Salil K.Roy Chowdhury, J. - (1.) THIS is an application under Section 34 of the Arbitration Act, 1940, for stay of suit.
(2.) THE facts relevant for the purpose of this application are as follows:-- By a public auction held by the Auctioneer, the respondent No. 3, United Auctioneer, on the 21st of Feb. 1964, on behalf of Union of India 400 M.T. of scrap rails of the specification mentioned in the auction catalogue were offered for sale and the respondent No. 1 was declared to be the highest bidder and he deposited the earnest money in terms of the said sale, which included General Conditions of Sale by auction contained in the said auction catalogue. THE General Conditions of Contract as contained in the said auction catalogue inter alia contain terms of inspection of the goods at various locations by the intending purchaser and also removal of the goods by the purchaser after making full payment against which release orders will be issued by the officers of the respondent No. 3 at various places where goods were lying. THE said sale was on the basis of 'as is where is' basis. THE General Conditions of contract as contained in the auction catalogue also contained an arbitration clause in the following terms: "In the event of any question, dispute or difference arising under these condition or in connection with this contract............ arbitration of an Arbitrator to be appointed by the General Manager of the Administration. It will be no objection that the Arbitrator is a Government servant and that in the course of his duties as Government servant he has expressed views on all of any of the matter in dispute or differences...... ...... ...... ...... ...... ......" It appears that the respondent 1 made payments of the entire sum being the price of the goods purchased by him in the said auction sale amounting to Rs. 7,06,400 including the earnest money paid on 21st of Feb. 1974. 14th of March, 1974 and 17th of April, 1974, and duly accepted by the petitioner and money receipts were issued. Thereafter, the respondent No. 3 by two sale release orders dated the 3rd of April, 1974 and 24th of Sept. 1974, authorised the respondent No. 1 to take delivery of 200 M.T. of the goods and 198.294 M.T. of the goods lying at Barkakhana and Barmo and Daltonganj and Latehar respectively. It appears that the petitioner only caused delivery of about 99,999 M.T. to be taken by the respondent No. 1 from Baromo and no further delivery was taken or could be taken by the respondent No. 1. From the correspondence annexed to the petition and also to the affidavit-in-op-position it transpires that the goods were not according to the specification and also goods were not lying at the places as per terms and conditions of the "said sale. It is alleged by the respondent No. 1 that the respondent committed fraud and misrepresentation thereby inducing the respondents to believe that the goods were of the specification mentioned in the auction catalogue and thereby the contract was voidable and avoided by the respondent No. 1, Such discovery is alleged in the plaint to have been made by the respondent No. 1 in Sept. 1974. It also transpires from the correspondence that as the petitioner and the respondent No. 2 were not in a position to deliver the goods from the site where they were alleged to have been lying due to the fact that the goods were not there and not according to the specification and therefore the respondent No. 1 was not able to take delivery of the goods and it also transpires that the time to take delivery was extended from time to time until 30th of May, 1976, but as the plaintiff is alleged to have discovered the fraud and misrepresentation and also alleged mistake as to facts essential to the said contract in respect of the goods purchased in the said auction sale not being in existence at the date of the contract, instituted the suit for the refund of the balance of purchase price of the goods on the ground of misrepresentation, fraud and also on mistake and as such, was void and has been avoided.
(3.) THE suit was filed in or about 20th of June, 1977, and after the writ of summons was served on the petitioner on or about 23rd of Sept. 1977, the notice of motion of the present application was taken out on the 7th of Dec. 1077, and ad interim stay of the suit was obtained. THEreafter, directions for filing affidavits were given on the 12th of Dec. 1977, which again was extended till 30th of Jan. 1978 and thereafter, affidavits were filed and the matter came up for hearing.;