Law: Civil Procedure Code (V of 1908)

Section: 9,O.XXXVII,R.1,2,3(1)(2)

Law: Arbitration Act, 1940

Section: 34,39

Civil Procedure Code (V of 1908)--- ----O. XXXVII, Rr. 1 & 2---Arbitration Act (X of 1940), Ss.34 & 39---Suit for recovery of money---Reference to arbitration---Principle---Defendant instead of filing application to defend the suit, sought stay of proceedings and referring the matter for arbitration---Trial Court dismissed the application filed by defendant as the same was filed before seeking leave to appear and defend the suit---Validity---Provisions of O. XXXVII, C.P.C. provided for special procedure in case of classes of suit specified therein---If dispute was covered under arbitration clause incorporated in agreement then provisions of Arbitration Act, 1940, were attracted and in such eventuality defendant was entitled to file application for staying proceedings under S. 34 of Arbitration Act, 1940, provided conditions mentioned therein were satisfied---Essential conditions required to be met were existence of arbitration agreement and filing of application before taking any other step in proceedings---Conduct of defendant was pivotal and crucial test for determining whether an act was step in proceedings was display of unequivocal intention not to proceed with the suit and to refer dispute for arbitration---Trial Court was to satisfy that conduct of party seeking stay of proceedings did not reflect an intent to waive right to resolve dispute through arbitration---Prior to seeking leave to appear and defend the suit filed under O. XXXVII, C.P.C. application under S.34 of Arbitration Act, 1940, could be entertained---Seeking and arguing application for leave to defend under O. XXXVII, R. 3, C.P.C. tantamount to taking a step in proceedings and thus negating legislative intent postulated under S. 34 of Arbitration Act, 1940---In order to demonstrate an unequivocal intention not to waive the right to refer the matter for arbitration, filing of application under S. 34 of Arbitration Act, 1940, at the first instance was crucial---Such application was to be filed independently and the same would also tantamount to seeking leave of Court to appear without defending the suit---High Court set aside order in question and remanded the matter to Trial Court…

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