Substituted service and arbitration stay: leave to enter appearance is not a step in the proceedings, so arbitration rights remain intact.

Substituted service was invalid because reasonable diligence had not been used to trace the defendant, and the plaintiff failed to attempt service at another known business address before resorting to affixture; the defendant was therefore properly granted leave to enter appearance. An application solely for leave to appear is not a step in the proceedings within Section 19 of the Arbitration Act, 1899, because it does not amount to an election to contest the suit on the merits or to waive arbitration. The court accordingly held that the application did not bar a stay, and the dispute was stayed for arbitration under the contract.

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Issues: (i) Whether the plaintiff had effected valid substituted service of summons. (ii) Whether the defendant's application for leave to enter appearance was a step in the proceedings so as to bar a stay under the arbitration clause.

Issue (i): Whether the plaintiff had effected valid substituted service of summons.

Analysis: Service by affixture was insufficient where reasonable diligence had not been used to ascertain the defendant's whereabouts. The plaintiff knew of more than one place where the firm carried on business, yet no attempt was made to serve the defendant at the other known address before resorting to substituted service. The preliminary conditions for substituted service were therefore not satisfied.

Conclusion: The substituted service was invalid and the defendant was rightly granted leave to enter appearance.

Issue (ii): Whether the defendant's application for leave to enter appearance was a step in the proceedings so as to bar a stay under the arbitration clause.

Analysis: Under Section 19 of the Arbitration Act, 1899, a stay may be granted after appearance and before any written statement or other step in the proceedings. An application for leave to enter appearance is directed only to enabling appearance and does not indicate an election to contest the suit on the merits. It is not the kind of step that shows acquiescence in the litigation so as to forfeit the right to seek a stay.

Conclusion: The application for leave to enter appearance was not a step in the proceedings and did not bar a stay.

Final Conclusion: The proceedings were stayed and the dispute was directed to arbitration in accordance with the contract.

Ratio Decidendi: An application made solely to obtain leave to enter appearance is not a step in the proceedings within Section 19 of the Arbitration Act, 1899, and a stay may still be granted where the applicant is otherwise ready and willing to arbitrate.

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