Food Corporation of India vs Ishwar Singh Bharat Bhushan

Satish Chandra, C.J.—On July 2, 1976, the Plaintiff-opposite party filed a suit for recovery of money against the Food Corporation of India. In the summons that were issued December 15, 1976 was fixed for filing the written statement. On that date the Defendant appeared and prayed for time. Time was allowed till December 22, 1976. On that date the Defendant again applied for time which was granted till January 22, 1977. On January 22, 1977 the Defendant appeared and moved an application for stay of the hearing of the suit u/s 34 of the Arbitration Act. The arbitration agreement was set up and it was prayed that the matter in dispute be referred to arbitration. The application u/s 34 was dismissed. An appeal filed against that order also failed. Aggrieved, the Defendant has come to this Court in revision.

Section 34 of the Arbitration Act runs as follows:

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One of the conditions for applying this provision is that the party applying for stay u/s 34 has not taken any steps in the proceedings or filed a written statement before the making of an application u/s 34. The courts below have held that on December 15, 1976 and December 22, 1976 the Defendant took time to file a written statement. Thereby they have taken steps in the proceedings and hence were not entitled to apply for stay of the hearing of the suit u/s 34.

Learned Counsel for the Defendant-applicant has invited my attention to the amendment of Section 34 of the Arbitration Act by the U.P. Civil Laws (Reforms and Amendment) Act, 1976 (U.P. Act No. 57 of 1976) which came into force on January 1, 1977. Section 19 of this Amending Act provides:

Amendment of Section 34. In Section 34 of the principal Act, at the end the following explanation shall be inserted, namely;

Explanation 1....

Explanation 2. A mere application for time to file a written statement or a mere contest to an interlocutory application for injunction, appointment of Receiver or the like, shall not, amount to taking any steps in the proceedings.

Learned Counsel submits that because of the statutory provision the prayer for time to file written statement made by the Defendant could not be held to taking steps in the proceedings within meaning of Section 34.

To the question that the Defendant-applicant took time in December, 1976 prior to the coming into force of the Amending Act of 1976, learned Counsel invited my attention to Section 36 of the Amending Act which provides:

Disposal of pending civil cases-A civil suit, or proceeding to which, the Code of Civil Procedure, 1908 applies, pending on the date of commencement of this Act shall be disposed off in accordance with the provisions of the said code as amended by this Act.

The present suit was filed in 1976. It was pending on January 1, 1977 when the Amending Act came into force. It bad to be disposed off in accordance with the provisions of the Code of Civil Procedure, as amended by this Act. The amendments introduced in the CPC are not material or relevant in this case. The applicant relies upon an amendment to Section 34, Arbitration Act by adding Second Explanation. Section 36 of the Amending Act does not extend to the amendments introduced to the Arbitration Act. It will not automatically apply to pending suits.

Learned Counsel relied upon certain decisions in support of the proposition that a curative or declaratory law must be deemed to be retrospective. Section 34 of the Arbitration Act is neither curative nor declaratory. It amends the law. Previously a Division Bench of this Court in Union of India (UOI) Vs. Hans Raj Gupta and Co., had held that taking of time in order to file a written statement is taking steps in the proceedings within the meaning of Section 34 and precludes a. party from applying under that section. This law was sought to be set at naught by the addition of the Second Explanation. It is more in the nature of amendment of the law rather than declaratory of it. I am, hence, not in a position to agree that the Second Explanation was retrospective in operation so as to apply to pending suits.

Even if it be held that it was retrospective, it will apply to time being taken to file a written statement after , coming into force of the Act. In the present case time was taken on December 15, 1976. Explanation II cannot catch or affect the action of the Defendant in asking for and Obtaining an adjournment on December 15, 1976 for filing the written statement, prior to the coming to force of the explanation. The application u/s 34 was, hence, not maintainable and was rightly dismissed.

In the result, the revision has no force and is accordingly dismissed with costs.