GAYA COTTON AND JUTE MILLSLTD Vs. BIHAR STATE ELECTRICITY BOARD

JUDGEMENT

(1.) Ramratna Singh and Shambhu Prasad Singh, JJ. 1. This appeal by the defendant, a company is directed against an order of the subordinate Judge, Second Court, Gaya, dated the 27th February, 1962. A suit was instituted by the plaintiff-respondents against this company and, on the 29th January, 1362, the defendant-appellant filed a petition praying to the Court that the hearing of the suit be stayed till the decision of arbitrators, as, in the deed of agreement between the parties on the basis of which, the suit had been instituted, there was a clear term that all disputes between the parties would be decided by arbitration. The learned subordinate Judge, however rejected the petition on the ground that the defendant had submitted to the jurisdiction of the Court inasmuch as it had filed no less than five petitions for time to file the written statement before the 29th January 1962.

(2.) From the order sheet of the suit, it appears that, after the service of summons, the defendant appeared and filed a petition for time to file the written statement by the 31st August, 1961. Thereafter the defendant filed five petitions for time, the last one being dated the 9th January, 1962, to file the written statement. Thus six such petitions were filed; but, unfortunately, two of those petitions and the Vakalatnama of the defendant have not been received in this Court. The question is whether any of these petitions amounts to taking of steps in the proceeding by the defendant before he filed the petition for stay on the 29th January, 1962. It is well settled that for the stay of legal proceedings under Section 34 of the Arbitration Act, it is necessary that some conditions should be fulfilled, namely-(1) the proceedings must have been commenced by a party to an arbitration agreement; (2) the proceedings which are sought to be stayed must be in respect of a matter agreed to be referred; (3) the applicant for stay must be a party to the proceedings and (4) the applicant must have taken no step in the proceedings after he appears. It will be recalled that the defendant appeared on the 7th August, 1961 and filed a petition for time to file the written statement, though he did not file the written statement itself. Of the four petitions which are on record, it can be said those filed before the 19th December 1961 may not amount to a step taken by the defendant in the proceedings. The real test is whether the petition for time indicated an intention to have the proceedings decided on merits by Court or an intention to abandon the right to have the matter disposed of by arbitration. In the petition dated the 31st August, 1961, it is stated that inasmuch as the Managing Director of the company had gone to Calcutta on some urgent business, no action including the filing of the written statement could be taken in his absence and, therefore, one month's time was prayed for. In the petition dated the 9th January, 1962, it is stated that, inasmuch as the Managing Director had gone to Patna High Court, no action could be taken in his absence and one month's time was prayed for which was granted. In the petition dated the 21st September, 1961, it is stated that the Managing Director had gone to Patna for some work and, without his order, it was not possible to file the written statement and again one month's time was granted as prayed for. The contents of the petition dated the 19th December, 1961 are very much damaging to the appellant. It is stated therein that that was the date fixed for filing the written statement; but, in the absence of the Managing Director, who had gone elsewhere, and without consulting him, it was not possible to file the written statement and, therefore, it was prayed that one month's time be granted for filing the written statement. It is, therefore, clear that this time, at least, a prayer for time was made for the purposes of putting in the written statement and the time was allowed for that purpose. This, apparently, indicates a desire on the part of the appellant to contest the suit on merits in court and the intention to abandon the right to have the dispute decided by the arbitrators.

(3.) Learned Counsel for the appellant did not dispute the proposition of law stated above; but he has relied on two decisions in support of his contention that none of the petitions referred to earlier would construe to indicate an intention to contest the suit on merits. In a Bench decision of the Allahabad High Court Roop Kishore v. United Provinces Government , it was held that an application by the defendant for adjournment of the suit with a view to file a written statement and the grant of time by the Court for that purpose was a step in the proceedings within the meaning of Section 34 of the Arbitration Act. It was also observed by their Lordships in that case that it is possible to hold in some cases that an application for adjournment of a case to enable the defendant to file a written statement was not a step in the proceedings within the meaning of Section 34 of the Act; but prima facie, such an application was a step in the proceedings within the meaning of Section 34 and the whole burden should be upon the defendant to establish the circumstance which would justify to hold that the effect should not be given to the prima facie meaning of the application. No circumstance has been pointed out in the instant case by learned Counsel to show that the prima facie meaning of the petition dated the 19th December, 1961 filed by the defendant for adjournment in order to file the written statement should not be given effect to the other case cited in State of Himachal Pradesh v. Lalchand Shahi A.I.R. 1953 Him. Pra. 75. In that case, the learned Judicial Commissioner observed that no party should be deemed to have taken any step in a proceeding, if he is not aware of what the proceeding is and, therefore, the prayer for adjournment of the case made by counsel who till the moment of making the request for adjournment had received no instruction from his clients did not amount to taking of a step in the proceeding within the meaning of Section 34 of the Arbitration Act. In that case, on the first date after the service of summons, the advocate for the defendant prayed for extension of time to enable him to file a written statement and the time was allowed. The defendant was the State of Himachal Pradesh. The defendant's advocate had filed an affidavit in the Court stating that he was engaged on behalf of the defendant on the date on which the aforesaid prayer was made and that by the time he appeared in court on that date he had not received instructions in the case and, therefore, he verbally requested the court to adjourn the case to enable him to prepare the defence on behalf of the defendant. In view of this statement of the learned advocate in the case, the learned Judicial Commissioner held that the defendant in that case could not be deemed to have taken any step in the proceeding as the advocate for the defendant was not aware what the proceeding was. In the instant case, as many as six petitions for time were filed on behalf of the appellant and, in none of them, it was stated that the petition was filed by the advocate for the defendant, as he had received no instruction in the case; rather, the contents of all the petitions show that he had some instructions and the petition dated the 19th December 1961 clearly shows that he prayed for time for the purpose of filing the written statement and the prayer was allowed.