JUDGMENT
S.K. Mahajan, J.
(1) This order will dispose of the application of the defendant under Section 34 of the Arbitration Act seeking stay of the suit filed by the plaintiff for recovery of Rs. 19,76,427.00 . Brief facts giving rise to filing of the application are that:-
(2) Under a sales contract dated 18th August, 1992 stated to have been entered into between the parties, the defendant had agreed to supply 3,60,000 metres of auto loom grey fabric ’30s X 30s – 76/68′ with 98″ width. The defendant failed to supply any part of the material as stipulated in the agreement. On account of the breach alleged to have been committed by the defendant, the plaintiff states that it had suffered loss of Rs. 19,08,254.00 . The present suit has, therefore, been filed for the recovery of the said loss, alleged to have been suffered by the plaintiff, along with interest.
(3) Instead of filing the written statement, the defendant has filed this application under Section 34 of the Arbitration Act for stay of the suit on the allegations that the agreement contained an arbitration clause being clause No. 11 under which the disputes were liable to be referred to an Arbitrator and as such the suit was liable to be stayed. It is stated that the defendant was always ready and willing to refer the matter to the arbitration in accordance with the agreement between the parties; he had not taken steps in the proceedings; the application was being filed without any undue delay and was bona fide. Therefore, it was prayed that the suit be stayed.
(4) Reply to the application was filed by the plaintiff. It is stated that there was no reason to stay the suit for the following reasons :- (A)defendant has already taken steps in the proceedings by seeking time to file written statement several times; (b) that the arbitration agreement is vague and the parties never intended to take recourse the arbitration; (c) parties were not ad-idem regarding the settlement of disputes through arbitration inasmuch as the arbitration clause printed on the contract is so small and faint that the same could not be noticed by the plaintiff; (d) defendant was at no time ready and willing to refer the matter to arbitration; (e) the disputes which are sought to be referred to an Arbitrator have not been specified in the application; and (f) it is not clear as to which forum i.e. the Complaint Committee for Conciliation or the Board of Arbitrators will act as an Arbitrator in the alleged disputes.
(5) The defendant in this case was served with the summons of the suit for 20th May, 1993. On that date Counsel for the defendant requested for a week’s time to file the power of attorney and she also wanted the documents to be supplied to her. The defendant was, therefore, directed to file written statement within six weeks of the supply of the documents and the matter was adjourned to November 26,1993. Documents appear to have not been supplied to the defendant and the Court, therefore, directed the written statement to be filed within six weeks from 26th November, 1993 when the date was fixed for hearing. On 10th May, 1994 Counsel for the defendant wanted time to seek instructions from the defendant before filing written statement and on her request the case was adjourned to 5th September, 1994 after giving time of eight weeks to the defendant to file written statement. On 5th September, 1994 an adjournment was sought by the defendant’s Counsel for filing the written statement. Order of 5th September, 1994 reads as under :- “LEARNED Counsel for defendant wants time to file the written statement. Let the same be filed within four weeks and replication thereto within four weeks thereafter. Parties to also file their respective documents with copies to the other side. Renotify for admission and denial of documents on 11th January, 1995.”
(6) Again on 11th January, 1995 when the case was fixed for hearing, last opportunity was given to the defendant to file written statement within four weeks and the case was directed to be listed on 17th May, 1995. On 17th May, 1995 as the written statement had not been filed and the Counsel for the defendant stated that he was not able to receive instructions from his client, he wanted to move an application for being discharged. The case was, accordingly, placed before the Court for appropriate orders on 17th July, 1995. On 17th July, 1995 written statement was not filed and it was stated by Counsel for the defendant that after he had written letter to the defendant, he has received instructions from the defendant and an application is proposed to be made for directions to the plaintiff to file original documents on record. This request of the defendant was supposed by the plaintiff, however, in the interest of justice one last opportunity was granted to the defendant to file written statement subject to payment of Rs. 1,000.00 as cost. Order of 17th July, 1995 reads as under :- “ON the last date of hearing, a statement was made by Counsel for the defendant that he had no instructions and he will be making an application for discharge from the case. Today Mr. Aggarwal states that he had written a letter to the defendant that he may be withdrawing from the case for want of instructions and he has now received instructions from the defendants and an application is proposed to be made for direction to the plaintiff to file original documents on record, as the documents which are the basis of the suit are not being filed. Learned Counsel for the plaintiff has objected to the adjournment of the case and submits that for the first time the Counsel for defendant had appeared on 20th May, 1993 and since then the matter is being adjourned for filing of the written statement. He further submits that any application which the defendant wanted to file could have been filed during the said period. After hearing learned Counsel for the parties, I, in the interest of justice, give final opportunity to the defendant to file written statement within four weeks subject to payment of Rs. 1.000.00 as cost. Replication be filed within four weeks thereafter. Put up on 22nd November, 1995.”
(7) Instead of filing the written statement, the defendant made an application for production and discovery of documents. Notice of that application was given to the plaintiff. On 14th August, 1995 the defendant filed the present application under Section 34 of the Arbitration Act for stay of the suit on the ground of there being an arbitration agreement between the parties.
(8) It is contended by Mr. Sharda, learned Counsel for the plaintiff that the present application is not maintainable inasmuch as the defendant has already taken steps in the proceedings by seeking time to file written statement. Mr. S.P. Aggarwal, Sr. Advocate, appearing on behalf of the defendant, however, submits that back page of the agreement dated 18th August, 1992 was not supplied by the defendant to the plain tiff and it was only on inspection of the file on 8th August, 1995 that he became aware of the existence of the arbitration agreement between the parties and, therefore, the application was made immediately thereafter. The contention is that as the defendant was not aware of the arbitration agreement between the parties, the application was not filed earlier and time was sought to file the written statement. He, therefore, states that there is no reason as to why the suit should not be stayed. His further contention is that he had not received instructions from the defendant and, therefore, merely asking for a date for filing the written statement cannot be said to be a step in the proceedings disentitling the defendant to stay of the suit.
(9) Mr. Aggarwal has referred to the judgment reported as Harbans Lat v. National Fire and General Insurance Co. Ltd. Air 1955 Nuc (Punjab) 4917, wherein it was held that where the branch office of the defendant Company had only received the summons of the suit filed by the plaintiff on the day before the appearance had to be entered and in such circumstances an oral application for an adjournment for filing the written statement cannot be regarded as a step taken in the proceedings disentitling the plaintiff Company for stay of the suit. In my opinion, this judgment is not applicable to the facts of the present case. In the present case, it is not the case of the defendant that the plaint had not been served upon the defendant. The defendant was aware of the complete facts about the agreement which had been entered into between the parties. Some other judgments relied upon by Mr. Aggarwal are : State of Himachal Pradesh v. Lalchand Shahi, , Nuruddin Abdulhusin v. Abu Ahmed Abdul Jalli, and Bhanwarlal and Another v. Insaf Ali and Another, .
(10) In State of Himachal Pradesh v. Lalchand Shahi, , it was held that no person can be deemed to have taken steps in the proceedings who is not aware of what the proceedings are. Therefore, the prayer for an adjournment of the case made by a Counsel who uptill the moment of making the request for an adjournment had received no instruction from his clients did not amount to taking of step in the proceedings within the meaning of Section 34 of the Arbitration Act.
(11) In Nuruddin Abdulhusin v. Abu Ahmed Abdul Jalli, , it was held that the true test for determining whether an act is a step in the proceedings is not so much the question as to whether it is an application – although, of course, that would be a satisfactory test in many cases – but whether the act displays unequivocal intention to proceed with the suit and to give up the right to have the matter disposed of by arbitration.
(12) In Bhanwarlal and Another v. Insaf Ali and Another, it was held that the matter whether the party has taken any step within the meaning of Section 34 of the Act by seeking an adjournment for filing a written statement will have to be decided in the light of the facts and circumstances of each case, but one has to start with a presumption that seeking of an adjournment by defendant for the purpose of filing the written statement is a “step” as contemplated by Section 34. In such a case Court has to see whether the defendant has been able to rebut the presumption by cogent evidence to the contrary.
(13) In my opinion, none of the judgments is of any help to the defendant/ applicant. Aid is being taken from these judgments by the defendant to show that as the defendant had not been supplied with the copy of the agreement, he was not aware as to whether there was an arbitration agreement between the parties and it was only on inspection of the file on 8th August, 1995 that the Counsel came to know about the arbitration agreement between the parties which is at the back of the agreement dated 18th August, 1992. In my opinion, the argument has to be considered to be rejected. The arbitration agreement is contained in printed clause No. 11 at the back of the contract. The contract is itself in printed form and it clearly means that defendant had been entering into similar agreements with its intended customers. It is difficult to believe that the defendant who had been regularly entering into such type of contracts will not be aware of the arbitration agreement appearing at the back of printed contract. It is not the case of the defendant that complete set of the plaint was not supplied to the defendant and the defendant was, therefore, not aware as to what type of proceedings had been initiated against it by the plaintiff. On a plain reading of the plaint it will become apparent that the plaintiff has filed this suit for damages on account of the breach committed by the defendant in fulfillling its obligations under the contract dated 18th August, 1992 and it is this contract which contained arbitration clause. That being the position, I am not inclined to accept the contention of learned Counsel for the defendant that the defendant had not given complete instructions to the Counsel on account of which an application under Section 34 of the Arbitration Act could not be filed earlier. As held in Bhanwarlal and Another v. Insaf Ali and Another, heavy onus lies upon the defendant to discharge the burden that an adjournment which has been sought by him for filing a written statement is not a “step” in the proceedings. In my opinion, defendant has not been able to discharge this onus. Right from May 1993 to July 17, 1995 the defendant had been seeking adjournment and at no stage any application was made to the Court either oral or in writing that as there existed an arbitration agreement between the parties, it intended to file an application under Section 34 of the Arbitration Act. Matter would have been entirely different in case time had been sought for filing an application under Section 34 of the Arbitration Act. That is not the position in this case. Repeatedly time has been sought by the defendants for filing the written statement which, in my opinion, is clearly a step in the proceedings which would disentitle the defendant from filing an application under Section 34 of the Arbitration Act.
(14) In M/s. National Small Industries Corporation Ltd. v. M/s. Punjab Tin Printing & Metal Industries and Ors., , it was held that a request made by the defendant to the Court to file the written statement will amount to taking steps in the proceedings.
(15) In State of Uttar Pradesh and Another v. M/s. Janki Saran Kailash Chandra and Another, , the facts were that on a suit having been filed by the plaintiff, the summons of the suit were served upon the District Government Counsel. On September 22,1966 the Government Counsel filed an appearance slip in the Court and also put in a formal application praying for one month’s time for the purpose of filing of written statement. This prayer was granted. On October I, 1966 the Government Counsel filed an application under Section 34 of the Arbitration Act pleading that there was an arbitration clause in the agreement between the parties to the suit and as the State of U.P. was willing to refer the matter to the arbitration, the suit should be stayed. The Trial Court held that the disputes are subject to arbitration clause and since the State had not taken any steps in the proceedings and had also not filed the written statement, the suit was liable to be stayed. In appeal, the High Court held that action of the Government Counsel in applying for time to file written statement amounted to taking a step in the proceedings within the meaning of Section 34 of the Arbitration Act. On this view the defendant was held disentitled to claim that the suit should be stayed. The appeal was, accordingly, allowed and the order of stay passed by the Trial Court was set aside. The argument of the State in the Supreme Court was that the Government Counsel had no instructions to ask for adjournment for the purpose of filing the written statement and, therefore, his action of applying for an adjournment cannot bind the State of U.P. for filing an application for stay of the suit under Section 34 of the Arbitration Act. The Supreme Court in the facts of that case held as under :— “ACCORDING to the appellant (State of U.P.), the District Government Counsel is authorised by the Code of Civil Procedure to receive summons on behalf of the State; Vide ground No. 3 in the petition for special leave. Indeed, the District Government Counsel was in fact so served. It is not the appellant’s case that the summons were not accompanied by a copy of the plaint in accordance with law and, therefore, the District Government Counsel was not aware of the nature of the case. A copy of the plaint, therefore, must be held to have been duly served on the District Government Counsel who under Order Xxvii, Rule 2 of the Code of Civil Procedure was authorised to act for the Government and was deemed to be the recognised agent by whom appearances acts and applications could be made or done on behalf of the Government. The District Government Counsel in the present case was thus fully empowered to appear and act for and on behalf of the Government and also to make applications on its behalf. If the said Counsel wanted time for the purpose of having fuller instructions, he could have asked for it specifically, for he was not a layman ignorant about the legal position but a professional lawyer retained by the Government for the purpose of acting and pleading on behalf of the Government as a recognised agent. He, however, chose instead to ask for time specifically for filing written statement and this act he purported to do on behalf of the State Government which he was fully empowered to do. The State took benefit of his appearance and his successful prayer for adjournment of the case by one month for the purpose of filing the written statement. In those circumstances, it is hardly open to the State Government to plead that the District Government Counsel was not authorised to seek adjournment on its behalf for this purpose. An oblique suggestion thrown on behalf of the appellant that the District Government Counsel had merely volunteered to appear without instructions, presumably taking the cue from the decision of the Punjab High Court in the case of Moji Ram (Supra) is merely to be stated to be rejected. A recognised agent like the District Government Counsel can scarcely be considered to appear voluntarily in a case on behalf of the Government in the sense of being unauthorised by his client for the simple reason that he is authorised by virtue of statute to appear, act and make applications on behalf of the Government. Indeed in the present case the District Government Counsel also filed in Court the usual appearance slip. If he wanted time for further consultations, he could and should have specifically made a prayer to that effect. It is, however, idle to contend that he can be considered to have merely volunteered without authority to appear and ask for time for filing the written statement. The argument of appearance by a recognised agent as a mere volunteer is extremely difficult to appreciate. The State, as already observed, took the benefit of the adjournment. It will be somewhat irrational and perhaps incongruous to permit the State, after having taken the benefit of this adjournment, to plead that the application for adjournment was not made on instructions and was unauthorised. To accede to the State Government the right to do so would clearly be unjust to the opposite party which could have rightfully objected to the adjournment, had there been any indication that the prayer was not being made on instructions from the State Government. September 2, 1966 was fixed in the summons for filing written statement. Failure to do so would have entailed consequences prejudicial to the State Government. Those consequences were avoided by making an application for extension of time for filing written statement which must have been understood by the opposite party, as also by the Court, to be on instructions by the State Government.”
(16) In the present case also, the defendant has delayed the suit by two years by seeking adjournments for filing the written statement and as held by the Supreme Court, it will be somewhat irrational and perhaps incongruous to permit the defendant to say that till the time of making this application, no instructions had been given about the existence of the arbitration agreement.
(17) In Rachappa Guruadappa v. Gurusiddappa Nuranjappa and Ors., , it was held that where the Counsel appearing for the party to the suit had sought adjournment specifically for filing written statement and obtained time for more than one occasions for such purpose, subsequent application for stay of suit would not be maintainable. It was further held that it was not only the time taken to consider whether written statement should be filed as defense to the plaint to enter into an arena of controversy but it was time taken to have the matter decided by the suit. The party evinced an intention to have the matter adjudicated by the Court.
(18) I am, therefore, not in agreement with learned Counsel for the defendant that a prayer for adjournment made by him for filing of the written statement will not amount to a step in the proceedings on account of his having no instructions from the defendant. In my opinion, the application is clearly an afterthought and has been made with a view to delay the proceedings in this Court.
(19) As I have already held that the defendant has already taken steps in the proceedings, he is nut entitled to stay of the suit, I, therefore, need not dwell myself upon other arguments advanced by the parties.
(20) For the reasons aforesaid, the application is dismissed with costs assessed at Rs. 2,000.00 .