MALIK MUHAMMAD QAYYUM, J.-This judgment shall dispose of FAO Nos. 247 and 248 of 1991.
2. These appeals under Section 39 of the Arbitration Act, 1940, arise from the order of the learned Additional District Judge, Lahore, dated 9.10.1991, whereby he dismissed an application under Section 34 of the Arbitration Act, 1940, filed by the appellants.
3. The necessary facts are that on 30.10.1989, a suit for recovery of Rs. 4,01,478/- was filed by the respondent against the appellants under Order XXXVll of the CPC on the basis of a promissory note.
On having been served with summons in the prescribed form, the appellants applied for leave to appear and defend the suit and was successful in obtaining it on 28.1.1991. Thereafter, the case was adjourned on more than one occasion at the request of the appellants for filing written statement.
Ultimately, the written statement was submitted on233.1991 and the case was adjourned to 7.4.1991 for recording the better statements of the parties. On 7.4.1991, a request for adjournment was made by learned counsel for the appellants, on which the case was adjourned to 29.4.1991, when the application under Section 34 of the Arbitration Act, 1940, was submitted by the appellants for stay of the suit.
4. The application was contested by the respondent inter alia on the plea that the appellants had filed the written statement and taken steps in proceedings and as such, the application was not maintainable. This objection found favour with the learned Additional District Judge, who, vide order dated 9.10.1991, dismissed the application.
5. Learned counsel for the appellants in support of these appeals has contended that in the written statement filed by the appellants, a specific plea that the suit was not maintainable in view of the arbitration agreement between the parties was raised and as such, the appellants cannot be said to have intended to submit to the jurisdiction of the trial Court, which erred in dismissing their application for stay of proceedings. The learned counsel for the respondent has been heard in reply.
6. There is no merit in the contention raised by learned counsel for the appellants. From a perusal of the record, it is obvious that prior to 29.4.1991, when the appellants moved the application under Section 34 of the Arbitration Act, 1940, no effort was made by them to have the proceedings stayed or the dispute referred to Arbitrator. On the contrary, they obtained leave to defend the suit by filing an application, in which no plea was raised that the proceedings of the suit be stayed. Learned counsel for the respondent has relied upon a decision of the Division Bench of the Bombay High Court in Jadavii Narsidas Shah and Co.. v. Hirehand Chatrabhuj (AIR 1954 Bombay 174), wherein the view taken was that in a suit under Order XXXVII of the CPC, if the steps are taken without asking for stay of the suit, subsequently, an application under Section 34 of the Arbitration Act, 1940, cannot be filed and further that steps in proceeding would include filing of an application for leave to appear and defend the suit.
7. The question as to what constitutes steps in proceedings within the terms of Section 34 of the Arbitration Act, 1940, came up for consideration before the Supreme Court for Pakistan in Pakistan International Air Lines Corporation v. Messers Pak Saaf Dry Cleaners (PLD 1981 S.C. 553), wherein it was observed that the true test for determination of the question was whether the applicant, at any stage, had ejqiressed an unequivocal intention to proceed with the suit. In the present case, the intention was manifestly clear from the conduct of the appellant, who have throughout participated in the proceedings, made an application for leave to appear and defend the suit, obtained adjournments for submitting the written statement and even after filing the written statement obtained another adjournment for having the better statements of the parties recorded.
8. The next contention of learned counsel for the appellants that since an objection has been raised in the written statement as to the maintainability of the suit in view of the arbitration clause, the appellants cannot be said to have acquiesced in proceedings cannot be accepted in view of plain language of Section 34 of the Arbitration Act, 1940. It is obvious from a bare reading of the said provision that the request for stay of the suit must be made before the filing of the written statement and not in it. A Division Bench of this Court in Pakistan and another v. M.Faiz Muhammad (1983 CLC 1369) has held that stay of proceedings must be asked for by filing a separate application before submitting the written statement. Learned counsel for the appellants has referred to G.M.Pfaff A.G. v. Sartaj Engineering Co. Ltd., Lahore and 3 others (PLD 1970 Lahore 184).
That derision was considered in M.Faiz Ahmad's case supra and was distinguished on the ground made in that case that the applicant had present the application for stay of suit before filing the written statement.
9. From the above discussion, it follows that the appellants, after filing the written statement and taking steps in proceedings, could not have asked for the stay of the proceedings and the application filed by the appellants under Section 34 of the Arbitration Act was rightly rejected by the learned trial Court.9For the aforesaid reasons, these appeals have been found without any merit and the same are dismissed, leaving the parties to bear their own costs.