1. The appellant herein is the original defendant and the respondent is the original plaintiff. The appeal is against the order of the learned Civil Judge, Senior Division, Rajkot, dismissing the application filed by the defendant under Section 34 of the Arbitration Act for stay of the suit in view of the arbitration agreement between the parties.
2. The facts leading to this litigation are as follows:
The plaintiff filed a suit against the Food Corporation of India, the appellant before me, to recover the amount for the bills for services rendered by the plaintiff for transport facilities placed a, the disposal of the defendant by the plaintiff. These transport facilities were rendered by the plaintiff under a contract and the plaintiff also claimed for damages alleged to have been caused to the plaintiff by the alleged breach of the contract on the part of the defendant, The defendant filed an application under Section 34 for stay of the proceedings in view of the arbitration agreement. The plaintiff objected to the application being granted and the grounds on which the plaintiff objected were that the defendant was not ready and willing to have the arbitration as per Section 34 of the Arbitration Act, nor was the Food Corporation of India ready and willing to take appropriate proceedings for arbitration. The main contention of the plaintiff was that on May 3, 1977, the plaintiff had requested the Food Corporation to have arbitration in, accordance 'with the arbitration agreement and also to name the arbitrator, for the purpose but the Managing Director of the defendant Corporation failed to accede to the proposal. Thereafter requests and reminders were sent on May 3. 1977. June 4, 1977 and December 19, 1977. It was t he case of the plaintiff that a sister concern of the plaintiff, namely Messrs Mathuroas Girdharlal, had filed Special Civil Suits No. 46 of 1978 and No. 49 of 1978 and while the proceedings of those two suits were going on, some talks of compromise took Place and at that time the defendant came to know that the present Plaintiff was also likely to file a suit within a short time and at that time the Corporation designated one Pathak as arbitrator and that was done on March 15, 1979, As it turned out, Pathak had died before 15th March 1979, and there after one Saxena was appointed arbitrator on April 17, 1979. As a matter of fact, the suit in which application under S. 34 of the Arbitration Act was made was filed on May 3, 1979, that is, after the arbitrator had been appointed by the Food Corporation of India. The learned Judge came to the conclusion that there was inaction on the part of the defendant for a period of two years and therefore he came to the conclusion that the defendant was not ready and willing to appoint the arbitrator Up to March 15, 1979 and he further came to the conclusion that the appointments of, March 15, 1979 and April 17, 1979, were, with an oblique motive to have the defence in the suit blocked because the defendant apprehended that a suit would be filed by the plaintiff. According to the learned trial Court Judge. such in action or silence in face of repeated requests amounted to unwillingness and unreadiness on the part of the defendant to refer the matter to arbitrators. His final conclusion was that the defendant Corporation was not ready and willing to appoint the arbitrator and hence the provisions of Section 34 of the Arbitration Act were not attracted. He found that there was not sufficient ground for allowing the application and he therefore dismissed the application. -
3. Mr. Shah for the respondent has drawn my attention to the decision of the Supreme Court in Uttar Pradesh Cooperative Federation Ltd. V. Sundar Bros,. Delhi AIR 1967 SC 249. There the scope of an appeal against an order passed under Section 34 of the Arbitration Act was considered by the Supreme Court and it, was held that where the discretion vested In the Court under Section 34 has been exercised by the lower Court. the Appellate Court would be slow to interfere with the exercise of the discretion. In dealing with the matter before it at the appellate stage, the Appellate Court would normally not be justified in interfering with the exercise of the discretion under appeal solely on the ground that if it had considered the matter at the trial stage it might have come to a contrary conclusion. If the discretion has been exercised by the trial Court reasonably and in a judicial manner the fact that the appellate Court would have taken a different view may not justify such interference with the trial Court's exercise of discretion. If it appears to the appellate Court that in exercising its discretion the trial Court has acted unreasonably or capriciously or has ignored relevant facts, then it would be open to the appellate Court to interfere with the trial Court's exercise of discretion.
4. In the instant case the facts speak for themselves, namely, that for nearly two years after the first request was made by the plaintiff for appointment of arbitrator on 3rd May 1977, no action was taken by the Food Corporation of India. Requests for appointment of arbitrator were repeated on May 23. 1977, June 4. 1977 and December 19, 1977. Therefore it can be argued that, at least in the beginning, the Food Corporation of India was not ready and willing to take the matter to arbitration. However, the crucial date on which the readiness and willingness of the defendant for the purpose of Section 34 has to be judged is, to use, the language of Section 34, 'applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration'. Therefore, readiness and willingness of the Food Corporation of India to go to arbitration has to be judged with reference to the date when the suit was filed by the present plaintiff, the respondent before me, and that date was May 3, 1979. By that time the appointment of Pathak was already made on March 15, 1979 and when it was realised that Pathak was dead by 15th March, Saxena was appointed on April 17, 1979. Therefore, as of May3, 1979, it could not be said that the defendant Corporation was not ready and willing to do all things necessary for the proper conduct of the arbitration. Whether the Food Corporation showed its readiness and willingness on March 15, 1979 and thereafter in April, 1979 because it came to know that the plaintiff was contemplating filing a suit against the Food Corporation, is besides the point because that cannot be said to be an oblique motive on the part of the Food Corporation. if the parties have chosen a forum by an arbitration clause and when the arbitrator is appointed, though belatedly, or after a considerable time after the request for arbitration was first made. it cannot be said that at the time when the suit was commenced, the defendant Food Corporation was not ready and willing to go to arbitration. With respect to the learned trial -Court Judge, he was in error when took into consideration not the date, namely, May 3, 1979 when the suit was filed but the earlier period from May3, 1977 to 15th March 1979 when the Food Corporation did not appoint the arbitrator. in accordance with arbitration clause. To use the language of the Supreme Court in Uttar Pradesh Co-operative Federation's case AIR 1967 SC 249 (supra), since the relevant facts and relevant legal position has been ignored and overlooked by the learned trial Court judge, it will be open to me as the appellate Court to interfere with the trial Court's exercise of discretion under Section 34 of the Arbitration Act.
5. The learned Judge seems to have been impressed considerably by reason of the delay on the part of the Food Corporation or failure to appoint the arbitrator till March 15. 1979, but if by the time the suit was commenced, it was ready and willing to go to arbitration, then the requirement of Section 34 in the last part of that section is satisfied.
6. The other part of the requirement, so far as Section 34 is concerned, is that the trial Court should be satisfied that there was no sufficient reason why the matter should not be referred in accordance with arbitration agreement. That sufficient reason must be in the nature of things independent of readiness and willingness on the part of the defendant to go to arbitration, Readiness and willingness must be present at the time when the proceedings were commenced and it must continue till the date of the application. That is the time during which readiness and willingness must be present. Earlier hesitation or the , earlier omission on the part of the defendant to go to arbitration is not to be taken into account,, and it is this delay or what the learned trial Court Judge has designated as inaction, on the part of the Food Corporation of India. that has led to his conclusion that there was sufficient reason why the matter should not be referred in accordance with the arbitration agreement. In my opinion, once the forum of arbitrator has been chosen, the party should ordinari1v be asked to go to that forum of its own choice rather than ask the defendant to have the dispute adjudicated before a regular Court of law. Under these circumstances, it cannot be said that the requirement of the last part of Section 34 regarding satisfaction to be reached was not properly complied with. Hence. this Appeal from Order is allowed and the order of the learned Civil Judge, Senior Division, Rajkot is set aside. The suit will be stayed under Section 34 of the Arbitration Act pending arbitration. There will be no order as to costs of this appeal.
7. Appeal allowed.