Case: Ramji Dayawala &amp; Sons (P) Ltd Vs. Invest Import

Procedure, 1908, if any party to a submission made in pursuance of an agreement to which the protocol set forth in the First Schedule as modified by the reservation subject to which it was signed by India applies, or any person claiming through or under him, commences any legal proceeding in any court against any other party to the submission or any person claiming through or under him in respect of any matter agreed to be referred, any party to such legal proceeding may, at any time after appearance and before filing a written statement or taking any other steps in the proceedings, apply to the court to stay the proceedings; and the court unless satisfied that the agreement or arbitration has become inoperative or cannot proceed, or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings"39. India and Yugoslavia have ratified the protocol. The question, however, is whether Section 3 is attracted in this case. The important expression is Section 3 to be noted is : "If any party to a submission made in pursuance of an arbitration agreement to which the protocol set forth in the First Schedule as modified by the reservation subject to which it was signed by India applies". This expression postulates an agreement to which the protocol set forth in the First Schedule as modified by the reservation subject to which it was signed by India applies and a submission made in pursuance of such agreement. Now, both India and Yugoslavia have ratified the protocol modified by the reservation subject to which it is signed by India. It may be assumed that arbitration agreement between the parties to this appeal is governed by the 1937 Act. Section 3 is, however, not attracted merely where an agreement as set forth in the First Schedule is subsisting between the parties but the next step ought to have been taken before proceedings can be stayed in exercise of the power conferred by Section 3, viz., submission made in pursuance of such an agreement. A reference to Section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961, (1961 Act for short), prior to its amendment by the Amending Act of 1973 and a decision of this Court interpreting the expression : "If any party to a submission made in pursuance of an agreement to which" would clearly establish that mere existence of an agreement as envisaged by the First Schedule would not attract Section 3 of the 1937 Act but it would only be attracted where there is a submission pursuant to that agreement. Section 3 of the 1961 Act prior to its amendment in 1973 read as under:"Stay of proceedings in respect of matter to be referred to arbitration : Notwithstanding anything contained in the Arbitration Act X of 1940 or in the Code of Civil Procedure, 1908, if any party to a submission made in pursuance of an agreement to which the Convention set forth in the Schedule applies, or any person claiming through or under him, commences any legal proceedings in any Court against any other party to the submission of any person claiming through or under him in respect of any matter agreed to be referred, any party to such legal proceedings may at any time after appearance or before filing a written statement or taking any other steps in the proceedings, apply to the Court to stay the proceedings and the Court, unless satisfied that the agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regards to the matter agreed to be referred, shall make an order staying the proceedings"40. This section came in for interpretation in V/O Tractoroexport, Moscow (1970 3 SCR 53 : 1969 3 SCC 562 ). Interpreting this section this Court held as under:"But in the present case a suit is being tried in the courts of this country which, for the reasons already stated, cannot be stayed under Section 3 of the Act in the absence of an actual submission of the disputes to the arbitral tribunal at Moscow prior to the institution of the suit"41. Section 3 of 1937 Act is in pari materia with Section 3 of 1961 Act. It, therefore, becomes crystal clear that Section 3 of the 1937 Act would only be attracted if there is a submission pursuant to an agreement to that effect. In fact, the decision in V/O Tractoroexport, Moscow (1970 3 SCR 53 : 1969 3 SCC 562 ), made it necessary for the Parliament to amend Section 3 of the 1961 Act. In this case we are concerned with Section 3 of the 1937 Act which is not amended. It must, therefore, receive the same interpretation which an identical provision received at the hands of this Court. Viewed from that angle, in this case while there is an agreement as contemplated by First Schedule to 1937 Act, there is no submission made in pursuance of such agreement and, therefore, the application of the respondent could not have been entertained under Section 3 of the 1937 Act. As far as the 1961 Act is concerned, Mr. Majumdar conceded that Yugoslavia has not ratified the protocol pursuant to which 1961 Act was enacted and, therefore, the respondent cannot maintain its application under Section 3 of the 1961 Act42. The last submission is that this being an arbitration agreement to refer a dispute to a foreign arbitral tribunal, Section 34 of the Arbitration Act would not be applicable and hence the application of the respondent for stay of the suit is not maintainable. It is not necessary to examine this contention on its merits because we have assumed for the purpose of this appeal that Section 34 of the 1940 Act would be attracted even where the agreement is to refer a dispute to a foreign arbitral tribunal43.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Undoubtedly, subcontract marked Ex. A has been signed both by the Managing Director of theand by one Mr. Petrovije on behalf of theThird paragraph of Article 12 of subcontract Ex. A recites an arbitration agreement. The provision is for a reference of disputes arising out of the subcontract to foreign arbitral tribunal, namely, the International Chamber of Commerce in Paris. Such a clause has always been interpreted to spell out an arbitrationrecall, subcontract Ex. A was signed by the parties in Belgrade on July 10, 1961. Managing Director of the appellant was in Belgrade on that day. On that very day Managing Director sent a letter from Belgrade itself addressed to the respondent at Belgrade, relevant portion of which may be extracted10, 1961I have signed the contract of Barauni Thermal Power Station work with you.I have objected to the clause of arbitration put in there in agreement which was deleted from our revised draft of agreement sent to you in advance. Arbitration clause will be acceptable to us if only arbitration is to be done in India, according to our rules and regulations and procedure of ourletter was handed in to the respondent on the same day on which Ex. A was signed and accepted by the parties and it would imply that it must be soon after the signing ceremony was over. Further, the Managing Director of the appellant immediately on landing in Bombay on July 13, 1961, sent a cable to the respondent which reads assafely Bombay (stop) Reference to our letter of July 10, 1961 regarding Arbitration clause to be deleted from the contractthings emerge from a conjoint reading of the letter and the cable that before subcontract Ex. A was signed by the parties of Belgrade, a draft of the intended subcontract was sent by the respondent to the appellant for its approval and the Managing Director of the appellant had raised a limited objection to the arbitrationbehalf of the appellant it was suggested that there would be no objection to the arbitration clause if arbitration was to be done in India. But as the original draft submitted on behalf of the respondent suggested arbitration by a foreign arbitral tribunal stationed in Paris, the same was objected to on behalf of the appellant and its amendment was sought. Undoubtedly, Managing Director of appellant signed Ex. A which incorporated the arbitration agreement was extracted hereinbefore. But the letter referred to herein was handed in presumably soon after the signing ceremony of subcontract Ex. A was over and was followed by the cable which not only referred to letter dated July 10, 1961, but also reiterated and repeated the objection to the arbitrationappellant Bench of the High Court held that the letter and the cable were not received by the respondent. This conclusion is not only contrary to evidence on record but is reached in utter disregard of the admission of the Manager of respondent. Ilija Kostantinovic, Manager ofstationed at Calcutta filed an affidavit in rejoinder. The admissions are spelt out in paragraphs 5 and 6 of the affidavit which are extracted hereinabove. In para 6 it is in terms admitted that the appellant purported to send a letter to the respondent seeking to modify and/or delete of the arbitration clause contained in the contract dated July 10, 1961, and also purported to send a telegram to the respondent. He further proceeded to state that the respondent never agreed to the modification and/or deletion of the arbitration clause. This unambiguous admission unmistakably shows that the letter and the cable were received by the respondent. Of course, again at a later stage when Panich Stojan, Project Manager of the respondent entered theto give evidence in support of the application for stay he was asked at question No. 13 whether he had any knowledge about the letter sent by the appellant on July 10, 1961, relating to the arbitration clause contained in the agreement. The answer was that the deponent had not received any letter his department. To question No. 16 about the cable, the answer was that the respondent had not received any cable also. Inwhen he was confronted with the averments in paragraph 6 of the affidavit of Ilija Kostantinovic, a nebulous answer was given that Mr. Kostantinovic must have replied to the letter and the telegram. And he admitted that Mr. Kostantinovic was the Manager of the branch office of the respondentcompany at Calcutta. Now, one employee, viz., the Manager of thestationed at Calcutta in terms admitted the receipt of the letter and the cable while the witness who claimed to be present at the signing ceremony of the subcontract Ex. A was emphatic that the cable and the letter were not received and gave an explanation with regard to the averments of the affidavit which only show that the truth was otherwise. In the face of uncontroverted and unambiguous admission in the affidavit of the Manager of theone can without fear of contradiction assert that the letter and the cable were received by the respondent. The letter and the cable would show that the arbitration agreement to refer disputes to a foreign arbitral tribunal in the draft was not acceptable to the appellant though the other terms were in acceptable. The appellant repudiated the arbitration agreement soon after the agreement was signed when the Managing Director of the appellant was in Belgrade and took the follow up action by sending a cable reiterating and repeating the objection immediately after his return tois that accepted the change in arbitration clause proposed by the appellant sub silentio coupled with the subsequent conduct. It is a fact that the respondent did not write back saying that if the arbitration agreement was not acceptable to the appellant the subcontract would not be acceptable as a whole to the respondent. On the contrary, after a specific objection only with regard to arbitration agreement in the subcontract Ex. A by the appellant, the respondent allowed the appellant to proceed further with the implementation and execution of the subcontract, without controverting what the appellant had stated in the letter and the cable. This would unmistakably show that the respondent accepted the alteration as suggested by the appellant in that the arbitration agreement was deemed to have been deleted from the subcontract Ex. A. Add to this the circumstance that a petty labour contractor could not have been expected to or was not likely to agree to arbitration by a foreign arbitral tribunal stationed in Paris because it would be beyond its reach to seek relief by arbitration in a foreignin this case Bhikhubhai Gourishankar Joshi who filed an affidavit on behalf of the appellant has referred to the averments in the letter and the cable. He is a principal officer and constituted attorney of theOnce the receipt of the letter and the cable are admitted or proved coupled with the fact that even after the dispute arose and before the suit was filed, in the correspondence that ensued between the parties, the respondent did not make any overt or convert reference to the arbitration agreement and utter failure of the respondent to reply to the letter and the cable controverting the averments made therein would unmistakably establish the truth of the averments made in their letter. What is the effect of averments is a different question altogether but the averments contained in the letter and the cable are satisfactorilythe facts of a given case acceptance of a suggestion may be sub silentio reinforced by the subsequent conduct. True it is that the general rule is that an offer is not accepted by mere silence on the part of the offeree. There may, however, be further facts which taken together with the offerees silence constitute an acceptance. One such case is where a part of the offer was disputed at the negotiation stage and the original offeree communicated that fact to the offerer showing that he understood the offer in a particular sense. This communication will probably amount to a counter offer in which case it may be that mere silence of the original offerer will constitute his acceptance (see HALSBURYS LAWS OF ENGLAND, 4th Edn., Vol. 9, para 251). Where there is a mistake as to terms of a document as in this case, amendment to the draft was suggested and a counter offer was made, the signatory to the original contract is not estopped by his signature from denying that he intended to make an offer in the terms set out in the document, to wit, the letter and the cable (ibid., para 295). It can, therefore, be stated that where the contract is in a number of parts it is essential to the validity of the contract that the contracting party should either have assented to or taken to have assented to the same thing in the same sense or as it is sometimes put, there should be consesus ad idem. And from this it follows that a party may be taken to have assented if he has so conducted himself as to be estopped from denying that he has so assented (ibid., para 288). Even apart from this, it would still be open to the party contending novatio to prove that he had not accepted a part of the original agreement though it has signed the agreement containing thatwould, therefore, be inappropriate to say that because the appellant has signed the subcontract, every part of it is accepted by him even though there is convicting evidence pointing to the contrary. It was, however, said that a subsequent negotiation or a repudiation of part of the contract cannot in any manner affect the concludedthe conclusion is inescapable that there was no concluded arbitration agreement between the parties. The High Court rejected the contention of the appellant holding that when the Managing Director of the appellant signed the contract at Belgrade on July 10, 1961, the subcontract contained the arbitration agreement and his signature was only less than half an inch away from the arbitration clause and that he has not entered theand offered himself forand that the respondents contention that the letter and the cable were not received appeared to be acceptable. The High Court totally overlooked and ignored the admission of receipt of letter and cable in paragraph 6 of the affidavit of Ilija Kostantinovic. The High Court attached importance to the denial of the receipt of the letter and the cable by Mr. Panich Stojan in his oral evidence and did not attach importance to his subsequent admission that Mr. Kostantinovic must have replied to the letter and the cable. Admission, unless explained, furnishes the best evidence. With respect, the High Court overlooked the material evidence, drew impermissible inference and came to the conclusion which on evidence we find utterly unsustainable. A finding of fact recorded by the High Court overlooking the incontrovertile evidence which points to the contrary and, therefore, utterly unsustainable cannot come in the way of this Court reaching a correct conclusion on facts and the examination of the evidence by this Court cannot be impeded by a mere submission of this Court does not interfere with finding ofthe present case respondent who moved an application for stay of suit instituted by the appellant founded its request for stay on shifting sands in that at one stage it was stated that the application was under Section 34 of the Arbitration Act, at other stage it was stated that it was under Section 151,CPC, and before us it was stated that it is under Section 3 ofthe Arbitration (Protocol and Convention) Act, 1937, or underthe Foreign Awards (Recognition and Enforcement) Act, 1961. In the notice of motion taken out for stay of the suit by the respondent it was stated that the application purports to be under Section 151,CPC. There is no reference to Section 34 ofthe Arbitration Act, 1940, in the body of the petition or in the affidavit annexed to the petition. On the contrary, it was stated in para 16 of the petition that if Arbitration Act, 1940, does not apply to the arbitration agreement relied upon by the respondent, the court may in exercise of its inherent jurisdiction restrain the appellant from proceeding with the suit. The learned Single Judge appears to have treated the application to be under Section 34 of the Arbitration Act, because in the last paragraph of his order he has stated that the Arbitration Act applies even if the arbitration agreement provides for reference to a foreign arbitral tribunal. So saying, stay was granted which would imply that the learned Judge treated the application to be one under Section 34 of the Arbitration Act. While dealing with the contention of the appellant that in view of the fact that arbitration agreement refers to arbitration by a foreign arbitral tribunal, Arbitration Act, 1940, is not attracted, the Division Bench has assumed as was done in Michael Golodetz v. Serajuddin & Co. (1964 1 SCR 19   : AIR 1963 SC 1044  ), thatthe Arbitration Act, 1940, invests a court in India with authority to stay a legal proceeding commenced by a party to an agreement against any other party thereto in respect of any matter agreed to be referred, even when the agreement is to submit it to a foreign arbitral tribunal. It further, however, held that even if Section 34 is not attracted, the court can in exercise of the inherent jurisdiction for doing justice between the parties, stay further proceeding of the suit which would imply that the court exercised its jurisdiction under Section 151,CPC. Both the courts practically overlooked the basic difference in the approach which the court will have to adopt if the application is to be treated under Section 34 ofthe Arbitration Act, 1940, or one under Section 151,CPC. In any event, as the motion is at the discretion of the court and as both the parties have led evidence, the burden of proof would assume secondaryis well settled that where the trial Court has a discretion in the matter; the appellate Court would not ordinarily substitute its discretion in place of the discretion exercised by the trial Court. But it is equally well settled that where the trial Court ignoring the relevant evidence,the approach to be adopted in the matter and overlooking various relevant considerations, has exercised its discretion one way, the appellate Court keeping in view the fundamental principle can and ought to interfere because when it is said that a matter is within the discretion of the court it is to be exercised according to well established judicial principles, according to reason and fair play, and not according to whim andor refusing to grant stay is still a matter within the discretion of the court. How discretion would be exercised in a given case would depend upon various circumstances. But to grant stay of the suit is still a matter within the discretion of theto the various heads of claim by the appellant and the correspondence between the parties prior to the suit it is safe to conclude that the evidence of the respondent would also be in India. Of course, as a remote possibility some highly placed officer may have to be examined by the respondent who may be incourt is required to consider the situation as on the date of institution of the suit and unquestionably on the date of institution of the suit office of the respondent at 36, Ganesh Chandra Avenue, Calcutta, was functioning and withindays of the institution of the suit respondent appeared in the suit through IlijaKostantinovic, Manager of therespondent stationed at Calcutta. Neither in the main petition for stay nor in the affidavit in rejoinder it was anywhere stated that the evidence of the respondent was not inif subsequent events as have a bearing on the contention canvassed before the court have to be taken into consideration, there is no material on record to show that the respondent has closed its office at Calcutta and that the documents and books of accounts which may have to be tendered in evidence have been taken to Yugoslavia. Save this, Mr. Majumdar could not controvert the fact that the entire evidence both of the appellant and the respondent which may be relevant for resolution of the dispute involved in the suit is in this country,t. The claim in the suit is Rs. 4, 25, 343. Now, just contemplate taking witnesses and books of accounts to Paris for leading evidence before the International Chamber of Commerce. The cost would certainly be disproportionately high. One nee not go into the mathematical calculations for this obvious andh in the case of Michael Golodetz (1964 1 SCR 19   : AIR 1963 SC 1044  ) and in V/O Tractoroexport, Moscow v. M/s. Tarapore & Co. (1970 3 SCR 53   : 1969 3 SCC 562  ), this Court held that restriction on availability of foreign exchange is a relevant consideration which should enter into judicial verdict for exercising the discretion one way or the other. The High Court in this connection observed that if the Managing Director of thecould obtain foreign exchange for going to Belgrade to sign the contract, why should to be assumed that he would get foreign exchange this time too to plead his causea cause which owes its existence to the grant of foreign exchange if 1961 ? This casual approach isForeign exchange for a visit for few days cannot be equated with heavy requirement of foreign exchange for engaging counsel, taking witnesses and transporting documents from India to Paris so as to substantiate a claim of Rs. 4, 25, 343. And the judicial approach is not whether the appellant would get necessary foreign exchange but the approach is should this valuable national asset of foreign exchange be frittered away for resolving a petty matter which can be conveniently resolved even in thisthis approach dictated by some principle or was the respondent aware of the fact that looking to the quantum of claim the appellant would not undertake the hazardous and expensive adventure of going to foreign arbitration tribunal stationed at Paris and that thereby the respondent would be able to thwart or stifle the claim of the appellant ? If the relief to be granted is discretionary, the approach of each party persuading the court to exercise the discretion one way or the other would be a vital and relevant consideration. The respondent has anyhow either to appear before the court in India or a foreign arbitral tribunal in Paris. The respondent is from Yugoslavia. Apart from this, the respondent has an office at Calcutta and the responsible officer like a Manager was stationed at Calcutta. The correspondence between the parties prior to the institution of the suit shows that the relevant documents were in India on the basis of which certain replies were given by the respondent to the claims advanced on behalf of the appellant. But once the suit was filed, the respondent insists that arbitration agreement should be given full effect. Having regard to all the circumstances of the case it appears crystal clear that the respondent is motivated to seek stay neither to vindicate any principle nor to hold the appellant to the bargain but to force the appellant to go to Paris incurring disproportionately heavy cost or to give up the claim. In Michael Golodetz (1964 1 SCR 19   : AIR 1963 SC 1044  ) the fact that arbitration in New York would proceed ex parte was viewed with disfavour and stay was refused. Similarly, in The Fehmarn (1957 2 All 2 All ER 707), the principal object of the defendant was not to achieve a trial in Russia but merely make it more difficult to the plaintiff to assert their claim, was emphasised while refusing stay. In such situation if there are other weighty circumstances which indicate that the court should not lend its assistance to the respondent by staying the suit, this aspect of the approach of the respondent would reinforce thethe court where the cause of action has arisen would try to resolve the dispute brought before it from the cause of action arising out of its jurisdiction. If parties have agreed to another mode of resolution of dispute, the court may hold the parties to their bargain but when the court is deprived of the jurisdiction by an agreement between the parties and if the court is called upon to enforce it, the matter will still be within the discretion of the court. As was stated in Bristol Corporation case (1913 AC 241, 257), when the court refused to stay an action it cannot be said that the court is not carrying out the bargain between the parties because that does not fairly describe the position. The court is carrying out the bargain between the parties because the bargain to substitute for the courts of the land a domestic tribunal was a bargain into which was written, by reason of the existing legislation, the condition that it should only be enforced if the court thought it a proper case for its being so enforced. And that is where the discretion of the court creepssum up, the entire evidence both of the appellant and the respondent is in this country; the contract as a whole was executed and carried out in this country; the claim as a whole arose in this country; the appellant is a company incorporated in this country and the respondent is having its office in this country; and that the respondent is not motivated by any principle to have the decision of the foreign arbitral tribunal at Paris but the principal object of the respondent is merely to make it more difficult, if not impossible, for the appellant to assert the claim. Add to this two other vital considerations, viz., that the cost of arbitration at Paris will be so disproportionately high to the claim involved in adjudication that one would never think of incurring such a huge cost to realise such a small sum claimed, and the restriction on the availability of foreign exchange, another vital relevant consideration. The sum total of all these well established circumstances clearly indicate that this was a suit in which when discretion is exercised on well settled judicial considerations no court would grant stay and the stay has to bedid not undertake construction of thermal power station actuated by any altruistic motive but guided by sound business considerations. One who comes here to earn by going into business need not be put on a pedestal. The High Court overlooked the global competition for obtaining international contracts and it is not a philanthropic motive. The extracted passage clearly indicates an approach not dictated by sound judicial principles but considerations wholly extraneous to the issue under discussion. It is in these circumstances that this Court is constrained to interfere with the discretionary relief granted in thisand Yugoslavia have ratified the protocol. The question, however, is whether Section 3 is attracted in this case. The important expression is Section 3 to be noted is : "If any party to a submission made in pursuance of an arbitration agreement to which the protocol set forth in the First Schedule as modified by the reservation subject to which it was signed by India applies". This expression postulates an agreement to which the protocol set forth in the First Schedule as modified by the reservation subject to which it was signed by India applies and a submission made in pursuance of such agreement. Now, both India and Yugoslavia have ratified the protocol modified by the reservation subject to which it is signed by India. It may be assumed that arbitration agreement between the parties to this appeal is governed by the 1937 Act. Section 3 is, however, not attracted merely where an agreement as set forth in the First Schedule is subsisting between the parties but the next step ought to have been taken before proceedings can be stayed in exercise of the power conferred by Section 3, viz., submission made in pursuance of such an agreement. A reference to Section 3 ofthe Foreign Awards (Recognition and Enforcement) Act, 1961, (1961 Act for short), prior to its amendment by the Amending Act of 1973 and a decision of this Court interpreting the expression : "If any party to a submission made in pursuance of an agreement to which" would clearly establish that mere existence of an agreement as envisaged by the First Schedule would not attract Section 3 of the 1937 Act but it would only be attracted where there is a submission pursuant to that agreement. Section 3 of the 1961 Act prior to its amendment in 1973 read asof proceedings in respect of matter to be referred to arbitration : Notwithstanding anything contained in the Arbitration Act X of 1940 or in theCode of CivilProcedure, 1908, if any party to a submission made in pursuance of an agreement to which the Convention set forth in the Schedule applies, or any person claiming through or under him, commences any legal proceedings in any Court against any other party to the submission of any person claiming through or under him in respect of any matter agreed to be referred, any party to such legal proceedings may at any time after appearance or before filing a written statement or taking any other steps in the proceedings, apply to the Court to stay the proceedings and the Court, unless satisfied that the agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regards to the matter agreed to be referred, shall make an order staying thesection came in for interpretation in V/O Tractoroexport, Moscow (1970 3 SCR 53   : 1969 3 SCC 562  ). Interpreting this section this Court held asin the present case a suit is being tried in the courts of this country which, for the reasons already stated, cannot be stayed under Section 3 of the Act in the absence of an actual submission of the disputes to the arbitral tribunal at Moscow prior to the institution of the3 of 1937 Act is in pari materia with Section 3 of 1961 Act. It, therefore, becomes crystal clear that Section 3 of the 1937 Act would only be attracted if there is a submission pursuant to an agreement to that effect. In fact, the decision in V/O Tractoroexport, Moscow (1970 3 SCR 53   : 1969 3 SCC 562  ), made it necessary for the Parliament to amend Section 3 of the 1961 Act. In this case we are concerned with Section 3 of the 1937 Act which is not amended. It must, therefore, receive the same interpretation which an identical provision received at the hands of this Court. Viewed from that angle, in this case while there is an agreement as contemplated by First Schedule to 1937 Act, there is no submission made in pursuance of such agreement and, therefore, the application of the respondent could not have been entertained under Section 3 of the 1937 Act. As far as the 1961 Act is concerned, Mr. Majumdar conceded that Yugoslavia has not ratified the protocol pursuant to which 1961 Act was enacted and, therefore, the respondent cannot maintain its application under Section 3 of the 1961 Act