P L D 1967 Dacca 250 (PLP)

MURSHED, C. J.‑This revisional application arises out of the following circumstances:‑ A suit was filed by the plaintiff (petitioner before us) against the opposite‑parties, who were defendants. The suit was for dissolution of a partnership and for accounts and it was filed on the 9th of April 1965. A day after the suit was filed, that is, on the 10th of April, 1965, an application was made 'by the plaintiff for appointment of a receiver in respect of the assets of the firm. On that date the learned Subordinate Judge, before whom the suit was pending, issued notice on the defendants to show cause why the prayer of the plaintiff 'should not be allowed. On the 19th of April 1965, defendants' asked for time to show cause and the Court fixed the 26th of April 1965, as the date for filing objection. Defendants, on the said date, filed a petition for staying the proceedings before the Court under section 34 of the Arbitration Act (Act X of 1940) and, simultaneously, with the said petition, filed an objection to the aforesaid application for appointment of a receiver. The learned Subordinate Judge allowed the prayer for staying the proceedings of the suit under the aforesaid section 34 of the Arbitration Act. On appeal, which was heard by an Additional District Judge of Chittagong, the said order passed by the learned Subordinate Judge was affirmed. Hence the petitioner moved this Court in its revisional jurisdiction and obtained this Rule Nisi. At the hearing of the Rule, Mr. Mozammal Huq, who appears for the plaintiff ‑petitioner, has urged two points before us and did not canvass any other point. He drew our attention to the provisions of section 34 of the Arbitration Act which reads thus: "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, 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 judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings, were commenced, and still remains ready and willing to do all things necessary, to the proper conduct of the arbitration, such authority may make an order staying the proceedings." (The underlining* is by me.) In the first place, he has argued that although no written statement has been filed on behalf of the defendants, that is, the opposite‑parties before us, they had asked for time to file objection to the application for appointment of receiver. It was urged that in the aforesaid circumstances, the course taken by the opposite‑parties, i.e., the defendants, amounted to taking steps in the proceedings of the suit so as to bar an application under section 34, as quoted above. In support of this contention he has relied on a decision of this Court in the case of The New Bengal Shipping Co. v. Eric Lancaster Stump of Singapore (P L D 1952 Dacca 22) and a decision of the Calcutta High Court in the case of Subal Chandra Bhur v. Md. Ibrahim (A I R 1943 Cal. 484). I would like to observe that a point like this is not resolved by a mere citation of cases. On a construction of the requirement of section 34 of the Arbitration Act, it must be held that whether an applicant under section 34, as quoted above, has taken an; "step in the proceedings" as mentioned above, would depend upon a consideration of the facts of each particular case. The primary duty of a Court is to look into the facts of the case fairly and squarely and then to decide whether the conduct of the applicant is such as would amount to a participation in the suit itself or' an indication of acquiescence in its proceedings. , If so, an application under section 34 would be barred for the simple reason that a party is not allowed to ask for staying the pro ceedings when he has clearly and willingly participated in them in a manner which can be construed acquiescence therein. If he intends to enforce an arbitration clause, he must do it at the earliest possible moment. If his conduct is such as would indicate that he has acquiesced in the suit, he is shut out from claiming the benefit of section 34 of the said Act. This is clean enough and is, in fact, the ratio decidendi of the numerous cases that have decided the meaning of the phrase "taking any steps in the proceedings". Viewed in this light, it would be evident that the facts and circumstances of the present' case are distinct from those involved in the decisions which have been, as mentioned above, cited before us. It would be remembered that, in the case which is now before us, only a day after the filing of the suit an application was made for appointment of a receiver. Obviously, defendants were not, and could not be, aware of the case which the plaintiff was seeking to make out in the plaint. A mere prayer for time to file an objection to an application for appoint‑, ment of receiver cannot, to my mind, amount to acquiescence in the proceedings, that is, in the suit itself. In this context, it should be remembered that defendants (opposite‑parties before us) filed an application with a prayer for staying the proceedings, on the day fixed for hearing objection against the appointment of a receiver, and along with the said application, they also filed a written objection with regard to the said application. Can it be said that this conduct amounts to an acquiescence in the proceedings of the suit? It seems to me that at the earliest opportunity defendants made it clear that they intended to pray in aid section 34 of the Arbitration Act for the purpose of staying the proceedings in the suit and, actually, made an application, under section 34, to that effect. The fact that they also filed a written objection to the application for appointment of a receiver is not very material when it is seen that they, in fact, did ask for staying the proceedings at the earliest possible moment. They had to object to such appointment in order to take recourse to arbitration. It would now be useful to refer to Subal Chandra's case. In that case what happened was that on the 5th of January 1943, the suit was filed. Two days thereafter, that is, on the 7th of January, 1943, Khan Bahadur Md. Ibrahim applied for and obtained leave to serve notice of appointment of receiver and for injunction returnable on the 11th of January 1943. On the last mentioned date, namely, the 11th of January 1943, the motion appeared in the list for hearing. Defendants, who were opposite- parties, asked for time to furnish affidavit‑in‑opposition and. the Court passed the following order: "Adjourned for three weeks. Affidavit in opposition within a fortnight Reply by Saturday following: Interim order to continue. Liberty to either parties to take inspection of the books and documents at the office of the S. D. O., Rachi, on two days notice to one another's Solicitors". (Again, the underlining* is by me.) On the aforesaid facts, Das, J., came to the conclusion that the conduct of the defendants amounted to acquiescence, within the meaning of section 34 of the Arbitration Act, in the proceedings. In pro nouncing the opinion of the Court, Das, J., on a consideration of a number of authorities, delivered himself thus (p. 487): "It seems to me that these authorities establish that in order to constitute a step in the proceedings the act in question must be: (a) an application made to the Court‑either on summons as in (1896) A C 1 (Ford's Hotel Co. v: Bartlett) or 34 Cal. 443 Sarat Kumar Roy v. Corporation of Calcutta) or orally as in 28 C W N 771 (Karnani Industrial Bank v. Satya Niranjan Shaw) or something in the nature of an application to the Court, e.g. attending on summons for directions as in (1902) 1 K B 480 (Company Theatres & Hotel Ltd. v. Knowles), (1903) 2 Ch. 222 (Richardson v. Le Maitre), (1909) 2 Ch. 121 (Ochs v. Ochs Brothers) and (b) such an act as would indicate that the party is acquiescing in the method adopted by the other side of having the dispute decided by the Court. Applying now the test deducible from the authorities referred to above to the facts of the present, I am satisfied that when the petitioner by his counsel applied to Court for obtaining time to file his affidavit in opposition and for leave to have inspection of the books and records he acquiesced in the method adopted by the plaintiff for having the disputes decided by the Court and not by arbitration and that he was quite content that the dispute should be fought in Court. This conduct, to my mind, clearly implies a statement to the effect that the defendant would proceed to defend the action and would not insist on the right to have the disputes disposed of by arbitration." is obvious that what had weighed with Das, J., was the fact that the defendant had asked for leave of the Court to inspect the books and records in relation to the suit itself. Asking for such inspection leaves no room for doubt that the defendant was taking "a step" towards entering into the merits of the suit itself. Without such a prayer it would have been difficult to hold that a mere application for time to file a written objection would amount to acquiescence in the aforesaid sense. I have referred to this vase because it is very frequently quoted in decisions of the subcontinent and I wish to emphasis what I consider to be the distinctive feature of that particular case. It seems to me that asking for inspection of documents and agreeing to continuance of the "interim order" are definite steps indicating participation in the suit itself. A similar distinction can be found in the case of the New Bengal Shipping Co. v. Eric Lancaster Stump of Singapore. No useful purpose would be served by discussing a large number of cases on this point. I may, however, refer to the case of Nuruddin Abdulhusein v. Abu Ahmed Abdul Jalil (A I R 1950 Bom. 127) in which a number of decisions and authorities have been discussed. It has been, if I may say so with respects, very rightly held: "The true test for determining whether an act is a step in the proceedings is not so much the question as to whether there has been an application in the suit‑although, of course, that would be a satisfactory test in many cases‑but whether the act displays an unequivocal intention to proceed with the suit and to give up the right to have the matter disposed of by arbitration." It was also held in that case that the filing of an unconditional appearance in Court was not a step in the proceedings as it was an act which was incumbent upon the defendant in order to prevent the suit from being set down as being undefended. The ratio decidendi of the case is that a Court must apply its mind to the facts and circumstances of each case and to decide for itself whether the conduct displayed by the defendant can be construed as acquiescence in the proceedings that have been instituted in the suit. I have stated the relevant facts and circumstances of the present case and I have no hesitation to hold that it cannot be said that the opposite‑parties (defendants in the suit) by merely taking time to file a written objection and by filing such objection, are deemed to have acquiesced in the proceedings when, at the earliest possible and practicable moment, they have, in fact, with the aforesaid written objection, filed a separate application for staying the proceedings in the suit under section 34 of the Arbitration Act. The next and the last point which was urged on behalf of the petitioner is that under the aforesaid section a duty has been cast upon the Court to examine whether the applicant under section 34 of the Arbitration Act is ready and willing to do all things necessary to the proper conduct of the arbitration. In the petition itself our attention was drawn to a letter which has been written by the petitioner to opposite parties Haji Sultan Ahmed Sowdagar and Nurul Haq, in which it has been said that opposite parties did not comply with a request for the appointment of an arbitrator, petitioner having nominated Mr. C. R. Das, Advocate, to act as his nominee in the arbitration. Mt. Ahmed Sobhan has produced the original letter, dated the 6th of June, 1964, addressed to his clients and written by the petitioner. I showed this letter to Mr. Mozammel Huq who has appeared for the petitioner. Mr. Mozammel Huq has frankly conceded that the letter handed over to us by Mr. Ahmed Sobhan is the letter which is mentioned in this petition.,, The last paragraph of the letter runs thus: "I have already stated that the arbitration proposed by you is absolutely unjustified, unwarranted and without jurisdiction. If you still intend to proceed with such arbitration, please note that Mr. C. R. Das, Advocate of 89, Iqbal Road, Chittagong, will act as my nominee in the said arbitration and in nominat ing my arbitrator, I reserve the right to challenge the legality and jurisdiction of the arbitration to make any decision." It would appear from the aforesaid letter that the petitioner himself suggested reference to arbitration. The reason why I have quoted the above passage is to show that the defendants have shown an anxiety to proceed to arbitration. When we add to this circumstance the fact that the plaintiff (petitioner) filed an application for staying proceedings in the suit as stated above, I am satisfied that the petitioner has shown readiness and willing ness to take necessary steps in order to proceed to arbitration. In these circumstances, I do not think that the petitioner has been able to make out any case calling for interference with the order passed by the trial Court and affirmed by the appellate Court below. The result, therefore, is that this Rule is discharged without any order as to costs. ABDULLA, J.‑I agree. K. B. A. Rule discharged. ,