Case: Ramvallabh Tibrewalla Vs. Dwarkadas &amp; Co

1. This appeal raises a question of construction of S. 20 of the Indian Arbitration Act, 1940. The appellant instituted Suit No. 1712 of 1949 in the Bombay High Court against the respondent claiming a decree for money said to be due on account of various dealing between the parties. On or about February 18, 1954, the parties entered into an arbitration agreement for reference of the disputes to the arbitration of Sri Ramrikhdas Parasrampuria. The agreement also provided for withdrawal of the suit. In view of the agreement, the suit was duly withdrawn. Sri Parasrampuria was subsequently removed, and in his place, two arbitrators were appointed. These arbitrators were also subsequently removed, and in their place Sri S. V. Gupte was appointed the arbitrator. The time for making the award was extended by orders of Court from time to time up to March 21, 1958. Two more applications for extension of time were rejected by the Court. Sri S. V. Gupte was unable to make the award by March 25, 19582. On April 3, 1958, the appellant applied to the Court for (a) the filing of the arbitration agreement under S. 20 of the Indian Arbitration Act, 1940, (b) extension of the rime of Sri Gupte to make the award, (c) in the alternative , reference of the disputes to some other person, and (d) an order for exclusion of the time from February 18, 1954 up to April 3, 1958 so as to save the bar of limitation, if any. The prayer for extension of the time of Sri Gupte to make the award was rejected by K. K. Desai, J. and also by the appellate Court, and that prayer is no longer pressed by the appellant. Both Courts also rejected the appellants prayer for the filing of the arbitration agreement under the S. 20. K. K. Desai, J. held that in order to attract S. 20, the applicant must prove that the subject-matter of the arbitration agreement was not the subject-matter of any suit already instituted. The appellate Bench held that the arbitration agreement having been entered into five years after the institution of the suit, could not be said to be an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement as contemplated by S. 20(1). The appellant now appeals to this Court by special leave

Court's reasoning:
13. The ground upon which the Courts below dismissed the application for filing the arbitration agreement under S. 20 cannot, therefore, be upheld. A technical objection as to the frame of the application based on Rule 391 of the High Court Rules is no longer pressed. But the respondent also contends that (1) the appellant elected to proceed with the arbitration under Chap. II, and having so elected, he cannot now claim arbitration under Chap. III; (2) the application is barred by limitation, and the prayer for exclusion of time under S. 37 ought not to be allowed; and (3) the parties intended that the arbitration would be by Ramrikhdas Parasrampuria only, and as he is not willing to act and/or has been removed, there can be no further arbitration. The Courts below have not considered these contentions of the respondent. Having heard learned counsel on both sides, we think that the respondent is entitled to ask for the final disposal of the application after consideration of these points by the lower appellate Court, and for that purpose, this case should be remanded.