1973 Supreme(Mad) 539
High Court of Judicature at Madras
KAILASAM & MAHARAJAN
K.V. Nagaraja Iyer & Brothers
Versus
The Union of India, represented by the General Manager, Southern Railway, Madras
A.A.O. No. 383 of 1972
Decided On :Decided on: 19-11-1973
For the Petitioner:S. Gopalarathnam & P.N. Venugopalan, Advocates.
For the Respondent:P.S. Srisailam, Advocate.
An averment in the petition is not a condition precedent to the invocation of S. 34 of the Arbitration Act, and the court should be satisfied that the party asking for stay was in fact ready and willing, at the relevant times, to do everything necessary for the proper conduct of the arbitration.
Headnote:
ARBITRATION - STAY OF SUIT - CONDITIONS - READINESS AND WILLINGNESS OF PARTY TO ARBITRATION - AVERMENT IN PETITION - NECESSITY - S. 34, ARBITRATION ACT, 1940.
Fact of the Case:
The appellant, an engineering contractor, entered into a contract with the Southern Railways for the supply of cross arm channels. A dispute arose between the parties, and the appellant instituted a suit against the railway administration for the recovery of a sum of money. The railway administration filed a petition under S. 34 of the Indian Arbitration Act, 1940, praying for a stay of the suit and a reference of the matter to arbitration as per the arbitration clause in the contract.
Finding of the Court:
The court held that the appellant had signed a tender in which he agreed to supply the railway with the articles specified upon the terms of the Indian Railway Standard Conditions of Contract for Stores, Serial No. A.3-51, which contained an arbitration clause. The court also held that the railway administration was ready and willing at the relevant times to do everything necessary to the proper conduct of the arbitration, and that the other conditions laid down in S. 34 of the Arbitration Act had also been fulfilled.
Issues: 1. Whether there was an arbitration clause in the contract between the parties? 2. Whether the railway administration was ready and willing at the relevant times to do everything necessary to the proper conduct of the arbitration?
Ratio Decidendi: 1. The court held that the reference in the tender form to the railway Standard Conditions of Contract for Stores was to the general conditions of contract referred to in the purchase order, and that the appellant must have known about the arbitration clause in the Standard Conditions of Contract. 2. The court held that an averment in the petition is not a condition precedent to the invocation of S. 34 of the Arbitration Act, and that the court should be satisfied that the party asking for stay was in fact ready and willing, at the relevant times, to do everything necessary for the proper conduct of the arbitration.
Final Decision: The court dismissed the appeal and confirmed the order of the lower court staying the suit and directing reference to arbitration.
MAHARAJAN, J.—
1. This is an appeal filed by the plaintiff in O. S. No. 4834 of 1969, against the order of the VI Assistant City Civil Judge, Madras, staying the trial of the suit on an application made by the plaintiff under S. 34 of the Indian Arbitration Act, 1940, and directing a reference of the matter to the arbitrators as per Cl. 25 of the conditions of the contract.
2. The appellant is a firm of engineering contractors who entered into a contract with the Southern Railways, Madras, for the supply of a certain number of cross arm channels. Some dispute arose between the railway administration and the appellant as to whether the administration was right in rejecting the supplies made, whereupon the appellant instituted the suit against the railway administration for the recovery of a sum of Rs. 24528-15 with interest at six percent per annum and for costs of suit. The defendant railway before filing a written statement, made a petition under S. 34 of the Indian Arbitration Act and prayed that as per Cl. 25 of the conditions of the contract between the parties, the dispute might be referred to two arbitrators, one to be nominated by the contractor and the other to be nominated by the railway administration. This petition was opposed by the appellant, firstly, on the ground that there was no arbitration clause at all in the contract between the parties, and secondly, on the ground that under S. 34 of the Arbitration Act, the railway administration was not, either at the time when the proceedings were commenced or at the time of the application, ready and willing to do all things necessary to the proper conduct of the arbitration. The court below rejecting the objections, allowed the petition for stay. It is against this order that the present appeal has been filed.
3. The first ground raised by the appellant may be disposed of at first. According to the learned counsel for the appellant, by the order placed by the railway administration with the appellant, which has been typed at page 2 of the typed papers, the appellant has been asked to deliver to the Assistant Signal and Tele-communications Engineer, Southern Railway, Tiruchirapalli, the articles contracted for, “subject to the general conditions of contract for the Stores Department of this railway and to addendum to the same specially applicable to this contract”. Leaned counsel would complain that no copy of the general conditions of the contract for the Stores Department of the railway was ever delivered into the hands of the appellant at the time of the contract It was also his complaint that though he summoned the railway administration to produce the tender made by his client, the administration failed to produce the same in the court below. In pursuance of our directions, counsel for the railway administration has produced the same and we find that the appellant has signed the tender in which ‘he engages to supply the Southern railway with the articles specified above upon the terms of the Indian Railway Standard Conditions of Contract for Stores, Serial No. A.3 , and upon the terms of the special conditions printed in the stores bulletin and the instructions for the guidance of the contractors issued by the railway, as amended from time to time’. The Indian Railway Code for the stares department contains, at page 533, the Standard Conditions of Contract, Serial No. A3-51. Cl. 25 of the said Standard Conditions runs as follows:
“In the event of my question or dispute arising under these Conditions or in connection with this contract (except as to any matters the decision of which is specially provided for in these conditions) the matter in dispute shall be referred to two arbitrators, one to be nominated by the Purchaser and one to be nominated by the contractor, or in the case of the said arbitrators not agreeing, then to an umpire to be appointed by the arbitrators in writing before proceeding on the reference and the decision of the arbitrators or in