Asutosh Mookerjee, J.
1. This is an appeal against an order dismissing an application for stay of proceedings under Section 19 of the Indian Arbitration Act.
2. The facts as set suit in the judgment of the Court below are shortly as follows. On the 6th December 1917, a contract was entered into whereby the defendants, Joy Lall and Co., sold on behalf of Gopiram Bhotica the plaintiff, for their order and on their account to their principal certain goods which are set out in the document. The contract contains an arbitration clause providing that any dispute whatsoever arising on or out of the contract shall be referred to arbitration. Disputes arose with regard to the contract and thereupon the brokers, Joy Lall and Co., on the 18th November 1919, referred the matters in dispute to arbitration of the Bengal Chamber of Commerce. Before any arbitration had taken plane, on the 18th December 1918, the plaintiffs instituted the present suit, asking for a declaration that there was no contract and seeking to restrain the defendants from proceeding with the arbitration. A rule was issued for the grant of an interlocutory injunction, was heard in December 1918, and judgment was reserved, but it was not till the 4th June 1919 that Mr. Justice Chaudhuri restrained the defendants from proceeding with the arbitration. An appeal was presented by the defendants against this order of Mr. Justice Chaudhuri; that appeal was allowed on the 2nd December 1919, See 55 Ind. Cas. 778--Ed. and as a result, the interlocutory injunction was dissolved. Thereupon, the present application was made on the 4th December 1919 for stay of proceedings under Section 19 of the Indian Arbitration Act. Mr. Justice Greaves has held that the application must be refused on the ground that the applicants had taken steps in the proceedings within the meaning of that section. In our opinion this view cannot be supported.
3. Section 19 of the Indian Arbitration Act is in these terms:-- 'Where any party to a submission to which this Act applies, or any person claiming under him, commences any legal proceedings against any other party to the submission, or any person claiming under him, in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time after appearance and before filing a written statement or taking any other steps in the proceedings, apply to the Court to stay the proceedings , and the Court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission end that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings.'
4. A preliminary objection has been taken that the order made by Mr. Justice Greaves refusing to stay proceeding s under this section, is not a judgment within the meaning of Clause 15 of the Letters Patent and is not appeal able. In support of this argument, reliance has been placed upon a decision of this Court in The Justices of the Peace for Calcutta v. Oriental Gas Co. 8 B.L.R. 433 at p. 452 : 17 W.R. 364. It is not disputed that the case is not precisely in point: there the appeal was preferred against an order issuing a mandamus and it was held by the Court of Appeal that the order was not a 'judgment' inasmuch as it did not determine the merits of any question between the parties. Sir Richard Couch, C.J., defined the term 'judgment' as used in Clause 15 to mean a decision which affects the merits of the question between the parties by determining some right or liability. He then proceeded to point out that there may be an obvious difference between an order for the admission of a plaint and an order for its rejection. The former determines nothing, but is merely the first step towards putting the case in a shape for determination: the latter determines finally, so far as the Court which makes the order is concerned, that the suit, as brought, will not lie. The decision, therefore, is a judgment in the proper sense of the term. This definition is further exemplified in the judgment of Sir 'Richard Couch in the case of Radjee Ismail Hadjee Hubbeeb v. Hadjee Mahomed Hadjee Joosub 13 B.L.R. 91 : 21 W.R. 303 where he held that an order determining that the plaintiff was not entitled to maintain his suit on the Original Side of this. Court was a judgment' within the meaning of the Letters Patent, He observed that the decision was of great importance to the parties: it was not a mere formal order or an order merely regulating the procedure in the suit, but one that had the effect of giving a jurisdiction to the Court which it otherwise would not have and it might fairly be said to determine some right between them, viz., the right to sue in a particular Court, and to compel the defendant', who were not within its local jurisdiction, to come in and defend the suit, or if they did not, to make them liable to have a decree passed against them in their absence. The test formulated by Sir Richard Couch has been repeatedly applied by this Court in principle in later cases: Mathura v. Haran Chandra Shah 34 Ind. Cas. 634 : 43 C. 857 : 20 C.W.N. 594 : 23 C.L.J. 443 and Budhu Lal v. Chattu Gope 39 Ind. Cas. 465 : 44 C. 804 : 21 C.W.N. 269 : 25 C.L.J. 193 18 Cr. L.J. 497. In the case before us, Section 19 of the Indian Arbitration Act entitles the applicant to apply under that section to the Court to stay legal proceedings. Mr. Justice Greaves has held, by his order, that the applicant was -not, in the circumstances of this case, competent to avail himself of the benefit of that section by reason of steps taken by him in the proceedings in the suit. This decision virtually determines that the controversy between the parties must be decided by this Court and not by arbitration. In our opinion, this determination is a 'judgment' within the meaning of the Letters Patent, and as such is appealable under Clause 15.
5. The question next arises, whether the view taken by Mr. Justice Greaves can be supported on the merits. Mr. Bose has expressed his inability to support the order on the ground mentioned in the judgment. The learned Judge has held, in the first place, that the appeal against the order of Mr. Justice Chaudhuri did not constitute taking a step in the proceedings within the meaning of Section 19. This view is clearly right Section 19 son-templates the institution of a suit, notwithstanding an agreement to refer to arbitration, and authorises the defendant in sash suit to apply for stay before he has filed his written statement or taken any other step in the suit. It is difficult to appreciate bow this can stand in the way of the defendant in the circumstances of the present case. If a contrary view were taken, the result would follow that the defendant would be deprived of his right to appeal against the adverse order made in the proceeding s instituted by the respondent himself. The learned Judge, however, has held, in the second place, and in support of his view has referred to the decision in Adams v. Catley (1892) 66 L.T. 687 : 40 W.R. 570, that certain grounds taken in the memorandum of appeal presented by the defendants to this Court, when they appealed against the order of Mr. Justice Chaudhuri, constituted the taking of a step in the proceedings within the meaning of Section 19. Those grounds have been placed before us and Mr. Bose has frankly conceded that he cannot explain how the grounds can be treated as 'taking a step,' which, to operate as a bar, must, as pointed out already, be taken in the suit. The decision, mentioned by the learned Judge clearly does not support his view. In that case, a party to a submission against whom legal proceedings had been commenced by another party to the submission applied to the Court for stay of proceedings until security for costs was given, and it was held that he had taken steps in the proceedings so as to disentitle him to apply under Section 4 of the Arbitration Act of 1389 to have the proceedings in the action stayed. There the defendant had applied to the Court to stay the proceeding s until security for costs was given, and this implied that if such security was given, the action might proceed. Mr. Justice Mathew paid that the defendant had done two things which were objected to as being ' steps in the proceeding s' so as to disentitle him to apply under Section 4 of the Arbitration Act. The first was that he had applied for and obtained a statement of claim. It was said that this was really a part of the appearance as indicated in Ives & Barker v. Williams (1894) 2 Ch. D. 478 : 63 L.J. Ch. 521 : 7 R. 243 : 70 L.T. 674 : 42 W.R. 483. However that might be, it was quite clear that the other thing which he had done, viz., applied for a stay until security for costs had been given was a step in the proceeding s within the section. By asking for security, the defendant had shown his willingness to proofed in the action if that security were given and showed also that he was not complying with the condition in the section that he should be ready and willing to go to arbitration, clearly those reasons have no application, to the circumstances of this case.
6. I see no escape from the conclusion that the order made by Mr. Justice Greaves cannot be supported, and that this appeal must be allowed with costs in both Courts, with the result that application under9 is granted.
7. I am of the same opinion.