JUDGMENT
1. This appeal was filed against the order of the I Additional Judge, City Civil Court, Hyderabad dated 6th July, 1994 in IA No.343 of 1994 in OS
No.48 of 1992 wherein the appellant has filed the above IA under Section 34 of Arbitration Act, 1940 (for short ‘The Act’) praying the Court to stay all further proceedings in OS No.48 of 1992.
2, The facts of the case are that the appellant has taken on lease two godowns belonging to the respondent initially for a period of eleven months from 1-9-1982. As per the agreement of lease dated 30-10-1982 wherein Clause 3 of the said agreement of lease stipulates that the lease shall be renewed for the same period on the same terms and conditions at the option of lessee at the end of term and so on from time to time. Thereafter, at the end of each successive terms, this option should have deemed to be exercised and the lease shall be deemed to have been automatically renewed if the lessee continues in possession of the demised premises on the expiry of the initial period of eleven months and on expiry of any subsequent term, as the case may be. It is further stated that the defendant continues to be in possession of the leased premises and has been paying monthly rent and the said amounts are being receiving by the respondent-plaintiff. The respondent-defendant sent legal notice dated 14-7-1991 purporting to terminate the tenancy by the end of August, 1991 calling upon the appellant to deliver vacant possession of the premises and a reply was sent on 5-8-1991 and the said notice was alleged to be under Section 106 of Transfer of Property Act is invalid and defective. As per Clause 3 of the lease deed, the lease between the parties is deemed to have been renewed for further eleven months on expiry of initial eleven months and the respondent cannot terminate the lease during its subsistence. Further the respondent continued to receive the rents even after the alleged expiry of lease period and has received the rent till this date and the suit filed by the respondent seeking eviction and also payment of mesne profits and the suit claim is totally without any basis and
the respondent cannot claim the said reliefs and as per clause 14 of the said agreement dated 3-10-1982 all disputes and difference arising out of or in any way touching or concerning the agreement shall be referred to Arbitration or any person appointed by Managing Director of the Central Ware-housing Corporation. Therefore, the respondent has to seek the appointment of arbitrator but cannot seek eviction in civil Court.
3. In reply to the said averments the respondent-plaintiff filed a counter denying the petition contents stating that the petition under Section 34 of the Act is neither maintainable nor tenable and it has to be rejected. Further the petitioner has taken adjournments this petition is filed which is untenable. It is further stated in the counter the petitioner-defendant having taken steps in the proceedings has no right to seek the relief under Section 34 of the Act and the petition is liable to be dismissed. The tenancy is month-to-month as per English Calendar and tenancy rightly terminated by legal notice under Section 106 of Transfer of Property Act. The respondent is not entitled to enforce the so called agreement dated 30-10-1982. The respondent is entitled under law to terminate tenancy and claim eviction and mesne profits.
4. Based on the assertions and denial of both the parties the issue for consideration before the Court below “whether the petitioner-defendant is entitled to stay all further proceedings in OS No.48 of 1992?”
5. The learned Judge after considering Section 3,4 of the Act and after going through the facts of the case that the suit in OS No.48 of 1992 was filed by the respondent-plaintiff seeking eviction and grant of mesne profits against the petitioner-defendant. The suit was filed on 26-10-1991 and on 12-7-1993 Sri. G. Ramachandra Rao, Advocate, filed vakalath
on behalf of the respondent and was seeking adjournments for filing written statement and the matter was posted to 22-9-1993 and again to 11-11-1993 then to 22-1-1994 and so on. Now the present petition is filed into the Court for the first time seeking stay of all further proceedings and notice was ordered on 17-4-1994 and counter was filed.
6. As already pointed out, Section 34 of the Act contemplates the petition should have been filed before filing the written statement or before taking any steps in the proceedings. The petitioner has not done so. Further there is no iota of evidence or whisper in the reply dated 5-8-1991 that the petitioner was ready and willing to go in for arbitration. Of course the validity of issue of notice under Section 106 of Transfer of Property Act and enforcement of terms of lease agreement and merits of the case can be decided after due trial of the case. Suffice to say that the present petition under Section 34 of the Act is not at all maintainable having sought time for filing written statement and there are no valid grounds. Therefore, the learned Judge has dismissed the IA with costs, assailing which the instant appeal is filed.
7. It is submitted by the learned
Counsel for the appellant that Section 34 of the Arbitration Act contemplates that a person can seek the stay of proceedings pending before a civil Court at any time before filing written statement and before taking any other steps in the proceedings. He further submitted that in the present case, though the Advocate entered appearance on behalf of the defendant in the suit on 12-7-1993, but the never sought for time for filing the written statement, but, however, the Court itself adjourned the matter from time to time as a matter of taking further steps, which is evident from the docket of the Court. Therefore, the order passed by the learned Judge is contrary to the provisions of Section 34 of the
Arbitration Act. No other steps are also taken in the above suit.
8. Under similar circumstances, a Division Bench of this Court in A. Ramaswamy v. K. Rama Murthy, (DB) following the judgment of the Supreme Court, interpreting the provisions of Section 34 of the Act of has held that taking other steps means an idea of doing something in aid of the progress of the suit or submitting to the jurisdiction of the Court for the purpose of adjudication on the merits of the controversy in the suit. Therefore, the learned Counsel for the appellant has submitted that in the present case, the defendant has not submitted to the jurisdiction of the civil Court wherein the suit was filed and therefore, the second limb of Section 34 of the Act is not attracted in filing the IA by the defendant in the main suit. Therefore, the order passed by the learned Judge is illegal and contrary to the provisions of Section 34 of the Act.
9. After considering the submission made by the learned Counsel for the appellant and after going through the judgment, it is evident that though the appearance was made by the Counsel on behalf of the defendant on 12-7-1993, he did not sought for any time for filing written statement and has not submitted to the jurisdiction of the Court for the purpose of adjudication on the merits of the controversy in the suit. Therefore, applying the principle laid down by the Division Bench of this Court in A. Ramaswamy’s case (supra), it is my considered view that the respondent herein cannot claim the relief sought for in the suit i.e., the termination of lease and claim mesne profits. But as per clause 14 of the agreement dated 30-10-1982; and all disputes and differences arising out of or in any way touching or concerning the agreement shall be referred to Arbitration or any person appointed by Managing Director of the Central Warehousing Corporation
and as such the respondent has to seek the appointment of an arbitrator but not seek eviction in a civil Court. Further the appellant herein had been willing for such arbitration and as such the suit is not maintainable. It is also not correct, as observed by the learned Judge, that the petitioner has not stated any where in his reply dated 5-8-1991 that he was ready and willing to go for arbitration. Therefore, the IA 343 of 1994 was not filed after taking time for filing written statement or to submit to the jurisdiction of the civil Court for adjudication on merits of the controversy in the suit and as such the IA, is maintainable under Section 34 of the Arbitration Act.
10. Accordingly, the order of the Court below is liable to be set aside and accordingly set aside. In the circumstances of the case, the appeal is allowed without costs setting aside the order under challenge in IA No.343 of 1994 in OS No.48 of 1992 dated 6-7-1994 on the file of the I Additional Judge, City Civil Court, Hyderabad. No costs.