(1.) THIS is an appeal against an order of Senior Subordinate Judge 1st Class, ludhiana, under Section 34 of the Indian Arbitration Act, staying the suit brought by Daulat Ram appellant against the State of Punjab, the respondent.
(2.) DAULAT Ram instituted the suit for recovery of Rs. 8,000/- on the allegations that he had contracted to carry out certain works for the Irrigation Department in the Gray Canal Circle, for which in addition to other charges he was to be paid Rs. 2/- per thousand cubic feet as wetness allowance, and that the defendant without his consent reduced the contracted allowance to Re. 1/8/-per thousand cubic feet and deducted the amount of Rs. 5,081/- and Rs. 1,422/-from his further bills as excess past payments and withheld the payment of Rs. 1,497/- The action of the defendant was challenged as illegal and without authority. The suit was instituted on 4th April, 1955. On 7th April, 1956, Summons for the appearance of defendant, on 10th June, 1955, was directed to issue. On that date, counsel for the defendant made a statement that his client wanted to present an application under Section 34 of the Arbitration Act and since the relevant records had not been received from the Department concerned he prayed for an adjournment. The Court thereupon made the following order:-"for written-statement of the defendant or application under Section 34 Arbitration Act, the case to come up on 1st July, 1955".
On 1st July, 1955, the defendant submitted the application stating that one of the terms agreed upon between the parties proved that "all disputes arising out of or connected with the work order will be referred to and decided by the superintending Engineer of the Circle as arbitrator'', that the subject matter of the suit was covered by the arbitration clause of the agreement and that the defendant always was and now is ready and willing to do all things necessary to the proper conduct of the arbitration proceedings.
The plaintiff opposed the application on the ground (i) that the defendant in praying for adjournment of the case on 10-6-1955 had taken a "step in the proceedings" and therefore the application was barred by the provisions of Section 34 of the Arbitration Act, (ii) that the dispute did not fall within the arbitration clause, and (iii) that the Superintending Engineer, being himself a party to the agreement and hence the dispute, was not the proper person to act as arbitrator. It was therefore, prayed that the Court, may in the exercise of its discretion, refuse to stay the suit.
(3.) ON all these points, the learned Subordinate Judge found against the plaintiff and accepting the application directed the suit to be stayed. The plaintiff has come in appeal against this order.
Section 34 of the Indian Arbitration Act lays down:--
"where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to 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; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings. "
Undoubtedly, the application was presented before the filing of the written-statement. On behalf of the appellant, it is contended that the defendant in praying for adjournment, for whatever purpose, on 10th June took a "step in the proceedings" and thereby deprived himself of the right to present the application. According to Mr. Thapar, intention of the defendant in seeking adjournment is of no consequence the matter of importance being the reason for which the adjournment was granted. Under Order 17, rule 1, Civil Procedure Code, cause has to be shown for the adjournment of a case. The ground on which the Court adjourned the case was for the filing of a writ-ten-statement. The statement of the defendant's counsel has to be read in the light of the order made thereon. The defendant acquiesced in the order. Therefore, he should be regarded as having taken time for filing the written statement, which amounted to taking a "step in the proceedings. " In the alternative, Mr. Thapar submits that even a prayer for adjournment for presenting an application under Section 34 amounts to taking a "step in the proceedings" of the suit. Number of decisions are cited, in which ft is held that an application for time to file a written statement is a "step in the proceedings" within the meaning, of Section 34, Arbitration Act. The proposition can be helpful only if the argument that the time in this case was sought and granted for the purpose of filing a written-statement be acceptable. But, with that, I cannot convince myself to agree. As already observed, on the presentation of the plaint summons for appearance of the defendant on 10th June was ordered to issue. The summons actually issued and served upon the defendant is not traceable on the record. It cannot, therefore, be said if he was also called upon to put in his written statement that day. Nor is it clear from the record that the summons was accompanied by a copy of the plaint. On the very first day when the defendant appeared and at the outset, his counsel expressed his intention to present an application under Section 34 for stay of the suit. The defendant did not take part in the proceedings of the suit, nor did he show his willingness to take any part therein. On the other hand, he objected to the proceedings of the suit and prayed for time to present a formal application in that connection. The prayer was granted. The Court instead of adjourning the case merely for presentation of an application under Section 34 directed that the written-statement may also be filed on the adjourned hearing. It was only either of them that was to be presented, the choice was left to the defendant. In case of the filing of an application under Section 34, the written statement need not have been submitted what the Court meant to say was that the defendant would present an application under Section 34 as desired, but in case he did not do so he should be ready with and file his written statement. It was only by way of extra precaution, to avoid the necessity off another adjournment, that this order was made. The defendant was clear in his mind that he was to present an application under Section 34, the precautionary measure taken by the Court would not affect his case adversely. In manner, could he object to the order which the court was pleased to make on his prayer for time? The order itself was in the alternative, his forced submission did not mean that he accepted or agreed to file a written-statement on the date to which the case was adjourned.;