) This is an appeal from the judgment of Coyajee J. on an application for stay of arbitration proceedings under Section 34 of the Indian Arbitration Act, 1940. The plaintiff, claiming to be the adopted son of defendant No. 1, filed this suit for several declarations on the footing that on adoption he became a member of the joint family. He claimed discovery and partition in the joint family properties. He alleged that he was adopted on February 9, 1942. On coming to know of this suit, defendant No. 1 took out a notice of motion for stay, on the ground that under two agreements dated January 30, 1942, and July. 26, 1942, the plaintiff and defendant No. 1 had agreed to refer all matters which may arise and cause disputes between them to arbitration. In support of that notice of motion defendant No. 1 filed an affidavit in which he propounded the two documents mentioned above. The plaintiff filed his affidavit in reply in which he denied that he had executed the documents propounded by defendant No. 1. According to him he had signed certain blank papers and defendant No. 1 had filled in the blank papers, and in order to support his case had cut out certain portions of his signature. The two documents are attested by two witnesses; one witness to each is one arbitrator. The plaintiff contended that the question about the existence of the agreement to arbitration cannot be decided by the arbitrators. The arbitrators were themselves privy or party to the forgery and were interested on behalf of defendant No. 1 and therefore biased. He contended that the questions at issue on the documents were grave and serious which could not be left to arbitrators and that defendant No. 2 was not a party to the arbitration agreement at all.

(2.) When the notice of motion came for hearing before Coyajee J., it was urged on behalf of defendant No. 1 that because of Secs.32 and 33 of the Indian Arbitration Act, 1940, this contention cannot be taken by the plaintiff on the notice of motion. It was contended that under Section 32 no suit was permitted to challenge the existence of an arbitration agreement. That section further provided that no arbitration agreement could be set aside, amended, modified or in any way affected otherwise than as provided by the Act. Under Section 33 any party to an agreement, desiring to challenge the existence thereof, should apply to the Court and the Court should decide the question on affidavits. Relying on the words of these sections it was contended that the plaintiff should make a substantive application to the Court to challenge the existence of the arbitration agreement, and obtain the Court's decision on that point. The learned Judge accepted this contention and asked the plaintiff's counsel if he wanted time to make such an application. The learned Counsel for the plaintiff contended that he was not bound to do so and was entitled to raise, as his defence to the application under Section 34, the fact that there was no agreement to reference. That argument was not accepted by the learned Judge. The learned Judge in his judgment stated that he had no jurisdiction under Section 34 to determine whether there was an arbitration agreement, and as the plaintiff had failed to avail himself of the opportunity offered to proceed under Section 33, an order under Section 34 must be made.

(3.) In my opinion the view of the learned Judge on the construction of Secs.32, 33 and 34 of the Indian Arbitration Act is not correct. The first part of Section 32 prevents a substantive suit to challenge the existence of an agreement. The second part of that section prevents the setting aside, amending, modifying or in any way affecting an arbitration agreement, otherwise than as provided by the Act. Section 33 provides a remedy to a party who challenges the agreement to obtain from the Court a decision, irrespective of the fact whether the other side wishes to enforce it or not. I do not think Section 33 takes away the right to set up as a defence the non-existence of an agreement when the agreement is propounded under Section 34 by the other side. The rights of the parties are to be governed by Section 34. The section starts with the fact that an arbitration agreement is alleged. The Court is called upon to stay the suit on the ground that there is a subsisting arbitration agreement, which the applicant is willing to follow up but the other side is not ready and willing to act upon. In order to succeed in an application under Section 34, therefore, the defendant (who is the applicant) has to establish the necessary things required by Section 34. One of them is that he is a party to an arbitration agreement. I am emphasising this point because when the Arbitration Act of 1940 was enacted, no amendment was made in the wording of Section 34, and therefore the decisions on the meaning and effect of old Section 34 are still good. Where a question is directly covered by Section 32 or Section 33, the same will have to be taken into consideration, but the decisions based on Section 34 only are not necessarily overruled because of the enactment of Secs.32 and 33 in the new Act.