Satish Chandra - (1.) ON July 2, 1976, the plaintiff opposite party filed a suit for recovery of money against the Food Corporation of India. In the summons that were issued December 15, 1976 was fixed for filing the written statement. ON that date the defendant appeared and prayed for time. Time was allowed till December 22, 1976. ON that date the defendant again applied for time which was granted till January 22, 1977. ON January 22, 1977, the defendant appeared and moved an application for stay of the hearing of the suit under Section 34 of the Arbitration Act. The arbitration agreement was set up and it was prayed that the matter in dispute be referred to arbitration. The application under Section 34 was dismissed. An appeal filed against that order also failed. Aggrieved, the defendant has come to this Court in revision.
(2.) SECTION 34 of the Arbitration Act runs as follows: "34. 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 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." One of the conditions for applying this provision is that the party applying for stay under Section 34 has not taken any steps in the proceedings or filed a written statement before the making of an application under Section 34. The courts below have held that on December 15, 1976 and December 22, 1976 the defendant took time to file a written statement. Thereby they have taken steps in the proceedings and hence were not entitled to apply for stay of the hearing of the suit under Section 34.
(3.) LEARNED counsel for the defendant applicant has invited my attention to the amendment of Section 34 of the Arbitration Act by the U. P. Civil Laws (Reforms and Amendment) Act, 1976 (U. P. Act No. 57 of 1976) which came into force on January 1, 1977. Section 19 of this Amending Act provides :- "19. Amendment of Section 34. In Section 34 of the principal Act, at the end the following explanation shall be inserted, namely: Explanation 1. Explanation 2. A mere application for time to file a written statement or a mere contest to an interlocutory application for injunction, appointment of Receiver or the like, shall not, amount to taking any steps in the proceedings".;