TMI Blog1960 (4) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... termination would take effect from March 31, 1958. However, by a subsequent letter written by the appellant to the respondent on March 17, 1958, the respondent was told that his services had been terminated with immediate effect and he was asked to hand over charge to his successor, Mr. T. S. Ramachandra Rao. Thereafter on July 14, 1958, the respondent, filed the present suit against the appellant. The appellant contended that the two contracts on which the respondent's claim was based were subject to an arbitration agreement, and so it was not open to the respondent to file the present suit against the appellant. The appellant, therefore, requested the Court under s. 34 of the Indian Arbitration Act, 1940, (hereinafter called the Act), to stay the proceedings initiated by the respondent and refer the dispute to arbitration in accordance with the arbitration agreement between the parties. The learned trial judge who heard the appellant's application, however, exercised his discretion against it and refused to stay the proceedings in the respondent's suit. Thereupon the appellant preferred an appeal in the Mysore High Court but his appeal failed and the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties but since no common ground was discovered between them the respondent filed the present suit. His case is that the two contracts entitled him to claim 1/10th of the profits made by the Deccan Herald during the period of his employment,, and so he claims an account of the said profits and his due share in them. The learned trial judge found that the respective contentions raised by the parties before him showed that there was no dispute as such between them which could attract the arbitration agreement. He also held that an attempt was made by the parties to settle their differences amicably through the mediation of Mr. Behram Doctor but the said attempt failed because the appellant was not serious about it and was just trying to protract, defeat and delay the plaintiff 's moves . According to the learned trial judge a plea of limitation would fall to be considered in the present suit and it was desirable that the said plea should be tried by a competent court rather than by arbitrators. He was, however, not impressed by the respondent's contention that his character had been impeached by the appellant and so he should be allowed to vindicate his character in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be confirmed. The appellant contends that the reasons given by the High Court in refusing to stay the suit are not convincing and that the discretion vesting in the High Court in that behalf has not been properly or judiciously exercised. Section 34 of the Act confers power on the court to stay legal proceedings where there is an arbitration agreement subject to the conditions specified in the section. The conditions thus specified are satisfied in the present case, but the section clearly contemplates that, even though there is an arbitration agreement and the requisite conditions specified by it are satisfied, the court may nevertheless refuse to grant stay if it is satisfied that there are sufficient reasons why the matter should not be referred in accordance with the arbitration agreement. In other words, the power to stay legal proceedings is discretionary, and so a party to an arbitration agreement against whom legal proceedings have been commenced cannot by relying on the arbitration agreement claim the stay of legal proceedings instituted in a court as a matter of right. It is, however, clear that the discretion vested in the court, must be properly and judicially e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leave the decision of such complex issues to the arbitrator, it may, in a proper case, refuse to grant stay on that ground; indeed, in such cases the arbitrator can and may state a special case for the opinion of the court under s. 13(b) of the Act. Thus, the question as to whether legal proceedings should be stayed under s. 34 must always be decided by the court in a judicial manner having regard to the relevant facts and circumstances of each case. Where the discretion vested in the court under s. 34 has been exercised by the trial court the appellate court should be slow to interfere with the exercise of the said discretion. In dealing with the matter raised before it at the appellate stage the appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. As is often said, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1,500 permensem under paragraph 1 (a). Paragraph 1(b) and (c) deal with the other amenities to which the respondent was entitled. Clause (d) of paragraph 1 provides that when the newspaper shows a profit in the annual accounts the Editor shall be entitled to 1/10th share of it is on this clause that the respondent's claim in the present proceedings is (1) [1942] A.C 130, 138. based. The terms on which the respondent had to remain in the service of the appellant are specified in paragraph 2(a) and (b). Paragraph 3 provides for the renewal of the contract for a further period of five years if it is found that such renewal is for the mutual advantage of the parties. This paragraph also provides that during the continuance of his employment the respondent shall not directly or indirectly be interested in any other newspaper business than that of the appellant or any other journalistic activities in competition with that of the appellant. It also stipulates that if the contract is determined the respondent shall not for a period of three years thereafter be directly or indirectly interested in any newspaper business of the same kind as is carried on by the appellant wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manner in which the contract has to be worked out and given effect to, and it is precisely such differences that are covered by the arbitration agreement. We would accordingly hold that the High Court was in error in coming to the conclusion that the present dispute between the parties was outside the scope of paragraph 4 of the contract. If the High Court had refused to stay the present proceedings only on this ground the appellant would no doubt have succeeded; but the High Court has based its decision not only, nor even mainly, on the construction of the contract. The tenor of the judgment suggests that the High Court considered the other relevant facts to which its attention was invited and the material findings recorded by the trial judge, and though it differed from some of the findings of the trial judge, on the whole it felt no difficulty in coming to the conclusion that there was no reason to interfere with the trial court's exercise of discretion under s. 34. That is why, even though the appellant has succeeded before us on the question of the construction of the arbitration agreement, having regard to the limits which we generally impose on the exercise of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or arbitration was that the respon- dent could not invoke the arbitration clause (D. 3). It is true that on April 23, 1956, Mr. Venkataswamy attempted to explain this statement by saying that all that he intended to suggest was that no occasion for invoking the arbitration agreement had arisen. That, however, appears to be an unsatisfactory explanation (D. 10). Even so, Mr. Venkataswamy agreed to meet Mr. Behram Doctor and so on March 9, 1956, the respondent gave to Mr. Venkataswamy the address of Mr. Behram Doctor and asked him to see him (D. 5). He informed Mr. Behram Doctor accordingly (D. 6). It appears that subsequently Mr. Behrain Doctor met both the respondent and Mr. Venkataswamy on May 9, 1956. The proceedings of this meeting which have been kept by Mr. Behram Doctor and copies of which have been supplied by him to both the parties indicate that Mr. Behram Doctor attempted to mediate between the parties and presumably the parties were agreeable to secure the mediation of Mr. Behram Doctor to resolve the dispute. We ought to add that the copy of the said proceedings produced by the appellant contains a statement that Mr. Venkataswamy at the outset told Mr. Behram Doct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant, being a powerful company, may delay and seek to defeat the respondent's claim by protracting the proceedings before the arbitrators. It now looks impossible that the parties would agree to appoint one arbitrator, and so if the matter goes before the domestic tribunal the two arbitrators appointed by the two parties respectively may have to nominate a third one to complete the constitution of the domestic tribunal, and that it is said may easily lead to a deadlock. In the trial court attempts were made to settle this unfortunate dispute but they failed and the respondent's grievance is that the appellant adopted an unhelpful and noncooperative attitude. It appears fairly clear that when the parties entered into the present contract and agreed that differences between them in regard to the interpretation and application of the contract should be referred to arbitration they did not anticipate the complications which have subsequently arisen. That is why an arbitration agreement may have been introduced in the contract in question. All these facts have been considered by both the courts, and though it is true that in their approach and final decisions in respect of these ..... X X X X Extracts X X X X X X X X Extracts X X X X
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