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1969 Supreme(Bom) 35

IN THE HIGH COURT OF BOMBAY
Patel and D.P.Madon, JJ.
Appellants: Anandkumar Parmanand Kejriwala and Anr.
Vs.
Respondent: Kamaladevi Hiralal Kejriwal
Appeal No. 18 of 1969 and Suit No. 73 of 1969 Decided On: 09.04.1969
Counsels:
For Appellant/Petitioner/Plaintiff: G.A. Thakkar, Adv.
For Respondents/Defendant: R.J. Joshi, Adv.

Steps in the proceedings within the meaning of Section 34 of the Arbitration Act are those taken in the substantive proceedings, which relate to the merits of the dispute, and not those taken in interlocutory proceedings, which are intended to protect the parties' interests and to advance the progress of the suit.

Headnote:

ARBITRATION - STAY OF SUIT - SECTION 34 OF THE INDIAN ARBITRATION ACT - STEP IN THE PROCEEDINGS - INTERIM ORDERS - APPOINTMENT OF RECEIVER AND INJUNCTION - FILING OF AFFIDAVITS - APPEARANCE UNDER PROTEST - INTENTION TO PROCEED WITH SUIT OR ARBITRATION.

Fact of the Case:

The plaintiff filed a suit for dissolution of partnership and for taking accounts. An ex parte order was granted appointing a receiver and an interim injunction. The defendants filed their appearance under protest and served an affidavit stating their intention to rely on the arbitration clause in the partnership agreement. They also filed a notice of motion to vacate or modify the interim order.

Finding of the Court:

The court held that the defendants had not taken any steps in the proceedings within the meaning of Section 34 of the Arbitration Act. The court distinguished between interlocutory proceedings, such as applications for appointment of a receiver or injunction, and substantive proceedings, which relate to the merits of the dispute. The court held that only steps taken in the substantive proceedings can disentitle a party from applying for a stay of the suit under Section 34.

Issues: Whether the defendants had taken any steps in the proceedings within the meaning of Section 34 of the Arbitration Act.

Ratio Decidendi: The court held that the defendants' filing of an appearance under protest, serving an affidavit stating their intention to rely on the arbitration clause, and filing a notice of motion to vacate or modify the interim order did not amount to taking steps in the proceedings within the meaning of Section 34 of the Arbitration Act. The court reasoned that these actions were not related to the merits of the dispute, but were intended to protect the defendants' interests and to advance the progress of the suit.

Final Decision: The court set aside the order of the trial court and remitted the matter for further hearing.

JUDGMENT - Patel, J.

1. The question in this appeal is whether the suit should have been stayed under Section 34 of the Indian Arbitration Act (hereinafter referred to as the Act). A few facts leading to the present appeal are as follows:

The plaintiff and the defendants were partners. The suit was filed by the plaintiff for a declaration that the Firm was dissolved and for taking accounts of the partnership. This suit was filed on January 20, 1969. On the same day the plaintiff made an application for receiver and for injunction, An ex parte order was granted appointing the Court Receiver to take charge of all books of accounts, vouchers, papers etc., connected with the partnership and in possession of the mediator, K.M.D. Thakersey. An interim injunction was also granted, one particular direction being In a mandatory form regarding the continuance of the supply of steam from the boiler to the plaintiff. The papers of the motion and the plaint were served on the defendants on the same day. The certificate of the Prothonotary was served on them on January 27, 1969 which indicated that liberty was reserved to the defendants to move the Court regarding the interim order. The defendants filed their appearance on the same day under protest. The defendants also wrote a letter to the Attorneys for the plaintiff on January 28, 1969 intimating that they had filed their appearance under protest and that they would make an application to the learned Judge on January 30 for vacating and/or modifying the ex parte interim order. On January 29, 1969 an affidavit sworn by appellant No. 1 was served on the Attorneys for the plaintiff and an application was made to the learned Judge on January 30, 1969 to vacate and/or modify the interim order. Mr. Joshi appearing for the plaintiff stated that his client would deposit the amount of Rupees 3,000/- in Court on the next day. On the next day i.e., January 31, 1969, the defendants counsel applied for adjournment of the notice of motion for a week, and thereafter on a similar motion it was adjourned to February 22, 1969. It was again adjourned to February 25 and ultimately on February 27, 1969 a consent order was made therein. In the meantime, on February 27, 1969, the appellants took out the present motion for staying of the suit under Section 34 of the Act on the ground that in the agreement of partnership there was a clause which required the dispute of the partnership to be referred to arbitration. After hearing this motion the learned Judge rejected the same. By this appeal the said order is being challenged.

2. Section 34 of the Act has been so often canvassed that we do not think that it is necessary to reproduce the same. In the present case, no written statement has been filed and the question, therefore, is, whether the conduct of the defendants amounts to taking any steps in the proceedings.

3. The Act does not define the word "proceedings". Then the question is, what meaning should be assigned to that Word in the context. In its generic sense it means any and every proceeding. Under (the Code of Civil Procedure it is well set- fled that a suit starts by a plaint and ends In a decree. A suit is a specie of a proceeding. Section 141 of the Code of Civil Procedure prescribes the same procedure for all proceedings and decided cases hold that those proceedings should be of the nature of Suits. Part III of the Code relates to incidental proceedings and Part VI relates to supplemental proceedings. Incidental proceedings are dealt with in Sections 75 to 78 of the Code and the proceedings are called incidental for the simple reason that they are intended to advance the process of suits or original proceedings in the nature of suits to their conclusion, since the Sections give power to issue commissions to other courts, letters of request to other courts and executions of commissions issued by foreign courts. The supplemental proceedings are dealt with under Sections 94 and 95 of the Code and they































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