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1997 Supreme(Mad) 1381
MADRAS HIGH COURT
K Govindarajan
THE CANNANORE CO-OPERATIVE SPINNING MILLS LTD. - PETITIONER
v.
THE COTTON CORPORATION OF INDIA LTD. - RESPONDENT.
C.R.P. No. 2958 of 1992 and C.M.P. No. 14683 of 1992
Decided on : November 27, 1997.
A party seeking a stay of a suit under Section 34 of the Arbitration Act, 1940, must be ready and willing to go into arbitration and must not have taken any steps in the suit proceedings.
Headnote:
ARBITRATION - STAY OF SUIT - CONDITIONS - SECTION 34 OF THE ARBITRATION ACT, 1940 - INTERPRETATION - APPLICABILITY - COURT'S DISCRETION - FACTORS TO BE CONSIDERED.
Fact of the Case:
The petitioner failed to lift cotton bales as per the contract with the respondent, resulting in losses for the respondent. The respondent filed a suit for recovery of the losses. The petitioner filed an application under Section 34 of the Arbitration Act, 1940, seeking a stay of the suit and referral of the dispute to arbitration.
Finding of the Court:
The court held that the petitioner was not entitled to a stay of the suit under Section 34 of the Arbitration Act, 1940, as it had not taken any steps in the suit proceedings and had not been ready and willing to go into arbitration.
Issues: Whether the petitioner was entitled to a stay of the suit under Section 34 of the Arbitration Act, 1940.
Ratio Decidendi: The court held that the petitioner was not entitled to a stay of the suit under Section 34 of the Arbitration Act, 1940, as it had not taken any steps in the suit proceedings and had not been ready and willing to go into arbitration. The court further held that the lower court had exercised its discretion judiciously in refusing to grant a stay of the suit.
Final Decision: The court dismissed the revision petition filed by the petitioner.
K. Govindarajan, J. - The defendant who failed in his attempt in getting an order of stay in I.A. No. 1111 of 1991 in O.S. No. 123 of 1991, on the file of the II Additional Sub Judge, Coimbatore, is the petitioner herein.
2. The respondent/plaintiff is a public sector undertaking dealing in cotton. The petitioner and respondent entered into a contract on 3-2-1988 for supply of cotton as specified in the contract. Since the petitioner did not lift 65 bales of cotton as per the contract dated 3-2-1988 the respondent issued a notice, and the petitioner received the notice but it did not lift the cotton bales. So, the respondent sold the same to the Tamil Nadu Textile Corporation at Rs. 8,875 per candy as per the sale contract dated 6-4-1988. Due to the same, the respondent incurred a loss of Rs. 1,57,319.27.
3. Similarly the petitioner and the respondent entered into an agreement on 4-11-1987 for lifting cotton. Even with respect to the said contract, the petitioner did not lift 150 bales of cotton. The respondent sent letters to the petitioner requesting them to lift the bales. But the petitioner did not lift the cotton and so the 100 bales of cotton were resold. The respondent issued a notice to the petitioner on 4-3-1989. The petitioner issued a reply on 10-10-1989. After several correspondence by the respondent, the respondent was constrained to resell 100 bales of cotton. Due to the same the respondent incurred loss of Rs. 3,45,651. To avoid limitation, the respondent filed a suit in O.S. No. 123 of 1991 on the file of the Sub Court, Coimbatore on 1-2-1991. After service of notice the case was posted to 7-3-1991. Again it was posted to 8-7-1991. When the case was posted to 8-8-1991, the petitioner/defendant entered appearance through its Counsel and requested time for filing written statement and the case was adjourned to 8-11-1991. Meanwhile, on 1-11-1991, the petitioner/defendant filed I.A. No. 1111 of 1991, under Section 34 of the Arbitration Act, 1940 to stay the suit and to refer the dispute that had arisen between the respondent/plaintiff and the petitioner/defendant to an Arbitrator as provided in Clause II(ii) of the contract. The application was contested by the respondent/plaintiff. The lower Court in its order dated 30-4-1992 rejected the application. Aggrieved against the same, the petitioner has filed the above revision.
4. The point for consideration on the facts of this case, is whether the petitioner is entitled to an order under Section 34 of the Indian Arbitration Act, staying the proceedings of the suit commenced by the respondent/plaintiff.
5. The scope and meaning of Section 34 of the Arbitration Act is quite clear. If a party to an arbitration agreement commences any legal proceedings against any other party to the said agreement with respect to the subject-matter thereof, then the other party is entitled to ask for such proceedings to be stayed so as to enable the arbitration agreement to be carried out. It is further to be clearly understood that mere existence of an Arbitration Clause in an agreement does not by itself operate as a bar to the suit in the Court and it does not by itself impose any obligation on the Court to stay the suit or to give any opportunity to the petitioner defendant to consider the question of enforcing the arbitration agreement. The right to file a suit in a Civil Court is conferred on a person having a grievance of a civil nature, under the general law. Where there is a right, there is a remedy. Under Section 9 of the Code of Civil Procedure this general right is conferred upon an aggrieved person except where the cognizance of the suit is barred either expressly or impliedly. The party seeking to curtail this general right of suit has to discharge the task of establishing his right to do so and it should be strictly complied with. The petitioner-defendant who wants to obtain an order of stay is required to present its application praying for stay before filing its
