Raghubir Aggarwal vs Jagdish Prashad Garg And Ors.
1995 Latest Caselaw 792 Del

JUDGMENT

N.G. Nandi, J.

(1) In a suit for dissolution of partnership, rendition of accounts and other incidental reliefs, the defendant has taken out this Ia under Section 34 of the Arbitration Act, praying to stay the proceedings in the present suit and get the matter referred to the arbitrators in terms of the arbitration agreement.

(2) According to the plaint, plaintiff and the defendants are the partners by virtue of the partnership agreement dated 2.4.79 and that the business of partnership to be the business of commission agents and merchants in Kirana goods under the name and Style of M/s. Jagdish Prashad Shiv Kumar Aggarwal or any other name as may be mutually agreed; that the said partnership was constituted w.e.f. 2.4.79 and the partnership business was carried on in the premises i.e. 204, Gali Kinariwali, Naya Bans, Delhi, taken on rent.

(3) The deed of partnership dated 2.4.79 between the plaintiff and the defendants as the partners therein besides other clauses is said to contain an arbitration agreement requiring the dispute to be referred for adjudication to the arbitrators mentioned therein. The copy of the said partnership deed has been produced by the plaintiff at page 6 of the documents file. Perusal of the same suggests to contain an arbitration agreement (Clause 19) which reads as below:- "19.That in case of any dispute arising between the parties to this Deed inters none of the parties shall straightaway rush to a Court of Law, the matter shall first be referred to a Board of 3 Arbitrators agreed to by all the parties whose decision shall be final and acceptable to all the parties".

(4) The partnership between the plaintiff and the defendants and the partnership deed containing arbitration clause, reproduced above, is not disputed for the present purpose.

(5) It has been submitted by Mr. Sanjay Poddar, counsel for the plaintiff that the defendant has submitted to the jurisdiction of the civil court and has taken steps in the proceedings inasmuch as the defendant sought adjournments for filing written statement of the suit and, therefore, not entitled to the stay of the proceedings in the suit under section 34 of the Arbitration Act. As against this, it has been submitted by Mr. R.K. Gupta, counsel for the defendants that the defendants have not submitted to the jurisdiction of the civil court nor taken any other steps in the proceedings; that the adjournment granted on 5.4.94 and 15.11.1994 is not at the request or at the instance of the defendants but by these orders, the court directed the filing of the written statement by the defendants and that defendants are and were ready and willing to do all things necessary to the proper conduct of the arbitration and that in view of clause 19 in the partnership deed, the proceedings in the suit be stayed and the disputes between the parties referred to the arbitrators for adjudication, as provided in the agreement.

(6) The suit was instituted on 2.11.1991 and the exparte ad interim injunction granted in the Ia under Order 39 Rules 1 & 2 CPC. The order dated 24.4.1992 suggests that the defendant remained present through the counsel and probably made grievance that the copies of the annexures were not supplied by the plaintiff whereupon the court directed the supply of the copies of the annexures to the plaint within one week to the counsel for the defendants. The order further reads - "Let the written statement and reply be filed within 6 weeks. Replication and rejoinder be filed before the next date of hearing". Thereafter, on one date, none appeared for the defendants. On 20.1.93, none was present on behalf of the defendant even at the second call and the defendants were ordered to be proceeded against ex parte and the plaintiff directed to file original documents within 4 weeks. On 20.7.93, counsel for the defendants stated that he has filed an application for setting aside the exparte order dated 20.1.93. Thereafter, on 22.11.93, none remained present. On 10.1.94, the notice of the application under Order 9 Rule 7 Civil Procedure Code for setting aside the order dated 20.1.93 was accepted by the cou8nsel for the plaintiff. On 5.4.94, IAs 10048-49/93 were heard and the order dated 20.1.93 was set aside on payment of costs of Rs. 1000.00 within one week. On that date, in the suit, an order was passed to the effect that the written statement be filed within 4 weeks. Replication within 2 weeks thereafter and the matter was adjourned to 22.8.94. On 22.8.94, counsel for the defendant stated that he would be filing an application under Section 34 of the Arbitration Act and thereafter, on 15.11.1994, the counsel for the plaintiff accepted the notice of this Ia under Section 34 of the Act.

Thus, will be seen that on 24.4.92, six weeks time was given for filing the written statement and reply and while setting aside the order dated 20.1.93 on 5.4.94, four weeks' time was given to file written statement to the suit.

(7) It can not be disputed that so long as the order dated 20.1.93 is not set aside/recalled, the question of filing either the written statement to the suit or application under Section 34 of the Act would not arise. It appears from the order dated 24.4.1992 that the counsel for the defendant made grievance for non-supply of the copies of annexures to the plaint, by the plaintiff to the defendants and therefore, the counsel for the plaintiff was directed to supply the copies of the annexures within one week. Making a request for getting the copies of the annexures can not tentamount to "taking any other steps in the proceeding". What is to be seen is that there must be an intention on the part of the defendant to waive benefit of arbitration agreement and to proceed with the suit. 'Taking other steps in the suit proceedings' connotes the idea of doing something in aid of the progress of the suit or submitting to the jurisdiction of the Court for the purpose of adjudication of the merits of the controversy in the suit. In the case of Pragati Engineering (P) Ltd. and Others versus Tamil Nadu Water Supply & Drainage Board, it has been held by the Division Bench of Calcutta High Court that the application under Section 34 praying for the stay of the suit could be filed at any time before the filing of the written statement,which would mean "before actually filing the same" and not "before expiry of the time to file the same".

(8) In the instant case, admittedly, the written statement is not filed. As far as "taking any steps in the proceedings" is concerned, a mere application for time to file a written statement or a mere contest to an inter locator application for injunction, appointment of receiver or the like, shall not amount to taking any steps in the proceedings. In the instant case, by two orders, i.e. order dated 24.4.92 and 56.4.94, time has been given by the court to file written statement. In the case of M/s. Sadhu Singh Ghuman versus Food Corporation of India and others , it has been held that "the expression "step in the proceeding", which would disentitle the defendant from invoking section 34 of the Arbitration Act, is not every step taken by him in the suit. It should be a step to abandon the right to have the suit stayed. It should be a step in aid of the progress of the suit. The step must have been consciously taken with a view to submit to the jurisdiction of the Court for the purpose of adjudicating the controversy on the merits".

(9) Thus, it will be seen that what is required is that there must be a clear expression of intention by the defendant to have the dispute involved in the suit resolved on merits by the court. In the instant case, taking the orders dated 5.4.94 and 24.4.92, as they are, it can not be said that the defendant took step in the proceedings to abandon the right to have the suit stayed and that it is a step in the aid of the progress of the suit, much less a step consciously taken with a view to submit to the jurisdiction of the court for the purpose of adjudicating the controversy on the merits. I am inclined to take this view for the reason that none of the orders, referred to above, to be "a step in the aid of the progress of the suit proceedings" consciously taken with a view to submit to the jurisdiction of the court for the purpose of adjudication on merits of the controversy in the suit and there is no unequivocal expression of the intention by the defendants to have the suit dispute resolved by the court.

(10) It need hardly be said that when the parties have chosen the forum of their choice for resolving the dispute arising out of the agreement, the parties must be directed to go to the forum of their choice and there is no reason why there should be a departure to this general rule in the present proceeding. In the above view of the matter, I am inclined to stay the proceeding in the suit under Section 34 of the Arbitration Act, as there is no reason to disentitle the defendants to stay of the proceedings in the suit.

(11) In the result, the proceedings in the suit are stayed under Section 34 of the Arbitration Act and the parties are directed to go to the forum of their choice and have the arbitrators appointed, as provided in clause 19 of the partnership agreement dated 2.4.1979 for the purpose.

(12) I.A. stands granted.