BACHAWAT - (1.) THIS appeal raises a question of construction of S. 20 of the Indian ARBITRATION AND CONCILIATION 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 18/02/1954, 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 In view of the agreement, the suit was duly withdrawn.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 21/03/1958. Two more applications for extension of time were rejected by the Court. Sri S. V. Gupte was unable to make the award by 25/03/1958.
(2.) ON 3/04/1958, the appellant applied to the Court for (a) the filing of the arbitration agreement under S. 20 of the Indian ARBITRATION AND CONCILIATION 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 18/02/1954 up to 3/04/1958 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 appellant's 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. The respondent contends that the opening words of S. 20 preclude the filing of the arbitration agreement dated 18/02/1954, as the agreement was entered into after the institution of a suit with respect to the subject-matter of the agreement. The appellant contends that (1) S. 20 permits the filing of an arbitration agreement entered into during the pendency of such a suit, if the suit is not pending when the party applies for the filing, in the alternative, (2) S. 20 permits the filing of an arbitration agreement entered into while no such suit is pending, though such a suit might have been instituted previously and (3) the arbitration agreement dated 18/02/1954 was intended to be operative upon the withdrawal of the suit and was thus an agreement entered into while the suit was no longer pending and it could properly be filed under S. 20. Sub-section (1) of S. 20 reads: "Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court."
(3.) THE dispute turns on the proper meaning to be given to the words "before the institution of any suit with respect to the subject-matter of the agreement or any part of it." Four alternative interpretations of these words are suggested: (1) THE word "before" suggests precedence in point of time; the section contemplates an arbitration agreement followed by a suit with respect to its subject-matter, and if there is not such suit, the section is not attracted: (2) THE words "before the institution of any suit" mean "where no suit has been instituted": the section precludes the filing of an arbitration agreement entered into after the institution of the suit, even though the suit may have been withdrawn before the making of the agreement; (3) THE words "before the institution of any suit" mean "while no suit is pending"; the section permits the filing of an arbitration agreement entered into while no suit is pending though previously such a suit was instituted; and (4) the words "before the institution of any suit" etc. qualify the words "may apply" the section permits the filing of all arbitration agreements provided the application for filing is made while no suit is pending. The object of the opening words is to restrict the operation of S. 20 to a limited class of arbitration agreements. It is obvious that the opening words admit of more than one meaning. For the purpose of resolving the ambiguity, it is legitimate to refer to the other parts of the section, the heading of Chap. III and the general scheme of the Act.;