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Indian Oil Corporation Ltd. Vs. Nainsukdas Baldeodas - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtChennai High Court
Decided On
Case NumberO.S.A. No. 133 of 1981
Judge
Reported inAIR1982Mad323; (1982)1MLJ401
ActsArbitration Act - Sections 34
AppellantIndian Oil Corporation Ltd.
RespondentNainsukdas Baldeodas
Appellant AdvocateKing and ;Partridge
Respondent AdvocateP.V. Subramaniam, Adv.
Cases ReferredHindustan Aluminum Corporation Ltd. v. Nainsukdas Baldeodas
Excerpt:
.....would be deemed to have taken a step in the proceeding and, therefore, no application for staying the suit could be filed. by defaulting to appear on that date he could not be given any privilege to file such an application merely on the ground that he had chosen to default and not to file a written statement or take time for filing a written statement. the period contemplated under section 34 has to be definite period and it cannot be measured with reference to the time taken by the defendant to come and appear in court.;the appeal was dismissed. - - .....it is now well settled that if the applicant makes an application for extension of time to file written statement that becomes a step in the proceeding and that also goes against the readiness and willingness of the petitioner at the time of making the application for stay or at the time of the hearing. it is true that the section provides that application for stay under s. 34 can be made 'at any time before filing of written statement' that in my view fixes the time up to the last date fixed for filing of the written statement under the provisions of the rules of the original side which i have mentioned before. otherwise, the petitioner would simply wait till the date of expiry and without making any application for extension of time to file the written statement formally get.....
Judgment:
1. This is an appeal against the order in Appeal. No, 941 of 1980 in C. S. No. 333 of 1978,. dismissing the application for stay of the suit under S. 34 of the Arbitration Act.

2. The summons in the suit was served on the defendant on I8-9-1979 the summons stated that if the defendant intended to defend the suit, he must cause an appearance to be entered on his behalf and file in the court a written statement stating the grounds of his defence within two weeks after service of this summons upon the defendant in which case the suit will be entered in the general list of causes, The written statement should, therefore, have been filed on or before 2-10-79. The defendant neither entered appearance nor filed any written statement within the Period Prescribed under the sunstones, but it filed a vakalat in the suit along with Appln. No- 941 of 1900 on 16-11-1979 pra7fmg for stay of the suit on the ground that there is an arbitration agreement between the parties in respect of the claim in the suit. The plaintiff resisted this application on two grounds Firstly it was contended that the application should have been filed within two weeks of service of summons, that it is, on or before the last date for filing the written statement and that its inaction in not filing the written statement will not ex~ tend the Period of 1buitation. Secondly it was contended that under Cl. 9 of the claim, which is claimed to be the arbitration clause, and which reads 'any dispute arising out of this sale order will be referred to the Material Manager of the defendant-company, that in this case it is this Material Manager of the defendant-company who had rejected the claim of the plaintiff before the suit was filed and that, therefore, no useful purpose would be served by referring the matter for arbitration. The learned single Judge who heard the application held that the application has been filed beyond the period prescribed and that therefore, the application is liable to be dismissed though he was willing -to accept the contention of the defendant that they were ready and willing to have the dispute referred to arbitration.

3. Section 34 of the Arbitration Act reads as follows -

"Where any party to an arbitration agreement or any person claiming under him commences any legal' proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the 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, such authority may make an order staying the proceedings."

4. The learned counsel for the appellant contended that the words at any time-before the filing of a written statement refer to the factual filing of a written statement and if the defendant had not taken any other step? In, the proceeding A could file the application at any time before Ming the written statement irrespective of the fact whether the application was filed before the time prescribed for filing the written statement, The learned counsel also contended that it the date before which he had to file the application is to be determined with reference to the date of filling the written statement fixed in the summons, the. section could not be applied uniformly throughout the country as each of the courts have prescribed different , times for filing the written statement. According to the learned counsel though this court in the summons normally fixes a period of two weeks from the date of service in filing the written statement, the same procedure is not followed in the other courts and in some of the summonses in the suits, a period of four weeks and more is also prescribed for filing the written statement, so much so in order to have a uniform pattern of understanding the limitation, the provision will have to be understood with reference to the actual filing of the written statement subject of course, to the other condition that the defendant had not taken any other step in the proceeding within the meaning of the section. We are unable to agree with this contention of the learned counsel. "Any time fixed before filing a written statement" occurring in S. 34 in our opinion mean at any time before the time fixed for filing a written statement. Otherwise, it would be putting a premium on defaulters. If a person had merely entered appearance and ask ed for time for Ming a written statement, it is admitted and also covered by authorities that he would be deemed the have taken a step in the proceeding and, therefore, no application for staying the suit could be filed. By defaulting to appear on that date he could not be given any privilege to file such an application merely on the ground that he had chosen to default and not to file a written statement or take time for filing a written statement. The period contemplated under S. 34 has to be a definite measured with plated under S. 34 has Period and it cannot be reference to the time taken by the defendants to come and appear in court, The argument of the learned counsel would imply an unlimited period till he chose to Me an application.

5. A direct question came up for consideration in the decision reported in Shroff, Bros. v. Bisheawar Dayal, . In that case also, the summons together with a copy of the plaint was served on 19th NOV. .1969, and that the summons had fixed 28 days from the date of service as the time within which 'the written statement will have to be filed. The defendant did not appear on the date prescribed in the summons or a written statement, but long later on 6th March 1970, he filed his appearance along, with an application for stay under S. 34 of the Arbitration Act. Dismissing the application, the Calcutta High Court held (at p, 366) -

"In order to enable the court to grant stay the petitioner must make the application within the said period, that Is, before the expiry of the time for filing the written statement, It is now well settled that if the applicant makes an application for extension of time to file written statement that becomes a step in the proceeding and that also goes against the readiness and willingness of the petitioner at the time of making the application for stay or at the time of the hearing. It is true that the section provides that application for stay under S. 34 can be made 'at any time before filing of written statement' that in my view fixes the time up to the last date fixed for filing of the written statement under the provisions of the rules of the Original Side which I have mentioned before. Otherwise, the petitioner would simply wait till the date of expiry and without making any application for extension of time to file the written statement formally get extension if it is permitted to make an application under S. 34 of the Arbitration Act, 1940, beyond that as if the time has not expired or it has been by necessary implication extended lay court. That, in my view, would be extending the meaning of the words at any, time before filing of written statement in S, 34 of the Arbitration Act, 19.40. In my view, what is required under the section is that the application for stay must be made Promptly and before. the last, date fixed for filing of the written statement under the provisions of the Civil Procedure Code or the rules of this court, It would not be a correct application of the said S. 34 of the Arbitration Act, if an application is entertained after the expiry of the time for filing of the written statement, because on principle there is no difference between a formal application for extension of time to file the writ en statement or allowing the time for Ming the written statement to expire and then make an application for stay under Section 34 of the Arbitration Act 1940. A defendant who has been served with a writ of summons along with the plaint must file his written statement within the time, fixed under the Civil P. C., or rules of this court for filing its written statement., Beyond the time so fixed he must make an application to the courts for getting the extension of time to file written statement which the court may allow or not, in the facts and circumstances of each case. So, in my view, making the application for stay beyond the time fixed for filing the written statement by the writ of summons served on the defendant implies an application for extension of time to file the written statement which has already expired. That is an absurd position and the petitioner must be said to be debarred from getting any order for stay under S. 34 of the Arbitration Act, 1940, if it makes the application after the expiry of the time for filing the written statement."

A learned single Judge of this court in the decision reported in Hindustan Aluminum Corporation Ltd. v. Nainsukdas Baldeodas, (1976) 2 Mad LJ 323: 89 Mad LW 229 quoted this case with approval though the decision was actually decided on another point. We are in entire agreement with the reasoning of the Calcutta High Court. As the learned single Judge put it, if the defendant cannot ask for extension of time for filing a written statement, he would be bound to file this application for stay within the period granted for filing a written statement.

6. For the foregoing reasons, we agree with the learned single Judge that the application was beyond the period prescribed under S. 34 of the Act and that it was liable to be dismissed. The appeal accordingly fails and it is dismissed with costs,

7. The learned counsel for the appellant prayed for leave to appeal to the Supreme Court, Though there is no direct decision of the Supreme Court on this point, no court has so far taken any view different from that which was taken in Shroff Bros. v, Bisheshwar Dayal, AM 1974 Cal

352. We are also not satisfied that the proposed appeal to the Supreme Court involve any substantial question of law of general importance which, in our opinion, needs to be decided by the Supreme Court. The leave prayed for is therefore, not granted.

8. Appeal dismissed.


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