A request for an adjournment for filing a written statement on behalf of a party amounts to a step in the proceedings and, therefore, the party is not entitled to the benefit of Sec.34 of the Arbitration Act, 1940.

Rajendra Nath Mittal, J.

1. Briefly, the facts are that M/s. William Jacks and Co, (India) Ltd. (hereinafter referred to as "the company"), filed a petition under Sec.439 read with Sections 433 and 434 of the Companies Act, 1956 , against Saraswati Industrial Syndicate Ltd. (hereinafter referred to as "the Syndicate" ). stating that an amount of Rs.5 lakhs odd was due from it which it failed to pay in spite of acknowledging that the above said amount was due from it. Notice in the petition was ordered to be issued by this court on January 13, 1983, for March 3, 1983. The notice was despatched on behalf of the company by Mr. R. N. Narula, advocate to the Syndicate, on January 18, 1983, which must have been received within one week thereafter. On March 3, 1983, Mr. A. K. Jaiswal advocate, appeared on behalf of the respondent and made a request for time to enable him to file a written statement. At his request, the case was adjourned to April 7, 1983. Two days before the date of hearing, that is, on April, 5, 1983, an application (C. A. No.54 of 1983) was filed on behalf of the Syndicate under Sec.34 of the Arbitration Act, 1940 (hereinafter called "the Act"), for staying the proceedings on the ground that the agreement between the parties contained an arbitration clause. The application has been contested on behalf of the company.

2. The first contention of Mr. Bhagirath Das is that there is an arbitration clause in the agreement between the parties according to which all the disputes are to be referred to an arbitrator to be appointed by the parties by mutual agreement and in the event of the parties failing to agree, the reference would be to a nominee of the Federation of Indian Chambers of Commerce and Industry, Delhi, at the instance of the party first applying to him. He submits that, therefore, the proceedings are liable to be stayed under Sec.34 of the Act.

3. On the other hand, Mr. Khaitan has argued that the Syndicate took steps in the proceedings as a request was made on its behalf to file a written statement. In the circumstances, he submits, that the proceedings cannot be stayed.

4. I have duly considered the arguments of the learned counsel. It is not disputed that the service of the petition was ordered to be effected on the Syndicate in the second week of January, 1983. It is also not disputed that the notice must have been served upon the Syndicate within a week from January 18, 1983, the date of its issuance. A request was made by Mr. A. K. Jaiswal to adjourn the case for enabling him to file the written statement on March 3, 1983, that is, more than a month, after having received notice by the Syndicate. In that situation, the inference is that the Syndicate knew the contents of the petition and it wanted to defend the same on merits. Sec.34 of the Arbitration Act, inter alia, provides that where any party to an arbitration agreement commences any legal proceedings in respect of any matter agreed to be referred, any party to such legal proceedings may at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings.

5. The question that arises for determination is whether the statement of Mr. Jaiswal amounts to taking a step in the proceedings. A similar question arose before the Supreme Court in State of Uttar Pradesh V/s. Janki Saran Kailash Chandra, AIR 1973 SC 2071. In that case, a suit was instituted for recovery of some amount by way of damages against the State of U. P. The summonses of the case were served on the District Government counsel who filed an appearance slip in the court and an application praying for one months time for the purpose of filing a written statement. The prayer was granted. Before the next date, he moved an application under Sec.34 of the Act stating that there was an arbitration clause in the agreement between the parties to the suit and, therefore