Muhamed Mohideen Nachiar and Others vs Muhamed Naina Maracair and Others

Horwill, J.—The defendants in their written statement in this suit raised various defences and one of them was that the plaintiffs had agreed

to submit their case to arbitration. Various issues were framed, one of which was whether the Court had jurisdiction. That issue and another were

heard nearly three years later; and on the last day of arguments on these issues the Court drew the attention of the vakil for the defendants to the

fact that he should, under paragraph 18 61 the second schedule to the Civil Procedure Code, have put in an application for a stay. The

defendant''s vakil acted on this and filed a petition; but even then the petition did not contain1 some of the necessary elements and it had to be

amended. Orders were then passed granting stay of the suit to permit the parties having recourse to arbitration. In the first instance a stay for six

months was granted and later the suit was adjourned sine die. An appeal was filed to the District Court, which upheld the orders of the

Subordinate Judge.

In revision it is urged that the Subordinate Judge acted illegally in granting a stay at such a late stage of the proceedings; for the provisions of

paragraph 18 of the second schedule like those of Section 22 of the Civil Procedure Code, require an application at the earliest possible

opportunity or at or before the framing of issues if stay is to be granted.

The Courts below seem to be of opinion that this objection of the plaintiffs was a highly technical one and one that should not be allowed to

prevail. Certain cases were quoted before them; but they came to the conclusion that although there was no ambiguity in the language of paragraph

18 of the second schedule, yet it did not appear probable that paragraph 18 intended to lay down any rigid rule. Reference was made to

Dinabandhu Jana v. Durgaprasad Jana ILR (1919) Cal. 1041 where it was only in the High Court in appeal that an objection was raised that no

application for stay had been put in. In that case, not only had one side failed to put in an application for stay, but the other side had failed to take

any objection to the proceedings on that ground; and so the Calcutta High Court thought that the best procedure to adopt was to remand the suit

to the stage of framing issues so that the trial Court could consider the merits of an application for stay. I do not think there is anything in this case

which suggests that the learned Judges of the Calcutta High Court who heard that appeal thought, that the provisions of paragraph 18 of the

second schedule were not mandatory. The wording of paragraph 18, as well as of Section 22 of the Civil Procedure Code, is clearly mandatory

and if any authority were needed for the position, it is found in Firm Behari Lal Kanhaya Lal v. Official Receiver, Lahore AIR 1925 Lah. 175 and

Shiv Datt v. Motiram AIR 1925 Lah. 322 (1). The suit was filed in August, 1933 and issues were framed on 5th December, 1933. The petition for

stay, far from being filed at the earliest opportunity, was put in only at the instance of the Court on 11th September, 1936. It cannot therefore be

said that the provisions of paragraph 18 of the second schedule were complied with; and I think the lower Courts were wrong in treating the

provisions of this paragraph so lightly. It is clearly beyond the powers of a Court to treat some laws of the legislature as being less binding on them

than others.

It is however argued that although the defendants did not put in a regular petition for stay, paragraph 6 of the written statement is tantamount to

an application for stay. Paragraph 6 runs as follows:

This defendant submits that the suit is barred by Article 14 of the Agreement of Partnership, whereby all the parties are bound to appoint

arbitrators in accordance with Article 119 of the CPC in force at Padang for the purpose of settling the accounts and distributing the shares. This

defendant specifically called upon the plaintiffs to act in accordance with the said provision and not to rush to Court with a suit for accounts. The

said clause is further evidence of the intention of the parties to be bound only by the authority and jurisdiction of the Courts at Padang.

Clearly, this paragraph was intended to be one of the many defences set up by the defendants to the plaintiff''s suit and the final prayer was that

the suit should be dismissed. Paragraph 6 cannot therefore in itself be interpreted as an application for stay. It is however possible to argue that if

this defence were accepted, the Court could not go on with the suit; but would be obliged, if it thought that the matter should be referred to

arbitration because the parties had contracted to do so, to stay the suit; and that although no application for stay was specifically made, yet the

consequence of this defence was that the suit should be stayed. This argument was one that ought not, I think, to be accepted; for upon the filing of

a suit the power of the parties to refer the matter to arbitration ends; and as paragraph 18 of Schedule II itself shows, an agreement to arbitrate

does not operate as a stay of suit.

Nevertheless, sitting in revision, I am reluctant to interfere because substantial justice has been done by the Courts. It seems eminently desirable

that as the parties had contracted to arbitrate, they should be compelled to do so. The plaintiffs filed no reply to the written statement of the

defendants; and until the situation had been cleared by arguments on the preliminary issues and by a decision by the Court on those points it was

not easy to say what the next step in the proceedings for the disposal of the dispute between the parties was to be.

I cannot however agree with the learned Subordinate Judge that the proper order to pass is ''adjourned sine die''. Clearly the Court ought not to

renounce its powers and its duties in the disposing of the suit; and it is bound to exercise as much control as it can over the proceedings before the

arbitrator. It is the duty of the Court to see that the parties do not delay the disposal of the arbitration proceedings and to see that as far as possible

they prosecute those proceedings.

I would therefore modify the order of the Subordinate Judge by granting an adjournment for one year from the last order of adjournment instead

of sine die. It would then be open to the Subordinate Judge to adjourn the case to such further date as he thinks necessary, if the parties have done

all that they could to further the disposal of their dispute before the arbitration tribunal. Although the Courts below have not done any injustice to

the parties, they have passed an order which is technically wrong. I therefore order both sides* to bear their own costs in regard to this petition for

stay, in all three Courts.