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1991 DIGILAW 104 (ORI)

STATE OF ORISSA v. S. JADAMMA

1991-04-05

AMARABHA SENGUPTA

body1991
JUDGMENT A. Pasayat, J. - The contour of controversy involved in the present revision application relates to the question whether the requirements of Section 34 of the Arbitration Act, 1940 (in short "the Act") to be fulfilled by a party seeking the discretionary relief of stay of proceedings existed or not. 2. The factual position has very little relevance except sequal description of certain dates. The State of Orissa and one of its functionaries filed a suit for a decree of realisation of some amount from the legal heirs of one S. Rama Kurty Das, alongwith costs, interest and consequential reliefs in the court of learned Subordinate Judge Bhawanipatna. The defendants, five in number, were the legal heirs. The plaintiffs as petitioners filed a petition under Order 38, Rule 5, Code of Civil Procedure, 1908 (in short "the Code") for an order to attach before judgment a sum of Rs. 3,14,412 involved in execution case No. 2 of 1988. The suit was filed on 4.10.1988, and on 28.11.1988 the plain was admitted. Thereafter notice was issued in attachment before judgment matter. By order dated 28.4.1989 summonses and notices were issued to the defendants fixing 22.7.1989 for service report and written statement in the suit, and for the service report and objection in the attachment matter. On 20.6.1989 motion was made to take up the matter relating to attachment before judgment, and that matter proceeded on several dates. On 22.7.1989 a petition styled to be one under Section 34 of the Act was filed to stay further proceedings in the suit on the ground that the contract which formed the basis in the Money Suit continued provision relating to arbitration and, therefore, the suit as well as the Misc. Cases should be stayed. The plaintiffs objected to the motion on the ground that the defendants having already participated in the proceeding were debarred from raising such a plea. This submission did not find favour with the learned Subordinate Judge. Therefore, the plaintiffs have filed this application for interference. 3. The challenge in the revision application is restricted to the applicability of Section 34 of the Act. For resolution of the dispute, a conspectus of the provisions of Section 34 is necessary. 4. This submission did not find favour with the learned Subordinate Judge. Therefore, the plaintiffs have filed this application for interference. 3. The challenge in the revision application is restricted to the applicability of Section 34 of the Act. For resolution of the dispute, a conspectus of the provisions of Section 34 is necessary. 4. One of the conditions which has to be satisfied before an order under Section 34 can be obtained is that the party to the legal proceedings applies to the judicial authority for the stay of the proceeding at any time before filing of written statement or taking any steps in the proceedings. In the instant case, undisputedly the application was filed before the written statement was filed. The residual question is whether the second pre-condition is satisfied. The answer to this question would depend on the significance of the expression "before taking any other steps in the proceedings". Each and every step taken in the proceedings cannot deprive the party seeking to enforce the arbitration agreement by obtaining stay of the proceedings. Step taken must be such step as would clearly and unmistakably indicate an intention on the part of such party to give up the right of recourse to the arbitration proceedings and acquiesce in the proceedings commenced against the party. The step taken should be of such nature as would show an unequivocal intention to proceed with the suit and to abandon the arbitration proceedings. The question whether participating in any interlocutory application is a step taken in the proceedings so as to disentitle a party from taking benefit from the arbitration agreement was the subject matter of dispute before several High Courts, and divergent views were expressed by several courts. The matter was finally set at rest by the apex court in Food Corporation of India and another v. Yadav Engineer and Contractor ( AIR 1982 SC 1302 ). The court held that even if any participation was there in any interlocutory matter, it cannot be said to be a step in the proceedings to display an unequivocal intention to proceed with the suit or to disclose acquiescence to the resolution of the dispute by the court or abandonment of rights under the arbitration agreement. 5. The court held that even if any participation was there in any interlocutory matter, it cannot be said to be a step in the proceedings to display an unequivocal intention to proceed with the suit or to disclose acquiescence to the resolution of the dispute by the court or abandonment of rights under the arbitration agreement. 5. Analysing what constitutes step in the proceedings it has been held that the filing of affidavits in answer to application by the plaintiff in interlocutory proceedings does not amount to taking a step in the proceedings. (See Zalinoff v. Hammond ((1898 2 Ch. 92))) referred to in Halsbury's Laws of England, 4th Edition, Volume 2, Para 563, Note 12). Russell on Arbitration, 19th Edition, Page 183 under the heading "Steps held not to be in the proceedings" has also noticed such situations. 6. The expression "taking any other steps in the proceedings" must be given a narrow meaning in that the step must be taken in the main proceedings of the suit and it must be such step as would unmistakably manifest the intention to waive the benefit of the arbitration agreement and acquiesce to the jurisdiction of the court. The general words quoted above just follow the specific expression "filing a written statement" and therefore, by application of the principle of ajusden generis, the import of the general words would have to be found out. The legislative intent seems to be that where a written statement is filed, it unequivocally indicates abandonment of rights under the arbitration agreement and an unequivocal intention for resolution of the dispute by the court. Taking other steps in the proceedings connotes the idea of doing something in aid of the progress of the suit, or submitting to the jurisdiction of the court for the purpose of adjudication of the merits of the controversy in the suit. (See The State of Uttar Pradesh and another v. M/s. Janki Saran Kailash Chandra and another ( AIR 1973 SC 2071 )). In that view of the matter, the conclusions of the learned Subordinate Judge are irreversible. The Civil Revision is accordingly disposed of. No costs. Order accordingly. *-*-*-*-*