- (1.) BRIEFLY, the facts are that M/s. William Jacks and Co, (India) Ltd. (hereinafter referred to as "the company"), filed a petition under Section 439 read with Sections 433 and 434 of the Companies Act, 1956, against Saraswati Industrial Syndicate Ltd. (hereinafter referred to as "the Syndicate" ). stating that an amount of Rs. 5 lakhs odd was due from it which it failed to pay in spite of acknowledging that the above said amount was due from it. Notice in the petition was ordered to be issued by this court on January 13, 1983, for March 3, 1983. The notice was despatched on behalf of the company by Mr. R. N. Narula, advocate to the Syndicate, on January 18, 1983, which must have been received within one week thereafter. On March 3, 1983, Mr. A. K. Jaiswal advocate, appeared on behalf of the respondent and made a request for time to enable him to file a written statement. At his request, the case was adjourned to April 7, 1983. Two days before the date of hearing, that is, on April, 5, 1983, an application (C. A. No. 54 of 1983) was filed on behalf of the Syndicate under Section 34 of the Arbitration Act, 1940 (hereinafter called "the Act"), for staying the proceedings on the ground that the agreement between the parties contained an arbitration clause. The application has been contested on behalf of the company.
(2.) THE first contention of Mr. Bhagirath Das is that there is an arbitration clause in the agreement between the parties according to which all the disputes are to be referred to an arbitrator to be appointed by the parties by mutual agreement and in the event of the parties failing to agree, the reference would be to a nominee of the Federation of Indian Chambers of Commerce and Industry, Delhi, at the instance of the party first applying to him. He submits that, therefore, the proceedings are liable to be stayed under Section 34 of the Act. On the other hand, Mr. Khaitan has argued that the Syndicate took steps in the proceedings as a request was made on its behalf to file a written statement. In the circumstances, he submits, that the proceedings cannot be stayed. I have duly considered the arguments of the learned counsel. It is not disputed that the service of the petition was ordered to be effected on the Syndicate in the second week of January, 1983. It is also not disputed that the notice must have been served upon the Syndicate within a week from January 18, 1983, the date of its issuance. A request was made by Mr. A. K. Jaiswal to adjourn the case for enabling him to file the written statement on March 3, 1983, that is, more than a month, after having received notice by the Syndicate. In that situation, the inference is that the Syndicate knew the contents of the petition and it wanted to defend the same on merits. Section 34 of the Arbitration Act, inter alia, provides that where any party to an arbitration agreement commences any legal proceedings 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.
(3.) THE question that arises for determination is whether the statement of Mr. Jaiswal amounts to taking a step in the proceedings. A similar question arose before the Supreme Court in State of Uttar Pradesh v. Janki Saran Kailash Chandra, AIR 1973 SC 2071. In that case, a suit was instituted for recovery of some amount by way of damages against the State of U. P. The summonses of the case were served on the District Government counsel who filed an appearance slip in the court and an application praying for one month's time for the purpose of filing a written statement. The prayer was granted. Before the next date, he moved an application under Section 34 of the Act stating that there was an arbitration clause in the agreement between the parties to the suit and, therefore, the suit should be stayed. The trial court accepted the application and stayed the suit. On appeal, the High Court held that the action of the Government Pleader in applying for time to file the written statement amounted to taking a step in the proceedings within the meaning of Section 34 of the Act. Consequently, the appeal was accepted and the application under Section 34 was dismissed. The State went up in appeal before the Supreme Court. Dua J. , while speaking for the court, after taking into consideration various cases, observed that there was no serious infirmity in the impugned judgment of the High Court. The District Government counsel in that case was empowered to appear and act for and on behalf of the Government and also to make applications on its behalf. If the counsel wanted time for the purpose of having fuller instructions, he could have asked for it specifically, for, he was not a layman ignorant about the legal position but a professional lawyer retained by the Government for the purpose of acting and pleading on behalf of the Government as a recognised agent. He, however, chose instead to ask for time specifically for filing a written statement and this act he purported to do on behalf of the State Government which he was fully empowered to do. The State took the benefit of his appearance and his successful prayer for adjournment of the case by one month for the purpose of filing the written statement. In those circumstances, it was hardly open to the State Government to plead that the District Government counsel was not authorised to seek adjournment on its behalf for that purpose. If he wanted time for further consultations, he could and should have specifically made a prayer to that effect. It was further observed that it would be somewhat irrational and perhaps incongruous to permit the State, after having taken the benefit of that adjournment, to plead that the application for adjournment was not made on instructions and was unauthorised. To accede to the State Government the right to do so would clearly be unjust to the opposite party which could have rightfully objected to the adjournment, had there been any indication that the prayer was not being made on instructions from the State Government. The above observations are fully applicable to the facts of the present case. Mr. Bhagirath Das sought to distinguish the case on the ground that Mr. Jaiswal did not file any memorandum of appearance on behalf of the Syndicate nor did he move any application as was done in the above-referred case. I am not impressed with the alleged distinction. It is presumed that when a lawyer puts in appearance, he does so on the instructions of his client. It is not necessary that he must put in a memorandum of appearance. It is also not necessary that a request should always be made in writing. An oral request is as good as a request in writing. In this view, I am fortified by the observations of this court in Union of India v. Hira Lal Sud [1978] PLR 239, wherein it was held that an oral request for adjournment for filing a written statement is as good as a written request. It was further held that if a written request seeking adjournment to file a written statement amounts to taking a step in the proceedings, there is no reason why an oral request to the same effect would not amount to taking such a step. That decision was followed in Segat Brothers v. Food Corporation of India [1983] CLJ (Candcr) 24, wherein similar observations were made.;