Mukand Wood Products vs Punjab Housing Development Board

R.L. Anand, J.—This is a second appeal against the order and has been directed against the judgment dated 10.2.1988, passed by the District Judge, Ambala, who has dismissed the appeal of the defendants-respondents by holding that it had become redundant on the withdrawal of the application u/s 34 of the Indian Arbitration Act, which was filed by the defendants. The learned District Judge also gave the directions to the trial Court to proceed with the trial instead of referring the matter to the arbitration.

The brief facts of the case are that M/s Mukand Wood Products filed a suit for permanent and mandatory injunction pleading that there was an agreement between the parties obliging the defendants to inspect and lift certain wooden goods consisting of doors, windows and shutters etc. from his premises at Yamunanagar against a pre-fixed price in pursuance to an agreement finalised in February and March, 1982 after floating tenders. 95% of the payment had to be made at the factory site whereas the balance amount of 5% had to be kept as security. It was averred that despite inspection and approval of 937 doors and 567 window shutters on different occasions from 29.7.1982 to 1.8.1982 by the Inspecting Committee of the defendants, they had failed to make payment and lift the goods. The plaintiff feared that defendants wanted to wriggle out of the agreement and were contemplating procuring the goods from some other source by inviting fresh tenders. He, therefore, tried to plead reasons but on finding them unresponsive he filed the present suit.

Notice of the suit was given. Before filing written statement or taking any other steps, the defendants made an application u/s 34 of the Indian Arbitration Act and prayed for referring the matter to the arbitration as contemplated under the agreement. It was contended that all the disputes pertaining to the contract had been agreed to be referred to the Arbitrator nominated in the agreement itself. The trial Court appointed Shri G.L Trehan, Retired Superintending Engineer, Electricity Department as an Arbitrator.

Feeling aggrieved, the defendants brought the appeal before the first appellate Court with the prayer that the appointment of Shri Trehan was in violation of the relevant arbitration Clause 30-A which required reference of such cases to the Superintending Engineer of Electricity Department and they had nothing to do with the nominated Arbitrator.

When the appeal was pending before the District Judge, Ambala, the counsel appearing on behalf of the defendants conceded and stated that as per his instructions, his clients were willing to suffer a decree in terms of Para No. 19 of the plaint which for all intents and purposes contained the gist of the plaintiff''s prayer towards the relief. The offer was taken down by the District Judge on 25.11.1987. Later on, the plaintiff was not willing to accept the offer made by the defendants. He rather, challenged the maintainability of the appeal of the Board before the District Judge. The impugned judgment dated 10.2.1988 further shows that before the District Judge, Ambala, the counsel for the defendants made a prayer that he has received the instructions from his clients and the defendants were not interested to pursue the matter regarding arbitration, in view of the reluctance shown by the plaintiff.

When the defendants were not interested to prosecute their application u/s 34 of the Indian Arbitration Act, the learned District Judge, Ambala dismissed the appeal by holding that it had become redundant and the parties were directed to appear before the trial Court for further proceedings.

It appears that after the passing of the order dated 10.2.1988, the plaintiff became interested to resort to the provisions of the Indian Arbitration Act and that is why he has filed the present appeal against the judgment of the District Judge.

I have heard Shri H.N. Mehtani, Advocate on behalf of the appellant and after hearing him I am of the opinion that his appeal is without any merit.

The plaintiff never filed an application u/s 20 of the Indian Arbitration Act calling upon the Civil Court that the agreement contained a arbitration clause and it may be filed in Court and, therefore, the matter may be referred to the Arbitrator. He field a suit in the form of mandatory and permanent injunction. It were the defendants who filed an application u/s 34 of the Indian Arbitration Act.

Admittedly, there was an arbitration agreement. A nominated Arbitrator was supposed to be appointed by the trial Court but the trial Court appointed Shri G.L. Trehan. This nomination of the Arbitration made by the trial Court was not acceptable to the defendants who filed an appeal. Even if it is assumed for the sake of arguments that the appeal was not maintainable, still, the finding of the District Judge was that the defendants were not interested to prosecute the application u/s 34 of the Indian Arbitration Act, and, therefore, the same was dismissed. The defendants were the master of their cause of action. If the defendants were not interested to prosecute the application u/s 34 of the Arbitration Act, there was no other option to the Civil Court but to dismiss the application. The plaintiff never exercised his right for arbitration by moving an application u/s 20 of the Arbitration Act.

In these circumstances, the appeal of the plaintiff is totally devoid of any merit because the plaintiff, at this stage, cannot revert back to the arbitration agreement which he never invoked before filing the suit. There is no merit in this appeal.