STATE OF GUJARAT Vs. GHANSHYAM SALT WORKS
LAWS(GJH)-1979-3-4
HIGH COURT OF GUJARAT
Decided on March 26,1979

STATE OF GUJARAT Appellant
VERSUS
GHANSHYAM SALT WORKS Respondents

JUDGEMENT

D.P.DESAI - (1.) IN Special Civil Suit No. 6 of 1974 filed by the respondent-plaintiff against the appellant State of Gujarat challenging an order for recovery of an amount of Rs. 19 686 passed by the Collector an ex-parte injunction was obtained by the plaintiff from the Court restraining the defendant and its servants from making recovery pursuant to that order. The ex-parte injunction along with a notice to show cause why it should not be made absolute was granted with the result that the learned District Government Pleader appeared in the said suit on 16/2/1974 and made an application Exh. 14 for grant of time for filing objections against the application for temporary injunction. The time was granted till 28 on which date he further applied for time. One more application for time was made on 15/3/1974; and thereafter on 31/7/1974 the learned District Government Pleader made application Exh. 2G stating that the agreement dated 19/6/1965 between the parties contained an arbitration clause No. 19 and thereafter the suit should be stayed under sec. 34 of the INdian Arbitration Act 1940 (the Act). The said clause as 1 find from the order passed by the learned trial Judge under appeal was to the effect that in case of any dispute arising between lessor and lessee or any difference of opinion as to the interpretation of the terms of the lease or the obligations the matter shall be referred to the Salt Commissioner for INdia whose decision shall be final and binding on both the parties. The application Exh. 26 for staying the suit under sec. 34 further stated that looking to the nature of the suit the arbitration clause was applicable to the dispute raised in the suit and that the defendant was and is ready and willing to do all things necessary to the proper conduct of the arbitration. This application for stay was opposed by the plaintiff; and one of the contentions raised by him was that the main relief was against the order of the Collector and the dispute referred to in the plaint does not come within the arbitration clause. The other contention was that the defendant by applying for time to file objections against the interim injunction application had taken step in the proceedings and therefore it was disentitled to an order for stay under sec. 34 of the Act. It appears that the learned trial Judge did not deal with the first ground. However he found substance in the second ground and holding that the act of the Government Pleader in asking for time to file objections to the application for interim injunction amounted to taking a step in the proceedings rejected the application for for stay. There is a conflict of opinion between some High Courts on the point like the present. The learned trial Judge referred to three of these decisions and purporting to follow the decisions reported in Amritraj v. Golecha Financiers A.I.R. 1966 Calcutta 315 and Bortes S. A. v. Astrouic Compania A.I.R. 1970 Madras 323 he held that the application for time to file objections to the interim injunction application amounted to taking a step in the proceedings within the meaning of sec. 34 of the Act. On this sole ground therefore he dismissed the application for stay. Being aggrieved the State has come in appeal.
(2.) IT must be made clear at the outset that out of the two grounds urged on behalf of the plaintiff in opposing the application for stay under sec. 34 of the Act the learned trial Judge has not decided upon the first ground. Therefore nothing stated in this judgment will affect the plaintiffs right to urge that ground against the order for stay under sec. 34 of the Act. So far as the second ground on which the learned trial Judge decided the matter following the decisions of the aforesaid two High Courts is concerned we proceed on the basis that after receiving the notice to show cause why the injunction order should not be made absolute the learned District Government Pleader appeared and applied for time more than once for the purpose of filing objections to the interim injunction application at Exh. 6. The question which then arises is whether in a case where an ex-parte injunction is granted by the Court and the defendant is called upon to show cause why the order should not be made absolute does the application given by the defendant contesting the injunction application and asking for time to file reply to the injunction application amount to taking of a step in the proceedings as contemplated by sec. 34 of the Act.
(3.) THE relevant provisions of sec. 34 of the Act are as under:- "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"; THE aforesaid section in terms contemplates two stages before which an application for stay under sec 34 can be given; and these stages are (1) filing of the written statement or (2) taking any other step in the proceedings. THEre is no difficulty with regard to the first stage. However the words taking any other steps in the proceedings occurring in the second stage have led to a division of opinion between some of the High Courts. On the one hand we have the decisions of the Calcutta and Madras High Courts referred to earlier and on the other hand we have the decisions reported in Nuruddin Abdulhusein v. Abu Ahmad A.I.R. 1950 Bombay 127 Daulat Ram v. Punjab State A.I.R. 1958 Punjab 19 Sansarchand v. State of Madhya Pradesh A.I.R. 1961 Madhya Pradesh 322 and Queens Collage Kanetra v. Collector Varanasi A.I R. 1974 Allahabad 431. THEse were the only decisions cited at the bar.;


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