JUDGMENT
K.S. Gupta, J.
1. In the suit filed for specific performance of agreement to sell dated 6th March, 1987 in regard to flat No. 140, first floor, DDA flats, East of Kailash, New Delhi, the defendant moved this application under Section 34 of Arbitration Act, 1940 (for short the ‘Act’) alleging that in view of arbitration clause contained in the agreement dated 6th March, 1987 upon differences having arisen between parties, the plaintiff filed Suit No. 2951/88 under Section 20 of the Act for referring the disputes as detailed in para No. 8 of petition to arbitration and by the order dated 20th July, 1990 Justice Charanjit Talwar (Retd.) was appointed as sole arbitrator for adjudication of those disputes. The arbitrator entered upon reference on 25th August, 1990 on which date, D.C. Aggarwal, husband of plaintiff was present while defendant was represented by his counsel. On time being sought by plaintiffs husband on the ground of his counsel being out of station, the arbitrator allowed 10 days time for filing statement of claim by the plaintiff. It is alleged that arbitrator fixed his fee at Rs. 15,000/- and required the parties to pay it in equal shares. Although the defendant paid Rs. 7,500/- but the plaintiff failed to pay her share of fee. She also failed to file her statement of claim till as late as 24th November, 1990. On 17th December, 1990 the arbitrator asked the plaintiff to file affidavit(s) by way of evidence by 20th December, 1990 and 23rd December, 1990 was fixed to conclude the case and deliver award within the statutory period of four months. On 23rd December, 1990; the defendant appeared alongwith his counsel who was ready with affidavit and documents in support, of the defense and to argue the case. After waiting for over 40 minutes for the plaintiff, the arbitrator adjourned the case sine die saying the since period of four months has elapsed, he would not fix any date unless the time is extended by the Court. The defendant has neither filed written statement nor taken any other steps in the proceedings. It was prayed that suit be stayed pending adjudication of the disputes which had been referred to arbitration vide order dated 20th July, 1990 passed in Suit No. 2951/88.
2. Plaintiff contested the application by filing reply. It is not disputed that in Suit No. 2951/88 filed under Section 20 of the Act, by the order dated 20th July, 1990, Justice Charanjit Talwar (Retd.) was appointed as sole arbitrator for adjudication of claims; the arbitrator entered upon reference on 25th August, 1990; the plaintiff filed her statement of claim on 24th November, 1990 and she was asked to file affidavit(s) by way of evidence by 20th December, 1990; the arbitrator fixed 23rd December, 1990 and no one appeared on her behalf on that date and arbitrator adjourned the
proceedings sine die. However, it is alleged that in view of the judgments reported in 1990 RLR 454 and 1990 RLR 536, suits for specific performance were not liable to be referred to arbitration. Accordingly, the plaintiff filed an application dated 20th December, 1990 before the arbitrator bringing to his notice both the said judgments and taking note thereof, he did not proceed further with the reference. It is denied that arbitrator did not proceed with the reference as the period of four months had elapsed, as alleged. It is claimed that plaintiff had always been ready and willing to pay her fair share of fee to the arbitrator. It is pleaded that the plaintiff has filed OMP No. 13/93 praying that arbitration clause in the agreement to sell dated 6th March, 1987 be declared to be of no effect etc. It is denied that suit is liable to be stayed as prayed for.
3. Simultaneously with the filing of suit of specific performance/injunction/damages etc., the plaintiff also filed OMP No. 13/93 on 13th January, 1993. In this OMP filed under Sections 33 & 37(5) of the Act, the prayer made by the plaintiff is for declaration that the arbitration clause in agreement to sell dated 6th March, 1987 is of no effect for the purpose of deciding the disputes between the parties under the said agreement and it shall cease to exist with reference to the differences/disputes referred to arbitration. Decisions in Smt. Sulochana Uppal v. Sh. Surinder Sheel Bharkri, and Hari Om Properties (P) Ltd. v. B. Dittta, 1990 RLR 536, are the basis of filing this OMP. After formulating the following question, the file was ordered to be placed before Hon’ble the Chief Justice for constituting a Bench to reconsider aforesaid two decisions by a learned Single Judge by the order dated 27th September, 1996 in the said OMP.
“Does Section 20 of the Specific Relief Act, 1963 debars parties to an agreement to sell from referring the question of specific enforceability for adjudication by an arbitrator ?”
4. Relying on the decision in Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan and Ors., , a Division Bench of this Court has answered the reference holding that there is no bar to referring the question of specific enforceability of an agreement of sale to an arbitrator and aforementioned two decisions rendered by this Court stand overruled by the said decision “of Apex Court by the order dated 29th November, 1999. OMP is to be disposed of now in the light of order dated 29th November, J.999.
5. Submission advanced by Sh. Arun Khosla appearing for plaintiff was three fold:-
1. The defendant had taken steps in the proceedings by filing written statement.
2. Non-filing of application seeking extension of time under Section 28 of the Act by the defendant after arbitration proceedings were adjourned sine die on 23rd December, 1990, shows that defendant was not ready and willing to proceed with the arbitration matter, and
3. Reference to arbitration was made more than ten years ago and it would not be appropriate to force the plaintiff to have the disputes adjudicated through arbitration now.
6. On the other hand, Sh. Daljit Singh appearing for defendant pointed out that application under disposal was filed on 12th April, 1992 immediately after receipt of summons arid as is evident from the order dated 29th October, 1993, the written statement was filed on 23rd November, 1993 by the defendant without prejudice to his rights and contentions in the suit. Relying on the decision in The Hanuman Chamber of Commerce Ltd. v. Parmeshri Lal CO. etc., AIR (38) 1951 Simla 173, it was urged by him that Section 34 of the Act does not prohibit filing of written statement pending decision of the application for stay of proceedings under that Section. Said order dated 29th October, 1993 and The Hanuman Chamber of Commerce Ltd.’s case (supra) do support the factual statement as also legal position pointed out on behalf of defendant
7. At the cost of repetition, it may be mentioned that the ground disclosed in reply for non-participation in proceedings before arbitrator by the plaintiff, is that it is only the Court which can decree specific performance of contract. In Olympus Superstructures Pvt. Ltd.’s case (supra), the Supreme Court has held that right to specific performance of an agreement of sale deals with contractual rights and it is certainly open to the parties to agree with a view to shorten litigation in regular courts-to refer the issues relating to specific performance to arbitration; there is no prohibition in the Specific Relief Act, 1963 that issue relating to specific performance of contract relating to immovable property could be referred to arbitration nor is there any such prohibition contained in Arbitration and Conciliation Act, 1996. Issue on hand is to be decided with reference to legal position as of date. Obviously, in view of the said decision the very foundation on which the plaintiff declined to participate in arbitration proceedings cannot be sustained. Since reference of disputes to arbitration with consent of parties stood made by the order dated 20th July, 1990, the argument about defendant not willing and ready to perform his part of obligation within the meaning of Section 34 for his failure to apply for extention of time under Section 28 of the Act, would not be available to the plaintiff. Nor could filing of written statement at a later stage without prejudice to his rights and contentions by the defendant, be taken as ground for dismissal of the application under disposal. It may be noticed that last order by the arbitrator was made on 23rd December, 1990 and the suit and OMP came to be filed by the plaintiff more than two years thereafter on 13th January, 1993. In this backdrop, the plaintiff also cannot be heard to say that because of long gap of about 10 years the disputes be decided in the suit instead of through arbitration. It is still not too late for the plaintiff to file application seeking extention of time for making award by the appointed arbitrator. Application thus deserves to be allowed.
Consequently, the application is allowed and suit is stayed.
