Filing an application to the court, even if it is merely for an adjournment or to vacate an interim injunction, amounts to taking a step in the proceedings and disentitles the party from seeking a stay of the proceedings under Section 34 of the Arbitration Act, 1940.

ORDER :- The defendants, a private limited Company, have taken out this application under Section 34 of the Arbitration Act, 1940, for stay of all proceedings in the suit. The suit is to recover Rs. 1,63,282-12 on the allegation that the said amount was payable in respect of the use of the plaintiff's vessel "S. S. Stavros", as per charterparty dated 17-5-1968 entered into between the plaintiffs and the defendants at New York, United States of America. Pending the suit, the plaintiffs applied in Application No. 1523 of 1968 for the issue of a temporary injunction restraining the defendants from removing their tanker from the Madras Harbour. Ismail, J., before whom that came up for orders, issued an interim injunction on 2-8-1968. The defendants took out Application No. 1564 of 1968 praying that the interim injunction may be vacated and that the bank guarantee of the First National City Bank, Madras, to the tune of Rs. 1,65,000/-, may be accepted. In view of the undertaking, the learned Judge vacated the interim injunction subject to the furnishing of the security. The defendants have taken out this application alleging inter alia that they had to apply to the Court for raising the interim injunction, as on account of the injunction they were put to a recurring loss of about Rs. 18,500/-every day, that as per the charterparty any dispute between the parties has to be referred to three persons at New York, one to be appointed by each of the parties and the third to be chosen by those two persons, that there is dispute between the parties, that the defendants are ready and willing to abide by the terms of the arbitration clause in the charterparty and that, therefore, this Court has no jurisdiction to try the suit, as the matter has to be referred to arbitration.

2. The plaintiffs oppose this application contending that it is not maintainable inasmuch as the defendants have taken part in the proceedings. They also contend that balance of convenience does not call for stay of the proceedings.

3. Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, the party against whom such a proceeding is instituted is given right to apply to the authority for stay of the proceedings. Section 34, which deals with that matter inter alia stated that such application may be made "at any time before filing a written statement or taking any other steps in the proceedings. In the instant case, the defendants have not filed the written statement. But they took out Application No. 1564 of 1968 to vacate the interim injunction and offered to furnish security. The question is whether the filing of this application would amount to "taking a step in the proceeding" within the meaning of Section 34. At page 369 of volume I of Halsbury's Laws of England it is observed :

"The applicant must have taken no step in the proceeding after appearance. The party who makes any application whatsoever to the Court, even though merely in an application for time, takes a step in the proceeding." What would amount to "taking step in the proceeding" arose for consideration in a number of cases both English and Indian. In Ives and Barket v. Williams, (1894) 2 Ch 478 at p. 484; Lindley, L. J., observed :

"The authorities show that a step in the proceedings means something in the nature of an application to the Court and not a mere talk between the solicitor or solicitor's clerks, nor the writing of letters but the taking of some steps such as taking out a summons or something of that kind which is in the technical sense a step in the proceedings".

In Ford's Hotel Co. v. Bartlett, 1896 AC 1 at p. 4; the defendant took out summons for extension of time to file written statement. That was held to be a step in the proceedings. In County Theatres and Hotels Ltd. v. Knowles, (1902) 1 KB 480; the defenda