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Smart Summary

Structured Summary of the Legal Opinion

Factual and Procedural Background

This is a defendant's appeal under Section 39(1)(v) of the Arbitration Act (10 of 1940) from an order of the Senior Subordinate Judge of Sirmur dated 24-7-1952 refusing to stay legal proceedings. The defendant had applied to stay the suit under Section 34 of the Arbitration Act on 24-5-1952; the trial court refused the stay on 24-7-1952, and the defendant appealed.

The underlying suit was filed by the plaintiff-respondent on 15-12-1951 for recovery of Rs. 7,886/9/6 as balance of price of empty tins, refund of security deposit, etc., under an agreement which contained an arbitration clause providing that disputes would be referred to the Conservator of Forests and his decision would be final.

Procedural history in the trial court relevant to the appeal:

  • Summons were issued and 29-2-1952 was fixed for settlement of issues and for filing written statement.
  • On 29-2-1952 the order-sheet records: plaintiff present and defendant's counsel prayed for extension of time to file the written statement (time allowed till 29-4-1952).
  • On 29-4-1952 the presiding officer was absent and the case was adjourned to 24-5-1952; it was noted that no written statement had been filed.
  • On 24-5-1952 the defendant filed an application under Section 34 of the Arbitration Act seeking a stay of the suit; that application was opposed by the plaintiff and ultimately refused by the trial court on 24-7-1952, prompting the present appeal.

Legal Issues Presented

  1. Whether, for the purpose of Section 34 of the Arbitration Act, the defendant had "taken a step in the proceedings" prior to filing the Section 34 application on 24-5-1952 — specifically, whether the oral request by the defendant's counsel on 29-2-1952 for an adjournment (to enable filing of a written statement or to prepare the defence) constituted such a "step."
  2. Whether the learned Senior Subordinate Judge erred in refusing to stay the proceedings on the ground that a step had already been taken in the proceedings before the defendant filed the Section 34 application.

Arguments of the Parties

Appellant's (Defendant's) Arguments

  • The defendant's counsel, Kr. Dalip Singh, averred by affidavit that he was engaged on 29-2-1952 and, when he appeared that day, had not yet received instructions from the defendant (State of Himachal Pradesh); he therefore orally requested an adjournment to enable him to prepare the defence.
  • Because counsel had received no instructions at the time he asked for adjournment, he could not have been aware of the agreement or its arbitration clause and therefore could not be treated as having taken any step in the proceedings that would preclude application under Section 34.
  • The defendant relied on the assertion that an adjournment sought by a counsel who has not yet been instructed cannot be equated to the party taking a step in the proceedings.

Respondent's (Plaintiff's) Arguments

  • The plaintiff's pleader, Sri L. D. Varma, in his affidavit stated that Kr. Dalip Singh asked the Court for an extension of time specifically to file a written statement. The plaintiff relied on authorities holding that applications for adjournment for filing written statements constitute steps in the proceedings under the Arbitration Act.
  • The plaintiff contended that the oral adjournment request on 29-2-1952 should be treated as taking a step in the proceedings and therefore the Section 34 application filed on 24-5-1952 was not maintainable.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
U. P. Govt. v. Sri Harnath, AIR 1949 All 611 Held that applications for postponement/adjournment to enable filing of written statement amounted to taking a step in the proceedings under the Arbitration Act. Identified as one of the rulings relied upon by the plaintiff; the Court distinguished it from the present case because in that case the adjournment was not sought by a counsel who lacked instructions.
Sadhan Kumar v. Sunil Kumar, AIR 1948 Cal 59 Same principle: adjournment for filing written statement treated as a step in the proceedings. Cited by the plaintiff; distinguished on facts because the present counsel had not been instructed when he sought adjournment.
Edward Radbone v. Jugilal Kamalapat, AIR 1943 Bom 228 Adjournment applications to file written statements can amount to taking steps in proceedings under the Act. Cited by the plaintiff; Court noted factual distinction and did not apply it to bar the Section 34 application.
Murlimal v. Banarsi Das & Sons, AIR 1935 Sind 62 Similar rule that adjournment applications for filing written statement are steps in proceedings. Although cited by the plaintiff, the Court found a material factual distinction (absence of prior instructions to counsel) and did not treat it as determinative.
Roop Kishore v. U. P. Govt., AIR 1945 All 24 Held that applications for adjournment to file written statement are prima facie steps in the proceedings; but acknowledged circumstances can show otherwise and the burden lies on the defendant to prove such circumstances. Cited by the plaintiff; the Court applied the observation that exceptions may exist and found that the defendant had discharged the burden in this case.
Bhowanidas v. Panachand, AIR 1925 Cal 801 Statement (Page, J.): any act or application indicating that a party is willing that the suit should proceed would be a step in the proceedings; intention is to be gathered from the nature of the application. Quoted and relied upon to explain that an adjournment request signals willingness that suit proceed only if it is the act of a party so intending; applied to hold that a counsel's adjournment request made before being instructed does not evidence such willingness.
Ramlal Murlidhur v. Hari Bux, AIR 1934 Cal 793 Listed among authorities recognizing that content/circumstances of adjournment applications may affect whether they are steps in proceedings. Cited within the line of cases discussed in Roop Kishore; used to show there can be exceptions though prima facie an adjournment is a step.
Dwarka Das & Co. v. Chain Roop Singhee, ILR (1937) 2 Cal 63 Another authority addressing circumstances in which adjournment applications may or may not be treated as steps in the proceedings. Referenced to support the proposition that circumstances matter; the Court relied on that principle in finding for the defendant here.
Premnath Pran Nath v. Amba Prasad, AIR 1941 Lah 64 Also cited for the proposition that adjournment applications are prima facie steps but exceptions may be shown by circumstances. One of the authorities referenced in the Roop Kishore discussion; used to frame the burden concept applied by the Court.

Court's Reasoning and Analysis

The court's analysis proceeded step by step from the facts before it and the established principles in the authorities cited.

  1. Admission and evaluation of affidavits:
    • The court had before it two affidavits: one by Kr. Dalip Singh (advocate for the defendant) stating he was engaged on 29-2-1952 and had received no instructions when he appeared and verbally sought adjournment; and a counter-affidavit by Sri L. D. Varma (pleader for the plaintiff) stating the adjournment was sought to file a written statement.
    • The court found the two affidavits essentially consistent as to the occurrence of an oral adjournment request, and crucially observed that Dalip Singh's specific averment that he had received no instructions was not controverted by the plaintiff. The court accepted that averment as correct.
    • The court also relied on an on-record communication from the Deputy Commissioner of Sirmur dated 29-2-1952 appointing counsel and instructing the Conservator of Forests and counsel to assist — supporting the finding that counsel was appointed on 29-2-1952 and had not yet been instructed at the time he sought adjournment.
  2. Application of legal principle:
    • The court held that, as a matter of principle, no person can be deemed to have taken a step in proceedings if that person is not aware of the proceedings' particulars. Because Kr. Dalip Singh had not received instructions or knowledge of the agreement and its arbitration clause before seeking adjournment, he could not be taken to have taken a step in the proceedings on 29-2-1952.
    • The court reasoned that an adjournment sought for filing a written statement is prima facie a step in the proceedings (as per earlier authorities), but that the surrounding circumstances — in particular, absence of instructions to counsel — may show otherwise.
    • The court distinguished the authorities cited by the plaintiff on the factual ground that in those cases the adjournment was sought by counsel who had already received instructions; thus those authorities did not apply to the present facts.
    • The court relied on the principles stated in Bhowanidas v. Panachand and Roop Kishore v. U.P. Govt. to frame the correct test: whether the application indicates that the party was willing the suit should proceed, and that, although prima facie adjournment is a step, the burden is on the defendant to show circumstances to rebut the prima facie inference. The court found that the defendant discharged that burden here by the unrebutted affidavit.
  3. Conclusion of analysis:
    • The court concluded that the application under Section 34 filed on 24-5-1952 was made before any step in the proceedings had been taken on behalf of the defendant.
    • Accordingly, the trial court should have allowed the Section 34 application (i.e., the stay), and its refusal to do so was erroneous.

Holding and Implications

Holding: The appeal is allowed with costs; the order of the Senior Subordinate Judge dated 24-7-1952 refusing to stay proceedings is set aside. The court held that the Section 34 application preferred on 24-5-1952 was made before the taking of any step in the proceedings and that the trial court should have allowed the application. The trial court is directed to proceed in the case in accordance with the law in light of this finding.

Implications:

  • Direct effect on the parties: The defendant's application under Section 34 is treated as timely (filed before any step was taken on its behalf) and the trial court's refusal has been reversed; the trial court must now proceed in accordance with the appellate court's finding (which implies the stay/referral question should be reconsidered consistent with this ruling).
  • Broader implications: The opinion applies and distinguishes prior authorities on whether adjournment applications constitute "steps" under the Arbitration Act, emphasizing that an adjournment requested by counsel before receiving instructions may not be a step. The opinion does not articulate a new binding precedent beyond applying established principles to the present facts; no broader rule beyond the factual conclusion is expressly proclaimed in the text of the opinion.

Note: This summary is strictly confined to the facts, reasoning, and citations contained in the provided opinion and does not add or infer information beyond that source.

Show full summary ...

    State Of Himachal Pradesh v. Lalchand Shahi

    C.

    1. This is a defendant's appeal under Section 39(1)(v), Arbitration Act (10 of 1940) from an order of the Senior Subordinate Judge of Sirmur dated 24-7-1952 refusing to stay legal proceedings on an application to that effect having been made before him by the appellant under Section 34 of the Act.

    2. The plaintiff-respondent filed this suit for recovery of Rs. 7,886/9/6 on account of balance of price of empty tins, refund of security deposit etc., on foot of an agreement. The agreement contained an arbitration clause to the effect that in case of any dispute arising between the parties the matter would be referred to the arbitration of the Conservator of Forests and his decision shall be final.

    3. The suit was filed on 15-12-1951 and summonses were issued to the defendant-appellant fixing 29-2-1952 for settlement of issues. The order-sheet of that date is to the following effect:

    "Present: Plaintiff through Sri L. D. Varma, Pleader and Sri Dalip Singh, Advocate for the defendant. Defendant's counsel prays for extension of time to enable him to file the written-state-ment. Time allowed till 29-4-1952."
    On the latter date the presiding officer was absent as he had been transferred, and therefore the case was adjourned to 24-5-1952. It was noted in the order-sheet of 29-4-1952 that no written statement had been filed. On 24-5-1952 the defendant filed an application for stay of the suit under Section 34, Arbitration Act. The application was opposed by the plaintiff, and the learned Judge passed the order in question dated 24-7-1952 against which the defendant has come up in appeal to this court. The learned Subordinate Judge was of the view that, reading the two orders dated 20-2-1952 and 29-4-1952 together, the defendant will be deemed, within the purview of Section 34 of the said Act, to have already taken steps in the proceedings before putting in his aforesaid application dated 24-5-1952. I have heard learned counsel for the parties and am clearly of the opinion that the order of the learned Senior Subordinate Judge was wrong.

    4. The learned Senior Subordinate Judge had before him two affidavits, one by Kr. Dalip Singh, Advocate for the defendant and another fey Sri L. D. Varma, Pleader for the plaintiff. It was averred in the former by Kr. Dalip Singh that it was on 29-2-1952 that he was engaged on behalf of the defendant, the State of Himachal Pradesh, to appear in the case, that by the time he appeared before the Court on that date he had not received instructions for the case, and, that therefore he verbally requested the Court to adjourn the case to enable him to prepare the defence on behalf of the defendant. The counter-affidavit of the learned pleader for the plaintiff on the other hand is to the effect that Kr. Dalip Singh asked the Court for extension of time to enable him to file a written statement.

    It is common ground that no written application was filed but that the request of adjournment made by Kr. Dalip Singh was an oral one. It will be seen that while according to Kr. Dalip Singh he only asked for adjournment for enabling him to prepare the Government's defence, according to Sri L. D. Varma the adjournment was prayed for specifically for filing a written statement. Essentially however there is no difference between the two affidavits, for it may be said that an adjournment to enable the counsel to prepare the Government's defence is the same as one to enable him to file a written statement on behalf of the Government. What is material, however, is that the averment of Kr. Dalip Singh that by the time he appeared before the Court on 29-2-1952 and prayed for adjournment he had received no instructions from the defendant was not controverted on behalf of the plaintiff. I must therefore accept the averment in, the affidavit of Kr. Dalip Singh as correct.

    The correctness of that averment in Kr. Dalip Singh's affidavit is further supported by a communication on the record of the case from the Deputy Commissioner of Sirmur informing the Court that the counsel in question was being appointed to conduct the case on behalf of the State of Himachal Pradesh, with copies of communication to the counsel and the Conservator of Forests Nahan. The counsel was directed to take the relevant documents and to obtain necessary help for the purpose of conducting the case from the Conservator of Forests, and similar directions were given to the Conservator of Forests. This communication is dated 29-2-1952. There can be no manner of doubt therefore that Kr. Dalip Singh, Advocate was appointed counsel on behalf of the defendant, the State of Himachal Pradesh, on 2S-2-1952, and that by the time he put in appearance in Court on that date and asked for adjournment he had received no instructions. Can it be said in such circumstances that by reason of his having requested the Court for time to file written-statement Kr. Dalip Singh should be deemed, within the intendment of Section 34, Arbitration Act, to have taken a step in the proceedings?

    The only reasonable answer to this question can be in the negative. And this for the simple reason that no person can be deemed to take any step in a proceeding who is not aware of what the proceedings are. 29-2-1952 was the date for settlement of issues and therefore for filing of written-statement on behalf of the defendant, and so Kr. Dalip Singh on behalf of the defendant naturally asked for adjournment for filing a written, statement. He had however received no instructions by that time from the defendant, and therefore he could not possibly have been aware of the agreement on foot of which the suit had been filed or of the arbitration clause in that agreement. It was impossible for him therefore to have filed any application on that date for stay of proceedings under Section 34 of the Act. Later on, when he had taken the necessary instructions, he filed such an application. It cannot in the circumstance be said by any show of reason that before filing the application under Section 34 a step in the proceedings had been taken on behalf of the defendant on 29-2-1952 by reason of the defendant's learned counsel having asked for an adjournment on that date in the circumstances mentioned above.

    5. The learned counsel for the plaintiff-respondent has relied upon the following rulings:--

    'U. P. Govt. v. Sri Harnath', AIR 1949 All 611 (A); -- 'Sadhan Kumar v. Sunil Kumar', AIR 1948 Cal 59 (B);-- 'Edward Radbone v. Jugilal Kamala-pat', AIR 1943 Bom 228 (C);-- 'Murlimal v. Banarsi Das & sons.', AIR 1935 Sind 62 (D); and

    -- 'Roop Kishore v. U. P. Govt.', AIR 1945 All 24 (E). In all these cases applications for postponement of the hearing of the suit for filing written statement were held to amount to the taking of steps in the proceedings within the purview of Section 34 of the said Act. There is this important distinction, however, between these cases and the present, that in none of them was the prayer for adjournment of the case made by a counsel who uptill the moment of making the request for adjournment had received no instructions from his clients. That being so, it goes without saying that if a counsel makes an application for adjournment of the case after having received necessary instructions from his client the application for adjournment must amount to the taking of a step in the proceedings within Section 34 of the Act. These rulings therefore are clearly distinguishable and do not apply to the facts of the present case. On the contrary, there are certain observations appearing in the last two rulings which support the view of the matter which I have taken in the present case. In the Sind ruling reliance was placed on the following observations of Page, J., in-- 'Bhowanidas v. Panachand', AIR 1925 Cal 801 (F):

    "Any act in the nature of an application to the Court which indicates that a party is willing that the suit should proceed, in my opinion, would be a step in the proceedings within Section 19, Arbitration Act. The intention of the party is to be gathered from the nature of the application which is made, and if, having regard to the form of the applicatioa, the Court is of opinion that a step has been taken it will so hold, notwithstanding that the party may in truth and in fact have no such intention, or that the application is coupled with a protest that the party (desires that the matters in dispute should be referred to arbitration."

    It would appear therefore that before any act of a party in the nature of an application for adjournment can be interpreted as the taking by him of a step in the proceedings it must be the act of a party willing that the suit should proceed. That being so, the act of a counsel for a party in asking for an adjournment before having received any instructions from his client cannot be construed as indicating that he was willing that the suit should proceed. Again it was laid down by Dar, J., as follows in the-- 'AIR 1945 All 24 (E)', case cited above:

    "The defendant, however, contends that every application made for adjournment of a case with a view to enable the defendant to file a written-statement cannot be treated as a matter of law 'a step in the proceedings' and the contents of the application or the surrounding circumstances of the case may show that the application was made without prejudice to the rights of the defendant to seek relief under Section 34 of the Act & for this contention reliance is placed upon-- ' AIR 1925 Cal 801 (F)',-- 'Ramlal Murlidhur v. Hari Bux', AIR 1934 Cal 793 (G),-- 'Dwarka Das & Co. v. Chain Roop Singhee', ILR (1937) 2 Cal 63 (H) and-- 'Premnath Pran Nath v. Amba Prasad', AIR 1941 Lah 64 (I). It may be possible to hold in some cases that an application for adjournment of a case to enable the defendant to file a written-statement was not a step in the proceedings within the meaning of section 34 of the Act, but prima facie such an application should be treated as a step in the proceedings within the meaning of Section 34 and the whole burden should be upon the defendant to establish the circumstances which will lead to the result that effect should not be given to the prima facie meaning of the application."

    It was conceded in this ruling therefore that there may be circumstances in which the filing of an application for adjournment of the case for the purpose of filing a written-statement may not be treated as a step in the proceedings, although no doubt the burden of proving the existence of such circumstances would be upon the party who made the application. This burden, as adverted to above, has been satisfactorily discharged in this case by the unrebutted affidavit of the learned counsel for the defendant that upto the moment of praying for adjournment he had received no instructions on behalf of his client.

    6. In the result, therefore, I hold that the application under Section 34, Arbitration Act, preferred on behalf of the defendant in the trial Court on 24-5-1952 was made before the taking of any step in the proceedings, and that therefore the Court should have allowed the application. Accordingly, the appeal is allowed with costs, the order of the Senior Subordinate Judge dated 24-7-1952 refusing to stay proceedings is set aside and the Court now seised of the case is directed to proceed with the case in accordance with the law in the light of the finding recorded above by this Court.

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    Comments

    State Of Himachal Pradesh v. Lalchand Shahi
    (Jan 15, 1953)