http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 9  

PETITIONER: STATE OF UTTAR PRADESH & ANR.

       Vs.

RESPONDENT: JANKI SARAN KAILASH CHANDRA & ANR.

DATE OF JUDGMENT23/04/1973

BENCH: DUA, I.D. BENCH: DUA, I.D. ALAGIRISWAMI, A. VAIDYIALINGAM, C.A.

CITATION:  1973 AIR 2071            1974 SCR  (1)  31  1973 SCC  (2)  96  CITATOR INFO :  F          1982 SC1302  (13,18,20,22,27)  F          1989 SC 635  (7,9)  F          1990 SC 893  (6)

ACT: Arbitration  Act  1940, S.  34-District  Government  Counsel accepting  summons along with copy of written  statement  in suit  for  damages  for breach  of  contract  against  State Government-Filing   memo  of  appearance  and   asking   for adjournment-whether  in  doing  so "any other  step  in  the proceedings"   is  taken  within  meaning  of  s.   34-State Government’s plea for stay of suit under s. 34 whether could be  entertained  in circumstances of case-It was  better  to have  suit  for  large sum tried by  court  rather  than  by arbitrator.

HEADNOTE: The  plaintiffs (respondents herein) instituted a  suit  for the  recovery of damages for breach of  contract  impleading the  State of U.P. (through the Collector of Bijnor) as  the first  defendant, and the Divisional Forest Officer,  Bijnor as the second defendant.  The summons in the. suit issued to the  State  of U.P. were served on the  District  Government Counsel.   On  September 2. 1966 the said counsel  filed  an appearance slip in the court and also put in a formal appli- cation  praying  for  one month’s time for  the  purpose  of filing  written  statement.  This prayer  was  granted.   On October  1,  1966 the District Government counsel  filed  an application under s. 34 of the Arbitration Act pleading that there  was an arbitration--clause in the  agreement  between the parties to the suit and the State of U.P. being  willing to  refer  the  matter to arbitration  the  suit  should  be stayed.   The trial court held that the dispute was  subject to  arbitration clause and since the State of U.P.  had  not taken  any  steps in the suit proceedings and had  also  not filed  the  written  statement the suit  was  liable  to  be stayed.   On appeal the High Court held that the  action  of the District Government Counsel in applying for time to file the  written  statement  amounted to taking a  step  in  the proceedings  within the meaning of s. 34 of the  Arbitration Act.   On  this view the defendant was held  disentitled  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 9  

claim that the suit should be stayed.  By special leave  the defendants appealed to this Court. Dismissing,the appeal, HELD : (i) Taking other steps in the suit proceedings within the meaning of s. 34 connotes the idea of doing something in aid  of  the  progress of the suit  or submitting  to  the jurisdiction of the court for the purpose of adjudication of The merits of the controversy in the suit. [37E-F] A recognised agent like the District Government Counsel  can scarcely  be considered to appear voluntarily in a  case  on behalf of the Government in the sense of being  unauthorised by his client for the simple reason that he is authorised by virtue  of statute to appeal, act and make  applications  on behalf  of the Government.  Indeed in the present  case  the District  Government  Counsel also filed in  the  Court  the usual  appearance  slip.   If he  wanted  time  for  further consultations, he could and should have specifically made  a prayer to that effect. [38C] The State took the benefit of the adjournment.  It would  be somewhat  irrational and perhaps incongruous to  permit  the State, after having taken the benefit of the adjournment, to plead that the application for adjournment was not made on instructions and was unauthorised. [38E] (ii)   The  argument that the trial court’s  discretion  had been  erroneously  reversed by the High  Court  was  equally devoid  of  merit.  If the appellants  application  was  for adjournment for the purpose of filing the written statement, then there was no question of any case of discretion by  the trial  court. Discretion with regard to stay under s. 34  of the  arbitration  Act  is  to  be  exercised  only  when  an application under that section is competent.[38G] (iii)     Keeping   in  view  the  long  delay   after   the commencement of the suit and the fact that the suit was  for a  very heavy                 amount by way of  damages  for breach  of  contract. it would be more satisfactory  on  the whole to have the suit tried in a competent court of law  in the normal course rather than by a lay 32 arbitrator  who was not bound either by the law of  evidence or by the law of procedure. [39B] United  Provinces  Government v. Sri Har Nath,  A.I.R.  1949 All. 611, Union of India v. Hans Raj Gupta & Co. A.I.R. 1957 All.  91, Punjab State v. Moji Ram, A.I.R 1957  Punjab  223, State  of  Himachal Pradesh v. Lalchand Shahi,  A.I.R.  1953 H.P.  75.  Harbans Lal v. National Fire & General  Insurance Co.  Ltd., A.I.R. 1955.  Notes on Unreported Cases  (Punjab) 4917  (Delhi), The Printers (Mysore) Private Ltd. v.  Bothen Joseph,  [1960]  3  S.C.R.  713,  Joharimal  and  others  v. Fatehchand  and others A.I.R.1960, Raj. 67, Anderson  Wright Ltd., v. Morarn & Co. A.I.R. 1955 S.C. 53.  Sarat Kumar  Ray v.  Corporation  of  Calcutta, I.L.R. 34  Cal.  443,  Adward Hadbons v. Juggilal, A.l.R . 1943 Bom. 222, Roop Kishore  v. U.P. Government A.I.R. 1945 All. 4, Ford’s Hotel Co. Ltd. v. Lartlet,  [1896]  A.C.I  (H.L.)  and J.N.  Shalu  &  Co.  v. Hirachand, A.I.R. 1954, Bom. 174, referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1701  of 1971. Appeal  by special leave from the judgment and  order  dated February  10, 1971 of the Allahabad High Court in F.A.  from Order No. 187 of 1967.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 9  

G. N. Dikshit and O. P. Rana, for the appellants. Mohan Behari Lal, for the respondents. The, Judgment of the Court was delivered by DUA J.-In this appeal by special leave the State of U.P. and the  Divisional  Forest Officer, Bijnor (defendants  in  the trial  court in the plaintiff-respondents’  suit)  challenge the  judgment  and order of a learned Single  Judge  of  the Allahabad  High Court, allowing  the  plaintiff-respondents’ appeal  and  setting  aside the order  of  the  trial  court staying the suit under s. 34 of the Arbitration Act. The plaintiffs had instituted a suit for the recovery of Rs. 69,556.27   by  way  of  damages  for  breach  of   contract impleading  the,  State of U.P. (through  the  Collector  of Bijnor  as  the first defendant and  the  Divisional  Forest Officer, Bijnor as the second defendant.  The summons in the suit issued to the State of U.P. were served on the District Government  Counsel.  On September 2, 1966 the said  counsel filed  an  appearance slip in the court and also put  in  a formal  application  praying for one month’s  time  for  the purpose  of  filing  written  statement.   This  prayer  was granted.   On  October  1  1966  the  District.   Government counsel filed an application under s. 34 of the  Arbitration Act  pleading  that there was an arbitration clause  In  the agreement between’ the parties to the suit and the State  of U.P.  being willing to refer the matter to  arbitration  tie suit  should  be  stayed.  The trial  court  held  that  the dispute  was  subject to arbitration clause  and  since  the State  of  U.P.  had  not  taken  any  steps  in  the,  suit proceedings and had also not filed the written statement the suit was liable to be stayed.  So holding the application of the State Government was allowed and the suit stayed. On appeal by   the  plaintiff the High Court relying on  two of its earlier decisions in United Provinces Government  v.. Sri  Har Nath(1) and Union of India v. Hans Raj Gupta &  Co. (2), held that action of (2)  A.I.R. 1957 All. 91 (1) A.I.R. 1949 All, 611. 33 the District Government Counsel in applying for time to file the  written  statement  amounted to taking a  step  in  the proceedings  within the meaning of S. 34 of the  Arbitration Act.   On  this view the defendant was held  disentitled  to claim  that  the  suit should be  stayed.   The  appeal  was accordingly allowed and the order of stay set aside. In  this  Court Shri G. N. Dikshit learned counsel  for  the State   of  U.P.  strongly  contended  that   the   District Government   Counsel   had  no  instructions  to   ask   for adjournment for the purpose of filing the written  statement and,  therefore, his action in applying for adjournment  for that  purpose cannot bind the State of U.P. with the  result that  application for stay of proceedings in the suit  under S.  34  of  the  Arbitration Act could not  be  held  to  be incompetent.   It  was also contended that the  trial  court having granted stay in its discretion the High Court was  in error  in  reversing  that order and  setting  it  aside  on appeal.   According  to this submission the  discretion  had been  exercised  by  the trial court  which  could  not  be. considered  to  be either unreasonable or  contrary  to  any recognised principles and the High Court should,  therefore, have upheld it. The  counsel relied in support of his submission  on  Punjab State v. Moji Ram(1).  In that case on the date fixed by the trial court for appearance of the defendant, the  Government pleader,  with  one  Kartar  Singh  Sub-Divisional  Officer, appeared  and asked for time to :file written  statement  as

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 9  

instructions  with  a  copy  of  the  plaint  had  not  been received.  Adjournment was granted and a date was fixed  for filing  the  written statement.  On the adjourned  date  the Government pleader filed an application for stay of the suit under  s.  34 of’ the Arbitration Act.  On these  facts  the High  Court observed that the Government pleader had  merely acted  as  a  volunteer and asked  for  adjournment  on  the assumption that in due course he would receive  instructions from  the  Government.   The  Government  as  a   defendant, therefore,  could not be said to have taken any step in  the proceedings.   The  application  for  adjournment  in  those circumstances  was held really to amount to a prayer to  get time  to discover the exact nature of the suit  and  nothing more.   The application thus could not be said to have  been made with a view to taking a step in the proceedings  within the contemplation of S. 34 of the Arbitration Act.  Reliance was  next placed on State of Himachal Pradesh  v.  Lalchand’ Shahi(2)  where-  it was observed by  the  learned  Judicial Commissioner  that no person can be deemed to take any  step in a proceeding who is not aware of what the proceedings are and,  the  prayer  for adjournment of the  case  made  by  a counsel,  who up till the moment of making the  request  for adjournment  had received no instructions from  his  client, did not amount to taking of a step in the proceeding  within S. 34 of the Arbitration Act.  Harbans Lal v. National  Fire &  General’  Insurance Co. Ltd.(3) is also a decision  by  a learned  single  Judge. of the Punjab High Court.   In  that case the branch office of the de- (2) A.I.R. 1953 H. P. 75.. (1)  A.I.R. 1957 Punjab 223. (3)  A.  1. R. 1955 Notes on Unreported Cases (Punjab)  4917 (Delhi) 4-L944SupCI/73 34 fendant  company had only received the summons of  the  suit filed  by  the  plaintiff, a day previous  to  the  date  of appearance.   It  was observed by the learned  single  Judge that  presumably  it was in the circumstances  necessary  to obtain instructions from the head office of the Company and, therefore,  a mere oral application for an  adjournment  for filing  a written statement could not be regarded as a  step in  the proceedings which disentitled the defendant  company from applying for stay under s.    34  of  the   Arbitration Act.   In  The  Printers (Mysore)  Private  Ltd.  v.  Pothen Joseph()  it was observed that where discretion under s.  34 of  the  Arbitration Act has been properly  and  judiciously exercised  by the trial court the appellate court would  not be justified in interfering with such exercise of discretion merely on the ground that it would have taken     a contrary decision if it had considered the matter at the trial stage. If,  however,  it appears to the appellate  court  that  the trial court    had exercised its discretion unreasonably  or capriciously or had ignored relevant facts or had approached the  matter injudiciously it would be the appellate  court’s duty  to  interfere.  Shri Dikshit did not submit  that  the earlier  decisions of the Allahabad High Court in the  cases of  Sri  Har Nath (supra) and Hans Raj Gupta &  Co.  (supra) laid  down an erroneous rule of law.  His contention on  the other  hand in substance was that where the counsel  without any instructions asks for ad adjournment, though ostensibly, for  filing  the  written statement, the prayer,  if  it  is likely  to  affect  his  client  prejudiciously,  should  be const rued  to mean as if it was for seeking time merely  to get  instructions,  so that the client’s  interests  do  not suffer.   This, he added, is a matter to be decided  on  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 9  

facts  and circumstances of each case.  He cited  Joharitnal and  others  v. Fatehchand and others (2  )  as  enunciating correct  test  in such cases, specifically  relying  on  the following observations at page 71 in para 23 :-A               "On principle and judicial     authority,   we               consider  that   the  following   propositions               maybe easily deduced:               An application for time to     file    written               statement  or  any other  similar  application               should  not be treated as a matter of  law  a               step   in  the  proceedings.   In   order   to               constitute  a  " step", it must be of  such  a               nature as to lead the Court to the  conclusion               that the party prefers to have his rights  and               liabilities  determined  by  the  Civil  Court               rather than by the ,domestic forum upon  which               the  parties  might  have  agreed.   It   must               display  an unequivocal intention  to  proceed               with  ,the  suit and to abandon the  right  to               have the matter disposed ,of by arbitration.               (2)The   test,  however,  should   not   be               subjective  and a party cannot be entitled  to               say  that  he had no actual knowledge  of  the               right under the arbitration agreement and that               in  fact  he  did not intend to  give  up  his               right.   On the other hand, the test  must  be               objective and a person shall be deemed to have               taken a step under S. 34 of the Act, if it can               be   held  that  he  could  have   actual   or               construction knowledge of his right in (1) [1960]3 S.C.R. 13. (2) A.I.R. 1960 Raj. 67. 35               the event of the exercising due diligence  and               that  in spite of that he participated in  the               proceedings of the Court.               (3)Prima facie, an application for time  to               file   written   statement  should   raise   a               presumption  that the defendant had actual  or               constructive  knowledge of his right and  that               he  acquiesced  in the method adopted  by  the               plaintiff.   The presumption, however, is  not               absolutely irrefutable and can be rebutted  by               showing   that  even  constructive   knowledge               cannot  be imputed to the defendant.   It  is,               however,  not  proper  and fair  to  lay  down               that.the  presumption can be rebutted only  on               the ground that the defendants did not receive               the   copy  of  the  plaint.   In   rare   and               exceptional cases, it may be rebutted by other               circumstances,  such as appearance of  a  Gov-               ernment  counsel without getting  instructions               in  a  particular case to appear.  It  is  not               desirable to enumerate the exhaustive list  of               the  circumstances and to make  generalization               and each case should be considered on its  own                             facts and circumstances." Passing  reference was also made by the appellant’s  counsel to  an unreported decision of this Court in Anderson  Wright Ltd.  v.  Moran  Co.  Ltd.  C.A., 452  of  1959  decided  on December  1,  1961.  That case had earlier come up  to  this Court  when  the  essential requirements of  s.  34  of  the Arbitration  Act were analysed and stated : Anderson  Wright Ltd.  v. Moran & Co. Ltd.(1). The case was remanded  to  the High Court for a fresh decision of the appeal from the order

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 9  

of  stay  made  by the trial court  after  ’determining  the question  whether the plaintiff was in fact a party  to  the agreement.  Incidentally, it may be pointed out that in that case this Court on appeal against the judgment and order  of the  High Court made after remand declined to stay the  suit having  regard to the considerable delay since the  institu- tion  of  the  proceedings and to the  fact  that  questions relating to custom of the market and the liability of  Moran (plaintiff)  under  S. 230 of the Contract Act  have  to  be determined.  Power to stay was not considered enforceable as a matter of course.  It was said there -               "We  think  that in this case at  this  stage,               nearly  ten year after the institution of  the               suit. we should not remand this proceeding  to               the  High Court for determination of the  same               question over again.  In our view, power under               s.  34 to stay the proceedings where there  is               an arbitration agreement is not enforced as  a               matter of course.  The Court may be  satisfied               in  a  particular case, having regard  to  the               circumstances  that the matter should  not  be               referred  ’in accordance with the  arbitration               agreement.  Having regard to the  considerable               delay   that  ha,;  taken  place   since   the               institution  of tile proceeding and  the  fact               that questions as to custom of the market fall               to be determined and also of the fact that the               liability if any of Morans under S. 230 of the               Contract  Act  has to be  ascertained  in  the               light of the surrounding circumstances, (1)  A.I.R. 1955 S. C. 53. 36               we  think this is a case in which the  hearing               of  the  suit,  in the interest  of  both  the               parties should not be held up but the  dispute               should be tried in the civil court instead  of               by the arbitrator." Shri  Dikshit submitted that just as a Counsel  cannot  bind his  client by his admission and the client can  disown  it, similarly  the appellant in this case can disown the act  of his  counsel  as  unauthorised in  seeking  adjournment  for filing   a  written  statement,  on  the  ground   that   no instructions  had been issued to the Counsel to make such  a prayer. Shri  Mohan  Behari  submitted in reply that  there  was  no material  on  the  record  that  the  counsel  applying  for adjournment on behalf of the State had no instructions.  The counsel,  according to the submission, must be  presumed  to have  been  duly  empowered  to take  all  steps  that  were necessary  to be taken in the court in connection  with  the proceedings on the date he appeared and filed his appearance slip  in the Court.  Shri Mohan Behari also relied on  Sarat Kumar  Ray v. Corporation of Cakutta(1), Adward  Hadbons  v. Judggilal(2)  and  Roop  Kishore v.  U.P.  Government(3)  in addition  to the two Allahabad judgments referred to in  the impugned  judgment, for the submission that the  prayer  for adjournment for filing a written statement is a step in  aid as  contemplated by s. 34 of the Arbitration Act.   In  Roop Kishore’s  case  (supra), it was emphasised that  the  whole burden  should  be  upon  the  defendant  to  establish  the circumstances  which  would lead to the result  that  effect should not be given to the prima facie meaning of the appli- cation  for adjournment.  In that case reference in  support of  the view adopted was made inter alia to Sarat Kumar  Ray (supra) and Ford’s Hotel Co. Ltd. v. Larlet(4).  J. N.  Shah

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 9  

& Co. v. Hirachand(5) is a case where in a summary suit  the defendant  has  filed  an affidavit  in  reply  setting  out defences and had asked for leave to defend and that was held to amount to a step in proceedings.  In Dr. V. R. Vaidra  v. Union  of  India (C.R. 347/67) decided by  the  Bombay  High Court on  April  1,  1970 reported in 1970  Maharashtra  Law Journal (notes of   case)  at  p.  12  (Case  No.  20),   in accordance  with the summons the counsel for  the  defendant prayed  for adjournment for filing a written statement.   On the next day, the defendant applied for stay under s. 34  of the Arbitration Act.     The  court stayed the  suit.   This order  was affirmed on appeal.  On revision, the High  Court set  aside these orders and declined stay.  It was  observed that  the  counsel  must  be  deemed  to  have  prayed   for adjournment   for   filing   a   written   statement   under instructions  and  it was not open to the defendant  to  say that  there were no instructions to that effect.   The  fact that  the  vakalatnama was not filed  when  adjournment  was prayed  for,  was considered inconsequential.  It  was  also added  that the discretion in the matter of stay had  to  be exercised on sound judicial principles. In  our view, there is no serious infirmity in the  impugned judgment  of  the High Court and we are unable to  find  any cogent ground (1) I.J.P,. 34 Cal,. 443. (2) AJ.R. 1943 Bom. 228. (3) A.I.R. 1945 All. 24. (4) (1896) A.C. 1. (H.  L.)  (5) A.I.R. 1954 Bom, 174. 37 for interference under Article 136 of the Constitution.  The legal  position with respect to the scope and meaning of  s. 34  of  the  Arbitration Act admits  of  little  doubt,  the language of this section being quite plain.  When a party to an  arbitration  agreement commences any  legal  proceedings against  any other party to the said agreement with  respect to  the  subject  matter thereof, then the  other  party  is entitled  to ask for such proceedings to be stayed so as  to enable the arbitration agreement to be carried out.  It  is, however, to be clearly understood that the mere existence of an  arbitration  clause in an agreement does not  by  itself operate  as  a bar to a suit in the court.  It does  not  by itself  impose any obligation on the court to stay the  suit or to give any opportunity to the defendant to consider  the question of enforcing the arbitration agreement.  The  right to institute a suit in some court is conferred, on a  person having a grievance of a civil nature under the general  law. It  is a fundamental principle of law that where there is  a right  there  is a remedy.  Section 9 of the Code  of  Civil Procedure  confers this general right of suit  on  aggrieved person  except  where the cognizance of the suit  is  barred either  expressly or impliedly.  A party seeking to  curtail this  general  right of suit has to discharge  the  onus  of establishing his right to do so and the law curtailing  such general right has to be strictly complied with.  To enable a defendant  to  obtain an order staving the suit  apart  from other  condition mentioned in s. 34 of the Arbitration  Act, he  is required to present his application praying for  stay before filing his written statement or taking any other step in  the. suit proceedings.  In the present case the  written statement was indisputably not filed before the  application for  stay was presented.  The question is whether any  other step  was taken in the proceeding as contemplated by  s.  34 and it is this point with which we are directly concerned in the   present  case.   Taking  other  steps  in   the   suit proceedings  connotes the idea of doing something in aid  of the  progress of the suit or submitting to the  jurisdiction

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 9  

of  the court for the purpose of adjudication of the  merits of the controversy in the suit. According  to  the appellant (State of U.P.).  the  District Government  Counsel  is  authorised by  the  Code  of  Civil Procedure  to receive summons on behalf of the State :  vide ground No. 3 in the petition for special leave.  Indeed, the District  Government counsel was in fact so served.   It  is not   the  appellant’s  case  that  the  summons  were   not accompanied  by a copy of the plaint in accordance with  law and,  therefore.  the District Government Counsel.  was  not aware  of  the nature of the case.  A copy  of  the  plaint, therefore.  must  be held to have been duly  served  on  the District  Government Counsel who under Order XXVII.  Rule  2 of the Code of Civil Procedure was authorised to act for the Government and was deemed to be the recognized agent by whom appea rances, acts and applications could be made or done on behalf  of the Government.  The District Government  Counsel in the present case was thus fully empowered to appear  and act  for  and on behalf of the Government and also  to  make applications on its behalf.  If the said counsel wanted time for the purpose of having fuller instructions, he could have asked for it specifically, for he was 38 not  a  layman  ignorant  about the  legal  position  but  a professional  lawyer  retained  by the  Government  for  the purpose  of acting and pleading on behalf of the  Government as  a recognised agent.  He, however, chose instead  to  ask for time specifically for filing written statement and  this act  he  purported to do on behalf of the  State  Government which he was fully empowered to do.  The State took  benefit of his appearance and his successful prayer for  adjournment of  the  case  by one month for the purpose  of  filing  the written  statement.   In those circumstances, it  is  hardly open  to  the State Government to plead  that  the  District Government Counsel was not authorised to seek adjournment on its  behalf for this purpose.  An oblique suggestion  thrown on  behalf  of the appellant that  the  District  Government Counsel   had   merely   volunteered   to   appear   without instructions, presumably taking the cue from the decision of the,  Punjab High Court in the case of Moji Ram  (supra)  is merely to be stated to be rejected.  A recognized agent like the  District Government Counsel can scarcely be  considered to appear voluntarily in a case on behalf of the  Government in  the  sense of being unauthorised by his client  for  the simple reason that he is authorised by virtue of statute  to appear,   act  and  make  applications  on  behalf  of   the Government.   Indeed  in  the  present  case  the   District Government Counsel also filed in court the usual  appearance slip.  If he wanted time for further consultations, he could and  should have specifically made a prayer to that  effect. It is, however, idle to contend that he can be considered to have merely volunteered without authority to appear and  ask for time for filing the written statement.  The argument  of appearance  by  a recognized agent as a  mere  volunteer  is extremely  difficult to appreciate.  The State,  as  already observed,  took the benefit of the adjournment.  It will  be somewhat  irrational and perhaps incongruous to  permit  the State,  after having taken the benefit of this  adjournment, to  plead that the application for adjournment was not  made on  instructions  and was unauthorised.  To  accede  to  the State Government the right to do so would clearly be  unjust to  the opposite party which could have rightfully  objected to  the adjournment, had there been any indication that  the prayer  was  not being made on instructions from  the  State Government.  September 2, 1966 was fixed in the summons  for

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 9  

filing  written  statement.   Failure to do  so  would  have entailed  consequences prejudicial to the State  Government. Those consequences were avoided by making an application for extension  of time for filing written statement  which  must have  been understood by the opposite party. as also by  the court, to be on instructions by the State Government. The  argument  that the trial court’s  discretion  has  been erroneously reversed by the High Court is equally devoid  of merit.   If the appellant’s application was for  adjournment for  the purpose of filing written statement, then there  is no  question  of  any exercise of discretion  by  the  trial court.   Discretion with regard to stay under S. 34  of  the Arbitration Act is to be exercised only When an  application under that section is otherwise competent.  Incidentally  it is  worth noting that even the order of the trial  court  is not  included by the appellant in the paper book and  we  do not know the reasoning of that court for 39 granting  stay.   But on the view that we  have  taken  that omission is of little consequence. Finally,  as a result of the decision of the High Court  the only consequence is that the suit will now have to be  tried by  a competent court on the merits in accordance with  law. Keeping in view the Icing delay after the institution of the suit  and the fact that the suit is for a very heavy  amount by  way of damages for breach of contract, it will,  in  our opinion, be more satisfactory on the whole to have the  suit tried  in  a  competent court of law in  the  normal  course rather  than by a lay arbitrator who is not bound either  by the law of evidence or by the law of procedure.  This course can certainly in no way be considered unjust or  prejudicial to the appellant as to require interference by this Court. This appeal accordingly fails and is dismissed with costs. G.C.              Appeal dismissed. 40