Report No. 76

8.56. Present position not satisfactor.- insertion of new sub-sections (6) and (7) recommended.-

If this is the present position, we venture to suggest that it is not very satisfactory. There may be cases where an arbitration becomes infructuous by reason of an order not mentioned in section 37(5). For example, an application challenging the validity of the agreement may be made under section 31(2) read with section 33, and the application may succeed. Whether this would be a case of the court "ordering that the arbitration agreement shall cease to have effect" is doubtful, as those words are appropriate only for section 12(2)(b) or section 19. Conversely, the application may fail, but some time is taken up in its prosecution.

In such cases, while a party is engaged bona fide in another proceeding, we cannot expect him to have an eye at the same time on an ordinary court also and file a suit. Such a course would lead to a half-hearted participation in the other application, and defeat the very object of the law of arbitration. Mere cases where a party remains supine and does not go on diligently with the arbitration may not deserve sympathy. But serious hardship is likely to be caused in cases of the nature illustrated above. It would, therefore, be advisable to insert an express exemption, in addition to that given by section 37(5). We are recommending the insertion of two new sub-sections in section 37, for the purpose.1

1. See para. 8.58, infra, suggested sections 37(6) and 37(7).

8.57. Section 37(5).-

In sub-section (5) of section 37, a reference to the Limitation Act, 1963, should be substituted in place of the present reference to the old Act.