1993 PLP 1074 (MLD)

4. It need not be gainsaid that (he Court before which preceding arc pending may make an order staying the proceedings if the condition inter alia p is fulfilled that the application is made at any time before filing a written statement or taking any other step in the proceedings.

5. The learned counsel for the appellant has reiterated the contention, raised before the learned trial Court, that the act of seeking adjournments to file the written statement by the defendants amounted to taking "steps in proceedings" and, therefore, they shall be deemed to have submitted to the jurisdiction of Civil Court and waived their right to arbitration. In support of the contention the learned counsel relied upon the following precedents: (1) Muhammad Idris and others v. Tobarak Hussain PLD 1965 Dacca 260; (2) G.M. Pfaff A.G. v. Sartaj Engineering Co. Ltd., Lahore and 3 others PLD 1970 Lah. 184; (3) Government of Balochistan and others v. Mir Qadir Bakhsh and Sons PLD 1978 Quetta 215; (4) Ghulam Sarwar and others v. Mazharullah 1988 SCMR 310(2).

6. In the case of Muhammad Idris, the defendant had filed the petition under section 34 of the Act with the words "that the defendants will contest the suit instituted by the plaintiff and submit a written statement in the suit and in the prayer portion was stated:

"It is, therefore, prayed that your honour would be pleased to grant an adjournment for filing of written statement in the interest of justice." The view taken was that the request was indicative of preparation for contest and the petitioner had submitted to jurisdiction of the Civil Court.

7. In G.M. Pfaff A.G.'s case, an application under Order XXXIX, rules l and 2, C.P.C., and section 53 of the Specific Relief Act was also filed alongwith the plaint. A "written statement" on behalf of the defendants was presented with preliminary objection about reference of the dispute to the arbitrators. In fact, what was submitted was a reply to the said injunction petition and not written statement. The objection of the plaintiff that the defendants had submitted to jurisdiction of the Court was repelled with the observations that there was a subsisting agreement between the parties to refer the dispute to arbitration, that the dispute raised in the litigation fell within the scope of that agreement, and that the application was filed before filing "a written statement or taking any other steps in the proceedings". An observation as obiter dicta was also made that such an application was after all a procedural matter and the rules of law relating to procedure have always to be construed so as to suppress the mischief and advance the remedy and are not to be utilized as clogs in the way of advancing the cause of justice. This ruling, in fact, goes against the appellant and favours the view taken up by the learned counsel for the defendants-applicants.

8. The facts of the Government of Balochistan and others' case are entirely different from the facts of the present one as Government Pleader appearing on behalf of the Government of Balochistan, defendant in that case, had sought several dates of hearing making several applications, requesting adjournments, applying for setting aside ex parte order, moving application under Order VII, rule 19, C.P.C. In such a situation the defendant was rightly held to have taken "steps in proceedings".

9. In the last case, the Supreme Court had upheld the order of the High Court disentitling the defendant to invoke arbitration clause and ask for stay of suit as "The High Court, on the basis of the evidence on the record, found that the petitioners had taken steps in the proceedings. In this short order the Supreme Court had not granted even leave to appeal.

10. The learned counsel for the respondents has defended the impugned order by making reference to the Supreme Court case Re: Pakistan International Airlines Corporation v. M/s. Pak Saaf Dry Cleaners PLD 1981 SC

553. In this case the Supreme Court fully illuminated the questions as to when proceedings are to be stayed to respect the arbitration clause and how the application and concomitant circumstances are to be examined to determine "steps in proceedings". The facts of the case were that on the date fixed for submission of written statement, the counsel applied for extension of time to file written statement on the ground that the Law Officer concerned, who was dealing with the case, had gone out of the country and was expected back by the end of the next month. On the next date the counsel again filed another application for extension of time on the ground that written statement could not be prepared due to the Officer Incharge being out of Karachi. A request was again granted and next date of hearing was fixed and in the meantime the party informed its counsel about existence of arbitration clause whereupon the learned counsel submitted the petition under section 34 of the Act for stay of the proceedings on the date fixed. The learned Judge of the High Court rejected the petition on the ground that the defendant in applying for the time to file the written statement had displayed submission to jurisdiction of the Court and had taken steps in the proceedings. The Supreme Court did not agree to this view and held that in the circumstances request for adjournment was not a step in proceedings. And so because non-submission of copy of agreement alongwith the plaint in suit had fundamentally contributed to the seeking of adjournment by the counsel and as soon as the party had drawn attention of its counsel to arbitration clause the counsel had filed the petition under section 34 of the Act. Here, it would be profitable to quote below the observation of the Supreme Court laying down the guidelines for dealing with such a situation:

"In my opinion, the true test for determining whether an act is a step in the proceedings is not so much the question as to whether the party sought an adjournment for filing the written statement

although of course that would be a satisfactory test in many cases

but whether taking into consideration the contents of the application as well as all the surrounding circumstances that led the party to make the application display an unequivocal intention to proceed with the suit, and to give up the right to have the matter disposed of by arbitration:"

10. In the instant case, although the defendants had submitted the petition under section 34 of the Act after considerable time, yet the conduct could not be taken as palpable as to disentitle them to benefit of availing the arbitration clause. The service of the defendants in this case had completed on the 20th of June, 1990 and thereafter the learned trial Court remained on long leave. The order dated the 22nd of January, 1991, suggests that the learned Civil Judge had resumed the duties by that time and on that day the case was adjourned and posted to the 9th of March, 1991, for filing the written statement as requested by the learned counsel. On the 9th of March, 1991, instead of filing the written statement, the application in question was filed. Whether a particular act of the defendants amounts to a step in the proceedings is necessarily a question of fact and the Court while determining has to take into account the contents of the petition as well as the surrounding circumstances of the case. The learned trial Court was not far wrong in answering the question of fact in favour of the applicant. There was no evidence on the record that the appellant had filed Insurance Policy Agreement alongwith the plaint under Order VII, rule 14, C.P.C., or that its copy was sent to the defendants or their counsel so that they could invoke the arbitration clauses 18 and

19. The agreement appended with the application under section 34 of the Act expressly stipulated that reference to an arbitration was a condition precedent to any right of action or suit upon that insurance policy.

11. The upshot of the discussion is that there was a subsisting arbitration agreement between the parties, that the dispute raised in the present litigation fell within the scope of that agreement, and that the application under section 34 of the Act was made by the defendants before filing the written B statement or taking any other "step in proceedings". The delay in submission of the application under section 34 of the Act stood explained. The impugned order of the learned trial Court to stay the proceedings in the circumstances is unexceptionable. The appeal, therefore, stands dismissed. The parties are, however, left to bear their own costs. A.A./A-367/L Appeal dismissed.