JUDGMENT
K.S. Radhakrishnan, J.
1. This appeal arises out of the order in I.A.No.3701 of 1990 in O.S. No. 861 of 1989 on the file of the Principal Subordinate Judge’s Court, Thiruvananthapuram.
2. The Kerala State Industrial Development Corporation Limited (in short “SIDCO”) was arrayed as first defendant in O.S. No. 861 of 1989 which was a suit filed by M/s. Capp. International Private Limited, for a declaration that the contract evidenced by Ext. B4 was duly discharged by performance and no part of the contract subsisted and also for a declaration that the first defendant was not entitled to make any claim against the plaintiff under the said contract by way of damages or loss or otherwise and also for a decree directing the first defendant and or the second defendant to pay the plaintiff bank guarantee of Rs. 3.5 lakhs appropriated by the first defendant with interest.
3. Suit was instituted on 3.11.1989 and was posted to 17.1.1990 for the appearance of the defendants. On 17.1.1990 defendants entered appearance and asked for time and the court adjourned the case to 1.4.1990 written statement. Since 1.4.1990 was a holiday the case automatically stood adjourned to 2,4.1990. On 2.4.1990 on the side of the defendant time was sought for and the court adjourned the case to 4.8.1990 for written statement. The case was not called on 4.8.1990 and was adjourned to 7.8.1990. Again it was adjourned to 4.10.1990 for filing written statement.
4. Defendant later filed I.A. No. 3701 of 1990 under Section 34 of the Indian Arbitration Act for stay of all further proceedings in the suit in view of Clause 16 of Ext. B4 agreement. Application preferred under Section 34 was opposed by the plaintiff stating that the first defendant had participated in the proceedings and sought time for filing written statement, consequently there is no reason to hold up the proceedings. In support of its contentions, reliance was placed on the decisions of the Supreme Court in State of Uttar Pradesh v. Janki Saran Kailash Chandra (AIR 1973 SC 2071), Food Corporation of India v. Yadav Engineer and Contractor (AIR 1982 SC 1302), General Electric Co. v. Renusagar Power Co. (1987 (4) SCC 137), Rachappa Gumdappa v. Gurusiddappa Nuraniappa and Ors. (AIR 1989 SC 635) and Sadhu Singh Ghuman v. Food Corporation of India (AIR 1990 SC 893). Reference was also made to the decision of various High Courts in The Barium Chemicals Ltd. v. Bombay Industrial and Chemical Co. (AIR 1977 A.P. 400), Brij Gopal Binani v. Sreelal Binani and Ors. (AIR 1978 Cal. 520), Central Hindustan Orange and Cold Storage Co. Ltd. v. Sir Brijnath Singhi and Anr. (AIR 1956 Nag. 61) and Sewa Ram Ahmednagar v. Smt. Raj Rani and Anr. (AIR 1985 P. & H. 84).
5. The court below took the view that a request for time to file written statement would not by itself mean that the first defendant had given up his right to initiate arbitration proceedings. Further, from the mere fact that they had sought for adjournment as such is not enough to draw a presumption that the defendant had manifested an intention to waive the benefit of the arbitration clause and to proceed with the suit. The court below held that Exts. B6, B9, B10 and B11 documents would suggest a contra intention and consequently took the view that the petition under Section 34 was maintainable. The court stayed all further proceedings in the suit till the completion of the arbitration proceedings already initiated pursuant to Clause 16 of Ext. B4 agreement.
6. Counsel appearing for the appellant Sri. T.R. Ravi laid considerable emphasis on the decision of the Apex Court in Rachappa Garudappa v. Gurusiddappa Nuraniappa and Ors. (AIR 1989 SC 635) apart from other decisions already cited herein before. Counsel submitted that when a counsel seeks time for filing written statement it has to be presumed that the party had the intention to have the matter adjudicated by court. His action according to the counsel is the intention to proceed with the suit and not dispose of it by arbitration. Counsel also placed reliance on the decisions in Janki Saran Kailash Chandra’s case (AIR 1973 SC 2071), Malabar Wholesale Co-operative Stores Ltd. v. Union of India (1961 KLJ 265), P.C. Joy and Co. v. United India Insurance Co. Ltd. (1991 (1) KLT 329), Abdul Kadir Shamsuddin Buberi v. Madhav Prabhakar Oak and Anr. (AIR 1962 SC 406), Svenska Handelshanken v. Indian Charge Chrome Ltd. (1994 (2) SCC 155). Reference was also made to page 89-2 of the text book on Arbitration Law and Practice by P.C. Markand, 1996 edition. Counsel appearing for the respondent/ defendant has also placed reliance on the decision in Sadhu Singh Ghuman v. EC.I. (AIR 1990 SC 893), P.C. Joy and Co. v. United India Insurance Co. Ltd. (1991 (1) KLT 329) and State of Punjab v. Geeta Iron and Brass Works Ltd. (AIR 1978 SC 1608) etc.
7. It is common case of the parties that Clause 16 of Ext. B4 agreement dated 3.3.1988 would enable the parties to resolve the disputes and differences arose between them by way of arbitration. The said clause specifically says that such disputes shall be referred to the Secretary, Industries Department, Government of Kerala. Instead of availing the arbitration remedy plaintiff had filed O.S. No. 861 of 1989 on 3.11.1989 and the case was posted to 17.1.1990 for return of notice to defendants. B diary would indicate that on 17.1.1990 defendants sought time for filing written statement. The case was adjourned to 1.4.1990. 1.4.1990 was a holiday and the case automatically stood adjourned to 2.4.1990. On 2.4.1990 plaintiff had filed an application for injunction and the case was adjourned for filing objection, to 4.8.1990. On 4.8.1990 same was adjourned to 4.10.1990. On 4.10.1990 defendant had filed I.A. No. 3701 of 1990 for stay of further proceedings in the suit so as to resolve the disputes through arbitration.
8. The Apex Court in Rachappa Gurudappa’s case (AIR 1989 SC 635) held Section 34 requires that the application for stay of legal proceedings must be filed before the filing of the written statement or taking any other step in the proceeding. In order to get entitlement to stay under Section 34 of the Act, it is imperative to find out whether any other steps in the proceedings have been taken before making an application of stay apart from written statement. The court also held that “some other step” mentioned in the section must indisputably by such step as would manifestly display an unequivocal intention to proceed with the suit and to give up the right to have the matter disposed of by arbitration. Further in the said decision the Apex Court also held that it was not only the time taken to consider whether written statement should be filed as a defence to the plaint to enter into an arena of controversy, but it was time taken to have the matter decided by the suit and the party evidenced an intention to have the matter adjudicated by the court. The above mentioned principle has been followed by the Apex Court in various decisions cited before.
9. We are of the view, the matter must be examined in the facts and circumstances of each case. The Arbitration Act, 1940 as well as the new Arbitration Act, 19% provides for resolution of disputes through conciliation. The Apex Court in Rachappa Gurudappa’s case clearly held that “some other step” mentioned in the section must indisputably by such step as would manifestly display an unequivocal intention to proceed with the suit and to give up the right to have the matter disposed of by arbitration. In this case, counsel appearing for the Corporation had sought time for filing written statement. The said conduct by itself would not lead to the irresistible conclusion that the parties wanted to have that the matter disposed of by Civil Court. In the instant case there are several factors which would indicate a contrary intention. Ext. B6 is a letter dated 18.10.1988 signed by the petitioner to the first counter petitioner suggesting arbitration. Ext. B9 is the letter dated 9.3.1989 sent by the petitioner to the first counter petitioner. Ext. B10 is yet another letter dated 18.3.1989 from the petitioner to the first counter petitioner and Ext. B11 is the letter dated 25.3.1989 written by Gagrat and Company to the petitioner. Exts. B12 to B14 proceedings would show that the matter was pending before the named arbitrator Sri. K.M. Chandrasekharan, Secretary, Industries (F) Department, Government of Kerala. It is in the light of the above mentioned documents we have to appreciate the conduct of the parties. Exts. B6, B9, B10 and B11 would show that the first defendant had itself suggested resolution of the dispute by arbitration. The mere fact that the counsel has sought for time for filing written statement by itself in the facts and circumstances of the case, would display an unequivocal intention to proceed with the suit and give up the right to have the matter resolved by arbitration. We are of the view Exts. B6, B9, B10 and B11 and the conduct of the parties would show that the first defendant wanted the matter to be resolved by arbitration by invoking Clause 16 of Ext. B4 and not through civil proceedings. We therefore uphold the findings of the court below and dismiss the appeal. The named arbitrator would take immediate steps to dispose of the matter.