STATE OF GUJARAT Vs. GHANSHYAM SALT WORKS

JUDGEMENT

(1.) IN Special Civil Suit No. 6 of 1974 filed by the respondent-plaintiff against the appellant State of Gujarat challenging an order for recovery of an amount of Rs. 19 686 passed by the Collector an ex-parte injunction was obtained by the plaintiff from the Court restraining the defendant and its servants from making recovery pursuant to that order. The ex-parte injunction along with a notice to show cause why it should not be made absolute was granted with the result that the learned District Government Pleader appeared in the said suit on 16/2/1974 and made an application Exh. 14 for grant of time for filing objections against the application for temporary injunction. The time was granted till 28 on which date he further applied for time. One more application for time was made on 15/3/1974; and thereafter on 31/7/1974 the learned District Government Pleader made application Exh. 2G stating that the agreement dated 19/6/1965 between the parties contained an arbitration clause No. 19 and thereafter the suit should be stayed under sec. 34 of the INdian Arbitration Act 1940 (the Act). The said clause as 1 find from the order passed by the learned trial Judge under appeal was to the effect that in case of any dispute arising between lessor and lessee or any difference of opinion as to the interpretation of the terms of the lease or the obligations the matter shall be referred to the Salt Commissioner for INdia whose decision shall be final and binding on both the parties. The application Exh. 26 for staying the suit under sec. 34 further stated that looking to the nature of the suit the arbitration clause was applicable to the dispute raised in the suit and that the defendant was and is ready and willing to do all things necessary to the proper conduct of the arbitration. This application for stay was opposed by the plaintiff; and one of the contentions raised by him was that the main relief was against the order of the Collector and the dispute referred to in the plaint does not come within the arbitration clause. The other contention was that the defendant by applying for time to file objections against the interim injunction application had taken step in the proceedings and therefore it was disentitled to an order for stay under sec. 34 of the Act. It appears that the learned trial Judge did not deal with the first ground. However he found substance in the second ground and holding that the act of the Government Pleader in asking for time to file objections to the application for interim injunction amounted to taking a step in the proceedings rejected the application for for stay. There is a conflict of opinion between some High Courts on the point like the present. The learned trial Judge referred to three of these decisions and purporting to follow the decisions reported in Amritraj v. Golecha Financiers A.I.R. 1966 Calcutta 315 and Bortes S. A. v. Astrouic Compania A.I.R. 1970 Madras 323 he held that the application for time to file objections to the interim injunction application amounted to taking a step in the proceedings within the meaning of sec. 34 of the Act. On this sole ground therefore he dismissed the application for stay. Being aggrieved the State has come in appeal.

(2.) IT must be made clear at the outset that out of the two grounds urged on behalf of the plaintiff in opposing the application for stay under sec. 34 of the Act the learned trial Judge has not decided upon the first ground. Therefore nothing stated in this judgment will affect the plaintiffs right to urge that ground against the order for stay under sec. 34 of the Act.

(3.) THE relevant provisions of sec. 34 of the Act are as under:-