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Appeal from Original Order No. 31 of 1968, decided on 2nd August 1968.

‑Expression "taking any other step in the proceeding"‑Interlocutory application by plaintiff in suit for grant of ad interim injunction‑Defendant asked to show cause against prayer for injunction but neither served with copy of petition for temporary injunction nor of plaint in suit‑Defendant in response filing application for stay of suit under S. 34 and simul taneously another application for time to file objection against prayer for grant of temporary injunction‑Mere filing of applica tion for adjournment to file reply to application for injunction-- Does not, in circumstance, amount to taking "step in proceeding " Party cannot be said to have acquiesced in suit unless it knew about subject‑matter of suit‑Intention a relevant consideration-- Contention that application whatsoever to Court irrespective of its intention, would be a "step in proceeding"‑Contrary to intention of Legislature and not correct‑[F. O. Murimal Santram v. Messrs Baransidas & Sons and another AI R 1935 Sind 62 dissented from].

New Bengal Shipping Co. and others v. Eric Lancaster Stump of Singapore and others 1 P L R 1 ; Sarat Kumar Roy v. Corporation of Calcutta I L R 34 Cal. 443 ; Subal Chandra Bhar v. Muhammad Ibrahim I L R 2 Cal. 298 and Fleming Shaw & Co. v. Haji Yusuf Ellias A I R 1917 Sind 12 distinguished.

F. O. Murimal Santram v. Messrs Baransidas & Sons and another A I R 1935 Sind 62 dissented from.

Zalinoff v. Hammond (1898) 2 Ch. D 92 ; Ford's Hoten Co. v. Bartlett (180) A C 1 and Brighton Marine Place & Pier Ltd. v. Woodhouse (1893) 2 Ch. 486 ref.

Badsha Meah Sowdagar v. Nurul Haq and others P L D 1967 Dacca 250 rel.

T. Ali and Md. Mozammel Hoque for Appellant.

D. C. Bhattacharjee with B. B. Roy Chowdhury for Respon dents.

.‑This appeal is at the instance of plaintiff Md. Esack and directed against an order made by Mr. S. S. Ahmad, Subordinate Judge, 3rd Court, Chittagong on the 13th March 1968, staying the suit under section 34 of the Arbitration Act (hereinafter called the Act') until further orders. The material facts are as follows

The plaintiff instituted a Title Suit on 5‑2‑68. On the same day he applied for injunction in respect of the suit property. The learned Judge issued notice on 6‑2‑68, on the defendants directing them to show cause within three days as to why the ad interim injunction should not be granted. On 9‑2‑68 the defendants who are two in number appeared and filed two petitions. Defendant No. 1 is a full brother of the sole plaintiff Md. Esack and defendant No. 2 is his uterine brother. Defendants prayed for time for two weeks to file objections in one petition and in the other they prayed for a direction on the plaintiff to supply copy of the petition for temporary injunction. It is clearly stated that the defendants were asked to show cause against the prayer for injunction but they have been served only with the notice to ‑show cause. It is specifically asserted that they have not been served with copies of the petition for temporary injunction and the plaint. The next important date is 12‑2‑68, on which date the learned Judge ordered as follows: ‑

"Requisite etc. already filed. Issue summon upon the defendant fixing 9‑3‑68, for ascertaining contest."

Although the learned Judge fixed 9‑3‑68 for "ascertaining contest," the defendants filed a petition under section 34 of the Arbitration Act, and prayed for stay of further proceedings of the suit, and on the same date they filed another petition for time to file petition against the prayer for temporary injunction. On '9‑3‑68, the Court found that the summonses were not issued though oversight and directed the same at once, fixing 1‑4‑68, 'for return and appearance. On that date, however, it appears that defendants I and 2 filed certain documents apparently to contest the injunction matter inasmuch as no summons was served in the suit itself till then. On 13‑3‑68, the learned Judge made the impugned order staying the suit as stated at the outset. 'He also refused the prayer for injunction. There is no appeal preferred against the order refusing to grant injunction but the order staying the suit has been called in question in this appeal.

Mr. T. Ali and Mr. Mozammel Hoque appeared for the appellant and the respondent is represented by Mr. D. C. Bhattacharjee and Mr. B. B. Roy Chowdhury.

Mr. Ali submits that a step having been taken in the proceed ing, respondent is not entitled to pray for staying the suit under ‑section 34 of the Act. In support of his contention Mr. Ali paces his reliance on the case of The New Bengal Shipping Company and others v. Eric Lancaster Stump of Singapore and others (1 P L R 1). In that case a Division Beach of this Court consisting ‑of Shahabuddin, C. J. and Akbar, J. (as their Lordships then were) held that an application for time for filing written‑statement would constitute a step in the proceeding. In the case before us, there is no petition for time for filing written statement in the suit itself and as such the decision in that case is not applicable to the present case.

Reliance has also been placed in the case of Sarat Kumar Roy v. Corporation of Calcutta (I L R 34 Cal. 443). In that case also there was an application for time for filing written‑statement. Subsequently when an application under section 34 was presented to the Court the question raised was whether that application indicated intention of taking step in the proceeding before the Court. In that case Woodroffe, J. observed that when there was a submis sion of that nature to the Court, it was clear that the act constituted a step in the proceeding. In the case before us there was a prayer for injunction. The defendant appeared, but they lid not even know what was the suit about and they applied for time or filing their objection in the injunction matter. We are, therefore, of opinion that the observation of Woodroffe, J. does apply not to the facts of this case. As a matter of fact, Woodroffe, J., himself observed: ‑

"A party must submit to the judgment of the Court or not and if his contention is that by reason of the contract of the parties the determination of the dispute is withdrawn from the Court, he should not in any manner, conditionally or otherwise, invite the Court's judgment on it. I must hold therefore that the defendant by taking out a summons on the 30th November 1906 for extension of time to file a written‑statement, took a step in the proceedings within the meaning of section 19 . . . ."

In the present case an application for extension of time to file written‑statement in the suit is wanting. Therefore, this case is also of no avail to the appellant.

Next case on which reliance has been placed on behalf of the appellant is the case of Subal Chandra Bhar v. Muhammad Ibrahim (I L R 2 Cal. 298). It is urged by Mr. Mozammal Hoque who also addressed us during temporary absence of Mr. Ali on behalf of the appellant, that in that case the defendants objected to the granting of injunction and according to him that case was, there fore, applicable to the facts of the present case. It might at first sight appear to be so; but on a closer study of the decision, that. case also does not support the contention of the appellant. In that case the most important date was January 11, 1943. On that date, the defendants prayed for adjournment and it appears from the minutes that this prayer was accompanied by an application for liberty being given to the parties to take inspection of the books and documents at the office of the Sub‑Divisional Officer, Ranchi, on two days' notice to one another's solicitors. This step was. construed to be acquiescence in the proceeding before the Court as distinct from the arbitration proceeding. In that case the Head Notes set out the facts clearly. It is stated therein "The defendant's counsel applied to the Court orally and obtained an adjournment of the hearing of the plaintiff's application and also obtained certain directions relating to inspection of the books and documents of the firm. Subsequently, the defendant applied under section 34 of the Arbitration Act, 1940, for a stay of the suit on the ground that the suit was in respect of a matter agreed" to be referred to arbitration". On these facts Das, J., observed

"In these circumstances, and for the reasons stated above, in my opinion, the applicant by doing what he did on January, 11, 1943, acquiesced in the filing of the suit and evinced an intention to fight it out."

In the case before us we can never say that the defendants‑respon dents "evidenced an intention to fight it out, for on the date they appeared and prayed for time for filing written‑statement to the injunction, they did not even have a copy of the petition, for A' injunction, nor of the plaint. In the absence of these copies, it cannot be said that they acquiesced to the filing of the suit. In the case before Das, J. the defendants were aware of the contents of the plaint as distinguished from the case before us.

It is true, it is pointed out that all the returns of the notices and the endorsement of the process‑server indicate service of notices but it is also true that the defendants appeared in the case without delay and complained about non‑receipt of a copy of the petition and in fact, they obtained on 15‑2‑68, a copy of the petition and the affidavit thereto from the plaintiff. It is stated in paragraph 6 of the affidavit filed on behalf of the defendants "That the plaintiff has supplied copy of the petition and affidavit on 15‑2‑68 to the defendants' Advocate from which the defendants have come to know that the plaintiff had included property in this suit which has already been referred to the arbitration." This affi davit was verified by defendant No. 1 on 17‑2‑68. It has not been shown to us by learned Advocate for the appellant that the statements contained in paragraph 6 of the petition filed on 17‑2‑68 was ever challenged by him. We, therefore, accept the aforesaid statement and we find that the defendants‑respondents did not receive the copy of the petition for injunction and it was not, therefore, known to them that the properties in respect of which there was an agreement for arbitration was included in the plaint of the suit filed by the plaintiff. A party can never be said to have acquiesced in the filing of the suit unless the party knew about the subject‑matter.

It is next argued by Mr. Mozammal Hoque that any step in the proceeding irrespective of any intention would constitute a step in the proceeding and in his opinion, a proceeding in the suit would include interlocutory matters as well.

In the very case of Subal Chandra Bhar, on which reliance has been placed on behalf of the appellant, the test for finding out as to whether or not there was a step in the proceeding was laid down by Das, J. in the following terms: ‑

"Applying now the test deducible from the authorities referred to above, to the facts of the present case, I am satisfied that when the applicant by his counsel applied to the Court for obtaining time to file his affidavit‑in‑opposition and for leave to have inspection of the books and records he acquiesced in the method by the plaintiff for having the disputes decided, viz. by the Court and not by arbitration, and that he was quite content that the disputes should be fought out in Court. This conduct, to my mind, clearly implies a statement to the effect that the defendant would proceed to defend the action and would not insist on the right to have the disputes disposed of by arbitration."

No such statement can be spelt out from the petitions filed by the defendants in the interlocutory matter in this case. Applying this test it would appear that the defendant in this case never indicated that they wanted to defend the action and as such we are not inclined to hold that the action taken by them would constitute a step in the proceed.

Mr. Mozammel Hoque also relies on the decision of the Sind Chief Court in the case of Fleming Shaw & Co. v. Hail Yusuf Ellias (A I R 1917 Sind 12). It was held in that case that any application whatsoever to the Court, even though it might be merely an application for time it would be a step in the proceedings within the meaning of section 34 of the Arbitration Act, irrespective of the intention with which the application was made. In that case the suit was filed on the 16th August and on the 6th September the defendants appeared and applied for postponement on the ground that the document relating to the suit had to be discovered and the time allowed had been too short to permit of this being done. The facts of that case are clearly distinguishable from the present case. In that case it was not urged that the defendants were unaware of the subject‑matter of the suit. They wanted time to find out their document to contest the suit by filing written statement. An application for adjournment in that case in those circumstances was held to be a step in‑the proceeding.

Next case relied on by the appellant is F. O. Murimal Santram v. M/s. Baransidas & sons and another (A I R 1935 Sind 62). In that case an application for postponement of the suit itself was made and that application was construed to be a stop in the proceeding. There was no such application in the case before us and this Sind case has also no application. In that case the defendants took various steps in the interlocutory matter relating to an injunction. The defendants, moreover, offered inspection and scrutiny of the books by the auditors in the injunction matter. In that case there was ready offer of inspection of the books of account which would indicate acquiscence in the proceeding. But the learned Judges in that case refused stay under section 34 of the Act on the ground that the defendants took steps in the interlocutory matter. The learned Judges found no difference between the proceeding in the interlocutory matter and the proceedings in the suit itself. We respectfully differ from the learned Judges when they say that the wording of the section 34 refers to the step in the proceeding and not a step in the suit. We have thought it fit to respectfully dissent from the view for the simple reason C that to hold otherwise would work injustice in a case like the one before us and that such an intention cannot be attributed to the Legislature.

Mr. B. B. Roy Chowdhury who also addressed us during the temporary absence of Mr. Bhattacharjee, has placed his reliance in the case of Zalinoff v. Hammond ((1898) 2 Ch. D 92). In that case the defendants entered appearance and filed affidavits in answer to a motion for a receiver in an action for dissolution of partnership and it was held that filing of an affidavit in the matter of appointment of a receiver would not constitute a step in the proceeding within the meaning of section 4 of the Arbitration Act, 1884 corresponding to section 34 of our Act. In that case Stirling, J. observed as follows: ‑

"It seems to me that the mere filing of affidavits in defence to a motion for a receiver is not in the nature of an application to the Court, and consequently not a "step in the proceedings" within the meaning of the section. By such a step is meant a substantive step taken by a party. It may be that a very limited application to the Court such as taking out a summons for extension of time would be enough. That has been so decided in Ford's Hoten Co. v. Bartlett 1896 A C 1, 4. In Brighton Maine Place and Pier Limited v. Woodhouse (1893) 2 Ch. 486, before North, J., the motion was ordered to stand over‑ to the trial, and it does not appear whether affidavits had been filed or not.

But I do not think in this case the defendant has taken a "step in the proceedings" within the meaning of the Act, and therefore I think I ought to make an order in accordance with the application. That being so, the motion for a receiver will stand over, for it may be useful hereafter, until after the arbitrator has decided all questions in the action, of which this may be one."

The above observation fully applies to the facts of the case before us.

Reliance has also been placed on behalf of the respondents on the case of Sansarchand Deshraj v. State of Madhya Pradesh. In that case it was observed: ‑

"Thus it is clear that when a party asks for interim relief by way of an appointment of a receiver or by issue of an injunc tion, that is no ground for refusing stay of the suit. To ask the Court to vacate the injunction order passed by it and to request that proceedings in the suit may be stayed under section 34 of the Act are not self‑contradictory or inconsistent of steps. It is clear that the interlocutory application for the appointment of a receiver or for granting of an injunction does not necessarily amount to a proceeding in the suit. Further, mere filing of a reply to any such application does not, in our view, indicate that there is in effect abandonment of the proposal to have the subject of the cause disposed of by arbitration."

Mr. Muzammel Hoque learned Advocate for the appellant frankly concedes that a Division Bench decision of this Court in the case of Badsha Meah Sowdagar v. Nurul Haq and others (P L D 1967 Dacca 250) supports the contention of Mr. Bhattacharjee that an intention is a relevant consideration in disposing of an application under section 34 of the Act. In that case the learned Judges observed as follows: ‑

"The primary duty of a Court is to look into the facts of the case fairly and squarely and then to decide whether the conduct of the applicant is such as would amount to a parti cipation in the suit itself or an indication of acquiscence in its proceedings. If so, an application under section 34 would be barred for the simple reason that a party is not allowed to ask for staying the proceeding when he has clearly and willingly participated in them in a manner which can be construed acquiescence therein. If he intends to enforce an arbitration clause, he must do it at the earliest possible moment. If his conduct is such as would indicate that he has acquiesced in the suit, he is shut out from claiming the benefit of section 34 of the said Act."

In the facts and circumstances of this case we are clearly of opinion that the defendants never acquiesced in the suit and never took a "step in the proceeding" within the meaning of section 34 E of the Arbitration Act and they are, therefore, entitled to an order of stay as prayed for by them and the learned Judge properly exercised his discretion in staying the suit.

In the result, the appeal is dismissed with costs and the order of learned Subordinate Judge is affirmed.

The connected rule has become infructuous and it is discharged without any order as to costs.

‑I agree.

K. B. A.

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