JUDGMENT
B.P. Jha, J.
1. I shall dispose of these two appeals, namely, Miscellaneous Appeals Nos. 58 and 72 of 1976 by a common judgment as there is common point of law for decision. The parties in both the appeals are common. The plaintiff preferred these two appeals against the order dated 12-12-1975 passed in Money Suit No. 26 of 1974 and order dated 7-1-1976 passed in Money Suit No. 173 of 1974. Miscellaneous Appeal No. 58 of 1976 arises out of Money Suit No. 26 of 1974 and Miscellaneous Appeal No. 72 of 1976 arises out of Money Suit No. 173 of 1974. The points of law raised in both the orders are common.
2. The appellant in both the appeals filed the aforesaid money suits for realization of certain dues from the Fertilizer Corporation of India Ltd. (hereinafter referred to as ‘the Corporation’). The plaintiff entered into agreements with the Corporation for executing certain works. In this connection the plaintiff executed two agreements with the Corporation. Clause 65 is the arbitration clause in both the agreements which runs as follows:–
“Settlements of disputes — except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship, or materials used on the work, or as to any other question, claim, right, matter or thing whatsoever if any arising out of, or relating to the contract, designs, drawings, specifications, estimates, instructions, orders, or these conditions, or otherwise concerning the work of the execution, or failure to execute the same. Whether arising during the progress of the work or after the completion or abandonment thereof or otherwise shall within one month of the arising of such question or dispute, be referred to the Sole Arbitration of the General Manager of F.C.I, and if the General Manager is unable or unwilling to act, to the Sole Arbitration of some other person appointed by the G. M. willing to act as such Arbitrator. There will be no objection if the Arbitrator so appointed is an employee of F.C.I, and that he had to deal with the matters to which this agreement relates and that in the course of his duties as such he had expressed views on all or any of the matters in dispute or difference. The Award of the Arbitrator so appointed shall be final, conclusive and binding on all parties to this contract.”
It is on the basis of this arbitration clause, the plaintiff sent two notices in respect of two agreements to the Corporation on 2-5-1973 for referring the dispute between the parties to the arbitrator in view of the arbitration Clause 65 of the agreement. The defendant Corporation instead of referring the matter to, the arbitrator filed an application under Section 33 of the Arbitration Act, 1940 (Act X of 1940) (hereinafter referred to as ‘the Act’) before the Subordinate Judge, 1st Court, Dhanbad challenging the validity of the arbitration clause. The Corporation challenged the validity of the arbitration clause on the ground that the arbitration agreement had been determined by efflux of time. In view of this application under Section 33 of the Act, the the learned Subordinate Judge was pleased to pass an ad interim order of injunction on 10-9-1973 restraining the plaintiff from enforcing the arbitration clause and restrained the General Manager of the Corporation from proceeding with the arbitration. Under Clause 65 of the agreement the General Manager of the Corporation was the arbitrator. This order was passed in Miscellaneous Case Nos. 38 and 39 of 1973 on the basis of the petition filed by the defendant-Corporation. Thereafter the plaintiff filed two money suits for realisation of the money dues with the Corporation, that is, on 25-2-1974 Money Suit No. 25 of 1974 and on 30-9-1974 Money Suit No. 173 of 1974. During the pendency of the ad interim injunction orders, the defendant-Corporation filed two applications under Section 34 of the Act for stay of proceedings in two suits on 20-5-1975 (in Money Suit No. 26 of 1974) and on 27-5-1975 (in Money Suit No. 173 of 1974). On the basis of these two petitions, the court below stayed the proceeding in both the suits (Money Suits Nos. 26 and 173 of 1974). The plaintiff has preferred these two appeals under Section 39 (1) (v) of the Act against the order staying the proceedings in both the suits.
3. The short point for consideration in both the appeals is:
Whether the applicant has satisfied the court not only that he is but also that he was at the commencement of the proceeding ready and willing to do every thing necessary for the proper conduct of the arbitration proceeding? Before filing an application under Section 34 of the Act the applicant is required to satisfy two conditions, namely:
(i) that the application must be filed at any time before filing the written statement or taking any other steps in the proceedings, and,
(ii) that the applicant was at the commencement of the proceedings and still is ready and willing to do all things necessary for proper conduct of the arbitration.
In the present case the first condition has been satisfied. The defendant-Corporation moved applications under Section 34 of the Act in two suits before filing of the written statement or before taking any other steps in the proceedings. It is to be seen as to whether the Corporation has satisfied the next condition or not. On 2-5-1973 the plaintiff-appellant sent notices to the Corporation requesting it to send the matter to the arbitration in accordance with Clause 65 of the agreement. Instead of referring the matter to the arbitrator, the Corporation moved applications under Section 33 of the Act and thereby challenged the validity of the existence of the arbitration agreement. To this effect the Corporation moved two separate applications in Miscellaneous Cases Nos. 38 and 39 of 1973 before the Subordinate Judge 1st Court, Dhanbad. In these two applications the court was pleased to pass ad interim injunction orders on 10-9-1973 whereby the plaintiff was restrained from referring the matter to the arbitration. It is also an admitted fact that while ad interim orders of injunction were in existence, the Corporation moved two separate applications under Section 34 of the Act in both the two Suits (Money Suits Nos. 26 and 173 of 1973) to stay the proceedings in these suits. In these two applications they relied on the arbitration Clause 65 of the agreement.
4. On these facts learned counsel for the appellant contends that as the Corporation was not willing to do all things necessary for proper conduct of the arbitration proceeding at the commencement of the proceedings both the suits and petitions under Section 34 of the Act are not maintainable. In my opinion there is sufficient force in this argument. When the two money suits were filed, that is, on 25-2-1974 and 30-9-1974, the respondent had already obtained ad interim orders of injunction in Miscellaneous Cases Nos. 38 and 39 of 1973. It is, therefore, clear that the Corporation was not ready and willing to do all things necessary for the proper conduct of the arbitration at the commencement of the proceedings in both the suits. Hence I hold that the Corporation failed to satisfy this condition and as such the petition for stay under Section 34 of the Act must fail on this ground alone.
5. In this connection learned counsel for the appellants relies on a decision of the Supreme Court in Food Corporation of India v. Thakur Shipping Co. (AIR 1975 SC 469). In that case, the Food Corporation of India requested M/s. Thakur Shipping Company to refer the dispute to the arbitrator in view of the arbitration clause. In spite of several letters Thakur Shipping Company refused to accede to the request of the Food Corporation of India. It is for this reason their Lordships held (at p. 471):
“Failing to act when a party is called upon to do so is a positive gesture signifying unwillingness or want of readiness to go to arbitration,”
Relying on this decision I hold that the defendant Corporation took a positive stand that arbitration clause does not apply to the facts of the present two cases. Hence the defendant Corporation obtained ad interim orders of injunction restraining the plaintiff in both the suits from referring the matter to the arbitrator. In my opinion the defendant Corporation took a positive step signifying unwillingness or want of readiness to go to arbitration. Hence I hold that the defendant Corporation was not ready and willing to refer the matter to the arbitration at the commencement of the proceeding in both the suits. If it is so, the petitions filed by the defendant Corporation under Section 34 of the Act must fail on this ground. In this connection reference was made to another decision Weir v. Johnson [(1882) WN 159). In that case it was held that if a party was not willing at the commencement of the proceeding to refer the matter to arbitration that party will not be entitled to move a petition for stay of the proceeding for referring the matter to the arbitration. In my opinion this decision fully applies to the facts of these cases.
6. There is another aspect of the matter and that is this : There are many infirmities in the petitions filed by the Corporation before the court below.
They filed two separate petitions in two different suits under Section 34 of the Act. They did not aver that they are still ready and willing to do all things necessary for proper conduct of the arbitration and they were also ready to do so at the commencement of the proceeding. There is no affidavit attached to any of the petitions filed under Section 34 of the Act. In this connection a reference was made to Halsbury’s Laws of England, Vol. 2, P. 291, para. 564 in 4th Edition that he must also file an affidavit to this effect in support of his application for a stay. The applicant must state in his application that he is and he was at the time of commencement of the proceeding ready and willing to do everything necessary for the proper conduct of arbitration and there must be an affidavit to support this, fact. In the present case neither there is any averment to this effect nor there is any affidavit filed by the applicant in both the suits. Hence both the petitions under Section 34 of the Act are not maintainable in view of these infirmities.
7. Learned counsel for the appellant also attacks the validity of the impugned orders on the ground that there is no specific finding that the Corporation was ready and willing to do everything necessary for the proper conduct of the arbitration at the commencement of the proceeding in both the suits. In the absence of this finding in both the orders the applications under Section 34 of the Act must fail.
8. Learned counsel for the Corporation (respondent) contends that merely because the Corporation filed petitions under Section 33 of the Act, it does not mean that the Corporation was not willing to participate in the arbitration proceeding. In other words he means to say that simply because the Corporation challenged the validity of the arbitration, it does not mean that Corporation was not willing at the commencement of the proceeding to do everything necessary for the proper conduct of the arbitration. Though the argument seems to be attractive, it is not possible to accept it in view of the decision of the Supreme Court in Food Corporation of India v. Thakur Shipping Co. (AIR 1975 SC 469) (supra). In this connection learned counsel for the respondent relies on a decision of King’s Bench Division in W. Bruce Ltd. v. J. Strong [(1951) 2 KB 447]. In that case a time limit was fixed to refer the matter for arbitration. The point for consideration in that case was that if the time had elapsed for referring the matter to arbitration in view of the arbitration clause then could a party refer the matter to arbitration or not? In this connection Denning L. J, has held that in a case of hardship, the High Court has power to extend the time for arbitration in view of Section 27 of the Arbitration Act, 1950, In my opinion the facts of King’s Bench case do not apply to the facts of the present case. In the present case when the plaintiff sent notices on 2-5-73 to the Corporation for referring the matter to the arbitration, the Corporation did not accede to his request. On the other hand, the Corporation filed applications under Section 33 of the Act and challenged the validity of the arbitration clause. In other words, the Corporation took the positive stand that the arbitration clause does not apply. Hence the Corporation filed two miscellaneous cases (Miscellaneous Cases Nos. 38 and 39 of 1973) before the Subordinate Judge, 1st Court, Dhanbad and obtained ad interim orders of injunction whereby the plaintiff wag restrained from enforcing the arbitration clause. It is on these facts I hold that the defendant Corporation was unwilling to do all things necessary for the proper conduct of the arbitration at the commencement of the proceedings in both the suits. Hence I hold that the two petitions filed by the Corporation in both the suits (Money Suits Nos. 26 and 173 of 1974) are not maintainable because the Corporation did not satisfy the mandatory conditions laid down under the latter part of Section 34 of the Act.
9. The point of law may be summarised thus :
Before filing an application under Section 34 of the Act, the applicant must satisfy these conditions, namely, that (i) that the applicant must file the application at any time before filing the written statement or taking any other steps in the proceedings, and (ii) that the applicant was at the time when the proceeding was commenced and is still ready and willing to do all things necessary for the proper conduct of the arbitration. In the present case, the former condition was satisfied but the latter condition was not satisfied. On the facts of this case it is clear that the Corporation had filed applications under Section 34 of the Act and was not willing and ready to do all things necessary for the proper conduct of the arbitration at the commencement of the proceeding. Hence its applications under Section 34 of the Act must fail on that ground. The applicant is also required to make necessary averments that not only he is ready at present but he was also ready and willing to participate in the arbitration at the commencement of the proceeding. These facts must be supported by an affidavit. If there is no such averment nor there is any affidavit, the application under Section 34 of the Act must fail. In the present case there was neither any averment nor there was any affidavit attached to the application.
10. In the result both the appeals are allowed and the impugned orders dated 12-12-1975 passed in Miscellaneous Appeal No. 58 of 1976 and dated 7-1-1976 passed in Miscellaneous Appeal No. 72 of 1976 are set aside. But in the circumstances in both the appeals the parties will bear their own costs.
Nagendra Prasad Singh, J.
I agree.