1. This is an appeal against an order, dated 15th December 1942, of the Civil Judge of Moradabad by which he stayed proceedings in a suit pending before him under Section 34, Arbitration Act (10 of 1940). The plaintiff who is a contractor carrying on business at Moradabad made some contracts with the U.P. Government on the basis of which he raised an action in the Court of the Civil Judge of Moradabad for recovery of a sum of Rs. 8500 as money due to him for work done and for arrears of security and as damages. This claim was made in Court on 25th July 1942. Previous to the institution of the suit a notice under Section 80 had been served upon the Government. The plaint was filed on a deficient court-fee which was not made good till 27th August 1942. On that date summons was issued to the defendant which was served on the Government Pleader, Moradabad, on 7th September 1942. On 2nd October 1942, which was the date fixed for issues in the summons, an application was made on behalf of the defendant by which it was prayed that the case be adjourned for two months to enable the defendant to file a written statement. Several grounds were stated in support of this petition, one of these was that under the rules the defendant was entitled to two months' time to file the written statement from the date of the service of the summons but the defendant had been allowed only three weeks' time. It was also mentioned that the documents in relation to the suit were being collected and some delay would take place in collecting the documents and in taking legal advice and getting directions from the Legal Remembrancer. The Civil Judge before whom this application was made noted in his order that by a mistake at the time of issuing of summons it was not taken into consideration that the Government was a party and two months' time should be given for appearance and he allowed time upto 4th December 1942, to file the written statement and adjourned the case.
2. On 2nd December 1942, an application was made by the defendant stating that there was an arbitration clause in the agreements which were the basis of the suit and under Section 34, Arbitration Act, (10 of 1940) the proceedings be stayed and the suit be referred to arbitration. This application was granted by the Civil Judge and against his order the present appeal has been made and the main question for our consideration is whether the application for reference to arbitration under Section 34 made by the defendant in circumstances mentioned above was made 'before filing a written statement or taking any other steps in the proceedings.' It is not disputed that the application was made before filing the written statement and the entire controversy in the case is whether it was made or not before taking any 'other steps in the proceedings.' In the English Arbitration Act as well as in the Indian Arbitration Act which was in force before Act 10 of 1940 came in operation, similar clauses existed and have been the subject of judicial consideration. In Ford's Hotel Co., Ltd. v. Bartlett (1896)1896 A.C. I, it was held by the House of Lords that
where a defendant takes out a summons and obtains an order for further time for delivering his defence, he 'takes a step in the proceedings' within the meaning of the Arbitration Act, 1889, Section 4, and is not afterwards entitled to apply under that section for a stay on the ground that the proceedings were brought in respect of a matter agreed to be referred.
3. This decision was followed in Sarat Kumar Roy v. Corporation of Calcutta ('07) 34 Cal. 443 and in Fleming Shaw & Co. v. Haji Yusif Ellias ('17) 4 A.I.R. 1917 Sind 12 and Firm Murlimal Santram v. Banarsidas & Sons ('35) 22 A.I.R. 1935 Sind 62. In the case before us the defendant made an application for adjournment of the case with, a view to file a written statement and obtained an order from the Court in his favour and after the case had been adjourned on the application of the defendant, another application was made by the defendant for stay of proceedings under s.34, Arbitration Act, with a view that the case be referred to arbitration. Prima facie therefore the first application made by the defendant is a step in the proceedings within the meaning of the cases mentioned above.
4. The defendant, however, contends that every application made for adjournment of a case with a view to enable the defendant to file a written statement cannot be treated as a matter of law 'a step in the proceedings' and the contents of the application or the surrounding circumstances of the case may show that the application was made without prejudice to the rights of the defendant to seek relief under Section 34 of the Act and for this contention reliance is placed upon Bhowanidas Ramgobind v. Pannachand Luchmipat : AIR1925Cal801 , Ramlal Murlidhar v. Haribux Puranmull : AIR1934Cal796 , Dwarka Das & Co. v. Chain Roop Singhee ('37) I.L.R. (1937) 2 Cal. 63 and Premnath Pran Nath v. Amba Prasad ('41) 28 A.I.R. 1941 Lah. 64 It may be 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 S.34 of the Act, but prima facie such an application should be treated as a step in the proceedings within the meaning of Section 34 and the whole burden should be upon the defendant to establish the circumstances which will lead to the result that effect should not be given to the prima facie meaning of the application. The cases relied upon by the defendant do not lay down any proposition of law helpful to the defendant. In Bhowanidas Ramgobind v. Pannachand Luchmipat : AIR1925Cal801 , the application of the defendant about which it was contended that it was a step in the proceedings was made for leave to enter appearance in the case. In I.L.R. (1937) 2 Cal. 637 the application for adjournment was made with the consent of the other side and without prejudice to the rights of the parties and in A.I.R. 1941 Lah. 648 the summons was served upon the defendant without a copy of the plaint and he applied to the Court for adjournment with a view that a copy of the plaint be supplied to him. No doubt, in 61 cal. 702 6 there is the following passage in the judgment of Roy J.
It was submitted that the defendant firm had taken a step in the proceedings by reason of the application made for adjournment of the summons taken out by the plaintiff firm to compel the defendant firm to file their written statement. I am not prepared to accept that submission.
but no reason is given in support of this view in the judgment and it is not clear from the report what were the exact facts upon which the contention was advanced that the defendant had taken steps in the proceedings. The position then in brief is whether there is anything in the application which was made by the defendant on 2nd October 1942, for adjournment of the case with a view to file a written statement to take the case out of the principle of the decision of the House of Lords and of the Indian cases mentioned above? It is possible that the defendants were misled and acted on faulty advice in making the petition and in introducing into it various matters which were contained in it. It is also possible that the purpose of the defendant would have been served by merely applying to the Court for adjournment of the case on the ground that the two months' time had not been allowed to the defendant to file a written statement after the service of summons but it is not necessary to express any opinion upon the question as to whether such an application, if made, would have had or had not brought the case of the defendant within Section 34, Arbitration Act. We must proceed in this case on the basis of application as it was presented to the Court and, so considered, in our opinion the application comes within the principle of the cases mentioned above. The result is that we allow the appeal, set aside the judgment of the Civil Judge, dated 15th December 1942, as also the order of the Civil Judge referring the case to arbitration and direct that the hearing of the suit be proceeded with and the suit be disposed of according to law. In the circumstances of the case we make no order as to costs.