State of U.P. vs Harsh Singh Kanyal

A.N. Verma, J.—This appeal is directed against an order passed by the Court below refusing to stay the proceedings u/s 34 of the Arbitration Act commenced by the plaintiff-respondent by way of a suit against the appellant for recovery of the sum of Rs. 22,000/-. The Court below has rejected the application filed by the appellant u/s 34 of the Arbitration Act on the ground that in the first place the appellant has not filed the original agreement which is stated to have contained an arbitration agreement and secondly that it was not satisfied that the appellant was ready and willing to do all things necessary to the proper conduct of the arbitration at the time when the proceedings i n t he suit were commenced or even thereafter when the application u/s 34 of the Act was moved.

The relevant facts are that the plaintiff was given a contract by the defendant for the excavation of hill site for the construction of a Motor Road in the District of Pithoragarh. According to the plaintiff, it completed the work in compliance with the orders placed by the appellant. However, the Executive Engineer (P.W.D.) Construction Division, Askote illegally withheld a sum of Rs. 28,840/-which was stated to be due to him under the contract. The plaintiff demanded the amount from the appellant (defendant) on several occasions and lastly on 23-7-1981 when a notice u/s 80 C.P.C. was served on the defendant-appellant, but to no avail. "Thereafter, on 20th Dec., 1983, the plaintiff filed the present suit for recovery of Rs. 22,000/- against the defendant-appellant together with interest pendente lite and future at the rate of Rs. 12 per cent per annum.

In this suit before filing any written statement, the defendant-appellant filed an application purporting to be u/s 34 of the Arbitration Act. In this application it was asserted that there was a clause in the contract providing for reference of any dispute arising between the parties to arbitration. The plaintiff-respondent instead of taking steps for reference of the dispute for arbitration has chosen to file this suit which is liable to be stayed u/s 34 of the Arbitration Act. The suit was still at initial stages and if the plaintiff-respondent was so advised he might still have the dispute referred for arbitration.

This application was contested by the plaintiff-respondent, who asserted that the appellant has by his conduct clearly indicated that he was not ready and willing to have the matter referred for arbitration, both at the time of the commencement of the proceedings as welt as even now and consequently the suit should not be stayed. The Court below agreed with the plaintiffs contention and has rejected the defendant-appellant''s aplication.

For the appellant, it was urged that the Court below was wrong in inferring from the mere omission of the defendant-appellant to reply to the notice given by the plaintiff-respondent u/s 80 of the C.P.C., that the defendant-appellant was not ready and willing to have the matter referred for arbitration. It was urged that mere silence of the defendant before the commencement of the proceedings could not by itself lead to the conclusion that he is not ready and willing to have the matter referred for arbitration. In support, learned counsel for the appellant cited several decisions which would be dealt with below.

Having heard learned counsel for the parties, I find no merit in this appeal. In my opinion the application of the appellant u/s 34 of the Arbitration Act was rightly rejected by the Court below. In the application there is a significant omission of any averment direct or indirect to the effect that the defendant was ready and willing at the commencement of the proceeding and even now to do all things necessary to the proper conduct of the arbitration. The purport of the application moved on behalf of the defendant-appellant has already been extracted above. From a perusal of the averments made by the defendant-appellant, all that emerges is a claim by the appellant that in view of the arbitration clause in the contract, the proceedings in the suit are liable to be stayed u/s 34 of the Arbitration Act, as a matter of law. There is not a single averment in that application that the defendant-appellant was ready and willing at all material times to have the dispute determined through the Arbitrator mentioned in the agreement.

1 do not agree with the learned counsel for the appellant that the very fact that the defendant moves an application u/s 34 of the Arbitration Act, must necessarily imply that he is ready and willing to have the matter referred for arbitration. The mere filing of the application u/s 34 of the Arbitration Act without more or without any specific averment about the appellant''s readiness and willingness to have the matter decided through arbitration, points only to the conclusion that the applicant wants the proceedings in the suit to be stayed. As mentioned above, the defendant-appellant has merely contended that the proceedings were liable to be stayed u/s 34, because of the arbitration clause.

Further even the averment in the application that the plaintiff-respondent was not justified in instituting the suit in spite of the arbitration clause, cannot support the contention that the application indicated by implication a willingness on the part of the defendant that the matter be referred for arbitration. Even in regard to the plaintiff-respondent, the defendant has reservations, and said that if he so desires he can have the matter decided through arbitration. This is not an unqualified offer that the matter be referred to arbitration which is mandatory u/s 34.

There are number of decisions, both of this Court and of other High Courts, in which it has been categorically held that an application u/s 34 must contain a specific and unequivocal averment to the effect that the applicant is ready and willing to get the matter adjudicated through arbitration. See, for example, 1981 ALJ 1268 Abid Khan v. Escort Farm and Padma Ram Vs. Bhanwari Devi, . It has been ruled in these cases that readiness and willingness of the defendant in an application u/s 34 of the Arbitration Act should not be a matter of implication but there should be a clear, unambiguous and specific averment to that effect in the application for stay. The same view has been reiterated by the Calcutta High Court in a case reported in Arvind Exports Private Ltd. Vs. Kamani Engineering Corporation Ltd., , in which what eventually weighed with their Lordships was that in the application u/s 34 there was a definite averment that the defendant was ready and willing to go to arbitration.

In this view of the matter, the Court below was right in rejecting the defendant-appellant''s application. In the absence of any assertion, it must be assumed that the requirement of Section 34 has not been fulfilled by the defendant-appellant,

Learned counsel for the appellant cited several decisions reported in Padma Ram Vs. Bhanwari Devi, in support of his contention that mere silence on the part of the defendant to reply to a notice given by the plaintiff before commencing the proceedings could not by itself be a valid ground for assuming that the defendant is not ready and willing to go to arbitration. Learned counsel advanced this argument because the Court below has observed that after service of the notice u/s 80, C.P.C. the defendant kept silent for nearly three years before the institution of the suit.

It is not necessary to go into the question whether in the facts of the present case mere omission of the defendant-appellant to give a reply to the plaintiff-respondent''s notice u/s 80, could by itself lead to the inference that the appellant was not ready and willing to go to arbitration u/s 34 of the Act, because, in my opinion on the averments made in the application u/s 34 of the Act, the appellant was not entitled to have the proceedings stayed u/s 34 of the Arbitration Act. In any case, the omission of the appellant to give a reply to the notice given by the plaintiff-respondent assumes significance when considered in the light of the averments made in the application u/s 34 of the Act. The two together constitute a valid basis for assuming that the defendant was not either at the commencement of the proceedings or even now ready and willing to go to arbitration so as to claim the stay of the proceedings u/s 34 of the Arbitration Act

In the result the appeal fails and is dismissed with costs.