Holding

Order XXIII CPC applies to Section 34 applications and the two separate stay applications are maintainable.

Summary

A suit was filed by Gouri Sankar Sarda against R. McDill Co. and Misrilal Bharamchand. The defendants applied under Section 34 of the Arbitration Act, 1940 for a stay of the suit, but the application was withdrawn for a formal defect and the court ordered them to make a fresh application. Instead of filing a joint fresh application, the defendants filed two separate stay applications, which the High Court rejected on the ground that the liberty to make a fresh application was singular. The Supreme Court held that Section 41 of the Arbitration Act makes the provisions of the Code of Civil Procedure, including Order XXIII, applicable to such applications, and that the two separate applications were maintainable. Consequently, the High Court's dismissal was set aside and the matter was remitted for disposal. The appeals were allowed.

Issues considered

Whether Order XXIII of the Code of Civil Procedure applies to applications for stay filed under Section 34 of the Arbitration Act, 1940.
Whether two separate applications for stay are maintainable after a court grants liberty to make a fresh application.

Legislation cited

Arbitration Act, 1940s. 34, s. 41
Code of Civil Procedure, 1908s. Order XXIII

Subjects

Arbitration ActSection 34stay of suitCode of Civil ProcedureOrder XXIIIwithdrawal of applicationfresh applicationmaintainabilitySupreme Courtspecial leave

Judgment

R. MCDILL AND COMPANY PVT. LTD.
A
V.
~ GOURI SANKAR SARDA AND OTHERS

MARCH 13, 1991

[N.M. KASLIWAL AND K. RAMASWAMY, JJ.] B

Arbitration Act, 1940: ss. 34, 41-Application for stay in a suit-
>----- Provisions of Code of Civil Procedure-Whether applicable.

Code of Civil Procedure, 1908: Order XXlll-Suit pending

......,.. ' --- before High Court-Joint application by two defendants under s. 34 of
Arbitration Act-Permission to withdraw with liberty to make a fresh
application-Two separate stay applications moved-Maintainability of.
c

In a suit filed by plaintiff-respondent no. 1 before the High Court,
defendant-appellants filed a joint application under s. 34 of the Arbitra-
tion Act for staying proceedings of the suit and referring the matter to D
arbitration. In view of some formal defects in the said application, the
High Court on 25.2.1966 without mentioning the defects ordered,
"Application withdrawn with liberty to make a fresh application". On
21.3.1966 the appellants submitted two separate applications for stay-
ing the suit in so far as it related to them or in the alternative for stay of

>- the entire suit. The plaintiff-respondent resisted the applications as not
being in terms of the order dated 25.2.1966. Upholding the objection,
E

Learned Single Judge refused to stay the suit.

On appeal, the Division Bench of the High Court held that the
liberty was granted to 'make a fresh application' and as such, under the
provisions of Order XXIII, C.P.C., the appellants had no right to move F
two separate applications to stay the suit.
v--· In appeal by special leave to this Court it was contended that
provisions of Order XXIII, C.P.C. were not applicable to applications
filed under s. 34 of the Arbitration Act; and that the High Court com-
mitted an error in taking a technical view that as liberty was given to G
withdraw the application in order to make a fresh application, the
appellants were not entitled to make separate stay applications.
~.~
Respondent no. 1 supported the impugned judgment.

Allowing the appeals, this Court,
H

- 809
810 SUPREME COURT REPORTS (1991] 1 S.C.R.

HELO: 1. m view of s. 41 of the Arbitration Act, 1940, subject to
A provisions of the Act, Code of Civil Procedure, 1908 apply to all pro-
ceedings before the Court. No provision in the Arbitration Act takes
away the provisions of Order XXIII, C.P .C. from being applied to ap-
plications filed under s. 34 of the Arbitration Act in a suit. [814F, 816B]

B Hakam Singh v. MIS Gammon (India) Ltd., (1971] 3 SCR 314,
relied on.

Nawab Usman Ali Khan v. Sagarmal, (1965] 3 SCR 201, held
inapplicable.

Munshi Ram v. Banwari Lal, [1962] Supp. (2) SCR 477; Hansraj
c Gupta v. Official Liquidator Dehradun-Mussoorie Electric Tramway
Co., (1932] L.R. 60 I.A-. 13; Union of India v. Mohinder Singh & Co.,
AIR 1971 JK 10; Union of India v. Rup Kishore, [1957] All. 504;
Executive Engineer v. Thingom Iboyaima Singh, AIR 1970 Manipur
76; Abdul Gani v. Reception Committee, AIR 1936 Born. 250; Ram
D Bharosey v. Peary Lal, AIR 1957 All. 265; Shrinath Bros. v. Century
Spinning & Wvg. Co.,_AIR 1968 Born 443; Indian Minerals Co. v.
Northern India Lime Making Association, AIR 1958 All. 69; Ganesh-
mal v. Keshoram Cotton Mills, AIR 1952 Cal. 10; Governor-General in
Council v. Associated Live Stock Farm (India) Ltd., AIR 1948 Cal.
230; Soorajmull Nagarmull v. Sagar Mal, AIR 1978 Cal. 239; Ram-
E chand v. Governor General in Council, AIR 1947 Sind. 147 and Scot-
tish Union of National Insurance Co. v. Saraswati Sainani, AIR 1960 Cal.
22, referred to.

2. In the instant case, apart from s. 41 of the Arbitration Act
providing for application of Code of Civil Procedure and there being
F no provision taking away provisions of Order XXIII, C.P.C. from
being applied to the applications for stay filed under s. 34 of the ~
Arbitration Act, the proceeding started on a plaint filed by the plaintiff
and in such a suit if any application was filed under. the Arbitration
Act, the same ought to be governed by the provisions of the Code of
Civil Procedure. [816A-C]
G-
3.1 The High Court was not right in dismissing the applications
on the ground that two applications were not maintainable as the same
were not covered withing its order dated 25.2.1966. [820E-F]

3.2 The term 'a fresh application' in the order dated 25.2.1966
H used in singular had no more significance than the fact that as both the
R. McDILL CO. v. G.S. SA.RDA [l(ASLIWAL, J.] 811

~appellants had submitted one joint application, liberty was given to
ma~e a fresh application, The main purpose of moving tbe applications
A
under s. 34 of the Arbitration Act was to stay the sujt proceeding, T)le
intentiQn and purpose of moving two such.separate applications was 8iso U.~
same. The explanation given by the appellants was that they were given
a legal advice to move two separate applications as there were two
different agreements between appellants no. 1and2 and the respondenf B
~o. 1 There being no element of mala fide in the two applications having
r,- been submitted within 30 days of the order dated 25.2.1966, the same
were maintainable. [SZOA-C)

"-~ CIVIL APPELLATE JURSIDICTION: Civil Appeal Nos.
_.. 2012-2013 of 1974.
c
~ From the Judgment and Order dated 2.2.1973 of the Calcutta
~· High Court in Appeal No. 211 of 1966.

B. Sen, Mrs. Geetanjali Mohan and Bishan Lal for the
Appellant. p
Dr. Shanker Ghosh, Darshan Singh, Praveen Kumar, LB. Gaur
and Ms. Shaifali Khanna (NP) for the Respondents.

The Judgment of the Court was delivered by
E
KASLIW AL, J. These appeals by special leave are direct~d
_ . against the order of the Calcutta High Court dated February 2, l973.
Brief facts necessary for the determination of these appeals are that
Shri Gouri Sankar Sarda (hereinafter referred to as Respondent No. 1)
filed a Suit No. 1783 of 1965 in the Calcutta High Court against
R. McDill and Company Pvt. Ltd. (in short Appellant No. 1), Misrilal F
~bharamchand (Pvt.) Ltd. (in short Appellant No. 2) and Shri Misrilal
' Jain for the recovery of some amounts as well as for some other rnliefs,
On or about 15th December, 1965 both the appellant Nos. 1and2 who
were also defendants in the suit submitted a joint application in the
High Court for staying proceedings of the aforesaid suit, under Section
34 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act'). G
0n view of some formal defect in the application the High Court by
r
order dated 25th February 1966 gave permission to withdraw the said
application with liberty to file a fresh application. As the entire case
hinges on ihe above order dated 25th Feb. 1966, relevant portion of
the said order is reproduced as under:
812 SUPREME COURT REPORTS (1991] 1 S.C.R.

A "Application withdrawn wit_h liberty to· make a fresh appli-~
cation. Cost to be paid by the applicant".

Though the above order does not make a mention of the formal
defect, but according to the appellants the permission to withdraw was
sought as no copy of the plaint was annexed with such application.
B
Thereafter, on March 21, 1966 the appellant Nos. 1 and 2 instead of
making a joint application submitted two separate applications for
staying the suit against the respective appellants and in the alternativ~
for stay of the suit as a whole. These applications were resisted by the
plaintiff-respondent No. 1 on the ground that separate applications
were not in terms of the order dated 25.2.1966 and hence no stay ~-.
c should be granted. Learned Single judge upheld the objection raised ._
by the plaintiff and refused to stay the suit. On appeal the Division
Bench of the Calcutta High Court by order dated 2nd February, 1973
dismissed the appeal. The Division Bench took the view that liberty y
was granted to make a fresh application and as such under the provi·
sions of .Order XXIII of the Code of Civil Procedure, the appellants
D
had no right to move two separate applications for staying the suit.
\
Aggrieved against the aforesaid Order of the High Court dated
2nd February, 1973 the appellants have filed these appeals by the grant
of special leave. Order XXIII C.P.C. as it existed at the relvant time is
E
reproduced as under:· -J..,
ORDER XXIII:WITHDRAWAL AND ADJUSTMENT
OF SUITS

1. Withdrawal of suit or abandonment of part of claim:

F
( 1) At any time after the institution of a suit, the plaintiff
may as against all or any of the defendants abandon his suit~
or abandon a part of his claim. r ·

(2) Where the Court is satisfied-
G (a) That a suit must fail by reason of some formal defect,
or
'
(b) That there are other sufficient grounds for allowing the ~
plaintiff to institute a fresh suit for the subject matter of a
suit or part of a claim.
H
R. McDILL CO. v. G.S. SARDA [KASLIWAL, J.] 813
i-

~ It may, on such terms as it thinks fit, grant the plaintiff
permission to withdraw from such suit or abandon such A
part of a claim with liberty to institute a fresh suit in respect
of the subject matter of such suit or such part of claim.

(3) Where the plaintiff withdraws from a suit, or abandon
part of a claim, without the permission referred to in sub- B
rule he shall be liable for such costs as the Court may award
and shall be precluded from instituting any fresh suit in
respect of such subject matter or such part of the claim.

(4) Nothing in this rule shall be deemed to authorise the
Court to permit one of several plaintiffs to withdraw the
consent of the others". c

~
It was contended on befalf of the appellants that the provisions
of Order XXIII were not applicable in the m(:ltter of applications filed
under Section 34 of the Arbitration Act. It was contended that the
provisions of Order XXIII could only apply to the proceedings of a suit D
and not in respect of any applications filed under the Act. It was
submitted that the High Court committed an error in taking a highly
technical view of the matter that initially a joint application was sub-
mitted for stating the suit and liberty was given to withdraw the same
)._ - and to make a fresh application and as such the appellants were not
entitled to submit t~o separate applications though for the same E
purpose. It was contended in this regard that there were two separate
~
agreements between the plaintiffs and appellants Nos: 1 and 2 contain-
ing an arbitration clause and as such the appellants were given a legal
advice to submit two separate applications for staying the suit and the
High Court should not have dismissed the applications on the ground
that liberty to file fresh application was given in respect of one applica- F
·< ti on only. Learned counsel for the appellants in support of this con ten-
tion placed reliance on Nawab Usmanali Khan v. Sagarmal, [1965] (3)
S.CR 201.

On the other hand it was argued on behalf of the respondent No.
1 that provisions of Order XXIII C.P.C. were applicable in respect of G
J an applcation under the Act. It was contended that basically the pro-
)- ceeding had arisen on account of a suit filed by the plaintiff-respondent
and in that suit an application was submitted for staying the suit and
referring the matter to Arbitrator under Section 34 of the Act. The
Order as such passed by the High Court on 25th February, 1966 would
be governed by the provisions of Order XXllI of the Code of Civil H
814 SlJfREME COURT REPORTS

!\ Procedure and fresti application could only lie in ;lccordance with the ~
terms and conditions imposed at the time of permittin,g the witMrnwal
of the first appliqttion. It was contended that it was an admittei:f pgsi-
tion that a joint appJicMion was filed for staying the !!l!it and the
permission was granted to wittidraw the same with libertv to m!lk@ a
B frnsh application aqd the defendants-appelJaqts had no right t~ i>l11;unit
two separate applications in violation 9f t'1e onler of the Cpµrt d~t~d
i5th February, 1966. Reliimc~ in sµpport of the above cop.tention. was
- placed on Mun$hi Ramy. Bflnwflri La{, [1962) ~upp, (2) SCR. 477 iim:l ~
Hakam.Singh v. Mis Gammon (India) Ltd., [1971] 3 SCR 3)4,

We would first deal with the questioµ whether the provisions of
C Orper XXUI C,P.C. apply or 0 pt to an application for stay pf sµit file{:!
under Section 34 of the Act. Section 41 of the Act reads as under:

41 Procedure and powers of Court.

"Subject to the provisions of this Act and of ruks mac:!c:;
D
thereunder-

(a) The provisions of the Code of Civil Procedure, 1908,
shall apply to all proceedings before the Court, and to all
appeals, under this Act. ;md ~

(b) The Court shall have, for the ..,urpose of, and in rela-
tion to, arbitration proceeding the same power of making
orders in respect of any of ttw matters set oµt in the Second
Schedule as it has for the purpose of, and in relation to, any
proceedings before t)le Court.
Provided that nothing in clause (b) shall be taken to pre-
F
judice any power which may be vested in an flrbitrator or
umpire for making orders with respect to any of such matters". >
According to the above provision the provisions of the Co.c;le of
Civil Procedure, 1908 shall apply to all proceedings before the Court
subject course to the provisio'ns of The Arbitration Act and of any
G rules made thereunder. It has been laid down in various decisions from
time to time that the following provisions of the Code of. Civp P. ro. ce- j
dure shall apply to proceedings under the Act. In the 'Law of Arbitra- - \
tiorf by R.S. Bachawat (2nd 1987 Ed., 585) under the Heading
'AppJic;i.bility of Code of Civil Proce~h~re to Court Proc~.eding' it has
H been me11tioned I:!& u11d<=ir:
R. McbILL CO. v. G.S. SARbA !kAsLiWAL, j.J 815

Subject tO the ptovisions of the Act and the Rules made there• A
under 1:he ptovisiotts of the Code of tivil I'tot:edure apply to all
proceedittgs before the Court aft.ti to all appe11ls tinder the Act;
Sectioh 4 l(a).
The foilowing ~rovisiotts <'.Jf the Cotle of Civil Ptocetlute
have been held to apply to certain proteedirtgs under the Aet:
( l) Sectioh 20 H akam Singh v. Gammon (India) Ltd. , AIR i 971
sc 740: (1971) 1sec286.
(2) Section 96(3) Union of India v. Mohi1ider Siftgh & Co.; AIR
1971JK10.
(3) Sectioh 24 Unioncof India v. Rup kishore, AIR 1957 All 504.
c
(4) Section 114 read with Order 47 Executive Engineer \!.
Thingom Iboyaima Singh, AIR 1970 Manipur 76.
(5) Order 1 Rule 8 Abdul Gani v. Reception Committee, AIR '
1936 Born. 250: ILR 60'Born. 645: 38 Born. LR 380. ·
(6) Order 3 Rule 5 Ram Bharosey v. Peary Lal, AIR 1951 All D
265.
(7) Order 5 Shrinath Bros. v. Century Spinning & Wvg. Co.,
AIR 1968 Born. 443.
(8) Order 6 Rule 17 Indian Minerals Co. v. Northern India Uime
Marketing Association, AIR 1958 All 69. E ;
.... (9) Order 9 Rule 13 Ganeshmal v. Keshoram Cotton Mills, AIR
1952 Cal 10: ILR ( 1951) Cal. 196.
( 10) Order 23 Rule, 3 Munsiii Ram v. Banwari Lal, AIR 1962
SC903.
~ ( 11) Order 30 Rule 3 Governor-General in Council v. Associated
Live Stock Farm (India) Ltd., AIR -1948 Cal. 230: 52 CWN 288.
(12) Order 30 Rule 4 Soorajmull Nagarmull v. Sagar Mal; AIR
1978 Cal. 239.
A proceeding under Section 14 or Section 17 under the Act is not a ·suit G
,.>..-.. and the provisions of Section 86(1) C.P.C. read with Section 87 C.P.C.
does not apply to such a proceeding Usman Ali Khan v. Sagar Mal,
AIR 1965 SC 1798. Nor does the provision of Section 80 C.P.C. apply
to a proceeding under Section 20 Ramchand v. Governor-General in
Council, AIR 1947 sind 147. The following provisions of the Code
Civil Procedure apply to appeals under the Act: H
816 SUPREME COURT REPORTS [1991] 1 S.C.R.

( 1) Section 96(3) Union of India v. Mohinder Singh & Co., AIR ~
A
1971 JK 10; (2) Order 41 Rule 5 Scottish Union of National
Insurance Co. v. Saraswati Sajnani, AIR 1960 Cal. 22: 63 CWN
800.

Apart from the above cases Section 41 of the Act itself provides
B that the provisions of the Code of Civil Procedure shall apply to all
proceedings before the Court. We do not find any provision in the Act ~
so as to take away the provisions of Order XXIII C.P.C. from being
applied to applications filed under Section 34 of the Act, in a suit. That
apart the case before us has started on a plaint filed by the plaintiff and
in such a suit if any application is filed under the Act, the same. ought -- -\....
to be governed by the provisions of the Code of Civil Procedure.
c
Jn Munshi Rdm v. Banwari Lal, (supra) the facts were that the
Arbitrator gave an award. The award was filed in the Court by the
Arbitrator. The appellants made application for setting aside the
award and the respondents filed their replies to the application. There-
D after, the parties came to terms and asked for a decree to be passed in
accordance therewith. The court passed a decree on the award
modified by the compromise. In execution, the appellant contended
that the decree was a nullity as the Court had no jurisdiction to modify
the award by compromise. It was argued that after a dispute is referred
to arbitration and an award has been obtained and filed in Court, it is
E not open to the Court to record the compromise under Order XXIII
Rule 3 of the Code of Civil Procedure, because an award can be set
aside or modified as laid down in the Arbitration Act, there is no
provision in the Arbitration Act for recording the compromise. the
above contention was not accepted and it was held as under:

F ''When an award is given, the parties cannot, under the _
Act, challenge it except as laid down there. The powers of --;:v-
the Court are indicated by the Act. They are limited to
accepting the award, if there be no objection and passing a
decree in accordance therewith, or superseding the refe-
rence or revoking or modifying the award or remitting it for
G further consideration, as laid down in the Act. But, the Act
does not disable the parties from terminating their dispute __ )
in a different way, and if they do it could not be intended by \
law that a dispute, which had been successfully terminated,
should again become the subject of litigation. If the parties
are dissatisfied with the award and want to substitute it by a
H compromise involving matters alien to the original dispute
R. McDILL CO. v. G.S. SARDA [KASLIWAL, J.] 817

which are inseparable, the Court may supersede the sub-
A
mission, and leave the parties to work out their agreement
in accordance with the law outside the Arbitration Act".

In Nawab Usnzanali Khan v. Sagarmal, (supra) on which reli-
ance has been placed by learned counsel for the appellant it was held
that a proceeding under Section 14 read with Section 17 of the Act for B
~e passing of a Judgment and decree on an award does not commence
with a plaint or a petition in the nature of a plaint, and cannot be
regarded as a suit and the parties to whom the notice of the filing of the
award is given under Section 14 (2) cannot be regarded as "suit in any
.._.,.Court otherwise competent to try the suit" within the meaning of
Section 86( 1) read with Section 87B, Civil Procedure Code. In the
above case the appellant was the Ruler, or the former Indian State of c
J aora. He had money dealing with the respondent. The respondent
, ~- after obtaining a decree in terms of the award started execution pro-
. ceedings against the appellant. The Central Government gave a certifi-
cate under Section 86(3) read with Section 87B of the Code Civil
Procedure, 1908 consenting to the execution of the decree against the D
properties of the appellant. The Executing Court passed the prohibi-
tory order under Order XXI Rule 46 of the Code of Civil Procedure in
respect of sums payable to the appellant on account of the privy purse.
\ On an objection raised by the appellant by order dated march 15,
~1958, the Court recalled the decree and cancelled the certifcate as
prayed for, on the ground that the amount receivable by the appellant E
on account of his privy purse was not attachable. The respondent

- preferred appeal before the High Court. The High Court allowed the
Appeal No. 33 of 1958. Usmanali Khan (appellant) filed an appeal
before this Court. This Court held as under:

"Sectioq 86( 1) read with s. 87B confers upon the Rulers of F
former Indian States substantive rights of immunity from
suits. Section 141 makes applicable to other procedings
only those provisions of the Code which deal with proce-
dure and not those which deal with substantive rights. Nor
does s. 4 l(a) of the Indian Arbitration Act, 1940 carry the
matter any further. By that section, the provisions of the G
Code of Civil Procedure, 1908 are made applicable to all
>-·- proceedings before the Court under the Act. Now, by its
own language s. 86(1) applies to suits only, and s. 141,
Code of Civil procedure does not attract the provisions of
s. 86(1) to proceedings other than suits. Accordingly, by
the conjoint application of s. 41(a) of the Indian Arbitra- H
818 SUPREME COURT REPORTS [t991] 1 S.C.R.

tiort Ad and ss. 86(1) and 141 of the Code of Civil Proce~
A dute; the provisions of s. 86(1) are not attracted to a pro-
ceeding under s. 14 of the Indian Arbitration.Act, 1940. 1t
foilows that the Court was competent to entertain the pro-
ceedings under s. 14 of the Indian Arbitration Act, 1940
and to pass a decree against the appellant in those proceed-
ings, though no consent to the institution of those proceed-
ings had been given by the Central Government".
The following observations in Hansraj Gupta ~. Official Liqtii~
Ylmor, Dehra Dun-Mussorrie Electric Tramway Co., (1932] L.R. 60
i. A. 13, 19 made by Lord Russell of Killowen were quoted.
....._.'-
"The word 'suit' ordinarily means, and apart from some
t context must be taken to mean a civil proceeding instituted
by the" presentation of a plaint".

The following observations mad~ by Shah, J. in Bhagwat Singh v. T
State of Ra_iasthan, AIR 1964 SC 444 were also quoted with approval:
b
''.The appellant is recognised under Art. 366(22) of the
Constitution as a Ruler of an Indian State, but s. 86 in
terms protects a Ruler from being 'sued' and not against
the institution of any other proceeding which is not in the )
nature of a suit. A proceeding which does not commence-""\
E with a plaint or petition in the nature of plaint, or where
the claim is not in respect of dispute ordinarily triable in a
Civil Court, would prima facie not be regarded as falling
withins. 86, Code of Civil Procedure".

The above observation made by Lord Russell of Killowen and
F Shah, J. go t~ show that ~or a suit the civil ~roceeding is i~stituted ~
the presentation of a plamt. In the aforesaid background it was he~
· that a proceeding which does not commence with a plaint or petition in"
the nature of plaint, or where the claim is not in respect of dispute
·ordinarily triable in a civil court, would prima facie not be regarded as
falling within Section 86, Code of Civil procedure. In the case before
G us as already mentioned above a· suit by presenting a plaint was
instituted by th~ ~espond~nt ~o. 1 and therafter it was sought to be)
stayed by subm1ttmg apphcat10n under S. 34 of the Act. Thus we are-"'\
clearly of the view that the above case of Usmanali Khan v. Sagarmal,
(supra) is clearly distinguishable and does not help the appellants in
the case before us. It may be noted that Bachawat, J. who delivered
H the Judgment in Usmanali Khan v. Sagarmal, (supra) has himself in his
R. McDILL CO. v. G.S. SARDA [KASLIWAL, J.] 819

. ~ book on the 'Law of Arbitration' under the heading 'Applicability of
Code of Civil Procedure to Court Proceeding' has mentioned a A
number of decisions wherein the provisions of Code of Civil Procedure
have been held to apply to proceedings under the Act. We have
already extracted the above passage from the book of Bachawat, J.

In Hakam Singh v. M/s Gammon (India) Ltd., (supra) it was B
>---.held that the Code of Civil Procedure in its entirety applies to pro-
ceedings under the Arbitration Act by Virtue of Section 41 of the later
Act. The jurisdiction of the Courts under the Arbitration Act to enter-
tain a proceeding for filing an award is accordingly governed by the
:... .,__ ~ provisions of the Code of Civil Procedure. By the terms of Section
-. 20(a) of the Code of Civil Procedure read with Explanation (II)
thereto, the respondent company which had its principal place of busi- c
ness at Bombay, was liable to be sued at Bombay. Thus in the above
~ case dispute arose between the parties and the appellant submitted a
petition to the Court of the Subordinate Judge at Varanasi for an order
under Section 20 of the Indian Arbitration Act, 10 of 1940 that the
agreement be filed and an order of reference be made to an Arbitrator D
or Arbitrators appointed by the Court to settle the dispute between
the parties in respect of the construction works done by him. In order
to determine the place of suing, it was held that Section 20 of the Code
·~ _of Civil Procedure would govern the case.

Thus we do not find any force in the submission made by learned E
counsel for the appellants before us that the provisions of Order XXIIl

- of the Code of Civil Procedure will not apply to the Order passed by
the High Court on 25th February, 1966.

We would, now, consider the scope and effect of the order dated
_25th February, 1966 considering that the said order would be governed F
/ - by the provisions of Order XXIII of the Code of Civil Porcedure.
"' Admittedly, appellant Nos. 1and2 were defendants in the suit filed by
respondent No. 1. A joint application was submitted on their behalf
for staying the proceedings of the suit, under Section 34 of the Act,
Though the order dated 25th February, 1966 does not make a mention
of the formal defect on account of which the said application was G
).--withdrawn, but the appellants have categorically stated that the same
was withdrawn on account of the fact that copy of the plaint was not
annexed with such application and in the absence of any counter made
by the respondent, we take that the reason for withdrawing the appli-
cation was that copy of the plaint was not annexed with such applica-
tion. The said application was allowed to be withdrawn with liberty to H
820 SUPREME COURT REPORTS [1991] 1 S.C.R.

A make a fresh application. To our mind, the term 'a fresh application' ~
used in singular had no more significance than the fact that as both the
appellants had submitted one joint application as such the liberty was
given to make a fresh application. The main purpose of moving the
application by the appellant was to stay the proceedings of the suit
under Section 34 of the Act. the intention and the purpose of .noving
B two separate applications is also to stay the proceedings of the suit
under Section 34 of the Act. The explanation given by the appellants _.-4.,
for moving two separate applications is that they were given a legal
advice to move two separate applications as there were two different
agreements between the appellant Nos. 1 and 2 and the respondent
No. 1. There was no element of mala fide in doing so and the two - ---'----
c. applications were also submitted on March 21, 1966 i.e. within 30 days
of the order dated 25.2.66. Learned counsel for the respondent No. 1
submitted that there was no merit in the applications submitted by the
appellants under Section 34 of the Act and the proceedings of the suit y
have already rem_ained stayed for nearly 15 years in this Court and now
there is no justification for further staying the_ suit. So far as the
D pendency of this appeal in this Court is concerned, no party is at fault
and it would have been proper if the respondent had been advised not
to take such objection of non maintainability of· two applications
before the High Court and would have contested the applications on
merits. We are not deciding the question of maintainability of the ---<_
applications under Section 34 of the Act on merits and we make it clear
E that respondent No. 1 would be free to take all objections as he likes
against the grant of such application and the same would be decided by
the High Court on merits in accordance with law. We are, however,
clearly of the view that the High Court was not correct in dismissing
the applications on the ground that two applications w_ere not main-
tainable as the same were not covered within the order passed by the
F High Court dated 25th February, 1966. In view of the fact that it is an
old·matter, we request the High Court to dispose of the applications ):v
filed by the appellants Nos. 1 and 2 under Section 34 of the Act. At the
earliest.

In the result, these appeals are allowed, the order of the High
G Court dated 2nd February, 1973 is set aside and the case would now be
decided by the High Court in the manner indicated above. The parties ~
are left to bear their own costs. -\

R.P. Appeals allowed.