A party who has filed a suit in court to assert rights and liabilities arising from an agreement cannot subsequently apply for a stay of the suit under Section 34 of the Arbitration Act, as such action indicates unwillingness to arbitrate.

1. H. Suresh, J. - This is an appeal filed by the plaintiffs as against an order granting stay of their suit filed in the Ratnagiri Court, under Section 34 of the Arbitration Act.

2. The dispute relates to a certain contract given to the respondents for the purpose of carrying out construction of agricultural faculty buildings of the plaintiff-university. The agreement was of November 3, 1977. On or about March 24, 1980, the plaintiffs purported to terminate the said agreement. After the termination on or about September 15, 1980, they invited fresh tenders for the purpose of carrying out the remaining work which had to be done in respect of the said contract. As soon as the respondents came to know of the fact that the plaintiffs were inviting fresh tenders, they rushed to the Court and filed a suit being suit No. 47 of 1980. That was on October 23, 1980. In that suit, they obtained on order of injunction restraining the present plaintiffs from interfering with the possession of the respondents herein until certain conditions were fulfilled. It appears that that injunction was confirmed on December 5, 1980. Against the said order of injunction the plaintiffs had to file an appeal in the Court of the District Judge at Ratnagiri and the appeal filed by the plaintiffs was allowed. Later on the suit was allowed to be dismissed for default.

3. In the meanwhile, the respondents filed a suit in this High Court, Arbitration Petition No. 511 of 1982 as against the present plaintiffs under Section 20, of the Arbitration Act for referring the dispute to arbitration as provided under the said agreement dated November 3, 1977. In that petition, the present plaintiffs contended that the High Court had no jurisdiction to entertain and try the suit. That contention was upheld and the petition was ordered to be returned to the respondents herein for presentation in a proper Court.

4. Thereafter the plaintiffs filed the present suit in the Court of Civil Judge, Senior Division, Ratnagiri, being Special Civil Suit No. 1 of 1983 claiming damages in the sum of Rs. 43,00,000/- and odd. It is in that suit the present respondents made an application on April 12, 1983 for stay of the said suit under Section 34 of the Arbitration Act. The learned Judge by an order dated October 19, 1985, allowed the said application and ordered the stay of the said suit. Present appeal is against the said order passed by the learned Judge.

5. In the meanwhile, the respondents presented the said petition under Section 20 of the Arbitration Act in the same Court at Ratnagiri and it appears that the same was decreed on or about February 24, 1986. It is against the said order and decree the plaintiffs herein have filed an appeal being appeal No. 90 of 1986. Both these matters are being heard together.

6. In suit No. 1 of 1983, filed by the plaintiffs, the defendants had appeared on February 9, 1983 and they applied for an adjournment for the purpose of filing a written statement which was granted, up to March 9, 1983. Thereafter again, it was adjourned for the same purpose to April 2, 1983. On April 2, 1983, it was again adjourned to April 29, 1983 for the purpose of enabling then to file their written statement. In between, on April 12, 1983, they took out the present application under Section 34 of the Arbitration Act.

7. Before the learned Judge, two contentions were raised viz., that the defendants had taken steps in the suit itself and, therefore, it could be said that they were not ready and willing to go on with the arbitration and that, therefore, the Court should not exercise any discretion in favour of the defendants. The other contention was that the defendants had filed an earlier suit No. 47 of 1980 which gives a clear indication that there was no intention on the part of the defendants that they were willing to go for arbitration but, on the contrary their conduct shows that they were intending to have the rights decided in the Court itself, and the