- (1.) This is a petition for leave to appeal against the judgment and order of the High Court of Karnataka dated 26th of May, 1988. By the said judgment the High Court affirmed the order of the learned Civil Judge, Hubli. To appreciate the controversy, a few facts may be necessary.
(2.) On or about 18th September, 1972 a partnership firm was constituted which included the petitioner and the respondents Nos. 1 to 9 to run a cinema theatre at Hubli in the State of Karnataka. The said firm was reconstituted in August, 1973 for a period of 25 years with one partner retiring from the first firm. In the said reconstituted firm the 1st respondent had 12 paise share. On 8th November, 1980 the 1st respondent had issued a notice calling for dissolution of the firm alleging mismanagement, loss and exclusion from the management. In 1981 the 1st respondent filed a suit in the Court of the Civil Judge, Hubli for (i) dissolution of the firm and (ii) accounts. On 4th November, 1981, the 9th respondent who is defendant No. 7 in the suit filed an application under S. 34 of the Arbitration Act, 1944 (hereinafter, referred to as 'the Act') for stay of the said suit. The learned trial Judge after referring to the facts and the relevant decisions referred to the order-sheet in this matter and observed that there is a clear record in the order-sheet that the counsel appearing for the applicant had "sought adjournment specifically for filing written statement." The order-sheet further recorded that the matter was posted to 4th November, 1981 "for arguments". The learned trial Judge was of the view that the petitioner herein who is defendant No. 4 in the suit had sought and secured several adjourments to file a written statement. In that view of the matter, the learned trial Judge was of the view that the petitioner had taken steps in the proceedings in the suit by seeking and securing adjournment to file the written statement. In that view of the matter he declined to exercise his jurisdiction to stay the said suit under S. 34 of the Act. There was an appeal. The Division Bench of the High Court was of the view that in view of the facts mentioned in the order of the Trial Judge, it appeared that the petitioner herein had taken steps in the suit and had thereby disentitled himself from asking for the stay of the said suit. The High Court, therefore, confirmed the order of the learned trial Judge. Aggrieved thereby, the petitioner seeks leave to appeal under Art. 136 of the Constitution from the said decision.
(3.) Arbitration is an alternative procedure for speedy adjudication of disputes between the parties and should normally be encouraged and parties have bound themselves to have their disputes adjudicated by arbitration, so they should be held bound by the agreement. between the parties. S. 34 of the Act is the satutory provision which deals with the powers to stay legal proceedings where there is an arbitration agreement. S. 34 of the Act which is relevant for our present purpose is as follows :- "34. Power to stay legal proceedings where there is an arbitration agreement. - Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a Written statement or taking any other steps in the proceedings, apply to the judicial. authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all. things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings.";