1. This is an application for stay of a suit under Section 34 of the Arbitration Act, 1940. The matter arises in thisway :
2. On or about March 7, 1974, one Phanindra Kumar Dutt filed a suit in this Court being suit No. 83 of 1974 against Seimens India Limited as defendant claiming, inter alia, a decree for Rs. 56,925.08 p. being the price of goods sold and delivered together with interest thereon, pursuant to certain orders in writing. The terms and conditions of the orders and copy bills were annexures to the plaint. The writ of summons in the suit was served upon the defendant on March 29, 1974.
3. Mr. Samir Kumar Roy Chowdhury, a solicitor of this Court entered appearance on behalf of the defendant on April 8, 1974. Thereafter, the plaintiff made an application to this court under Chapter XIII-A of theRules of the Original Side of this Court for final judgment for the amount claimed in the suit. The summons taken out under Chapter XIII-A of the Rules of the Original Side was returnable on April 23, 1974.
4. This summons under Chap. XIII-A was served upon the solicitor for the defendant Mr. Roy Choudhury on April 11, 1974. The High Court was closed from April 12, 1974 upto April 21, 1974 for Easter Vacation: and reopened on April 22, 1974.
5. On April 23, 1974, by consent of the parties, directions were obtained from the Court for filing of the affidavits in the application under Chapter XIII-A. The direction was as follows : Affidavit in opposition by the defendant by May 10, 1974; affidavit in reply by the plaintiff by May 20, 1974 and the matter is adjourned till May 23, 1974.
6. After obtaining the said directions from Court the defendant, however, did not file the affidavit-in-opposition on May 10, 1974, but made this application against the plaintiff in the suit Phanindra Kumar Dutt for stay of the suit under Section 34 of the Arbitration Act, 1940 on May 17, 1974, inter alia, for an order that the said suit No. 83 of 1974 and all proceedings thereunder including the said application under Chap. XIII-A of the Rules of the Original Side be stayed permanently and for injunction restraining the respondent his servants and agents from proceeding with or taking any steps in the said Suit No. 83 of 1974 or in the application under Chapter XIII-A of the Original Side Rules till the disposal of this application.
7. The defendant (I shall now call 'the petitioner company') states in the petition that each of the orders issued by it contained an arbitration clause which is as follows :
'If at any time any question, dispute or difference whatsoever shall arise between the supplier and the purchaser in relation to or in connection with the order, the same shall be referred to arbitration within the meaning of the Indian Arbitration Act of 1940 or any statutory modification thereof.'
8. The petitioner company further states that at all material times and in particular at the time when the proceedings were commenced and all along the petitioner had been and still is and remains ready and willing to do all things necessary to the proper conduct of the arbitration in terms of the said arbitration agreement.
9. With regard to the directions obtained for filing affidavit-in-opposition to the Chapter XIII-A application, the petitioner company states that the said directions were obtained only in order to prevent the respondent Phanindra Kumar Dutt from obtaining the summary judgment against the petitioner in supersession of the arbitration and that the said directions were not obtained in aid of the progress of the suit or in submission to the jurisdiction of this court in the said suit. The case of the petitioner company is thatthe petitioner company did not acquiesce to proceed with the hearing of the said application nor did it take any steps in the said proceedings on April 23, 1974 or on any other date. Further the case of the petitioner company is that there is no sufficient reason why the matter, being the disputes which are the subject-matter of the suit, should not be referred to arbitration in accordance with arbitration agreement and why the suit and all proceedings thereunder should not be stayed by this court. The respondent has instituted the suit in breach of the arbitration agreement and in supersession thereof.
It. The plaintiff in this suit and respondent in this application is opposing this application for stay of the suit.
11. The question in this application is whether the suit should be stayed under Section 34 of the Arbitration Act.
12. Certain conditions must be fulfilled for stay of a suit under Section 34. There must be a valid and subsisting agreement and the subject-matter in question in the legal proceedings which is sought to be stayed must be within the scope of the arbitration agreement and the application must be made before filing of the written statement or taking any other steps in the proceeding. Then, if the judicial authority before which the proceedings are pending is 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.
13. The word 'may' in the section indicates that the court has a discretion to stay the suit or not to stay the suit.
14. The first important point which has to be considered is whether there is a valid and subsisting arbitration agreement and whether the subject-matter of the dispute in the suit is covered by the arbitration agreement. It cannot be disputed that there are valid and subsisting arbitration agreements between the parties. The arbitration clause is very wide. The words in the arbitration agreements : 'in relation to or in connection with the order.' are wide enough to cover the subject-matter in question in the suit which is sought to be stayed in this application.
15. The next question is whether the petitioner company has made this application before taking any other steps in the proceeding. The court has no discretion to stay if the petitioner company allows the suit to continue. Therefore, the question is: Has the petitioner company allowed the suit to continue? In other words, the question is, has the petitioner company exercised an unequivocal intention to submit to jurisdiction of the court to proceed with the hearing of the suit? The answer to these questions will necessarilydepend upon the facts of each particular case. I shall, therefore, consider the facts of this case, as I understand the same, so far as this point is concerned. The fact is that the writ of summons in the suit was served upon the petitioner company. A copy of the plaint with the annexures to it was served. On the date of service of the writ of summons, the petitioner company knew the case of the respondent. The terms and conditions on which the goods were supplied and a copy of the order are annexures to the plaint. The petitioner company, therefore, knew that there was an arbitration clause in each of the orders and the suit has been filed 'in relation to or in connection with the order.' It was for the petitioner company to decide whether the petitioner company would apply for stay of the suit or would contest the suit. This choice is for the petitioner company. But what the petitioner company did?
16. On April 8, 1974, the solicitor for the petitioner company entered appearance but did not apply for stay of the suit. The solicitor for the respondent, on the other hand took out summons under Chapter XIII-A of the Original Side Rules for summary judgment.
17. The Rules of the High Court provide that the respondent has to make an affidavit swearing positively to the facts verifying the cause of action and the amount claimed and stating that in his belief, there is no defence to the claim for final judgment. An affidavit to this effect with the summons was served upon the petitioner company on April 11, 1974. The court was closed for Easter Vacation from April 12, 1974. The court reopened on April 22, 1974. During this period although the court was closed, the petitioner company had time to decide what course, the petitioner company would take. Would the petitioner company show cause against the application for summary judgment, by filing an affidavit stating that it has good defence to the claim on its merits and disclose facts as may be deemed sufficient to entitle the petitioner company to defend or would the petitioner company apply for stay of the suit and go to arbitration to decide the dispute raised in the suit? Although the court reopened on April 22, 1974, the petitioner company did not make any application for stay of the suit or stay of the proceeding under Chapter XIII-A on that day. The petitioner company did not even mention before the court on the reopening day after the Easter Vacation to adojurn the application for summary judgment which is due to appear on the next day, namely on April 23, 1974 to enable the petitioner company to make such an application for stay.
18. Again on April 23, 1974 which is the returnable date for such summons, the petitioner company did not pray for adjournment of the summons under Chapter XIII-A to enable it to apply for stay under Section 34.But instead of doing so the petitioner company wanted time to file affidavit-in-opposition and entered into a solemn agreement with the lawyers for the respondent as to the dates when the petitioner company would file the affidavit-in-opposition to the Chap. XIII-A application. After entering into agreement as to the dates for filing of the affidavits, petitioner company applied to Court orally for giving directions and such directions were obtained from the Court. Therefore, in my view, on April 23, 1974, the petitioner company intended to show cause against the application for summary judgment made by the respondent against the petitioner company. The petitioner company intended on that date to raise a triable issue by filing an affidavit-in-opposition to the Chapter XIII-A application, and expressed an unequivocal intention to do so by agreeing as to dates for filing of affidavits. Thereafter, the petitioner company took steps by obtaining directions from this Court for filing the affidavits by the agreed dates and the court gave such direction. So, at this point of time, namely, on April 23, 1974, it seems to me that the petitioner company wanted to defend the suit and take steps in the proceeding. It is true, that the petitioner company did not actually file the affidavit in opposition, but made this application for slay. This happened at a later stage, i. e. on or about May 17, 1974, when this petition was filed.
19. The other point to consider in this connection is whether the petitioner company 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 arbitration. The petitioner company in this application says that the petitioner company was at all material times, since the filing of the suit and still is ready and willing to go to arbitration. But, is the statement correct? The petitioner company must be ready and willing to go to arbitration at all material times from the time when the suit commenced. But what happened on April 23, 1974? Why the petitioner company did not say on this date that the petitioner company wanted to go to arbitration and was ready and willing to proceed with the arbitration and the application under Chapter XIII-A should be adjourned to enable the petitioner company to make the application for the same. This was not done by the petitioner company. Therefore, at least on April 23, 1974, the petitioner company was not ready and willing to proceed with the arbitration, but was ready and willing to contest the summons under Chapter XIII-A and to show that it has good defence to the suit and should be given leave to defend. It was the choice of the petitioner company on April 23, 1974 either to proceed with the suit or to go to arbitration. The petitioner company knew that there was such an arbitration clause. All the papers in the suit and in the application under Chapter XIII-A were with the petitioner company. Yet, the petitionercompany on April 23, 1974 chase to contest the application under Chapter XIII-A.
20. In my view, the petitioner company did take steps to defend the suit and was not at all material times, ready and willing to go to arbitration. The petitioner company has failed to satisfy me that there is no sufficient reason why the matter should not be referred.
21. In view of the above matter, I think that in the exercise of my discretion under Section 34 I shall not allow stay of the suit or stay of the proceeding.
22. Only point now remains is whether there is any decision of Court which compels me to decide the matter otherwise.
23. Mr. S. B. Mukherjee with Mr. Jayanta Mitter and Mr. D. K. Shome appearing for the petitioner company could not place before me any authority which is exactly on the point. Mr. Mukherjee cited Union of India v. Hind Galvanizing and Engineering Co. Pvt. Ltd., reported in : AIR1973Cal215 . This is the latest judgment of the Division Bench of this Court. What happened in this case was that a suit was instituted in this court against the defendant Union of India. The writ of summons was duly served upon the Union of India. The suit appeared in the Warning list of undefended suit. Then it appeared in the peremptory list of the undefended suit. When it appeared in the peremptory list of the undefended suit, the learned counsel for the defendant appeared before the learned Judge and asked for an adjournment. The minutes of the order of the court is important :
'Order dated the 19th March, 1971 Cor. K. L. Roy, J. Mr. P. K. Sen prays for adjournment. Mr. Bhaskar Sen for the plaintiff submits. The Cor. adjourned for a fortnight. All costs thrown away to be costs in the cause, so far as the plaintiff is concerned.' The suit again appeared on the list on April 1, 1971 when the learned counsel for the Union of India asked for an adjournment on the ground that an application will be made under Section 34 of the Arbitration Act. Thereafter, such an application was made and the same was heard by Salil K. Roy Chou-dhuri, J. The learned Judge dismissed that application. Against that judgment appeal was preferred and the appeal was heard by the court of appeal consisting of A. N. Sen and T. K. Basu, JJ. The judgment of the court of appeal was delivered by T. K. Basu, J. The facts of this case, it seems to me are not similar to the facts of the instant case. But in the judgment of the court of appeal, the learned Judges have considered several cases on the point. The learned Judges considered the case of the Karnani Industrial Bank Ltd. v. Satya Niranjan Shaw, reported in 28 Cal WN 771 = (AIR 1924 Cal 789), where it was held that a verbal prayer by defendant's counsel for further time to file written statement in reply to Court's question is 'taking a stepin the proceedings.' Reference was made to , where it was held that a defendant against whom a suit has been ordered to proceed ex parte is not entitled to take any step in the proceedings unless he gets the ex parte order set aside so that he can apply for stay under Section 34 of the Arbitration Act. Reference was also made to where it was held that where in a suit against the Government, on the date filed for appearance of the defendant, the Government pleader appeared voluntarily without any authority from Government to represent it in the case and asked for adjournment for filing a written statement on the assumption that in due course he would receive instruction from the Government it cannot be said that the Government, the defendant, took any step at all in the proceedings. The learned Judges also referred to where on the first appearance in the suit the counsel for the defendant made a statement that his client wanted to present an application under Section 34 of the Arbitration Act and since the relevant records have not been received he prayed for an adjournment, and the court thereupon made an order for filing of the written statement of the defendant or application under Section 34 of the Arbitration Act. It was held that the prayer for adjournment in that case did not amount to a step in the proceedings of the suit. After reviewing several judgments the court of appeal observed at page 220 of the report : 'It seems to us that this third finding of the learned trial judge is really a corollary of the first finding that the appellant had evinced an unequivocal and unambiguous intention to proceed with the suit.'
In my view, the case does not support the contention of Mr. S. B. Mukherjee that on the facts of this case, I shall stay the suit under Section 34 of the Arbitration Act. On the other hand, it seems to me that this decision goes against the contention of Mr. Mukherjee.
24. Mr. Mukherjee, then cited a decision by P. C. Mullick, J. reported in : AIR1966Cal315 , (Amritraj Kothari v. Golecha Financiers). In that case it was held that where the defendant appeared by the counsel in the suit filed by the plaintiff in breach of arbitration agreement and opposed the application for extension of injunction and further got the time extended for filing affidavit in opposition: these were steps in the proceedings and having taken these steps, the defendant was debarred from getting a stay of the suit.
25. This case is definitely against the contention advanced by Mr. S. B. Mukherjee. But the learned counsel said that there was an appeal against this decision of P. C. Mullick, J. to the court of appeal consisting of D. N. Sinha and G. K. Mitter, JJ. and the learned judges differed. D. N. Sinha, J. (as he then was) agreed with the view taken by P. C. Mullick, J. But G. K. Mitter, J. (ashe then was) disagreed with the view of Mr. Mullick, J. In the judgment, D. N. Sinha, J. observed that the matter should be referred to a third judge of this Court. Mr. Mukherjee could not say whether the matter was actually heard and decided by any learned judge as the third Judge and, if so, what is the view of the learned third judge. I must say that if there is such a judgment by the learned third judge, the same is binding upon me and I would have followed the same, but since the two learned judges of the court of appeal have differed, and the decision of the learned third judge has not been traced before me. I think I am free to express my own views in the matter which I have already done.
26. Mr. D. K. De appearing for the respondent submitted that in such case I will rather follow the reasoning of the learned trial judge which is affirmed by one of the learned Judges of the court of Appeal. In any event, I have expressed my own views in the matter.
27. In view of the above matter this application is dismissed with costs. The ad interim order stands vacated. There will be stay of operation of the order for four weeks.