The court's decision highlights the importance of considering the defendant's conduct as a whole, including their inaction in not replying to a notice under section 80 of the Code of Civil Procedure, in determining their readiness and willingness to go to arbitration.

JUDGMENT - Chandurkar J.-The respondent-plaintiff had filed a suit against Union of India, appellant in this appeal, for recovery of Rs. 68,033.95 whicn includes interest of Rs. 25,575.95 on the amount of Rs. 42,458 being the price of goods sold and delivered by the plaintiff to the defendant and which, according to the plaintiff, have been wrongly rejected by the defendant by their rejection order dated 3rd October 1975.

2. Prior to the suit, a notice under section 8G of the Civil Procedure Code was served on the Union of India on 31–7-197 Even prior to that, a letter was served by the plaintiff on the defendant on 1st December 1975 through the General Manager of Western Railway requiring them to pay the suit amount and this letter was accompanied by a copy of the plaint which the plaintiff proposed to file. The Union of India was thus given due information by the plaintiff as far back as 1st December 1975 that the plaintiff would file a suit if the amount due is not received.

3. The suit is filed on 2–10–1978 which is almost the last day of limita- tion. Summons of the suit was served on Union of India on 27–10–1978. It was only on 9–12–1979 that Union of India took out a notice of motion for staying the suit under section 34 of the Arbitration Act contending that the contract, in pursuance of which the goods were supplied by the plaintiff, was governed by an arbitration clause No. 2900 contained in the Indian Railways Standard Conditions of Contract. This clause provides for an appointment of a sole arbitrator by the General Manager of the Zonal Rail-ways for the purposes of referring all disputes and differences arising under the contract like the one in the instant case.

4. The learned Judge took the view that in the letters which were exchanged between the parties, there is no indication given by thedefendant of their readiness and willingness to refer the dispute to an arbitrator. The learned Judge took the view that no reply was given to notice under sec- tion 80 of the Code of Civil Procedure and, in fact, the only document in which the defendant has indicated their readiness and willingness to refer the disputes and differences to arbitration was the affidavit filed by them in support of the notice of motion. The learned Judge, therefore, took the view that the defendant had not shown their readiness and willingness to refer disputes to arbitrator at the commencement of the suit and they were, therefore, not entitled to succeed in the notice of motion. The motion having been dismissed by the learned Judge, the Union of India has filed this appeal.

5. Mr. Dalai appearing on behalf of the appellant has mainly placed reliance on two decisions of the Supreme Court in support of his contention that mere inaction in not replying to a notice under section 80 of the Code of Civil Procedure cannot be construed against the Union of India and it is argued that since the decision of the learned single Judge was based mainly on the failure of Union of India to reply to the notice under section 80 of the Code of Civil Procedure, the decision was liable to be set aside.

6. In (Food Corporation of India v. M /s. Thakur Shipping Co. and others)1 the Supreme Court has held that where a party to an arbitration agreement chooses to maintain silence in the face of repeated requests by the other party to take steps for arbitration, the case is not one of “mere inac- tion” and failing to act when a party is called upon to do so is a positive gesture signifying unwillingness or want of readiness to go to arbitration. It may be pointed out that this was not one of the decisions on which Mr. Thakkar appearing on behalf of the plaintiff has relied and the ratio of this decision is not attracted to the facts of the present case because it is not the case of the plaintiff that the plaintiff had at any time called upon the defen- dant to go to arbitration and that they having failed, it must be held that they were unwilling or not ready to go for arb

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