JUDGMENT - V.S. SIRPURKAR, J.:--Being aggrieved by the rejection of its application under section 34 of the Indian Arbitration Act for staying the Civil Suit filed against it by the plaintiff/respondent, the present appellant/defendant has come up before this Court. 2. The Civil Suit came to be filed against the present appellant State of Maharashtra for a declaration that the defendant was not entitled to receive any amount above 32.52 Lacs on account of the toll from the Wardha river bridge near Ghugus-Wani in the year 1992. The suit was also for a declaration that the recovery proceedings started against the plaintiff by the defendant State of Maharashtra were null and void and on that account, a permanent injunction was sought restraining the defendant from recovering the amount of Rs. 19,04,400/- or any part thereof from the plaintiff. In this suit, a temporary injunction was also claimed. In short, the case of the plaintiff was that though he had agreed under the agreement alongwith the defendant that he would deposit certain amount every week and though he had failed to deposit this amount and on that account the arrears having amounted to Rs. 19,04,400/- and though under the agreement the defendant State of Maharashtra was entitled to recover this amount as a recovery of land revenue, the said amount was not liable to be recovered at all, as the State Government was, in fact, in law, not entitled to the same. 3. It was an admitted position that there was an agreement in between the original defendant State Government and the original plaintiff having the following clause as clause 15 :- "15. Except where otherwise provided or specified in the agreement and subject also to such powers as may be delegated to him from time to time by the Government, the decision of the Chief Engineer for the time being in charge of the said bridge on all questions and matters whatsoever arising out of or in relation to or in connection with this agreement or as to the interpretation of any of its condition/s or clause/s either during the subsistence of this agreement or at any time thereafter, shall be final and binding on the parties to this agreement." 4. As soon as the suit was filed, an application came to be made under section 34 of the Arbitration Act, vide Exhibit 8, by the defendant. As soon as the suit was filed, an application came to be made under section 34 of the Arbitration Act, vide Exhibit 8, by the defendant. However, the said application came to be rejected necessitating the present appeal. 5. In the application, which has been filed on 9-8-1994, it is contended by the appellant-defendant that the respondent-plaintiff was awarded the work of collecting the toll tax at Wardha river bridge situated at Ghugus-Wani under the agreement between the parties and in that agreement there is Clause 15 which amounted to an arbitration clause. It was, thus, pointed out that the defendant was always ready and willing to settle the dispute whatsoever arising out of the said agreement through arbitration and as such the Court had no jurisdiction to try the suit and that the suit had to be stayed under section 34 of the Arbitration Act. 6. The trial Court has passed an elaborate order rejecting the said application. However, the main ground, amongst others, for rejecting the application, is that the defendant had waived his right for the stay of suit by submitting to the jurisdiction of the Civil Court by filing a written-statement Exhibit-15. According to the trial Court even if this written-statement was filed after the filing of the application under section 34 of the Arbitration Act, even subsequent submission of the appellant defendant to the jurisdiction would disentitle the appellant defendant from claiming a stay of the suit under section 34 of the Arbitration Act. 7. Shri Deshpande, the learned Counsel appearing on behalf of the appellant, strenuously points out that in this case, the present appellant defendant had entered a caveat under section 148-A of the Code of Civil Procedure. He points out that the Civil Suit was filed on 3-8-1994 alongwith an application for interim relief a copy of which was already served on the Assistant Government Pleader. On 3-8-1994, the matter was made over to the file of the 2nd Joint Civil Judge (Senior Division), Chandrapur, and was posted for further orders on 4-8-1994. On 4-8-1994, finding that the copy of temporary injunction application (Exhibit-3) was already supplied to the Assistant Government Pleader, the matter was put on 9-8-1994 for the reply on the temporary injunction application. On 3-8-1994, the matter was made over to the file of the 2nd Joint Civil Judge (Senior Division), Chandrapur, and was posted for further orders on 4-8-1994. On 4-8-1994, finding that the copy of temporary injunction application (Exhibit-3) was already supplied to the Assistant Government Pleader, the matter was put on 9-8-1994 for the reply on the temporary injunction application. He points out that on 9-8-1994, the Assistant Government Pleader, for the first time, took part in the Civil Suit and on that very day, he filed the present application (Exhibit 8) under section 34 of the Arbitration Act for the stay of suit. He also had filed a list of documents alongwith 10 other documents on that day. Now, according to Shri Deshpande, since the application under section 34 of the Arbitration Act was already filed on 9-8-1994, it is clear that the said application was filed before taking any steps in the Civil Suit or even prior to the filing of the written-statement and as such the application was filed well in time. 8. Shri Deshpande further points out that the case was posted for hearing on Exhibit-8, the present application, on 24-8-1994, on which date, the Counsel for the plaintiff filed an application for immediate hearing of temporary injunction application and on that application, the Assistant Government Pleader again reiterated his objection to the effect that the defendant had already filed an application under section 34 of the Arbitration Act and unless that application under section 34 of the Arbitration Act was decided first, no further proceedings could be taken, including the hearing on the temporary injunction application. From this, Shri Deshpande contends strongly that the State had disclosed its intention of proceeding with the Arbitration and was firm in its request that the suit had to be stayed, as ordinarily the matter was liable to be decided by arbitration. According to him, the subsequent filing of the written-statement could not have the effect of effacing away the Exhibit-8 at all. 9. Shri Bhangde, learned Counsel appearing for the respondent, however, points out that the further course of action in the suit was enough to show that the State Government had abandoned its insistence on referring the matter to the arbitration. He has pointed out that on 24-8-1994, the matter was posted on the very next day for hearing on Exhibit-8 only. The order-sheet clearly mentions that. He has pointed out that on 24-8-1994, the matter was posted on the very next day for hearing on Exhibit-8 only. The order-sheet clearly mentions that. Shri Bhangde points out that on 25-8-1994, the State Government came out with an application (Exhibit-13). This application was styled as - "Application for permission and taking reply and written-statement on record". The prayer in this application was that the reply and the written-statement may kindly be taken on record. Though opposed, this application was allowed by the Court, and as a sequel to that application, not only the reply to the temporary injunction application, but the written-statement opposing the suit on merits was also filed at Exhibit-15. The matter did not stop there, but by way of Exhibit-16, a list of documents alongwith one document, was also filed. According to Shri Bhangde, there was no necessity whatsoever of filing the written-statement, once the State had already filed its reply to the application for temporary injunction. He points out that filing of the written-statement would itself show that the State had decided to oppose the suit on merits. According to him, the reading of the written statement clearly would show that a request was made therein for the dismissal of the suit on merits. This was the written-statement duly verified by the officer of the defendant and parawise reply was given to each and every allegation made in the plaint. He further points out that the written-statement does not, in any manner, object to the jurisdiction of the Civil Court to proceed with the suit, nor did it reiterate any insistence on the party of the State to get the suit stayed on account of its application (Exhibit-8) under section 34 of the Arbitration Act. Shri Bhangde further points out that the hearing on the temporary injunction application and the application under section 34 of the Arbitration Act, (Exhibit-8), was therefore adjourned from time to time and after hearing the arguments, the application (Exhibit-8) came to be rejected by an order dated 14-9-1994, while the application for temporary injunction was allowed. He points out that thereafter the suit proceeded and was fixed for framing of the issues. He points out that thereafter the suit proceeded and was fixed for framing of the issues. He, therefore, contends that there is a clear-cut intention shown by the defendant State of Maharashtra to take part in the suit which would defeat the right of the defendant to stay the suit under section 34 of the Arbitration Act. 10. Shri Deshpande counters these arguments by submitting that the plaintiff had, in its temporary injunction application, sought the permission to rely on the contents of the plaint and, in fact, the temporary injunction application was a very short application. It was, therefore, that an equally short reply was filed to that temporary injunction application and in that reply in paragraph No. 1 itself, it was reiterated that if the plaintiff's averments were to be taken into consideration, then even the written-statement filed by the defendant should be taken into consideration as the reply. In short, the contention raised is that the written-statement was no written-statement but a reply to the temporary injunction application, and since the plaintiff was to rely on the contents of the plaint, a detailed written-statement was deemed necessary for meeting the arguments on the temporary injunction application. 11. It has to be seen as to whether this subsequent filing of the written-statement has, in any manner, affected the right of the defendant to get the suit stayed under section 34 of the Arbitration Act. The clear language of section 34 of the Arbitration Act brings out the position that any party wanting the reference to the arbitration and for that purpose requiring the stay of the proceedings, must make an application at any time before filing the written-statement or taking any steps in the proceedings and it is only after such an application is made that the judicial authority would exempt recording the absence of any reason for a reference. The judicial authority is also required to examine whether the applicant, 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. In this case, there is no dispute that application under section 34 of the Arbitration Act has been made before taking any other steps in the proceedings or even before filing a written-statement, as the application has been filed on the very first date when the defendant appeared on the scene. In this case, there is no dispute that application under section 34 of the Arbitration Act has been made before taking any other steps in the proceedings or even before filing a written-statement, as the application has been filed on the very first date when the defendant appeared on the scene. However, the complication has arisen because of the defendant's filing a written-statement afterwards. 12. It will have, therefore to, be seen whether, firstly, it was necessary to file the written-statement at all and, secondly, whether the filing of the written-statement has affected the right under section 34 of the Arbitration Act. It is undoubtedly true that the plaintiff has in his application for temporary injunction sought to rely on the contents of the plaint. There is nothing unusual in that, as the plaintiff would always want to rely on the pleadings raised in the plaint in order to spell out his right to get an injunction. This was a suit for permanent injunction and if a temporary injunction was sought for by a separate application, the plaintiff could have always used the facts pleaded in the plaint for spelling out his right. The grant of an injunction would depend upon the facts pleaded while for the purposes of temporary injunction, additionally the question of balance of convenience would be relevant. Therefore, there was nothing unusual in the plaintiff seeking to rely on the facts pleaded in the plaint. However, the reply to the temporary injunction could have always been given, considering the contents of the plaint and the temporary injunction application as a whole. After all, even if the temporary injunction application was decided by the trial Court, one way or the other, it could not have defeated the right of the defendant to get the suit stayed. In (Sadashiv v. Food Corporation of India)1, 1990(2) S.C.C. (68 ), the Supreme Court has clarified this position. It is held that the expression "step in the proceeding which would disentitle the defendant from invoking section 34 of the Arbitration Act" is not every step taken by him in the suit. It should be the step to abandon the right to have the suit stayed. It should be the step in the aid of the progress of the suit. It should be the step to abandon the right to have the suit stayed. It should be the step in the aid of the progress of the suit. The step must have been consciously taken with a view to submit to the jurisdiction of the Court for the purpose of adjudicating the controversy on merits. In that view of the matter, the Apex Court held that the application demanding the production by the plaintiff of the original agreement and the other documents which had been filed with the plaint for enabling the defendant to give written-statement, did not amount to be a step taken in the proceedings. The Supreme Court further held that the step must be such as to manifest the intention of the parties unequivocally to abandon the right under the Arbitration Act and, instead, to opt to have the dispute resolved on the merits in that suit. The step must be such as to indicate an election or affirmation in favour of the suit in the place of the arbitration. The election or affirmation may be by express choice or by necessary implication by acquiescence. 13. In (Food Corporation of India v. Yadao Engineer and Contractor)2, A.I.R. 1982 S.C. 1302, the Supreme Court has clearly held that contesting interlocutory orders or filing application forsetting aside ex-parte interim injunction did not disentitle a party from claiming a stay. Thus, even if the defendant had allowed the injunction application to be decided, it would not have deprived him of his right under section 34 of the Arbitration Act. The defendant could have contested this temporary injunction application by filing a reply and for that purpose, even opposing the plea raised in the plaint as the plaintiff had sought to rely on the contents of the plaint in support of his temporary injunction application. Nothing would have stopped the defendant in this case, therefore, to file a detailed reply to the temporary injunction application and for that purpose, traversing the factual position brought out by the plaintiff in the plaint. The defendant in this case, however, did not stop at that and, instead, chose to file not only a reply to the temporary injunction application but also a fullfledged written-statement whereby he opposed the suit and prayed for its dismissal. The defendant in this case, however, did not stop at that and, instead, chose to file not only a reply to the temporary injunction application but also a fullfledged written-statement whereby he opposed the suit and prayed for its dismissal. There can be no dispute, therefore, that the defendant in this case has disclosed his intention to contest the suit on merits. It is to be remembered here that his application under section 34 of the Arbitration Act was not decided by the Court and even before the decision, when the defendant comes out with a fullfledged written-statement, it will have to be held that he had disclosed his unequivocal intention to take part in the suit. 14. However, Shri Deshpande, learned Counsel for the appellant, urges that the said written-statement did not come prior to the filing of the application under section 34 of the Arbitration Act. His contention is that once he had prayed for the stay of the proceedings under section 34 of the Arbitration Act, before taking any step in the proceedings, merely because a written-statement came to be filed subsequently, the right under section 34 of the Arbitration Act would not be affected. Shri Deshpande points out to the language of section 34 of the Arbitration Act and reiterates that since the application under section 34 being anterior in point of time, nothing would depend on the subsequently filing of the written-statement. In support of his contention, Shri Deshpande relies on a case reported in (Hanuman Chamber of Commerce v. Permeshri Lal Co.)3, A.I.R. 1951 Simla 173. In this case, after the suit was filed, the defendant first applied under section 34 of the Arbitration Act, on 9-2-1948. However, the trial Court subsequently on 24-11-1948 passed an order, directing the defendant to file a written-statement on 10-12-1948 without prejudice to the decision of the defendant's application under section 34 of the Arbitration Act. This order was sought to be reviewed. However, the review application failed and, therefore, a revision came to be filed challenging the same. The contention raised was that it was not open to the trial Court to call upon the defendant to put in a written-statement before deciding the application under section 34 of the Arbitration Act. This order was sought to be reviewed. However, the review application failed and, therefore, a revision came to be filed challenging the same. The contention raised was that it was not open to the trial Court to call upon the defendant to put in a written-statement before deciding the application under section 34 of the Arbitration Act. The Court referring to some English decisions, came to the conclusion that in that case the defendant had taken no steps before the filing of the application under section 34 of the Arbitration Act. It came to the conclusion that there are six conditions to be complied with for obtaining a stay order under section 34 they being - (i) there must be an arbitration agreement in existence; (ii) legal proceedings must have been started (iii) legal proceedings must have been started by a party to the agreement, or any person claiming under it, or against any other party or any person claiming under it; (iv) proceedings must be with respect to the matter agreed to be referred to the Arbitration; (v) application for stay must have been filed before filing the written-statement or taking any other steps in the proceedings; and (vi) the party asking for the stay must be ready and willing to do all things necessary to the proper conduct of arbitration. It further held that section 34, however, did not prohibit the filing of a written-statement pending the decision of the application for stay of proceedings thereunder. In that view of the matter, the High Court disallowed the revision and confirmed the order passed by the trial Court, directing the filing of the written-statement. Shri Deshpande heavily relies upon this decision and submits that even if the written-statement was filed in the present case subsequently, it did not defeat the right of the party under section 34 of the Arbitration Act. I am afraid, Shri Deshpande is completely misreading the law laid down in the case of Hanuman Chambers of Commerce (supra). In the first place, the question for consideration was not as to whether the right of the party under section 34 of the Arbitration Act was defeated or not. The order which fell for consideration in the reported decision was whether the Court was right in directing filing of the written-statement. In the first place, the question for consideration was not as to whether the right of the party under section 34 of the Arbitration Act was defeated or not. The order which fell for consideration in the reported decision was whether the Court was right in directing filing of the written-statement. The High Court did not decide there as whether because of subsequently filing the written-statement the application under section 34 of the Arbitration Act had been rendered otiose. In that case, strictly, the powers of the Court to direct a written-statement to be filed, had fallen for consideration and in that, the Court made an observation that section 34 does not prohibit the filing of the written-statement pending the decision of the application for stay of proceedings under that section. The facts are quite different in the present case. Here, what has fallen for consideration is the view taken by the trial Court that the subsequent filing of written-statement has defeated the right of the party. Such was not the question in the reported case. The second reason why the reported case would not help the present appellant is because in the said case it was the trial Court which had directed the filing of the written-statement. In fact, this order directing the applicant/defendant to file the written-statement had nothing to do with the volition of that party and, therefore, there was no question of that party thereby showing an intention to take part in the suit. In the present case, there is no such direction by the Court and it is through the volition of the defendant that the written-statement has been filed. The reported decision, therefore, is not an authority on the proposition that even if subsequently the written-statement is filed, it does not defeat the right under section 34 of the Arbitration Act to get the suit stayed. The question of intention of the parties and more particularly of the objecting party had never fallen for consideration in that case. 15. It will be seen that language of section 34 of the Arbitration Act itself provides a sufficient answer to the controversy present herein. The question of intention of the parties and more particularly of the objecting party had never fallen for consideration in that case. 15. It will be seen that language of section 34 of the Arbitration Act itself provides a sufficient answer to the controversy present herein. The language suggests the filing of the application under section 34 before taking any steps in the proceedings or filing the written-statement is not the only requirement but further it has to be shown 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. Therefore, it has to be shown that at the time when the proceedings started, the applicant was ready and willing to do everything necessary for the proper conduct of the arbitration, and not only that, but he continued to be so thereafter also. The words "and still remains" do take into their sweep the period which is post commencement period in the sense that even if the application is made in proper time, i.e. before filing the written-statement or before taking steps in the proceedings, the applicant should continue to remain ready and willing to do everything necessary to the proper conduct of the arbitration during the pendency of such application, i.e., till such application is finally decided. Undoubtedly, making a request for reference of the dispute to the arbitration would be a thing necessary to the proper conduct of the arbitration, as the reference to the arbitration is a step in the conduct of arbitration. Therefore, the party making an application under section 34 of the Arbitration Act has also to continue to be ready and willing to make a reference for arbitration. If, before the application is decided under section 34 of the Arbitration Act, the party shows its intention to abandon such application and submits to the jurisdiction of the Civil Court where the proceedings are lodged, the application under section 34 of the Arbitration Act would lose all its significance and become otiose, thereby disentitling such party from insisting to stay the suit. 16. Such controversy came up before the Calcutta High Court in (Asiatic Shipping Co. (Private) Ltd. v. P.N.D. Lloyd)4, A.I.R. 1969 Calcutta 374. 16. Such controversy came up before the Calcutta High Court in (Asiatic Shipping Co. (Private) Ltd. v. P.N.D. Lloyd)4, A.I.R. 1969 Calcutta 374. There, the appellant made an application in the Court on 2nd February, 1967, under section 34 of the Arbitration Act, but the said application was refused on 7th July, 1967. The refusal was on the ground that there was no arbitration agreement against the guarantor, though the said claim was against the guarantor also alongwith the Principal debtor. As soon as the application was dismissed on merits, the Counsel for the appellant made a prayer for filing a written-statement and sought three weeks' time to file the same, while later on an appeal was filed before the High Court against the order refusing the application under section 34. In that appeal, an objection was taken that in making a request for filing a written-statement, the appellant had taken a step in the proceedings and, therefore, was not entitled to stay. The Division Bench of the Calcutta High Court proceeded to observe in para 5 that an applicant for getting stay of suit must be ready and willing at the time when the proceedings are commenced and "still" remain "ready and willing to do all things necessary for the proper conduct of the arbitration". It is further observed that the word "still" must mean that he must continue to remain ready and willing. The Court further observed that in that case as soon as the order was made by the Court refusing the application under section 34 for staying the proceedings, the learned Counsel for the appellant did not ask for a stay, but deliberately made a prayer before the Court for opportunity to file a written-statement and asked for and obtained direction for the further conduct of the suit. In that view of the matter, the Court came to the conclusion that the appellant had shown his readiness to proceed with the suit. The following observations of the Calcutta High Court in that case are of real significance : "It must not be forgotten that under section 34, not only there must be readiness and willingness to go to arbitration at the time when the proceedings were commenced, but such readiness and willingness must continue. Here, no stay has been obtained in the Court below and an appeal has been preferred. Here, no stay has been obtained in the Court below and an appeal has been preferred. The entire matter, therefore, is open before us. We have the same rights as those of the Court below. If this appeal succeeds, then we shall have to make an order for stay, and we cannot ignore the wordings of section 34 which requires that the parties applying must 'still remain ready and willing to go to arbitration'. By asking for directions in the suit itself, the applicant must be taken to have expressed a desire to go on with the suit. In our opinion, the preliminary point is a valid one and should be upheld." While dealing with the preliminary objection, the Calcutta High Court has referred to the case in Hanuman Chambers of Commerce, (cited supra). After referring to the facts of that case, the Calcutta High Court proceeded to observe in the following manner : "If the learned Judge intended to say that after an application under section 34 is filed, the parties can go on taking steps in the suit, then, with respect we differ. But the case may be distinguished on this ground that it was the Court which ordered the party to file the written statement and so it could not be said that the filing of the written statement was ad invitum and that it displayed the intention of the party not to proceed with the arbitration." The observations by the Calcutta High Court are self-sufficient. 17. In the present case also, the Assistant Government Pleader could have waited for the decision on his application under section 34 of the Arbitration Act. Not only that he did not wait for the final rejection, but in the gard of opposing the temporary injunction application, he filed a fullfledged written-statement praying therein for the dismissal of the suit itself on merits. It cannot, therefore, be said that the Assistant Government Pleader for defendant had not abandoned his application under section 34 by filing a written-statement. As I have already pointed out, nothing would have mattered had the temporary injunction application been contested as perhaps that contest would not have sealed the fate of the defendant for asking for the stay of the suit under section 34 of the Arbitration Act. As I have already pointed out, nothing would have mattered had the temporary injunction application been contested as perhaps that contest would not have sealed the fate of the defendant for asking for the stay of the suit under section 34 of the Arbitration Act. However, when it was wholly unnecessary to file the written-statement, to oppose a mere temporary injunction application, the learned Counsel for the defendant chose to file the written-statement on merits and thereby has disclosed that the defendant could not be said to be "still ready" to refer the matter to arbitration. A similar such view has been taken by the Gujarat High Court in a judgment reported in 1978 Gujarat Law Reports 357. There also after the application under section 34 of the Arbitration Act was preferred, before that application was finally decided, the defendant filed an application for dismissal of the suit on preliminary grounds, though the said application for dismissal of the suit was later on withdrawn and though the said application was filed without prejudice to the right of the applicant under section 34 of the Arbitration Act, the learned Single Judge of the Gujarat High Court took a view that the applicant therein did show the intention to abandon the application under section 34 of the Arbitration Act and, therefore, ultimately rejected the application. 18. In the present case, the trial Court has rejected the application on two grounds, namely, that the legality of the very agreement upon which the plaintiff had filed the suit was in challenge in the suit and, therefore, there was no question of there being any arbitration about the validity of the agreement. Secondly, the trial Court also observed that the defendant had already proceeded in the suit by filing the written-statement and, therefore, there was no question of passing any order under section 34 of the Arbitration Act. Since I am agreeing with the trial Court's observations as regards the refusal of the stay due to the filing of the written-statement by the defendant, the other question regarding the merits of the application under section 34 is not necessary to be decided here and, indeed, no argument is advanced on this question before me. 19. In the result, the order of the trial Court refusing the application Exhibit-8 is a correct order and the instant appeal has no substance. 19. In the result, the order of the trial Court refusing the application Exhibit-8 is a correct order and the instant appeal has no substance. It is liable to be dismissed and is hereby dismissed with costs. Appeal dismissed. ******