Report No. 76

8.42. Section .- Effect of legal proceedings on arbitration.-

Section 35 provides that a reference or award shall not become invalid by reason only of the commencement of legal proceedings upon the subject-matter of the reference; but after such legal proceedings have been commenced between all the parties to the reference and a notice given to the arbitrators or umpire, all further proceedings in a pending reference shall (unless stay of the suit is granted under section 34) be invalid.

Previous to the enactment of this section, the law was in an unsatisfactory condition. In the English case of Doleman,1 it was held, that an award made in an arbitration proceeding after an action was brought (in respect of the difference to which the arbitration clause applies) was bad, where the defendant had not applied for stay. This decision had been followed by most High Courts in India 2-5

1. Doleman v. Ossett Corporation, (1912) 3 KB 257.

2. Ram Prasad v. Mohan Lal, ILR 47 Cal 752: AIR 1921 Cal 770.

3. Appavu v. Seeni, ILR 41 Mad 115: AIR 1918 Mad 719.

4. Jawahar Singh v. Flemming Shaw, AIR 1937 Lah 851.

5. Jai Narain v. Narain Dass, ILR 3 Lah 296: AIR 1922 Lah 369.