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2002 Supreme(Pat) 327
PATNA HIGH COURT
S.N.Pathak, J.
Sri Arjun Prasad
Versus
Nutan Savera Sahkari Grih Nirman Samiti Ltd.
Miscellaneous Appeal No. 95 of 1995 ;
Decided On : MARCH 07, 2002
The main legal point established is that under Section 34 of the Arbitration Act, the proceeding of the suit cannot be stayed for reference to the Arbitrator unless there is a dispute referable to the Arbitrator arising out of a contract.
Headnote:
Arbitration Act - Dispute Reference - The court held that the proceeding of the suit cannot be stayed for reference to the Arbitrator unless there is a dispute referable to the Arbitrator arising out of a contract, as per Section 34 of the Arbitration Act.
Fact of the Case:
The trial court stayed the proceeding of a title suit for reference to the Arbitrator under Section 34 of the Arbitration Act, based on a petition filed by the respondents. The appellants argued that the petition did not refer to any dispute.
Finding of the Court:
The court found that the impugned order was passed erroneously and without application of the judicial mind to the provisions of law as contained in Section 34 of the Arbitration Act. The court allowed the appeal and set aside the impugned order.
Issues: The main issue was whether the proceeding of the suit could be stayed for reference to the Arbitrator based on the petition filed by the respondents, which did not refer to any dispute.
Ratio Decidendi: The court held that under Section 34 of the Arbitration Act, the suit can only be stayed when there is a dispute referable to the Arbitrator arising out of a contract. Since the petition did not refer to any dispute relating to the contract, the impugned order was passed erroneously.
Final Decision: The appeal was allowed, and the impugned order was set aside.
S.N.Pathak, J.
1. This appeal is directed against the order dated 7.3.95, whereby the trial court stayed the proceeding of the title suit no. 346 of 1994 for reference of the dispute to the Arbitrator under Section 34 of the Arbitration Act.
2. It was submitted by the appellants lawyer that admittedly there was an agreement between the appellants and the respondents for construction of certain house. However, clause 19 of the agreement stipulated that in case the house plan is submitted to the P.R.D.A. and it is not approved within six months from the date of its submission, the contract shall stand terminated. Of course, there was clause 10 of the agreement to the effect that disputes relating to the construction, payment of construction money etc. shall be referable to an Arbitrator; but the petition filed by the respondents before the court (Annexure-1), on the basis of which the proceeding of the suit was stayed and the parties were directed to take steps for reference to an Arbitrator, did not refer to any dispute. Under Section 34 of the Arbitration Act unless there is a dispute, the proceeding of the suit cannot be stayed for reference to the Arbitrator. Under Section 34 of the Arbitration Act, suit can be stayed only when there is dispute referable to the Arbitrator arising out of a contract. Unless there is such a dispute, proceeding of the suit cannot be stayed under Section 34 of the aforesaid Act. The petition under reference (Annexure-1) did not refer to the dispute arising between the parties relating to the contract. So, the impugned order was passed, perhaps, erroneously and without application of the judicial mind to the provisions of law as contained in Section 34 of the Arbitration Act. I am, therefore, of the opinion that the impugned order should not be allowed to stand in the present form.
3. In the result, this appeal is allowed and the impugned order is set aside.
