Case: R. Mcdill and Company Private Limited Vs. Gouri Shankar Sarda and Others

i Gouri Sankar Sarda (hereinafter referred to as respondent 1) filed a Suit No. 1783 of 1965 in the Calcutta High Court against R. McDill and Company Pvt. Ltd. (in short appellant 1), Misrilal Dharmchand (Pvt.) Ltd. (in short appellant 2) and Shri Misrilal Jain for the recovery of some amounts as well as for some other reliefs. On or about December 15, 1965 both appellants 1 and 2 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). In view of some formal defect in the application the High Court by order dated February 25, 1966 gave permission to withdraw the said application with liberty to file a fresh application. As the entire case hinges on the above order dated February 25, 1966, relevant portion of the said order is reproduced as under"Application withdrawn with liberty to make a fresh application. 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. Thereafter, on March 21, 1966 appellants 1 and 2 instead of making a joint application submitted two separate applications for staying the suit against the respective appellants and in the alternative for stay of the suit as a whole. These applications were resisted by the plaintiff-respondent 1 on the ground that separate applications were not in terms of the order dated February 25, 1966 and hence no stay should 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 February 2, 1973 dismissed the appeal. The Division Bench took the view that liberty was granted to make a fresh application and as such under the provisions of Order XXIII of the Codes of Civil Procedure, the appellants had no right to move two separate applications for staying the suit2. Aggrieved against the aforesaid order of the High Court dated February 2, 1973 the appellants have filed these appeals by the grant of special leave. Order XXIII CPC as it existed at the relevant time is reproduced as under"XXIII : Withdrawal and adjustment of suits1. Withdrawal of suit or abandonment of part of claim. - (1) At any time after the institution of a suit, the plaintiff may as against all or any of the defendants, withdraw his suit or abandon a part of his claim(2) Where the court is satisfied -(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 claimit may, on such terms as it thinks fit, grant the plaintiff permission to withdraw from such suit or abandon such part of a claim with liberty to institute a fresh suit in respect of the subject matter of such suit or such part of a claim(3) Where the plaintiff withdraws from a suit, or abandons part of a claim, without the permission referred to in sub-rule (2), 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 without the consent of the others." *

Court's reasoning:
12. Thus we do not find any force in the submission made by learned counsel for the appellants before us that the provisions of Order XXIII of the Code of Civil Procedure will not apply to the order passed by the High Court on February 25, 196613. We would, now, consider the scope and effect of the order dated February 25, 1966 considering that the said order would be governed by the provisions of Order XXIII of the Code of Civil Procedure. Admittedly, appellants 1 and 2 were defendants in the suit filed by respondent 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 February 25, 1966 does not make a mention of the formal defect on account of which the said application was withdrawn, but the appellants have categorically stated that the same was withdrawn on account of the fact the 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 application was that copy of the plaint was not annexed with such application. The said application was allowed to be withdrawn with liberty to make a fresh application. To our mind, the term a fresh application used in singular had no more significance that the fact that as both the appellants has 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 moving two separate applications is also to stay the proceedings of the suit under Section 34 of the Act. The explanation given by the appellants 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 appellants 1 and 2 and respondent 1. There was no element of mala fide in doing so and the two applications were also submitted on March 21, 1966 i.e. within 30 days of the order dated February 25, 1966. Learned counsel for respondent 1 submitted that there was no merit in the applications submitted by the appellants under Section 34 of the Act and proceedings of the suit have already remained stayed for nearly 15 years in this Court and now there is no justification for further staying the suit. So far as the 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 that respondent 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 were not maintainable as the same were not covered within the order passed by the High Court dated February 25, 1966. In view of the fact that it is an old matter, we request the High Court to dispose of the applications filed by appellants 1 and 2 under Section 34 of the Act, at the earliest