AI Structured Summary
Not yet generated for this judgment
Judgment
V.K. Jhanji, J.—This is plaintiff''s second appeal directed against the judgment and decree of the Courts below dismissing the suit of the plaintiff for recovery of Rs. 63,001/- as price for the work done along with costs and interest.
In brief, the facts are that in pursuance of an arbitration clause in respect of work contract executed between the plaintiff (appellant herein) and the defendants (respondents herein), plaintiff made an application u/s 20 of the Indian Arbitration Act, 1940 (in short the Act) for filing the arbitration agreement in reference to the dispute to the arbitrator. The learned Sub Judge, 1st Class, Amritsar, allowed this application and made reference to Shri J.S. Sodhi, Chief Engineer, as Arbitrator. Arbitrator made his award on 31.5.1982. Plaintiff filed objections u/s 30, 33, 16 and 19 of the Act against this award on the ground of misconduct of the arbitrator and for lack of opportunity of hearing in the proceedings. The learned Sub Judge recorded a finding that the arbitrator had misconducted himself and also misconducted in the proceedings and therefore, vide order dated 21.2.1985 set aside the award. Defendants filed an appeal u/s 39 of the Act against the order of Sub Judge, 1st Class, Amritsar so as to sustain the award, but the appeal filed was dismissed vide order dated 16.10.1986 by the learned Additional District Judge, Amritsar. Defendants filed civil revision against the order of Additional District Judge and also of the Sub Judge, Amritsar, but the revision petition too was dismissed by this Court on 4.10.1988.
Plaintiff thereafter served notice u/s 80, Code of Civil Procedure, and filed the present suit. Suit was contested by the defendants by taking the preliminary objections that the suit is barred by law of limitation to entertain and try the suit; that the suit is not properly valued for the purposes of court-fee and jurisdiction; and that the suit is not maintainable. On merits, it was admitted that the dispute arose between the parties on account of breach pf terms and conditions of the agreement. It was however, denied that plaintiff was not given full opportunity by the arbitrator. It was admitted that Shri M.M. Aggarwal, Sub Judge, 1st Class, Amritsar, set aside the award of the arbitrator. Defendants claimed that amount of Rs. 14,600/- on account of balance work being carried out at enhanced rate is liable to be adjusted towards the due amount. Defendants also claimed that the plaintiff is not entitled to claim the amount or interest. Defendants prayed for the dismissal of the suit. Plaintiffs filed replication to the written statement controverting the allegations of the defendants in the written statement and reiterating those convained in the plaint. On the pleadings of the parties the learned trial Court framed the following issues :-
(1) Whether the plaintiff is entitled to recover amount of Rs. 63,001/- as prayed? OPP.
(2) Whether Civil Court at Amritser has jurisdiction to entertain present suit? OPP.
(3) Whether the suit of the plaintiff is within time? OPP.
(4) Whether the suit is not properly valued for the purposes of court-fee and jurisdiction? OPD.
(5) Whether the suit is not maintainable? OPD.
(6) Relief.
The learned trial Court dismissed the suit by saying that in view of the reference already made to the arbitrator, suit is not maintainable. It was further held that the suit is not within time. In appeal, plaintiff challenged both the findings. The learned Additional District Judge did not return any finding on the issue of limitation and simply affirmed the finding of the trial Court in regard to the suit being not maintainable. First appellate Court held that on setting aside of the award, plaintiff ought to have approached the arbitrator once again for fresh decision and suit on the same cause is not maintainable. Hence, the second appeal by the plaintiff.
Learned counsel appearing on behalf of plaintiff has contended that the Courts below while holding suit to be rot maintainable have failed to take into consideration that on setting aside of the award, neither any reference made by the Court was pending with the Arbitrator nor could be deemed to have been revived. In answer to these submissions, learned counsel appearing on behalf of defendants has contended that on setting aside of the award, the only remedy left with the plaintiff was to get the matter again referred to the Arbitrator and a separate suit for recovery was not maintainable. It is contended that there is no illegality or infirmity in the judgment of the Courts below.
It is well recognised that the Civil Courts nave plenary powers to try all suits which involve determination of any civil right. Only two things are required to give jurisdiction; (i) dispute must be of civil nature; and (ii) its cognizance must not be barred by other Statute either expressly or by necessary implication. Suit out of which the present appeal has arisen, was for recovery of money and the same being of civil nature, Civil Court had the jurisdiction to entertain the same. The objection of the defendants to the maintainability of the (sic) is that the parties to the suit by an agreement had decided to refer the dispute to the Arbitrator and therefore, the remedy of the plaintiff was only in getting the dispute again referred to the arbitrator and suit in this regard was not maintainable. It is true that the parties can enter into written agreement to submit present or future differences to arbitration, but mere subsistence of arbitration agreement between the parties is no bar to the institution of a suit by a party to such an agreement. It is only when a suit is filed by a party to an agreement, the other party has an option u/s 34 of the 1940 Act either to apply for stay of the suit filed against him in respect of the matters covered by arbitration agreement or to defend the suit to get a decision on merits by the Court. A party applying for stay of the suit has to do so before taking any steps in the proceedings and before filing a written statement. In this case, earlier the matter was referred to the Arbitrator but the award made by the Arbitrator was set aside by the Court. While setting aside the award, the Court did not remit the same to the Arbitrator u/s 16(1)(c) of the 1940 Act and instead held the Arbitrator to be guilty of misconduct. On setting aside of the award, plaintiff had two remedies; either to file suit or to seek reference of the dispute for adjudication by the Arbitrator. Plaintiff in this case chose to file suit. Defendants in case were ready and willing to do all things necessary for the proper conduct of arbitration, they were required to apply to the Court u/s 34 of the 1940 Act for stay of the suit and for referring the matter to the Arbitrator in accordance with the arbitration agreement. Defendants instead of applying for stay of the suit, sought adjournments to file written statement and then filed written statement on merits wherein an objection was also taken in regard to subsistence of the arbitration agreement. The objection regarding subsistence of the arbitration agreement if taken for the first time in the written statement filed on merits, cannot be taken to be an application u/s 34 of the 1940 Act for stay of suit. Section 34 requires that application for stay of legal proceedings must be filed before the filing of written statement or taking any other steps in the proceedings. In this regard, reference may be made to a judgment of the Supreme Court, in Rachappa Gurudappa Bijapur Vs. Gurudiddappa Nurandappa and Others, , wherein their Lordships of the Supreme Court have opined "In order to be entitled to stay under S.34 of the Act, it is imperative to find out whether "any other steps in the proceedings" have been taken before making an application for stay apart from written statement. "Some other step" mentioned in the Section must indisputably be such step as would manifestly display an unequivocal intention to proceed with the suit and to give up the right to have the matter disposed of by arbitration." In Rachappa Guruadappa''s case (supra), counsel appearing for the party to the suit had sought adjournment specifically for filing written statement and obtained time for more than one occasions for such purpose. Subsequent application for stay of suit was held to be not maintainable. In this case, defendants not only sought many adjournments to file written statement, but also did not file any application for stay of suit. By their conduct, defendants clearly showed their intention to have the matter adjudicated by the Court. Consequently, the finding of the Courts below on issue No. 3, being erroneous deserves to be set aside. It is so ordered.
Learned counsel for the appellant contended that the suit filed was within limitation and could not be dismissed on the ground that it is barred by time. It is contended that finding of the trial Court in this regard is erroneous. The issue in regard to suit being within time was decided against the plaintiff by the trial Court but in appeal, no finding on this issue was given by the first appellate Court. In order to obtain finding on this issue, I am of the view that the matter deserves to be remanded to the first appellate Court. Accordingly, it is so ordered. In case, first appellate Court on remand, finds that suit of the plaintiff was within time, then it may remand the suit to the trial Court for giving finding on all other issues after affording an opportunity to the parties to lead evidence or may call for a report from the trial Court.
Resultantly, the appeal is allowed, judgment and decree of the Courts below is set aside and the matter is remanded to the first appellate Court to decide the first appeal as directed above. No costs.
Parties through their counsel are directed to appear before the Additional District Judge, Amritsar, on 13.1.1999.