Pratibha Bonnerjea, J. - (1.) THE parties to this application entered into a partnership agreement dated 5-1-1976 to carry on business under the name and style of Godhur Colliery Co. THE said deed contained an arbitration clause as follows:-- "32. If during the continuance of the partnership or any of them afterwards any dispute, differences or question shall arise between the partners hereto relating to or appertaining to such partnership of these presents, such disputes, difference and question shall be referred to arbitration of two Arbitrators one to be appointed by the First party and the Other by the other parties and in case of difference between the Arbitrators at any point the same shall be referred to a third party umpire as the case may be final and binding on the parties."
(2.) ACCORDING to the petitioner, the partnership stood dissolved on expiry of the period of partnership on 31-12-1970 or from 17-10-1971 when the business undertaking was taken over by the Government under the provisions of Coking Coal Mines (Emergency) Provisions Ordinance 1971 which ultimately culminated in nationalisation of the said business under the provisions of Coking Coal Mines (Nationalisation) Act 1972. This allegation of dissolution is denied by the respondents Nos. 1 and 3 who are contesting this application. It is further alleged in the petition that a settlement was arrived at by and between the parties and a joint petition was filed before the Commissioner of Payment whereby the respondent admitted that a sum of Rs. 1,15,000 would be payable to the petitioner out of the compensation money and pursuant to the order of the Commissioner of Payment the partners have received payments. These allegations are denied by the respondents. The petitioner stated that on 4-8-1979, the petitioner was surprised to receive a letter from one Solil Kumar Mukheriee whereby the petitioner was intimated that in Suit No. 555 of 1979 (Baidya Nath Roy v. Arjun Agarwalla and Ors) this Court had passed an order restraining the petitioner from receiving any money in respect of compensation. Thereafter he instructed M/s. Meheria and Co. to enquire into the matter and on 13-8-1979 the matter was mentioned on behalf of the petitioner and the Court directed service of a copy of the plaint on the petitioner and gave directions for filing affidavits in the pending application. The matter was again mentioned on behalf of the petitioner on 31-8-1979 for adjournment of the date of hearing of the application. Instead of filing the affidavit-in-opposition, the petitioner took out this application under Section 34 of the Arbitration Act for stay of the Suit No. 555 of 1979 filed by the respondent No. 1 on 30-7-1979 for dissolution of the partnership and accounts. The petitioner alleged that he did not take any step in the proceeding and was ready and willing to do everything necessary for proper conduct of the Arbitration. The respondents Nos. 1 and 3 filed their respective affidavits-in-opposition alleging that the petitioner orally prayed for vacating the interim order of injunction on 13-8-1979. The court refused to grant the said prayer and gave directions for service of a copy of the plaint on the petitioner and for filing affidavits. The petitioner again prayed for extension of time to file affidavit on 31-8-1979 and obtained another adjournment of hearing of the application on 6-6-1979 (or 6-9-1979 ?). Thereafter on 7-9-1979 the present application under Section 34 of the Arbitration Act was taken out. The conduct of the petitioner will show that he had taken steps in the proceeding prior to the taking out of this application. It was further alleged that the subject matter of the suit was not covered by the arbitration agreement and the agreement became unworkable. Hence stay should be refused. The counsel for the appearing respondents, cited several cases in support of their contention that the aforesaid acts of the petitioner would amount to taking steps in the proceeding. Great reliance was placed on AIR 1943 Cal, 484, But the petitioner's counsel, Mr. Mitter submitted that what acts should be considered as steps in the proceeding and its guiding principles were laid down finally by the Supreme Court(The State of Uttar Pradesh v. Janki Saran Kailash Chandra) as follows : -- "Taking other steps in the suit proceeding connotes the idea of doing something in aid of the progress of the suit or submitting to the jurisdiction of the court for the purpose of adjudication on the merit of the controversy in the suit."
(3.) IF steps are taken in the proceedings which are not in aid of the progress of the suit or without having any intention to have the adjudication on merit by the court, then those acts would not amount to step in the proceeding. He submitted that the law on this point had to be settled by the Supreme Court in view of the divergence of decisions by different High Courts in India. He further submitted that prior to 1973, in some of the High Courts including our Court, it was held that filing of affidavits or obtaining time for filing affidavits in an application for Receiver or injunction would amount to taking step in the proceeding. This caused serious hardship to the defendant if he wanted to enforce the arbitration agreement He was unable to try to vacate interim orders for Receiver or injunction or to contest the same. In such cases, even if the defendant could obtain an order for stay ultimately, he would have to face serious prejudice and inconvenience during the intervening period. To eradicate these inconveniences and for the ends of, justice, it was necessary to settle the law on this point. He submitted that in (Shri Ram Shah v. Mastan Singh) the Division Bench of that High Court, has elaborated this principle in the light of the decision and has pointed out two distinct classes of proceedings viz, "incidental" and "supplemental" and has opined that contesting a supplemental proceeding or taking any step in the same will not amount to taking step in the proceeding. This will be clear from paragraph 6 of this decision :-- "There is yet another useful test which may be formulated in order to determine as to whether a defendant has taken a step in the proceedings so as to deprive him of the benefit of Section 34 of the Act. A look at the language of Section 141 of the Civil P. C. points to a division of "proceedings" into two categories. A suit after all is merely a species of the generic term "proceedings". Section 141 of the Civil P. C. provides that the procedure provided in the Code with regard to suits shall be followed in all proceedings in any Court of Civil jurisdiction. Part III of the Code relates to incidental proceedings and Part VI relates to "supplemental proceedings". Incidental proceedings are dealt with in Sections 75 to 78 of the Code, and the supplemental proceedings are dealt with in Sections 94 and 95 of the Code. Sections 75 to 78 deal with the power of the Court to issue Commission, letter of request, and commission issued by foreign courts. The nomenclature given to these proceedings is "incidental proceedings" as they are integral to the suit inasmuch as they are necessary in the taking of the suit to its fruition, that is, its ultimate decision and the making of a decree, on the other hand, the proceedings in Part III of the Code are described as supplemental proceedings because they relate only to the powers of the Court which may be exercised for preventing the ends of justice being defeated. Attachment, injunction etc. fall within the category of supplemental proceedings. They do not by themselves contribute to the advancement or the progress of the suit. They are merely intended to protect the interest of the parties in certain circumstances. It follows that if any step is taken with regard to these supplemental proceedings, it cannot be said that it has contributed to the progress of the suit on merits, that is, the progress of substantive proceedings. On the other hand, if steps are taken in the incidental proceedings covered by Part III of the Code comprised of Sections 75 to 78, that would be a step in the substantive proceedings themselves. The test, therefore, is whether any step, taken by the defendant is related to the advancement of the hearing of the suit or the substantive action or is merely connected with supplemental proceedings the purpose of which is not to decide or proceed or proceed to decide the hearing of the suit on merits. To borrow the language of their Lordships of the Supreme Court in State of Uttar Pradesh v. Janki Saran Kailash Chandra "Taking other steps in the suit proceedings connotes the idea of doing something in aid of progress of the suit or submitting to the jurisdiction of the Court for the purpose of adjudication of the merits of the controversy in the suit." Applying the above tests to the facts of the present case, we are of the opinion that the respondents by merely filing objection to the injunction application moved by the plaintiff, could not be said to have taken a step in the proceedings so as to disentitle them from the benefit of Section 34 of the Act.;