Law:

Section:

(a) Arbitration Act (X of 1940)--- --------Sections 34, 8 & 20---Suit for recovery of money and damages---Stay of proceedings---Effect---Arbitration clause in agreement for resolution of dispute---Defendant on the first available opportunity filed application to stay the proceedings and to refer the matter to arbitrator---Trial Court allowed the application filed by defendant and stayed the proceedings in suit for recovery of damages---Plea raised by plaintiff was that application was filed by defendant after many adjournments-- Validity---Once the Court would stay proceedings in suit, the parties were left whether to institute arbitration proceedings with intervention of Court (under S.20 of Arbitration Act, 1940), or without intervention of Court (under Chap.II of Arbitration Act, 1940)---Where parties to the suit, who were also parties to arbitration agreement executed prior to institution of suit, jointly applied for matters in dispute between such parties to be referred to arbitration, the Court could treat such application as an application under S.20 of Arbitration Act, 1940, and could refer the disputes to arbitration---Adjournment granted in routine by Trial Court was not inductive of defendant's conduct to abdicate his claim to have disputes raised in the suit to be decided in accordance with arbitration clause in the agreement---Single adjournment granted by Court in routine, requiring defendant to file a power of attorney and written statement could not be termed as 'a step in the proceedings'---Date on which the order was passed was the first date on which representative of defendant had tendered appearance in Court---Conduct of the defendant, in order to be termed as 'a step in the proceedings' must be such as would manifestly have displayed an unequivocal intention to proceed with the suit and gave up the right to have the matter disposed of by arbitration---Trial Court not only stayed proceedings in civil suit but had also directed plaintiff to invoke arbitration clause in agreement for resolution of dispute---Trial Court could not have given such direction and it was against the law---High Court partially set aside the order passed by Trial…