Sinha, J. - (1.) THIS is an appeal against an order passed by G.K. Mitter, J. on the 21st September, 1961 whereby he made an order staying the suit instituted by Dunichand Sons and Company, against Fort Gloster Industries Ltd., under Section 34 of the Arbitration Act. The facts are as follows: By a contract dated 18th October, 1960, put through by brokers, the petitioner, Fort Gloster Industries Limited (hereinafter referred to as the "appellant" (sic. respondent ?)) agreed to sell, and the respondent (sic. apellant) firm Dunichand. Sons and Company, (hereinafter referred to as the "respondent" (sic. appellant)) agreed to buy, 50,000 yards hessian cloth 40" x 10 at the rate of Rs. 54.50 Np. per hundred yards, on terms and conditions contained in the Standard Contract of the Indian Jute and Hessian Exchange Limited, relating to transferable specific delivery of jute goods, including the usual arbitration clause, referring all disputes to the arbitration of the Bengal Chamber of Commerce and Industry, Calcutta. On the 21st February, 1961 the appellant gave shipping instruction to place the goods per S. S. "City of Philadelphia". On the '28th February, 1961 the respondent tendered a bill dated 22-2-1961 for Rs. 27,249.18 Np. together with the delivery order. On the 10th March, 1961 the respondent tendered the mate's receipt. Thereafter, the respondent demanded payment of the price of the goods. The appellant claimed that there were no goods on board the vessel above-mentioned, because the goods had in fact been seized by the Custom Authorities and there was no proper tender of the mate's receipt. As the appellant failed to pay for the goods alleged to be sold and delivered under the contract, the respondent referred the dispute to arbitration of the Bengal Chamber of Commerce and Industry and this was registered as Case No. 202 of 1961. On or about the 19th June 1961, Suit No. 975 of 1961 (Dunichand Sons and Company v. Fort Gloster Industries Limited) was instituted in this Court, asking for a decree for Rs. 10,750, alternatively for an enquiry into damages, for a declaration that the tender by the defendant (respondent) of the delivery order and the mate's receipt dated February 7, 1961 was wrongful and invalid, and for other reliefs. The Writ of Summons was served on the defendant (respondent) on 27th June, 1961. On the 17th July, 1961 the defendant (respondent) executed a warrant of attorney in favour of Messrs. Khaitan and Company. THIS warrant was filed before the Registrar on the 18th July, 1961 and on the same day appearance was entered in the suit on behalf of the defendant-respondent. On the 17th July, 1961 even before the warrant was filed, an application was taken out under Section 34 of the Arbitration Act, which application was made returnable on the 24th July, 1961. The notice of the application was served on the solicitors of the plaintiff (appellant) on the same day. The affidavit-in-opposition herein was affirmed on August 24, 1961 and the affidavit in reply on 31st August, 1961. Thereafter, the matter came up for hearing before Mitter, J. Before the learned Judge two points were taken (1) Did the plaintiff take a step in the proceedings by entering appearance in the suit and filing a warrant of attorney as stated above, 2nd is it thereby precluded from making an application under Section 34 of the Arbitration Act? (2) Do the disputes between the parties involve the determination of difficult questions of law and facts which the arbitrators will be called upon to try and should the Court consider that as a sufficient reason for allowing the suit to go ten?
(2.) THE learned Judge answered the first point in the negative. As regards the second point, he held that upon the materials on record he was not prepared to say that such a serious question of law would arise for determination by the arbitrators that the Court should take it out of their hands and try it itself. In appeal, the second point has not been pressed before us. THE only point pressed before us is the first point, namely as to whether by entering appearance in the suit and filing a warrant of attorney, the applicant has taken a "step in the proceedings" thereby precluding itself from making an application under Section 34 of the Arbitration Act. The argument advanced by Mr. Bhabra on behalf of the appellant turns on the wordings of Section 34, and the change that has been brought about in that section by amendment of the original Section 19 of the Indian Arbitration Act, 1899, which was based on Section 4 of the English Arbitration Act of 1889. Under the English Act, an application for stay can be made "at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings". Under Section 19 of the Indian Arbitration Act, 1899 such an application could be made "at any time after appearance and before filing a written statement or taking any other steps-in the proceedings". The wordings have now been changed and under Section 34 of the Arbitration Act, 1940, such an application should be made "at any time before filing a written statement or taking any other steps in the proceedings." The short argument of Mr. Bhabra is that previous to the amendment, Section 19 of the Indian Arbitration Act itself laid down that the application was to be made after appearance. In this respect, the provision was similar to the English Act. Therefore, it followed that under the old provision, entering appearance was by itself not a 'step in the proceedings'. Now, the words "after appearance" have been deliberately omitted. It is therefore argued that under Section 34 of the present Act, entering appearance is by itself a step in the proceedings. So far as the warrant is concerned, it is argued that the warrant executed on behalf of the solicitors authorised them to enter appearance in the suit and to defend the same. Therefore, this amounted to the expression of an intention to defend the suit. As to what amounts to a step in the proceedings, the leading case in England, is the judgment of Lindley, L. J. in Iyes and Barker v. Wilians, (1894) 2 Ch 478. This was what the learned Judge said : "The authorities shew that a step in the proceedings means something in the nature of an application to the court, and not mere talk between solicitors or, solicitors' clerks, nor the writing of letters, but the taking of some step, such as taking out a summons or something of that kind, which is, in the technical sense, a step in the proceedings."
(3.) THIS principle has, more or less, been followed in English cases and in cases under the Indian Arbitration Act, although it has been pointed out by Page, J. in a case presently to be mentioned, that the principle laid down cannot be wholly accurate, because the filing of a written statement is according to the terms of the section itself, a step in the proceedings and yet it cannot be said that it is an application to Court, or even in the nature of such an application. In my opinion, it is not of much use looking into cases decided before the amendment. It is obvious that under the old law, a "step in the proceedings" could only be taken after appearance. It followed that appearance itself could not be a step in the proceedings. Although this is so, it is necessary to look into an authority under the old Act namely, the decision of Page, J. in Bhowani Das Ramgovind v. Panna Chand, AIR 1925 Cal 801. In that case, there was an agreement for reference to arbitration, and notwithstanding the agreement a suit was filed. According to the defendant, the summons was suppressed, with the result that the time to enter appearance was over by the time the defendant came to know of the filing of the suit. The defendant thereupon applied for a copy of the plaint and made an application for leave to enter appearance, as is necessary under the rules. Having done so, and having received a copy of the plaint, the defendant then made an application under Section 19 of the Arbitration Act for Stay of the suit, it was alleged that by making an application for leave to enter appearance, the defendant had taken a 'step in the proceedings' and was precluded from asking for a stay. Page J. referred to the case of Ives and Barker, 1894-2 Ch 478 (supra) and held that so far as the application for a copy of the plaint was concerned, it was merely to seek information about the nature of the plaintiff's claim. THIS was not a step in the proceedings. The learned Judge said as follows: "But in order to conform to the provisions of Section 19 the defendant must apply to the Court 'after appearance and before filing a written statement or taking any other step in the proceedings'. Now, in my opinion, to move the Court for leave to enter an appearance is, for certain purposes, to take a step in the proceedings. For example, a party taking such a step would be deemed to have waived any irregularity in the service of the writ to which he applies for leave to appear. The question which I have to determine is whether such an application is a step in the proceedings within Section 19 of the Arbitration Act.......... Any act in the nature of an application to the Court which indicates that a party is willing that the suit should proceed, in my opinion, would be a step in the proceedings within Section 19 of the Indian Arbitration Act. The intention of the party is to be gathered from the nature of application which is made, and if, having regard to the form of the application, the Court is of opinion that a step has been taken it will so hold, notwithstanding that the party may in truth and in fact have no such intention, or that the application is coupled with a protest that the Party desires that the matters in dispute should be referred to arbitration. Applying this test to the motion before the Court I am clearly of opinion that the defendant's application for leave to enter an appearance was not a step in the proceedings within Section 19 of the Arbitration Act. It is not a reasonable deduction from such conduct that the defendant intends to resist the suit on the merits. It is equally reasonable to infer therefrom that he intends thereafter to make a preliminary objection to the matter being made the subject of litigation at all. Nay more, the language used in the section leads me to the same conclusion, for it is therein expressly provided that the party making an application under the section for a stay of the proceedings must before so doing have entered an appearance. It is not reasonable to suppose that the legislature intended that a party should be held to have taken a step in the proceedings within Section 19 of the Arbitration Act merely because he has made an application which, if granted, will place him en train for fulfilling a condition precedent to an application for stay being duly made in accordance with the provisions of the section.";