1. In this case the defendants ask for stay of a suit pending in the Calcutta Court of Small Causes, in which the plaintiffs claim the sum of Rs. 92-8-0 as an allowance arising out of a written contract, which contains an agreement to refer all disputes to arbitration.
2. Section 89(1), Civil P.C. is as follows:
Save in so far as is otherwise provided by the Indian Arbitration Act, 1899 or by any other law for the time being in force, all reference to arbitration whether by an order in a suit or otherwise, and all proceedings thereunder, shall be governed by the provisions contained in Schedule 2
and para. 18 of Schedule 2 provides that an application to stay a suit must be made to the Court at the earliest possible opportunity. It is clear that this para has been adapted from Section 19, Arbitration Act 1899, which itself was as clearly adapted from Section 4, English Arbitration Act 1889. The Para and Sections are as follows:
Where any party to any agreement to refer to arbitration or any person claiming under him, a statutes any suit 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 suit; may, at the earliest possible opportunity and in all cases where issues are settled at or before such settlement, apply to the Court to stay the suit ; and the Court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the agreement to refer to arbitration, and that the applicant was, at the time when the suit was instituted and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the suit.Section 19:
Where any party to a submission to which, this Act applies or any person claiming under him, commences any legal proceedings against any other party to the submission, 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 after appearance and before tiling a written statement or taking any other steps in the proceedings, apply to the Court to stay the proceedings ; and the Court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission 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, may make an order staying the proceeding.Section 4:If any party to a submission, or any person claiming through or under him, commences any legal proceedings in any Court against any other party to the submission, or any parson claiming through or under him, in respect of any matter agreed to be referred, any party to such legal proceedings may at any time after appearance, and before delivering any pleadings or taking any other step in the proceedings, apply to that Court to stay the proceedings, and that Court or a Judge thereof, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission, and that the applicant was at the time when the proceedings wore commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings.
3. In the English Act the word 'Court' is defined as meaning the High Court of Justice, unless the contrary intention appears and having regard to the words legal proceedings in any Court' and 'apply to that Court' in Section 4, it is clear that it was intended that such applications under the English Act should be made to the Court of trial, and it has been so held. Thus 'Court' in the section includes a County Court as was settled after some doubt in Morrison Tinplate Co. v. Brooker and Co.  1 K.B. 403, and Ors. cases. But it will be noticed immediately that these or similar words have been deliberately omitted from Section 19 by the draftsman of the Indian Act whereas ' the Court' is defined in Section 4, Indian Act, as meaning in the presidency towns, the High Court and elsewhere, the Court of the District Judge. In para. 18, Schedule 2, Civil P.C., the distinctive words of the English section have been again omitted. But the Code contains no definition of the word 'Court'. Presumably, therefore, applications under para. 18 should be made to the Court of trial, as in England. Section 2, Indian Act, provides as follows:
Subject to the provisions of Section 23, this Act shall apply only in cases where, if the subject matter submitted to arbitration wore the subject of a suit, the suit, could, whether with leave or otherwise, be instituted in a Presidency town.
4. It is to be noted in the first place that the words used are Presidency town' and not the ' High Court in a Presidency town'. Therefore they include Wits instituted in the Calcutta Court of Small Causes, and although Clause. 12 Letters Patent (1865), provides that the High Court shall not have original jurisdiction in cases falling within the jurisdiction of the Small Cause Court at Calcutta, in which the debt or damage, does not exceed one hundred rupees, (which is the case with which I am dealing), nevertheless I am satisfied that the legislature intended and deliberately provided that such applications for stay, interfering with and denying as they do, the ordinary right to litigate in the Courts of the Crown should be made to the High Court or to the Court of the District Judge. This was the view expressed by Davar, J., in the case of Lucas Ralii v. Noor Mahomed  31 Bom. 236 with whoso reasoning and decision I agree and which was approved by C.C. Ghose, J., in the unreported case of Pannalal Sagoremull v. Tilakchand Joychandlal decided in this Court on 18th May 1925. I am unable to concur in the decisions expressed In re, Babaldas Khemchand A.I.R. 1921 Bom. 185, Sitaram Nathmull v. Sushil Chandra Das & Co. A.I.R. 1921 All. 219 and Tatya Rowji v. Hathibhai Bulakidas A.I.R. 1928 Bom. 275.
5. In my opinion the learned Judges who decided those cases misdirected themselves by trying to apply the analogy of English law and practice and the decisions thereon.
6. Thus in Babaldas Khemchadn A.I.R. 1921 Bom. 185 Pratt, J., has put on the various sections of the Indian Act what in my view are most strained constructions, because he seems to think that there is only one Indian Arbitration Act for the whole country as in England and has overlooked the fact that the Code provides for all the gaps and omissions and difficulties which he foresaw.
7. In the Allahabad case, this obsession has completely misled the Court, whoso decision is based upon the entirely false premises that Section 19 is a mere repetition of Section 4, English Arbitration Act', and that English Case law applies. The learned Judges in Tatya Rowji's case have simply followed these two decisions and rejected the decision in Lucas Ralil v. Noor Mahomed  31 Bom. 236 without making any very careful analysis or scrutiny of the reasoning applied by the learned Judges who decided them.
8. For these reasons I am of opinion that the application for stay in this case is properly made to the High Court. Whether there is concurrent jurisdiction in the Small Causes Court to hear such an application, I do not at present decide.
9. The law on this subject is very confusing, and many of the sections are loosely drawn and difficult to reconcile and to construe.
10. The provisions made in the Civil Procedure Code 1908 were relegated temporarily to Schedule 2 in anticipation that the whole matter would be dealt with at an early date. That is 20 years ago and it is high time that this branch of the law was overhauled and consolidated.
11. One further point remains to be decided.
12. Section 19 requires that the application should be made:
after appearance and before filing a written statement or taking any other steps in the proceedings.
13. The procedure in the Calcutta Small Causes Court Rule 43 requires that a defendant shall appear by filing a document called a memorandum of appearance which, shall also contain the pleas jupon which the defendant intends to rely at the hearing.
14. It is clear that this rule and Section 19, Arbitration Act cannot be reconciled and that a defendant cannot obey both.
15. In these circumstances it is necessary to have regard to the object of the legislature in providing that the application shall be made after appearance and before taking any steps in the proceedings. That object is to ensure that such applications shall be made promptly before costs are thrown away in the suit and before the defendant has accepted and recognized the jurisdiction of the Court.
16. I am of opinion, therefore, that it is unnecessary to file any memorandum in the Small Cause Court. The application in the High Court is a sufficient appearance to satisfy the terms of the section and when such an application is intended, no further costs need be thrown away by unnecessary proceedings in the Small Cause Court Kodumal Kalumal v. Volkart Bros  12 S.L.R. 34.
17. The petition is allowed with costs.