Raghubir Aggarwal vs Jagdish Prasad Garg
1997 Latest Caselaw 121 Del

JUDGMENT

M. Jagannadha Rao, J.

(1) The plaintiff is appellant in this appeal directed aginst an order dated 28.9.95 in Ia 8217/94 in Civil Suit No. 3767/91. By the impugned order, the learned Single Judge allowed the said Ia filed under Section 34 of the Arbitration Act and stayed the suit. The plaintiff whose suit has been stayed has filed this appeal.

(2) The suit was filed by the appellant who claims to be a tenant in respect of the ground floor shop measuring 720 Sq. Ft. for dissolution of partnership, rendition of account etc. According to the appellant, there was a settlement between the appellant and his landlords who sued for eviction and a deed was executed on 3.2.1984 by the owners of the property (Mr. K.L. Jain and Smt. Raj Rani Jain) wherein, it is said, they recognised the appellant as a tenant of the shop on a monthly rent of Rs. 100.00 . Appellant says he entered into a partnership on 2.4.79 with one Mr. Satpal, the respondents (S.P. Garg, Sulekh Chand Shiv Kumar). These five partners are said to have agreed to carry on commission business under the name M/S Jagdish Pershad Shiv Kumar Aggarwal. It is also the appellant's case that the deed provided that the business will be at the shop which is under appellant's tenancy from the owners and that the tenancy right vests in the appellant. It is said that appellant's share is 20%, that later in 1985, Mr. Satpal retired and a fresh deed of partnership was executed between the remaining 4 partners, i.e. appellant and the 3 respondents. It is said respondents were not rendering accounts and therefore appellant issued notice on 5.12.90 dissolving the firm w.e.f. 31.12.1990. The respondents did not reply but were saying that appellant had retired from the firm. On the basis since there was neither dissolution nor retirement of appellant, suit was filed for dissolution and accounts and relief for permanent injunction was also sought on the basis that the plaintiff-partner is the lessee from the owners.

(3) The suit came up for hearing on 2.12.1991 and notice was issued in suit. In Ia 12396-97/91, temporary injunction was granted restraining respondents 1 to 3 from parting with possession, or creating interest in 3rd parties. Local Commissioner was appointed to take certain action. On 24.4.92, respondents entered appearance through counsel and were directed to file written statement in 6 weeks. On 24.4.92, respondents filed vakalatnama and plaintiff's counsel was asked to supply copies of annexures to the plaint, to the defendants in 6 weeks. The Court said: "LET, the written statement and reply be filed within 6 weeks."

(4) Matter was adjourned to 26.8.92. The appellant supplied copies of the documents as directed. Even so the respondents failed to file written statement and on 20.01.1993, their counsel did not appear and were set ex parte.

(5) On 20.5.93, the respondents filed Ia under Order 9 Rule 7 Civil Procedure Code for setting aside the ex parte order dated 20.1.93 with an application under Section 5 of the Limitation Act. The said application was returned with objections on 22.5.93 and was refiled after 4 months on 28.9.93.

(6) On 5.4.93, the Ia filed under Order 9 Rule 7 by respondent was allowed subject to payment of costs of Rs.1000.00 and the court once again directed : @SUBPARA = "W.S. be filed within four weeks." and the matter was to be listed before the Joint Registrar on 22.8.94. The respondents did not file written statement within 4 weeks nor pay cost of Rs. 1000 within the period.

(7) On 22.8.94, when the matter was listed before the Joint Registrar, learned counsel for the respondent said he would be filing an Ia under Section 34 of the Arbitration Act. The case was adjourned to 19.9.1994 for directions.

(8) It was at that belated stage that the respondents filed Ia 8217/94 under section 34 seeking stay of suit on the ground that the partnership agreement contained an arbitration clause. Plaintiff - appellant filed reply thereto.

(9) The learned Single Judge, by orders dated 28.9.95 allowed the respondents Ia and stayed the appellant's suit of 1991. Aggrieved by the same, this appeal has been preferred by the plaintiff - appellant.

(10) In this appeal, it is contended by the learned Counsel for the appellants that the request made by the respondents - defendants counsel on 24.4.92 for copies of various documents filed with the plaint to the defendants amounted to the defendants taking a 'Step' in the proceedings. Though it is not recorded in the proceedings that the defendants required the same for the purpose of filing written statement and the Court merely observed in its order Let the written statement and reply be filed, the intention of the respondents was clear. It is further contended that in any event, the respondents have not moved for stay at the earliest opportunity for arbitration. The suit was filed in 1991 and the present Ia was filed on 13.9.94. If the respondents were bona fide, they should have filed this application soon after entering appearance on 24.4.92.

(11) Learned counsel for the respondents contends that the respondents have not taken any step in the proceedings. Merely seeking from the plaintiff certain annexure filed with the plaint did not amount to taking steps. So fas as the other contention is concerned, it is argued that the respondents were set ex parte on 20.1.93 and the application to set aside the same was allowed only on 5.4.94 and hence there is no delay. It is also contended for respondents that they could not have filed the application under section 34 of the Arbitration Act after 20.1.93 when they were set ex parte and till 5.4.94.

(12) We are of the view that the first contention raised by the appellant's counsel here need not be decided. We shall assume that the request on 24.4.92 by the respondents for supply of the copies of certain annexures filed alongwith the plaint does not amount to taking a step in the proceedings. But, we are of the view that the second contention that at the earliest opportunity the respondents were neither keen nor ready for arbitration is liable to be accepted.

(13) Russel on Arbitration clearly points out that an application for stay of suit on the basis of arbitration agreement is to be filed at the earliest opportunity. Learned counsel for the respondents argued that this view is not reflected in the 19th Edition of Russel. We are unable to agree with this contention of respondents's counsel. We may point out that this edition of Russel did not agree with the earlier editions in regard to another point as to at what stage defendant has to prove the existence of the arbitration clause. But on the point of dealy, the above 19th edition does not differ with views expressed in earlier editions. The 19th Ed. says : "WITHOUT actually taking a step in the proceedings, a party wanting a stay should apply promptly and if he does not, that is a ground on which the discretion can be exercised against him." and quotes The Elizabeth H. 1962 (1) Lloyd's Rep. 172.

(14) Again, the Supreme Court had occasion to consider the same question in State of Punjab Vs. Geeta Iron & Brass Works Ltd. . In that case a notice was given under section 80 Civil Procedure Code and there was no response. A suit was filed and summons taken out to the Chief Secretary. The summons were refused. An ex parte proceeding was taken when the government woke up. Later on, an application under Section 34 of the Arbitration Act was made. It was held that it was not a fit case for grant of stay. In the present case too, the respondents were set ex parte on 20.1.1993, though they entered appearance on 24.4.92. During this period they had only asked on 24.4.92 for copies of annexures filed by the plaintiff and took adjournments. At this stage, they never asked for stay of suit. Here we may state that the absence of these annexures when they entered appearance can be no excuse for not applying for stay of suit inasmuch as those annexures have no relevance for seeking stay of suit. These annexures were in our view not required for filing an Ia under Section 34. After all, the copy of the plaint, even without annexures, reveals that this is a civil suit and on a reading of the plaint, one can decide whether to invoke the arbitration clause or not. It was only much later, i.e. on 20.1.1993 that respondents were set ex parte. We are therefore of the view that the respondents were, at the earliest opportunity, not keen and did not apply under section 34. The delay upto 20.1.93 is sufficient to warrant rejection of the applicaiton.

(15) For that matter even after they were set ex parte on 20.1.93, the respondents could have filed an application under Section 34 of the Arbitration Act. In law, there was nothing to debar them from `joining' in the proceeding after 20.1.93 and filing an application under section 34. We are satisfied that the respondents were guilty of dilatory tactics.

(16) For the aforesaid reasons, this appeal is allowed and the Ia 8217/94 filed by the respondents is dismissed.