Waiver of arbitration right requires clear, unequivocal conduct; a time request to file defence was not enough.

A request for time to file a written statement does not, by itself, amount to a step in the proceedings that waives the contractual right to arbitration. The relevant test is whether the party's conduct clearly and unequivocally shows an intention to proceed with the suit and abandon the right to seek a stay under section 34 of the Indian Arbitration Act. Surrounding conduct and contemporaneous correspondence must be examined, and prior references to the named arbitrator supported the view that arbitration had been contemplated. On that basis, the stay application was maintainable and the suit was properly stayed in favour of arbitration.

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Issues: Whether the defendant's request for time to file a written statement constituted a step in the proceedings so as to bar an application for stay under section 34 of the Indian Arbitration Act, and whether the dispute was required to be resolved through arbitration under the contractual clause.

Analysis: The relevant test is whether the conduct complained of shows an unequivocal intention to proceed with the suit and abandon the right to have the dispute determined by arbitration. A mere request for time to file a written statement does not, by itself, necessarily amount to such a waiver; the surrounding conduct and contemporaneous correspondence must be examined. The record showed earlier letters and proceedings indicating that the dispute had been referred to the named arbitrator and that the parties had contemplated arbitration under the contract. In that setting, the request for time was not treated as a clear election to forego arbitration.

Conclusion: The application for stay was maintainable, and the defendant had not taken a step in the proceedings that amounted to waiver of the contractual right to arbitration.

Final Conclusion: The appeal failed, and the order staying the suit and directing the dispute to be resolved through arbitration was upheld.

Ratio Decidendi: For purposes of section 34 of the Indian Arbitration Act, waiver of the right to seek a stay arises only from conduct that clearly and unequivocally manifests an intention to proceed with the suit rather than arbitration.

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