Filing a counter in the original petition is a step in the proceeding within the meaning of Section 34 of the Arbitration Act, which amounts to a waiver of the arbitration agreement and acquiescence in the proceedings.

The appellant has been doing business under the trade name and style ‘Satish Weaving Factor/at Manalmedu village, Karur Taluk She had insured with the second respondent “under a fire insurance policy for the period 27-1-1989 to 26-1-1990 for a total sum of Rs. 95,000/. On 31-7-1989, there was a fire accident in the appellants factory. The machinery and accessories were all burnt. The appellant informed the third respondent immediately and a survey was made by the respondents through their surveyor on 3 1-7-1989 and 2-8-1989. The appellant was required to furnish the details of the machinery and their value to the surveyor. The appellant had also sent a consent letter on 16-10-1989 as instructed by the respondents agreeing to receive a sum of Rs. 87,500/- without prejudice. As the claim was not settled, the appelant issued a notice on 27-11-1989 which was received by the third respondent on 30-11-1989. The appellant did not receive any reply. She filed a suit on 11-1-1990 in the Court of the Subordinate Judge, Karur for recovery of Rs. 95,100/- as compensation with interest thereon. She prayed for permission to file the suit as an indigent person. The proceeding was taken on file as O.P. No. 7 of 1990.

2. The Court ordered notice in the petition on 15-2-1990 and made it returnable by 21-3-1990. On 21-3-1990 Sri. K. Meenakshisundaram, Advocate, filed vakalat for all the three respondents and took time for counter. The matter was posted to 20-4-1990. The Court ordered notice to the Government Pleader returnable by 20-4-1990. On 20-4-1990 a petition was filed by the respondents under S. 34 of the Indian Arbitration Act for stay of all further proceedings in O.P. No. 7 of 1990. In the affidavit filed in support of the petition it was stated that the respondents had sent a reply to the appellants notice claiming benefits of the Arbitration clause. The affidavit did not disclose the date of the notice. Nor did the respondents file the notice along with the affidavit. It is now represented before me that the reply notice was issued on 10-1-1990.

3. The appellant filed a counter to the application on 20-6-1990. It was stated specifically in the counter that the respondents had taken time in the original petition for filing counter on 21-3-1990 and thus they were ready to proceed with the suits. It was also stated that the respondents were not ready and willing to do all things necessary for a proper conduct of arbitration at the commencement of proceedings and they were not entitled to apply for stay subsequently. The application was being adjourned from time to time. It is seen from the entries made by the Court below on the application that the respondents were not ready for enquiry on 21-8-1990 and 2-4-1991. On the latter date, the matter was adjourned to 30-4-1991 as a last chance. On 30-4-1991, the Court allowed the application with a one line order as follows:

“Heard both, According, to S. 34 of Indian Arbitration Act 1940, petition is allowed.”

4. It is the said order which is challenged by the appellant in this appeal. The appellant filed C.M.P.No-9111 of 1991 for stay of the operation of the order of the Court below. In the affidavit filed in support of the petition it was alleged that on 30-4-1991 counsel for the respondents prayed for an adjournment and the learned Subordinate Judge passed over the matter to enable them to file a petition for adjournment. It was stated that to the shock and surprise of the appellants counsel, he found from the ‘A’ Diary, immediately after the reopening of the court that the petition had been allowed on 30-4-1991 and orders were passed as if both part ies were heard. It should be mentioned here that 30-4-1991 was the last working day before the summer vacation. In the counter affidavit filed in the said Civil Miscellaneous Petition, the Deputy Manager of the first respondent denied the allegations made by the appellant. It is better to extract the relevant portion in the counter affida