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HIGH COURT OF CALCUTTA
A. N. Sen, T. K. Basu
UNION OF INDIA - Appellant
Versus
HIND GALVANIZING AND ENGINEERING CO. PVT. LTD - Respondent
A. F. O. O. 271 Of 1971 And Award Case No. 74 Of 1971
Decided On : JULY 14, 1972
ARBITRATION ACT, 1940 - SECTION 34 - STAY OF SUIT - DISCRETION OF COURT - INTERFERENCE BY APPELLATE COURT - PRINCIPLES - STEP IN PROCEEDINGS - INTENTION TO PROCEED WITH SUIT - COSTS AWARDED IN ADJOURNMENT ORDER - RELEVANCE - COMPLICATED QUESTIONS OF LAW - READINESS AND WILLINGNESS TO ARBITRATE - CONDUCT OF PARTY AFTER NOTICE UNDER SECTION 80 OF CPC - RELEVANCE.
Fact of the Case:
The appellant, Union of India, accepted a tender of the respondent for the supply of G.T. Steel tubes. The contract contained an arbitration clause and a Price Increase Clause. The respondent claimed an increase in price based on the Price Increase Clause, but the appellant allowed only a portion of the claim. The respondent served a notice under Section 80 of the Civil Procedure Code for the balance of the claim and filed a suit for Rs. 16,46,080.58p. The appellant appeared in the suit and obtained adjournments on two occasions. The appellant then filed an application under Section 34 of the Arbitration Act, 1940, for a stay of the suit.
Finding of the Court:
The trial court dismissed the application, holding that the appellant had taken a step in the proceedings by obtaining adjournments, that the suit involved complicated questions of law, and that the appellant was not ready and willing to do all things necessary for the proper conduct of the arbitration.
Issues: 1. Whether the appellant had taken a step in the proceedings by obtaining adjournments. 2. Whether the suit involved complicated questions of law. 3. Whether the appellant was ready and willing to do all things necessary for the proper conduct of the arbitration.
Ratio Decidendi: 1. The court held that the appellant had taken a step in the proceedings by obtaining adjournments, as the appellant's lawyers were aware of the arbitration agreement when the first adjournment was sought. The court also noted that the order for adjournment directed that the costs of the plaintiff which were thrown away would be costs in the cause, which would have been nullified if the suit had been stayed. 2. The court held that the suit involved complicated questions of law, as the impounding of goods by Pakistan raised complex questions of law, including the question of whether the respondent was entitled to payment in view of the provisions of Section 133b of the Defence of India Rules. 3. The court held that the appellant was not ready and willing to do all things necessary for the proper conduct of the arbitration, as the appellant had taken no steps to invoke the arbitration clause after the receipt of the notice under Section 80 of the Code of Civil Procedure.
Final Decision: The court dismissed the appeal, holding that the trial court's decision was not unreasonable, capricious, or unjudicial, and that there was no ground for interference by the appellate court.
( 1 ) THIS is an appeal arising out of the judgment and order passed by Salil K. Roy Chowdhury, J. , dated the 20th August, 1971, dismissing an application for stay of a suit under Section 34 of the Arbitration Act, 1940.
( 2 ) ALTHOUGH the facts have been fully noted by the learned trial judge, they may be briefly recorded.
( 3 ) THE appellant Union of India accepted a tender of the respondent with regard to the supply of G, T. Steel tubes of particular specifications. The contract constituted by such acceptance of the tender contained the usual arbitration clause. The contract also contained a Price Increased Clause. The respondent preferred a claim against the appellant based on this clause relating to the increase in the price of steel. Out of this claim, the appellant allowed only a portion. Thereafter a notice under Section 80 of the Civil Procedure Code was served on the appellant for the balance of the claim and a suit was instituted in this Court on the 27th January, 1970 praying for a decree for Rs. 16,46,080. 58p. being Suit No. 67 of 1970. The Writ of summons was duly served on the appellant. The suit appeared in the Warning list of Undefended Suits, on the 17th February, 1971, 3rd March, 1971 and 17th March, 1971. On the 19th March, 1971 when the suit appeared in the Peremptory list of the Undefended suits; learned Counsel appeared before the learned Judge and asked for an adjournment. The minutes of the order made on the date is material and may be set out:"order dated the 19th March, 1971 Cor. K. L. Roy, J. , Mr. P. K. Sen prays for adjournment. Mr. Bhaskar Sen for the plaintiff submits. The Cor. adjourned for a fortnight. All costs thrown away to be costs in the cause, so far as the plaintiff is concerned. "
( 4 ) THE suit again appeared in the list on the 1st April, 1971 when the following order was made:"order dated 1st April, 1971 of K. L. Roy, J. Mr. N. C. Roy Chowdhury mentions and asks for an adjournment on the ground that the respondent will make an application under Section 34 of the Arbitration Act, 1940. Mr. Bhaskar Sen for the plaintiff opposed. The Cor. adjourned till 8th of April, 1971. "
( 5 ) THEREAFTER the application out of which the present appeal arises was made by the appellant on the 6th April, 1971.
( 6 ) IN delivering his judgment the learned trial Judge adverted to three principal questions as will appear from the following observations in the judgment:"three questions are to be gone into in this application: Firstly, whether in the facts and circumstances of this case the petitioner (s) have taken a step in the proceeding whereby (they) have been debarred from making any application under Section 34 of the Arbitration Act, 1940; secondly, whether the disputes between the parties involved an intricate and complicated question of law and thirdly, whether the petitioners were ready and willing at the commencement of the proceeding to do all things necessary to the proper conduct of the arbitration. "
( 7 ) ON the first question after noticing a number of decisions cited before the learned trial Judge the proposition of law is summarised in the judgment as follows:"i do not think it is necessary for me to refer the said decisions in detail as it is now well settled as would appear from the said decisions that any act which shows an unequivocal intention on the part of the defendant to proceed with the suit would be a step in the proceedings. Such an act may be of diverse nature depending on the facts and circumstances of each and the substance is that whether from such an act the intention of the defendant is clear and unambiguous to defend and proceed with the suit or proceeding. "
( 8 ) APPLYING the above proposition of law to the facts of the present case the learned trial Judge has come to the conclusion that the defendant expressed an unequivocal and unambiguous intention to de- fend this suit and got the suit adjourned and in fact the Court directed that all costs thr
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