Holding

The Supreme Court held that no valid arbitration agreement existed and that the stay of suit granted by the lower courts was erroneous, thus vacating the stay and allowing the suit to proceed.

Summary

Ramji Dayawala & Sons entered into a sub‑contract with Yugoslavian firm Invest Import that contained a clause referring all disputes to arbitration before the International Chamber of Commerce in Paris. After completing the work, the Indian contractor sued for unpaid sums, and Invest Import moved to stay the suit on the ground of the arbitration clause, invoking sections of the Arbitration Act, 1940, the CPC and the Arbitration (Protocol and Convention) Act, 1937. The High Court and its Division Bench granted a stay, holding that a valid arbitration agreement existed. On appeal, the Supreme Court examined the correspondence showing the appellant’s objection to the arbitration clause, the receipt of that objection by the respondent, and the lack of consensus ad idem on the arbitration provision. The Court found no concluded arbitration agreement and held that the lower courts erred in exercising discretion to stay the suit, especially given the small claim, the disproportionate cost of foreign arbitration, and the restriction on foreign exchange. Consequently, the stay was vacated and the suit was ordered to proceed.

Issues considered

The existence of a concluded arbitration agreement between the parties under the sub‑contract.
Whether the trial court had jurisdiction to stay the suit under Section 34 of the Arbitration Act, 1940, or under Section 151 of the CPC, or under Section 3 of the Arbitration (Protocol and Convention) Act, 1937.
The proper exercise of judicial discretion in granting or refusing a stay of suit in a foreign arbitration context.
The relevance of cost, foreign‑exchange restrictions, and the location of evidence to the discretion to stay proceedings.

Legislation cited

Subjects

arbitration agreementstay of suitforeign arbitrationjudicial discretionArbitration Act 1940CPC Section 151Arbitration (Protocol and Convention) Act 1937Foreign Awards Act 1961consensus ad idemcost of arbitrationforeign exchange restriction

Judgment

899'

RAMJI DAYAWALA & SONS (P) LTD. A

v.
INVEST IMPORT
B
October 9, 1980 ·

[P. N. SHINGHAL AND D. A. DESAI, JJ.]

Arbitration Act 1940, S. 34; Code of Civil Procedure 1908, S. 15; Arbi-
,,, tration (Protocol and Convention) A ct 1937, S. 3 ; & Foreign Awards (Recog-
nition & Enforcement) Act, S. 3-Sub-contract between Indian .firm and foreign
c
firm-Sub-contnact incorporating .an agreement to re.fer disputes to a foreign
arbitral tribunal-After execution o~ agreement Indian firm repudiating the
arbitration agreement-Suit for re'C:overy in High Court by Indian firm-Foreign
firm contesting that suit to be stayed on account of arbitration clause in the
agreement-Single Judge and Division Bench deciding stay of suit necessary-:
Decision-Whether valid-power of court to stay suit-Exercise of discretion
by trial court-Interference by appellate court.

The appellant (plaintiff), a private limited company, a labour contractor,
entered into a sub-contract with the respondent (defendant), a Yugoslavia based
company which in turn had entered into a contract with the State Electricicy
Board for setting up a power station. The sub-contract dated July 10, 1961
between the appellant and the respondent incorporated a·n agreement to refer E
~ll the disputes arising out of the sub-contract to arbitration by the Inter-
national Chamber of Commerce in Paris with the application of Yugoslav
materials and economical law. In carrying out the work undertaken under
the sub-contract, the appellant claimed that it carried out some extra work
for which it was entitled to recover extra amounts from the respondent, and
as the claims were not satisfied or met with by the respo~dent, the appellant
filed a civi\ suit on the original side of the High Court for recovery of the F
amount. On .a notice of motion taken out by the appellant, the High Court
granted an ad interim exparte injunction restraining the respondent from with-
drawing the money due to it from the State Electricity Board.

Pursuant to service of the aforesaid notice of motion' the respondent moved
an application under sec. 151 of the Code of Civil Procedure, alleging in the
petition for stay that the disputes and differences that arose were in respect G
of and/or relating to the sub-contract dat,ed July 10, 1961 and in view of the
subsisting agreement to refer disputes or differences arising under or out of
the sub-contract to arbitration, the suit filed by the appellant should be stayed.
The appellant filed a counter-affidavit contending that there was no concluded
agreement" between the parties to refer all the disputes arising out of the sub-
contract to arbitration and alleged that by letter dated July 10, 1961, the very
date on which the sub-contract was entered into at Belgrade, the Managing H
'.900 SUPREME COURT REPORTS [1981] 1 S.C.R.

A Director of the appellant company informed the respondent that he had ob-
jected to the arbitration clause in the agreement. It was also averred that a
cable was also sent by the Managing Director on reaching Bombay on July 13,
1961 requiring that the clause regarding arbitration be deleted. Second con-
tention was that even if it is held that there is a subsisting arbitration agree-
ment, having regard to all the circum&tances of the case, the discretion should ·
not be exercised in favour of· the defendant-respondent.
B
The Single Judge granted !he P<ctition of the respondent and stayed fur-
ther proceedings in the suit filed by the appellant, and vacated the ad interim
injunction granted in favour of the appellant.
The appellant preferred two appeals. One against the order of the single
Judge granting stay of the suit of th'e appellant and the other against the order
vacating the ad in•terim injunction. A Division Bench of the High Court dis-
missed both the appeals by a common judgment holding that there was a
valid subsisting arbitration agreement between the parties and that it was
binding on both. It also held that the claims made· by the appellant in the
suit arose• out of the sub-contract which included the arbifration agreement
and, therefore, the appellant must be bound by the bargain undertaken by
him. · It negatived the appellant's contention that on the facts and circum-
stances of the case discretionary relief of grant of stay of suit would cause
D irrepairable hardship and deny justice.
In appeal to this Court against the order of stay of the suit granted by
the High Court, it was contended on behalf of the appellant: (I) there was no
concluded arbitration agreement between the parties to refer the disputes aris-
ing out of the sub-contract dated July 10, 1961 to arbitration and, therefore,
the suit cannot be stayed ; (2) even if the. Court came to the conclusion that
.E . there was such a subsisting arbitration agreement between the parties, prayer·
for stay having been made under sec6on 51 c.f the Code of Civil Procedure
and/or under section 34 of the Arbitration Act, 1940, read with Section 151
CPC, the Court should not enfon:e it in its discretionary jurisdiction as it
would result in miscarriage of justice ; (3) in view of the provisions contained
in the Arbitration (Protocol and Convention) Act, 1937 the Court could not
invoke its inherent jurisdiction under section 151 CPC and the Speciar" Act _..,
F would not assist the respondent as the case. was not covered by its provisions.
It was also contended that the undermentioned circumstances when properly
evaluated would unmistakably indicat<' that the instant case is not a .fit case
in which the Court should decline to adjudicate• upon the dispute brought to it
by granting stay in favour of the respondent. (I) The work under the special
contract Ext. A dated July 10, 1961 was executed and carried out in India
and the whole of the evidence both for and against the appellant in India, (2)
the amount claimed in the suit is so disproportionately small in relation 10
the huge cost of arbitration to be held at Paris :in France, that forcing the appel-
lant to incur the cost to realise such a small 8Um would be denial of justice,
(3) restrictions on availability of foreign exchange is a relevant consideration,
a fact of whic~ the Court can take :iudicial notic:, '.4) the Co~rt ~hould not
render its assistance by granting stay to one who ms1st_s _on arb1trat10n. not as
a matter of principle but with a view to thwarting, stifhn~ or e~haust1~g the
H th ·d d (5) in all cases of arbitration by a foreign arb1tral tnbunal
oh er ~ e,I ans
1
ri"der that in case. of hard,;hip or injustice, Courts of the
t ere 1s a way a . . . .
country of the party being forc.ed to go to foreign arb1tral tnbunal will pro-
tect him.
R. D. & SONS v. INVEST IMPORT 901

On behalf of the respondent it was contended that (I) even if the conrt A
proceeds on the assumption that the letter and the cable were received, it is
not open to the Court to look into the contents of the letter and the cable
because the contents were not proved, as the Managing Director ef the appellant
company who was supposed to have signed the letter and the cable had neither
entered the witness box nor filed his affidavit proving the contents thereof, (2)
that once the sub-contract was admittedly signed and executed by the. Managing
Director of the appellant company, subsequent attempt on behalf of the appel- B
lant to repudiate a part of the contract would be of no avail and the court
cannot give effect to it except if the· 1.10vatio suggested by the appellant was
unreservedly accepted and agreed to by the respondent, and (3) when the motion
is addressed to the discretion of the court and the couPt has exercised its dis-
cretion, the appellate Court should be slow to interfere. with the discretionary
order and substitute its own discretion in place of the discretion of the court
before which the motion was addressed. c
Allowing the appeal,
HELD: 1. Both the learned Single Judge and the Division Bench of
the High Court were in error in granting stay of the suit. The stay of the
suit granted by the learned Single Judge and affirmed by the Division Bench
is vacated. The suit should proceed further from the stage where it was
stayed. The trial court would give priority to it and dispose it' of as expedi-
D
tiously as possible. [928G-H]
2. The sub-contract marked Ext. A had been signed both by the Manag-
ing Director of the appellant company as well as on behalf of the respondent
company. The third paragraph of Article 12 of sub-contract Ext. A recites
an arbitration agreement. The provision is for a reference of disputes arising
out of the sub-contract to foreign arbitral tribunal, namely, the International E
Chamber of Commerce in Paris. Such a clause spells out an arbitration
agreement. [908E-F]
3. (i) The Appellate Bench of the High Court held that the letter and the·
cable were not received by the respondent. This conclusion is not only con-
trary to evidence on record but reached in utter disregard of the admission of
the Manager of the respondent. [9 IOA-B]
F
(ii) The letter and the cable would show that the arbitration agreement
to refer disputes to a foreign arbitral tribunal in. the draft was not acceptable
to the appellant though the other terms were acceptable. The appellant repu-
diated the arbitration !lgreement soon after the agreement was signed when
the Managing Director of the appellant was in Belgrade and took the follow
up action by sending a cable reiterating and repeating the objection immediately
after his return to India. After this specific objection with regard to a·rbitra-. G
tion agreement in the sub-contract, the respondent allowed the appellant to
proceed further with the implementation and execution of the sub-contract,
without controverting what the appellant had stated in the letter arid the cable.
This unmistakably shows that the respondent accepted the alteration as sug-
gested by the appellant in that the arbitration agreement was deemed to have
been deleted from the sub-contract Ext. A. [910H; 911A-D]
4. If the truth of the facts stated· in a document is in issue, mere proof H
of the handwriting and execution of the document would not furnish evidence
of the truth of the facts or contents of the document. The truth or otherwise
•902 SUPREME COURT REPORTS [1981] 1 S.C.R.

A of the facts or contents so stated would havti to be proved by admissible evid·
ence i.e. by the evidence of those persons who can vouchsafe for the truth of
the facts in issue. [912B-C]
In the instant case the utter failure of the respondent to reply to. the
letter and the cable controverting the averments made therein unmistalyibly
establish the truth of the averments made in the letter. [912E]

J
5. Iii the facts of a· given case acceptance of a suggestion may be sub
silentio reinforced by the subsequent conduct. The general rule is that an
offer is not accepted by mere silence on the part of the offeree. There may,
however, be further facts which taken together with the offeree's silence con-
stitute an acceptance. One such case is where a part of the offer was disputed
at the negotiation stage and the original offeree communicated that fact to the .·
offerer showing that he understood 1the offer in a particular sense. This com-
·c munication will probably amount to a count•er offer in which case it may be
that mere silence of the original offerer will constitute his acceptance. [9120-H]
In the instant case, the conclusion is inescapable that there was no con-
cluded arbitration agreement between 1he parties. [914E] 1t
Halsburys Laws of England 4th Edn. vol. 9 para 251, R. v. Fulhan, Ham-
l!Wrsmith and Kensington Rent Tribunal, ex pa1·te Zerek, [1951] I All E. R.
D 482, Davies v. Sweet (1962) 2 W.L.R. 525, refem!d to.
6. (i) The High Court totallir overlooked and ignored the admission of
· rece.ipt of letter and cable in paragraph 6 of the affidavit. The High Court
attached importan.ce to the denial of the rec:eipt of the letter and the cable
by the employee of the respondent company in the oral evidence and did not
attach importance to the subsequent <idmission that the manager of respondent
E company must have replied to the letter and the cable. Admission, unless ex-
plained, furnishes the best evidence. The High Court overlooked the mate.rial
evidence, drew impermissible inference and came to the conclusion which on
evidence is found utterly unsustainable. [914G-HJ

(ii) A finding of fact recqrded by the High Court overlooking the incon·
trovertible evidence which points to the contrary and, therefore, utterly unsus-
tainable cannot come in the way of this Court reaching a correct conclusion
F
on facts and the examination of the t'vidence by this Court cannot be impeded
by a mere submis·sion that this Court does not interfere with finding of fact.
[915A]

7. (i) Both the Courts practic:ally overlooked the basic difference in the
approach whi.ch the Court will have to adopt if the application is to be !rented
under section 34 of the Arbitration Act, 1940, or one under section 151 C.P.C.
In any event, as the motion is at the discretion of the Court and as both the
parties have led evidence, the burden of proof would assume secondary
importance. · [9 l 6F]

Michael Golodetz & Ors. v. Sev·ajuddin and Co. [1964] S.C.R. 19, referred
to.
(ii) It is well settled that when' the trial court has a discretion in the
H matter, the appellate court would not ordinarily substitute its discretion in
place of the discretion exercised by the trial court. It is equally well settled
that where the t~ial court ignoring the relevant evidnce, side tracking the
R. D. & SONS v. INVEST IMPORT 903

approach to be adopted in the matter and overlooking various relevant con· A
siderations, has exercised its discretion one way, the appellate court keeping
in view the fundamental principle can and ought to interfere because when it
is said that a matter is within the discretion of the court it is to be exercised
according to well established judicial principles, accor~ing to reason and fair
play, and not according to whim and caprice. [917B-C]
Craies Statute Law 6th Edn. p. 273 R. v. Wilkes (770) 4 Barr 2527, referred
to. B
8. The Single Judge and the Division Bench completely overlooked the
well established pcinciples in granting stay of suit in a case, where reliance is
placed upon a subsisting arbitration agreement. [9170] · ·
9. When parties by contract agree to arrange for settlement of their dis-
putes by a Judge of the:ir choice, by procedure of arbitration voluntarily agreed
upon, ordinarily the court must hold the parties to their bargain. As a corol-
lary, if a party to a subsisting arbitration agreement in breach or violation of
the agreement to refer dispute to arbitration approaches the Court, the Coutt
·-,r. would not Jend its assistance to such a party and by staying the suit compel
the party in breach to abide by its contract. When the parties have agreed
to an arbitration by a foreign arbitral tribunal the case for. stay would be
stronger than if there was a domestic arbitration agreement. However, it is
not an absolute rule. Granting or refusing to grant stay is still a matter within D
the discretion of the court. How discretion would be exercised in a given case
would depend upon various circumstances. [9180-F]
Bristol Corporation v. John Aird & Co. [1913] A.C. 241 at 257 and Owners
of Cargo Ex "Athenee" v. Athenee Llyods' Ost Law Reports, Easter Sittings

.
1922, Vol. XI, page 6, referred to.
Jn the instant case the entire evidence both of the appellant and the, res- E
pondent is in this country ; the contract as a whole was executed and carried
-0ut in this country; the claim as a whole arose in this country; the appellant

r
is a company incorporated in this country ; and the respondent is having its
office in this country ; and that the respondent is not motivated by any prin-
.ciple to have the decision of the foreign arbitral tribunal at Paris but the prin-
. cipal object of re.spondent is merely to make it more difficult, if not impos-
'---.
sible, for the appellant to assert the claim. The other vital considerations are, F
that the cost of arbitration at Paris will be. so disproportionately high to the
claim involved in adjudication that one would never think of incurring such
.a huge cost to realise such a small sum claimed, and the restriction on the
availability of foreign exchange. The sum total of all these well established
.circumstances clearly indicate that the instant suit is one in which when· discre-
tion is exercised on well settled judicial considerations no court would grant
stay and the stay has to be refused. [925B-D] G
Michael Golodetz & Ors. v. Serajuddin & Co. [19641 1 S.C.R. 19, Bristol
Corparation v. John Aird & Co. [1913] A.C. 241 at 257, Owners of Cargo
Ex "Athenee" v. Athenee L!yods' List Law Reports, Easter Sittings 1922, Vol.
XI, page 6, V/o Tractoroexport, Moscow v. M/s. Tarapore & Company and
Anr.. [1970) 3 S.C.R. 53 and The Fehmarn [1957] 2 All E.R. 707, referred to.
10. Section 3 of the Arbitration (Protocol and Convention) Act, 1937 is
in pari materia with section 3 of the Foreign Awards (Recognition and En- H
forcement) Act, 1961. Section 3 of !he 1937 Act would only be attracted ifl
there is a submission pursuant to an agreement to that effect. [928B-C]
SUPREME COURT REPORTS q981] 1 S.C.R.

A In the instant case while. there i> an agreement as contemplated by First
Schedule to the 1937 Act, there is no submission made in pursuance of such
agreement and, therefore the application of the respondent could not have

..
been entertained under section 3 of the, 1937 Act. [9280]

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2407-2408
of 1968.
B
From the Judgment and Order dated 1-12-1965 of the Calcutta: 1
High Court in Appeal Nos. 110-111/M
P. K. Chatterjee and P. K. Mukherjee for the Appellant.

c
S. C. Majumdar, Arvind Kumar, S. Dasgupta, Mrs. L. Arvind·
and Miss> Karabi Banerji for the Respondent.
The Judgment of the Court was delivered by
J
DESAI, J.-Protracted, time consuming, exasperating and·
atrociously expensive court trial:; impelled an alternative mode of
resolution of disputes between the parties : arbitrate - don't litigate.
D Arbitration being a mode of resolution of disputes by a judge of the
choice of the parties was considered preferable to adjudication of
disputes by court. If expeditious, less expensive resolution of dis-
putes by a judge of the choice of the parties was the consumation
devoutly to be wished through arbitration, experience shows and this
case illustrates that the hope is wholly belied because in the words
E of Edmond Davis, J. in Price v. Milner, ( 1 ) these may be disastrous
proceedings.
A petty labour contractor h'.i. search of its labour charges in a
paltry amount of Rs. 4,25,343.00 from a giant foreign engineering
and construction company which had undertaken to erect a thermal
F power station at Barauni in Bihar State under a contract dated
February 27, 1960, with Bihar State Electricity Board, filed a suit
in the year 1963 which stands stayed without the slightest progress
for the last 17 years and with end nowhere in sight. P1aintiff
(appellant herein), a private limi1ed company, a labour contractor,
entered into a sub-contract for erecting two complete radiation type
G steam boilers as part of Thermal power station at Barauni, with the
defendant Invest-Import, a Yugos.lavia based company which in turn
had entered into a contract with the Bihar State Electricity Board
for setting up the power station. Plaintiff sub-contractor, pursuant
to the sub-contract dated July 10, 1961, had to supply ski1led labour,
unskilled labour and apprentice labour, to carry out the erection work
H
and incidentally to do other things provided in the sub-contract.
(1) [1966] 1 W.L.R. 1235.

..
...

I
, R. D. & SONS v. INVEST IMPORT (Desai,!.)

· The contract also provided for employing extra labour force as well
90 5

A
as carrying out extra stipulated job for installation, substantial altera-
t_ion of dejgn etc. as and when desired and directed by the principal
' contractor, respondent herein. In carrying out the work undertaken
A.. under' the sub-contract, the plaintiff claims that it carried out some
extra work for which it was entitled to recover Rs. 70,000 from
the respondent. There were also other claims made by the appellant B
which wire not satisfied or met with by the respondent with the
result that the appellant filed suit No. 1359/63 on the original side of
the High Court at Calcutta on August 1, 1963, to recover
~ Rs. 4,25,343.00 f.rom the re~pondent. The split up of the total cl~im
· ~ has been set out m the particulars appended to para 16 of the plamt.
# /' The appellant also annexed sub-contract between the appellant and
c
~. the respondent as Annexure 'A' to the plaint. On August 2, 1963,
-..,. · on a notice of motion taken out by the appellant, a learned single
judge of the..fligh Court granted an ad interim ex parte injunction
restraining/ the respondent from withdrawing the money due to it
from the Bihar State Electricity Board. D
... Pursuant to serviCe of notice of motion taken out by the
appellant, on August 8, 1963, the respondent appeared through one
Ilija Kostantinovic, Manager of the respondent company posted at
its office at 36, Ganesh Chandra Avenue, Calcutta, and moved an
application purporting to be under s. 151 of the Code of Civil
Procedure, contending, inter alia, that the sub-co!ltract between ihe E.
appeHant and the respondent incorporates an agreement to refer all
the disputes arising out of the. sub-contract to arbitration and. there-
fore, the suit should be stayed. The clause spelling out agreement
to refer disputes to arbitration was reproduced in the petition. 1t
reads as under :
p
"Any mutual disputes should be settled in mutual agree-
ment, however, should they fail to reach an agreement in the
way, both contracting parties accept the jurisdiction of the
Arbitration by the Internationa1 Chamber of Commerce in Paris
with application of Yogoslav materials and economical law".
After setting out the background of dispuks between the parties, G
it was alleged in the petition for stay that in the circumstances set
out in the petition, disputes and differences arose between the
appellant and the respondent out of or in respect of :md/or relating
to the sub-contract dated July 10, 1961, and in view ofthe subsisting
agreement to refer disputes or differences arising under or out of
the sub-contract between the parties to arbitration, the suit filed by H
the appellant should be stayed. It was also averred that if the
provisions of Arbitration Act did not apply the Court should in
16-645 S. C. India/80
906 SUPREME COURT REPORTS [1981] 1 S.C.R.

A exercise of its inherent jurisdiction injunct the' plaintiff appellant from
proceeding with the suit instituted by rt. There were further aver-
ments praying for vacating ad interim injunction granted by the High
Court which are no more relevant. The respondent annexed to the
petition for stay the sub-contract between the parties dated July 10,
1961, as also some correspondence that had ensued between the
B partie!>.
Appellant filed a counter affidavit sworn by one Bhikhubhai
Gourishankar Joshi who described himself as principal officer and
constituted attorney of the appellant company controverting the
averments made by the respondent in the petition seeking stay of
the suit. The principal contention taken in the counter affidavit was
that there was no concluded agreement between the parties to refer ·_,;
all the disputes arising out of the sub-contract to arbitration as con-
tended for and on behalf of the respondent. To substantiate this
.contention letter dated July 10, 1961, the very date on which the
:sub-contract was entiered into between the appellant and the respon-
D dent, sent by the Managing Director of the appellant company as
also a telegram sent by the same person on July 13, 1961, were
annexed to the counter-affidavit. \
Ilija Kostantinovic, Manager of the respondent compan\r at
Calcutta filed an affidavit in rejoinder in which there are certain
ayerments which go to the root of the matter and, therefore, they
IE
may better be extracted here. They read as under :
"5. With reference to the allegations contained in para-
graph 4 of the said affidavit, I reiterate the statements contained
in paragraphs 3 and 4 of the petition and I deny all allegations,
which are contrary thereto and/ or inconsistent therewith.
F 6. With further reference to the allegations contained in
paragraph 4- of the said affidavit, I say that after entering into
the contract dated July 10, 1961, and after executing the same,
the respondent purported to send a letter to the petitioner seeking
to modify and/or delete the arbitration clause contained in the
contract dated July 10, 1961, and also purported to send a cable
G to the petitioner. The petitioner never agreed to the modifica-
tion and/or deletion of the arbitration clause as contained in the
said contract or to the alleged arbitration clause suggested by
the respondent".
The petition for stay was set down for recording evidence. ·· One
H Panich Stojan son of Nikola Panich, Project Manager, Barauni
Thermal Project, an employee of !he respondent company was
examined on behalf of the respondent. No oral evidence was offered
R. D. & SONS v. INVEST IMPORT (Desai,!.) 907

on behalf of the appellant. The learned single judge by his order A -
dated January 10, 1964, granted the petition of the respondent and
stayed further proceedings in the suit filed by the appellant. The
learned judge also vacated the ad interim injunction granted in
favour of the appellant.
The appellant preferred ,two appeals being Civil Appeal No. B
110/64 against the order of the learned single judge granting stay
of the suit of the appellant and Civil Appeal No. 111/64 against the
order dated February 6, 1964, vacating the interim injunction granted
in favour of the appellant. A Division Bench of the High Court
disposed of both the appeals by a common judgment dated December
1, 1965, dismissing both the appeals. While dismissing the appeals c
the division bench held that there was a valid subsisting arbitration
agreement between the parties and it was binding on both the parties.
It was also held that the claims made by the appellant in the suit
arose out of the sub-contract which included arbitration agreement
and, therefore, the plaintiff must be bound by the bargain undertaken
by him. The contention of the appellant that even if there was a D
subsisting arbitration agreement, in the facts and circumstances of
the case discretionary relief of granting stay of suit would cause
irreparable hardship and deny justice to the appellant was negatived.
Appellant then moved an application for a certificate under
Article 133(l)(c) .of the Constitution. The High Court was of the E
opinion that the appeals did involve sub&tantial questions of law
and the case was a fit one for appeal to the Supreme Court and
accordingly granted a certificate under Art. 133(l)(c). Appellant
accordinJ.!).y preferred these two appeals by certificate.
At the commencement of hearing of the .appeals Mr. P. K.
Chatterjee, learned counsel who appeared for the appellant stated F
that by passage of time the prayer for injunction restraining the res-
pondent from recovering its claim from Bihar State Electricity Board
had become infructuous and accordingly Civil Appeal No. 2408/68
which was against the order vacating ad interim injunction granted by
the High Court and the dismissal of the appeal against that order
wa&• not pressed. Therefore, Civil Appeal No. 2408/68 would stand G
dismissed as having not been pressed. ·
t Mr. Chatterjee in support of Civil Appeal No. 2407 /68
.canvassed four contentions before us. They are :
1. There is no. concluded arbitration agreement between the
parties to refer the disputes arising out of the sub-contract H
dated July 10, 1961, to arbitration and, therefore, the suit
cannot be stayed;

~-
908 SUPREME COURT REPORTS [1981] 1 S.C.R.

A 2. Alternatively, even if the Court comes to the conclusion that
there is such a subsisting arbitration agreement between
the parties, prayer for stay having been made under s. 151
of the Code of Civil Procedure and/or under s. 34 of the
Arbitration Act, 1940, read with s. 151, C.P.C., the Court
should not enforce it in its discretionary jurisdiction in the
facts and circumstances of the case as it would result in
miscarriage of justice;

c
3. In view of the provisions contained in Arbitration (Protocol
and Convention) Act, 1937, the Court could not invoke
its inherent jurisdiction under s. 151, C.P.C. and the
special Act would not assist the respondent because the
present cas1~ is not covered by the provisions of the Act;
J
4. This being a foreign arbitration, s. 34 of the Arbitration Act,
1940, is not attracted and the Court would have no
jurisdiction to grant stay of the suit filed by the appellant.
D The first contention is that there is no· concluded arbitration
agreement betwen the parties to refer. the disputes arising out of the
sub-contract dated July 10, 1961, to arbitration and in the absence
of a mutually agreed arbitration agreement, the respondent is not
entitled to a stay of the suit filed by the appellant either under
s. 34 of the Arbitration Act or under s. 34 read with s. 151 of the
E
Code of Civil Procedure. Undoubtedly, sub-contract marked Ext. A
has been signed both by the Managing Director of the appellant
company and by one Mr. Petrovije on behalf of the respondent
company. Third paragraph of Art. 12 of sub-contract Ext. A recites.
an arbitration agreement. The provision is for a reference of
disputes arising out of the sub-contract to foreign arbitral tribunal,
F
namely, the International Chamber of Commerce in Paris. Such a clause
has always been interpreted to spell out an arbitration agreement.
Respondent contends that admittedly the Managing Director of the
appellant company has signed sub-contract Ext. A which incorporates
arbitration agreement and the appellant accepted the same and
G entered upon the work entrusted to it under Ext. A and, therefore,
it is not now open to it to repudiate a part of the contract which
provides for reference of disputes arising out of the sub-contract to
arbitration of a foreign arbitral tribunal. Appellant countered by
saying that the appellant accepted the principal contract but not the
agreement to refer the dispute to foreign arbitral tribunal and that
H there are tell-tale circumstances on record which would convincingly
establish that the parties were not ad idem with regard to arbitration
clause in Ext. A.
R. D. & SONS v. INVEST. IMPORT (Desai, J.) 909

To recall, sub-contract Ext. A was signed by the parties in
Belgrade on July 10, 1961. Managing Director of the appellant was
in Belgrade on that day. On that very day Managing Director
'Sent a letter· from Belgrade itself addressed to the respondent at
·-"- I Belgrade, reievant portion of which may be extracted :
"10th July 1961
"I have signed the contract of Barauni Thermal Power
Btation work with you.

l I have objected to the clause of Arbitration put in there in
agreement which was deleted from our revised draft of agree-
ment sent to you in advance.
Arbitration clause will be acceptabl.e to us if only arbitra-
c
tion to be done in India, according to the rules and regulations
and procedure of our country".
This letter was handed in to the respondent on the same day on which
Ext. A was signed and accepted by the parties and it would_ imply D
that it must be soon after the signing ceremony was over. Further,
the Managing Director of the appellant immediately on landing in
Bombay on July 13, 1961, sent a cable to the respondent which
reads as under :
"Reached safely Bombay (stop) Reference to our letter of ;E
10th July 1961 regarding Arbitration clause to be deleted from
the contract document".

Three things emerge from a conjoint reading of the letter and the
cable that before sub-contract Ext. A was signed by the parties at
.Belgrade, a draft of the intended sub-contract was sent by the
respondent to the appellant for its approval and the Managing
Director of the appellant had raised a limited objection to the arbitra-
tion clause. On behalf of the appellant it was suggested that there
. would be no objection to the arbitration clause if arbitration was
to be done in India. But as the original draft submitted on behalf
of the respondent suggested arbitration by a foreign arbitral tribunal G
stationed in Paris, the same was objected to on behalf of the appellant
and its amendment was sought. Undoubtedly, Managing Director
of appellant signed Ext. A which incorporated the arbitration agree-
ment as extracted herein-before. But the letter referred to herein
was handed in presumably soon after the signing ceremony of sub-
contract Ext. A was over and was followed by the cable which not ·H
<>nly referred to letter dated July 10, 1961, but also reiterated and
repeated the objection to the arbitration clause.
910 SUPREME COURT REPORTS [1981] 1 S.C.R.

A At one stage of the proceeding the respondent adopted a posi-
tion that neither the letter nor the cable were received by it anci
they are not genuine documents. The appellate Bench of the High
Court held that the letter and the cable were not received by the
respondent. This conclusion is not only contrary to evidence on
record but is reached in utter disregard of the admission of the
B Manager of the respondent. Hija Kostantinovic, Manager of the
respondent company stationed at' Calcutta filed an affidavit in re-
joinder. The admissions are spelt out in paragraphs 5 and 6 of the

c
affidavit which are extracted hereinabove. In para 6 it is in terms
admitted that the appellant purported to send a letter to the respondent
seeking to modify and/ or delete the arbitration clause contained in
the contract dated July 10, 1961, and also purported to send a tele-
_j
gram to the respondent. He further proceeded to state that the
respondent never agreed to the modification and/or deletion of the
arbitration clause. This unambiguous admission unmistakably shows
that the letter and the cable were received by the respondent. Of
course, again at a later stage when Panich Stojan, Project Manager
D of the respondent entered the witness box to give evidence in support
of the applicatimi for stay he was asked at Question No. 13 whether
he had any knowledge about the letter sent by the appellant on July
10, 1961, relating to the arbitration clause contained in the agree-
ment. The answer was that the deponent .had not received any
E letter in his department. To question No. 16 about the cable, the
answer was that the respondent had not received any cable also. In
cross-examination when he was confronted with the averments iri
paragraph 6 of the affidavit of Ilija Kostantinovic, a nebulous answer
was given that Mr. Kostantinovic must have replied to the letter
and the telegram. And he admitted that Mr. Kostantinovic was the
F Manager of the branch office of the respondent company at Calcutta.
Now, one employee, viz., the Manager of the respondent company
stationed at Calcutta in terms admitted the receipt of the letter
and the cable while the witness who claimed to be present at the
signing ceremony of the sub-contract Ext. A was emphatic that the
cable and the letter were not received and gave an explanation with
G regard to the averments of the affidavit which only show that truth was
otherwise. In the face of uncontroverted and unambigiious admission
in the affidavit of the Manager of the respondent company one can
without fear of contradiction assert that the letter and the cable were
received by the respondent. The letter and the cable would show
that the arbitration agreement to refer dispute~ to a foreign arbitral
H in the draft was not acceptable to the appellant though the other
terms were acceptable. The appellant repudiated the arbitration
agreement soon after the agreement was signed when the Managing
R. D. & SONS v. INVEST IMPORT (Desai, J.) 911

Director of the appellant was in Belgrade and took the follow up A
1
action by sending a cable reiterating and repeating the objection
immediately after his ,return to Ind~a.
Now once it is admitted and established that the letter and the
cable wer~ received by the respondent, ordinarily if the contents of .
the letter and cable are not acceptable to respondent, a reply to that
effect is naturally expected. Contention i& that respondent accepted

t
'
the change in arbitration clause proposed by the appellant sub silentio
coupled with the subsequent conduct. It is a fact that the respondent
did not write back saying that if the arbitration agreement was not
· acceptable to the appellant the sub-contract would not _be acceptable
as a whole to the respondent. On the contrary, after a specific objec- c
tion only with regard to arbitration agreement in the sub-contract
Ext N. by the appellant, the respondent allowed the appellant to
proceed further with the implementation and execution of the sub-
contract, without controverting what the appellant had stated in the
letter and the cable. This would unmistakably show that the respon-
dent accepted the alteration as suggested by the appellant in that the D
arbitration agreement was deemed to have been deleted from the sub-
contract Ext. A. Add to this the circumstance that a petty labour
contractor could not have been expected to or was not likely to agree
to arbitration by a foreign arbitral tribunal stati:oned in Paris because
it would be beyond its reach to seek relief by arbitration in a foreign
E
country.
Incidentally it. was urged by Mr. 'Majumdar that even if the
court proceeds on the assumption that the letter and the cable were
received, i:t is not open to this Court to look into the contents· of the
letter and the cable because the contents are not proved as the
Managing Director or the appellant company who is supposed to F
have signed the letter and the cable has neither entered the witnes~
box nor filed his affidavit proving the contents thereof. Relianct>
was placed on Judah v. I solyne Bose, ( 1 ) • In that case a letter and
two telegrams were tendered in evidence and it was observed that the
contents of the letter and the telegram were not the evidence of the
facts stated therein. The question i:n that case was whether the G
testatrix was so seriously ill as would result in impairment of her
testamentary capacity. To substantiate the degree of illness, a letter
and two telegrams written by a nurse were tendered in evidence. The
question was whether in the absence of any independent -evi:dence
about the testamentary capacity of the testatrix the contents of the
letter could be utilised to prove want of . testamentary capacity. H

(I) AIR 1945 P.C. 174.

•.
912 SUPREME COURT REPORTS [1981] 1 S.C R.

A Obviously, in these circustmances the Privy Council obse!Ved that
the fact that a letter and two telegrams were sent by itself would not
prove the truth of the contents of the letter and, therefore, the
contents of the lc~tter bearing on the question of lack of testamentary
capacity would not be substantive evidence. Undoubtedly, mere
proof of the handwriting of a document would not tantamount to
B proof of all the contents or the facts stated in the document. If the
truth of the facts stated in a document is in issue mere proof of the
'
handwriting and execution of the document would not furnish

c
evidence of the truth of the facts or contents of the document. The
truth or otherwise of the facts or contents so stated would have to be
proved by admissible evidence, r.e. by the evidence of those persons
who can vouch safe for the truth of the facts in issue. But in this
case Bhikhubhai Gourishankar Joshi who filed an affidavit on behalf
J
of the appellant has referred to the averments in the letter and the
cable. He is' a principal officer and constituted attorney of the
appellant company. Once the recerpt of the letter and the cable are
D admitted or proved coupled with the fact that even after the dispute
arose and before the suit was filed, in the correspondence that ensued
between the parties, the respondent did not make any overt or covert
reference to the arbitration agreement and utter failure of the
respondent to reply to the letter and the cable controverting the
averments made therein would unmistakably estabHsh the truth of
the averments made in the letter. What is the effect of averments
is a different question altogether but the averments contained in the
letter and the cable are satisfactorily proved.

It was, however, contended that once sub-contract Ext. A was
admittedly signed and executed by the Managing Director of the
appellant company, subsequent attempt on behalf of the appellant
F
lo repudiate a part of the contract would be of no avail and the
court cannot give effect to it except if the novatio suggested by the
appellant is unreservedly accepted and agreed to by the respondent.
In the facts of a given case acceptance of a suggestion may be sub
silentio reinforced by the subsequent conduct. True it is that the
G general rule is that an offer is not accepted by mere silence on the
part ofr the offerce. There may, however, be further facts which
taken together with the offeree's silence constitute an acceptance.
One such case is where a part of the offer was disputed at the
negotiation stage and the original offeree communicated that fact
to the offerer showing that he understood the offer in a paFticular
H sense. This communication will probably amount to a counter offer
in which case it may be that mere silence of the original offerer will
co11stitute his acceptance (see Halsbury's Laws of England, 4th Edn.,
R. D. & SONS v. INVEST IMPORT (Desai, !.) 913

Vol. 9, para 251). Where there is a mistake as to terms of a docu-
ment as in this case, amendment to the draft was suggested and a
<:ounter offer was made, the signatory to the original contract is
not estopped by his signature from denying that he intended to make
an offer in the terms set out in the document ; to wit, the letter and
the cable (Ibid. para 295). It can, therefore, be stated ,that where
the contract is in a number of parts it is essential to the validity of B
the contract that the contracting party should either have assented

t
to or taken to have assented to the same thing in the same sense or
as it is sometimes put, there should be consensus ad idem. And from
this it follows that a party may be taken to have assented if he has
so conducted himself as ,to be estopped from denying that he has so
assented (Ibid, para 288). Even apart from this, it would still be
c
. open to the party contending novatio to prove that he had not
accepted a part of the original agreemeJ1t though it has signed the
agreement containing that part. It would in this connection be
advantageous to refer to R. v. Fulhan, Hammersmith and Kensington
Rent Tribunal, ex parte Zerek, ( 1 ) wherein an oral agreement was D
· entered into between the landlord and a tenant for lease of unfurnish-
ed premises at weekly rent of 35s. The landlord subsequently
refused to grant the tenant possession unless he agreed to hire his
furniture to the landlord for one year at a rental of £ 12 and to
-execute a document certifying, inter alia, that the letting was a
furnished letting at a rent of 35s. a week. The tenant signed the E
·document and entered into possession. Later the tenant applied to
.ca rent tribunal to .fix a reasonable rent for the premises as an un-
. furnished dwelling house under the Landlord and Tenant (Rent
Control) Act, 1949. The tribunal accepted the tenant's evidence
that the premises were originally let unfurnished and came to the
F
· conclusion that the document signed by the tenant did not constitute
a valid agreement and did not modify or replace the earlier oral
agreement and tha: the premises were not bona fide let furnished.
The tribunal reduced the rent to 15s. a week. On an application by
the landlord for an order of certiorary, motion for certiorary was
G
refused and in so doing the subsequent written agreement was
·ignored and the previous oral agreement was accepted a:> genuine
t and binding. It would, therefore, be 'inappropriate to say that
because the appellant has signed the sub-contract, every part of it is
accepted by him even .though there is convincing evidence pointing
· to the contrary. It was, however, said that a subsequent negotiation ff

(I) [1951] 1 All E.R. 482.
914 SUPREME COURT REPORTS (1981] 1 S.C.R.

.A or a repudiation of part of the contract cannot in any manner affect
the concluded agreement. Reliance was placed on Davies v. Sweet( 1 )
the pertinent observation at p. 529 being as under:
"If there was originally a concluded bargain between the _>.
parties, this could only be got rid of by either (a) a mutual
B

j
agreement to call off the sale, or (b) an agreement for a varia-
tion of the tenns of the original contract. The mere fact that
there have been negotiations which prove to b~ abortive and do·
not result in an enforceable agreement does not des.troy the·
original contract : see Perry v. Su/fields Ltd. (1916) 2 Ch. 187.
c~ .
c
If on the evidence in this case it can be held that the sub-contract
Ext. A was a concluded contract in respect of all clauses of it
including the arbitration agreement, a subsequent repudiation of a·
part of it by a party to the contract cannot affect the concluded·
agreement. But as clearly pointed out hereinbefore an amenderp.ent
D was suggested to th<: draft of the intended contract and immediately
after the signing ceremony a letter pointing out that that part in;
respect of which amendment was sought and not carried out was:
not acceptable and it was followed by a cable it would indicate that
the parties were not consensus ad idem with regard to a severable·
portion of contract and there was thus lack of mutuality on the
E questron of arbitration agreement. Therefore, the conclusion is
inescapable that there was no concluded arbitration agreement
between the parties. The High Court rejected the contention of the
appellant holding that when the Managing Director of the appellant
11igned the contract at Belgrade on July 10, 1961, the sub-contract
contained the arbitration agreement and his signature was only less
F than half an inch away from the arbitration clause and that he has
not entered the witness box and offered himself for cross-examination
and that the r<:spondent's contention that the letter and the cable
were not received appeared to be acceptable. The High Court
totally overlooked and ignored the admission of receipt of letter and
cable in paragraph 6 of the affidavit of Ilija Kostantinovic. The
G High Court attached importance to the denial of the receipt of the
letter and the cable by Mr. Panich Stojan in his oral evidence and
did not attach importance to his subsequent admission that Mr.
Kostantinovic must have replied to the letter and the cable. Admis-
sion, unless explained, furnrshes the best evidence. With respect,
the High Court overlooked the material evidence, drew impermissible
H
inference and came to the conclusion which on evidence we find
(1) [1962] 2 W.1.R. 525.
R. D. & SONS v. INVEST IMPORT (Desai, J.) 915

utterly unsustainable. A finding of fact recorded by the High Court A
overlooking the incontrovertible evidence which points to the contrary
and, therefore, utterly unsustainable cannot .come in the way of this
Court reaching a correct conclusion on facts and the examination
of the evidence by this Court cannot be impeded by mere submission
that this Court does not interfere with finding of fact.
B
Assuming we are not right in reaching the conclusion that there
was no concluded arbitration agreement between the parties and that

l. the concurrent finding of fact recorded by the learned single judge
and the division bench of the High Court in Letters Patent Appeal
are binding on us, we may now examine the contention of law
whether in the facts and circumstances of this case th.e High Court
was right in exercising its discretion in favour of the respondent by
c
granting stay of the suit filed by the appellant.

If the application for stay filed by the respondent purported
to be under s. 34 of the Arbitration Act, by a catena of decisions ·
it is well settled that granting of stay of the suit is within the D
discretion of the Court. The expression 'such authority may make
an order staying the proceedings' clearly indicates that the Court
has a discretion whether to grant the stay and thereby compel the
parties to abide by the contract or the Court may refuse to lend
its assistance by· undertaking to adjudicate the dispute by refusing
E
the stay. If the application is under s. 151, C.P:C., undoubtedly
the Court will still have a discretion in exercise of its Inherent juris-
diction to grant stay of the suit or refuse the same but the approach
of the Court would be different. If s. 34 of the Arb1tration Act,
1940, is attracted, ordinarily the approach of the Court would be
to see .that people are held to their bargain. Therefore, the party
F
who in· breach of arbitration agreement institutes an action before
the Court, the burden would be on such party to prove why the
stay should be refused. On the other hand, if the application inmder
s. 151, C.P.C., invoking inherent jurisdiction of the Courf to grant
stay, the burden will be on the party seeking stay to establish facts
for exercise of discretion in favour of such party. In the present
case respondent who moved an application for stay of suit instituted
by the appellant founded its request for stay on shifting sands in
that at one stage it was stated that the application ·was under s. 34
of the Arbitration Act, at other stage it was· stated that it was under
s. 151, C.P.C., and before us it was stated that it is under s. 3 of
the Arbitration (Protocol and Convention) Act, 1937, or under H
the Foreign Awards (Recognition and Enforcement) Act, 19-61. In
the notice of motion taken out for stay of the suit by the respondent
ill 6 SUPREME COURT REPORTS [1981] 1 S.C.R.

A it was stated that the application purports to be under s. 151, C.P.C.
There is no reference to s. 34 of the Arbitration Act, 1940, in the
body of the petition or in the affidavit annexed to the petition. OB
the contrary, rt was stated in para 16 of the petition that if Arbitra-
tion Act, 1940 does not apply to the arbitration agreement relied
upon by the respondent, the Court may in exercise of its inherent
B jurisdiction restrain the appellant from proceeding with the suit.
Learned single judge appears to have treated the application to be
under s. 34 of the Arbitration Act, because in the last paragraph
of his order he has stated that the Arbitration Act applies even if
the arbitration agreement provides for reference to a foreign arbitral
tribunal. So saying, stay was granted which would imply that the
c learned judge treated the application to be one under s. 34 of the
Arbitration Act. While dealing with the contention of the appellant
that in view of the fact that arbitration agreement refers to arbitra-
tion by a foreign arbitral tribunal, Arbitration Act, 1940, is not
attracted, the Division Bench has assumed as was done in Michael
Golodetz & Ors. v. Serajuddin & Co.,( 1 ) that the Arbitration Act,
D
1940, invests in Court in India with authority to stay a legal proceed-
ing commenced by a party to an agreement against any other party
thereto in respect of any matter agreed to be referred,, even when
the agreement is to submit it to a foreign arbitral tribunal. It further,
however, held that even if s. 34 is not attracted, the Court can in
E exercise of the inherent jurisdiction for doing justice between the
parties, stay further proceeding of the suit which would imply that
the Court exercised its jurisdiction under s. 151, C.P.C. Both the
Courts practically overlooked the basic difference in the approach
which the Court will have to adopt if the application is to be treated
under s. 34 of the Arbitration Act, 1940, or one under s. 151, C.P.C.
F In any event, as the motion is at the discretion of the Court and
as both the parties have led evidence, the burden cf proof would
assume secondary importance.

The important question is whether the Court was justified in
the facts and circumstances of the case in exercising its discretion
G in favour of the respondent. ·Before examining this aspect, a minor
contention raised by Mr. Majumdar that when the motion is addres-
sed to the discretion of the Court and the Court bas exercised its
discretion one way, the appellate Court should be slow to interfere
with the discretionary order and substitute its own discretion in
place of the discretion of the Court before which the motion was
addressed and as in this case both the learned single judge and the
(l) [1964] 1 S.C.R. 19.
R. D. & SONS v. INVEST IMPORT (Desai, J.) 917

appellate bench have exercised the discretion in favour of the res·· A
pondcnt, in exercise of its extra-ordinary jurisdiction this Court
should not interfere with the same, may be disposed of. It is well
settled that where the trial court has a discretion in the matter, the
appellate court would not ordinarily substitute its discretion in place
of the discretion exercised by the trial court. But it is equally well
settled that where the trial court ignoring the relevant evidence, side
trackrng the approach to be adopted in the matter and overlooking
various relevant considerations, has exercised its discretion one way,
the appellate court keeping in view the fundamental principle can and
ought to interfere because when it is said that a matter i:> within the
discretion of the court it is to be exercised according to well esta-
blished judicial principles, according to reason and fairplay, and not c
according to him and caprice. ·'Discretion', said Lord Mansfield
in R. v. Wilkes, 'when applied to a court of justice, means sound
discreti:on guided by law. It must be governed by rule, not by
humour; it must not be arbitrary, vague, and fanciful, but legal and
regular' (see Craies on Statute Law, 6th End., p. 273). Jn the course
of this judgment we would be constrained to point out that both the
learned single judge and the judges of the Division Bench completely
overlooked the well established principles in granting stay of suit in
a case where reliance is placed upon a subsisting arbitration
agreement.
Mr. Chatterjee, learned counsel for the appellant deduced the E
following circumstances from the evidence on record which, when
properly evaluated, would unmistakably indrcate that this is not a
fit case in which the Court should decline to adjudicate upon the
dispute brought before it by granting stay in favour of the respondent :
(i) The entire main contract including the work of erecting the F
boilers entrusted io the appellant under the sub-contract
Ext. A, dated July 10, 1961, was executed and carded out
in India and the whole of the evidence both for and against
1 the appellant is in India; ·
(ii) The amount claimed in the suit is so disproportionately
small in relation to the huge cost of arbitration to be held G
at Paris in France that forcing the appellant to incur the
costs.Jp realise a small sum would be denial of justice;
. (iii) Restrictions on availability of foreign exchange is a relevant
consideration, a fact of which Court can take judicial
notice;
(iv) The Court should not lend its assistance by granting the
stay to one who insists on arbitration not as a matter of
1H8 SUPREME COURT REPORTS [1981] 1 S.C.R.

principle but with a view to thwarting, stifling or exhausting
the other side;
(v) In all cases of arbitration by a foreign arbitral tribunal there
is always a rider that in case of hardship or injustice Courts
of the country of the party being forced to go to foreign
arbitral trib11nal will protect him.
B
We would analyse and examine each one of the circumstances lieri-
inabove extracted separately and evaluate their cumulative impact on
exercise of the judicial discretion one way or the other. While so
doing the observations of the learned single judge and learned judges
of the Division Bench in granting stay of suit must receive serious
c consideration.
When parties by contract agree to arrange for settlement of
their disputes by a judge of their choice, by procedure of arbitration
voluntarily agreed upon, ordinarily the Court must hold the parties
to their bargain. As a corollary, if a party to a subsisting arbitration
D agreement in breach or violation of the agreement to refer dispute
to arbitration approaches the Court, the Court would not lend_ its
assistance to such a party and by staying the suit compel the party
in breach to abide by its contract. When the parties have agreed
to an arbitration by a foreign arbitral tribunal the case for stay would
be stronger than if there was a domestic arbitration agreement. This
E proceeds on the assumption that parties not only sought and ·agreed
upon· the forum for resolution of dispute but also the law according
to which the dispute would be resolved. However, this rs not an
absolute rule. G):anting or refusing to grant stay is still a matter
within the discretion of the Court. How discretion would be exer-
cised in a given case would depend upon various circumstances.
F But .to grant stay of the suit is still a matter within the discretion of
the Court. In Bristol Corporation v. John Aird & Co.,( 1 ) Moulton,
L.J. observed as under :

"But, my Lords, it must be remembered that these arbitra-
tion clauses must be taken to have been inserted with due regard
G to the existing law of the land, and the law of the land as ap-
plicable to them is, as I have said, that it does not prevent the
parties coming to the Court, but only gives to_!he Crort the
power to refuse its assistance in proper cases. Therefore, to
say that if we refuse to stay an action we are not carrying out
the bargain between the parties does not fairly describe the posi-
H
tion. We~ are carrying ou~ the bargain between the parties,
(I) [1913] A.C. 241 at 257.
.1{. D. & SONS v. INVEST IMPORT (Desai, J.) 919

because that bargain to substitute for the Courts of the land a A
domestic tribunal was a bargain into which was written, by
reason of the existing legislation, the condrtion that it should
only be enforced if the Court thought it a proper case for its
being so enforced".
In Owners of Cargo Ex "Athenee" v. Athenee,( 1 ) the Court of B
Appeal affirmed the extracted passage from Lord Moulton's judgment.
In that case ·the action was brought by the receivers of a part cargo
of onions, which it was alleged were damaged in course of carriage
from Alexandria to Hull, and the President of the Admirality Division
dec1ined to stay the action. The Court of Appeal in the appeal at
the instance of tlie defendants declined to interfere with the order c
refusing the stay on the ground that the balance of convenience and
the substantial advantage which the plaintiffs have by suing in U.K.
(and which they lose by not being able to proceed in rem against
this ship) and many other advantages' such as_ in respect of proof of
loss, a matter which any commercial tribunal would wish should be
decided, if possible, having regard to the evidence obtained at the D
time by inspection of the vessel and so on, and in these c!rcumstances
the arbitration clause in the contract was not given effect to.
Reverting to the circumstances relied upon by the appellant
which are likely to influence the discretion of the Court, the first sub-
mission is that the whole of the principal contract including the sub- E
contract was carried out in India and the whole of the evidence both
r -of the appellant and the respondent is in India and that this is a rele-
•' vant circumstance which must influence the judicial verdict. Appel-
1ant has itemised his different claims· in the plaint. Broadly stated,
it claims payment for extra work, difference between agreed charg~~
-and the revised charges, loss incurred on account of non-performance F
'Of a part of the contract by the respondent, etc. In respect of most
'Of the claims the appellant will have to examine the men incharge ·
-of the work, strength of labour force supplied by it and this evidence
would ce,rtainly be in India. Respondent had ·set up its' office at
'Calcutta and this office was functioning even when the suit was
instituted. Looking to the various heads of claim by the appellant G
and the correspondence between the parties prior to the suit it is safe
to conclude that the evi:dence of the respondent would also be in
India. Of course, as a remote possibility some highly placed officers
may have to be examined by the respondent who may be in Yugos-
1avia. Mr. Majumdar learned counsel for the· respondents, however,
. !Urged that the respondent has closed its office and all the books and H

0) Llyods' List Law Reports, Easter Sittings 1922, Vol. XI, page 6.
.\
•'

920 SUPREME COURT REPORTS [1981] l S.C.R.

A relevant documents have been taken to Belgrade and, therefore, it is
now. too late' in the day to say that the evidence of the respondent is
also in India. The Court b· required to consider the situation as on
the date of institution of the suit and unquestionably on the date of
institution of the suit office of the respondent at 36, Ganesh Chandra
Avenue, Calcutta. was functioning and within 7-8 days of the instrtu-
B tion of the suit respondent appeared in the suit through Ilija Kostan-
tinovic, Manager of the respondent stationed at Calcutta. Neither

J
in the, main petitron for stay nor in the affidavit in rejoinder it was
anywhere stated that the evidence of the respondent was not in India.
It was, however, urged that nearly a decade has rolled by and that
this Court should take into consideration the change in circumstances
c on account of the passage of time for which respondent is in no way
responsible. Reliance was placed on Pasupuleti Venkateswarlu v.
The Motor & General Traders. (1) In that case :m action was brought
by the landlord for recovering possession of certain premises from the
tenant. When the matter was pending in the High Court, evidence
was tendered to point out that since the institution of the action in
D
the tri:al court the landlord has recovered another accommodation and
that if the subsequent development is taken into consideration land-
lord has no present need of the accommodation in possession of the
tenant. The High Court admitted evidence on this point arnd took
into consideration the fact that the landlord has since the institution
E of the suit obtained possession of another accommodation and on
this finding non-suited the appellant. An objection was taken on
behalf of the landlord before this Court that the High Court was in
error in taking i:nto consideration subsequent events and this conten-
tion was negatived. In the very nature of action for eviction on the
ground of personal requirement, the Court has not only to be satisfied
F that the requirement was present at the date of institution of the
action but continued to exist at the time of decree and has to mould
the decree accordingly. Even if subsequent events as have a bearing
on the contention canvassed before the Court have to be taken into
consideration, there is no material on record to show that the respon-
dent has closed its office at Calcutta and that the documents and
G books of accounts which may have to be tendered in evidence have
been taken to Yugoslavia. Save this, Mr. Majumdar could not
controvert the fact that the entire evidence both of the appellant and
the respondent which may be relevant for resolution of the dispute
involved in .the suit is in this country, India. In Athenee (supra)
case the fact that the evidence was in U.K. was considered as very
H relevant considera~ion for refusal to stay the suit. In Michael

(1) [1975] 3 S.CR. 1958.
R. D. & SONS v. INVEST IMPORT (Desai, J.) 921

Golodetz & Ors~ (Supra) the fact that all the evidence of the par.ties A
was in India was acc_epted by this Court as a relevant consideration
for refusing to stay the suit.
The next circumstance relied upon is that the cost of arbitra-
tion to be held at Paris would be so disproportionately high to the
amount claimed in the suit that forcing the appellant to go to arbitra- B
tion would be denial of justice. This is self-evident. The claim
in the suit is Rs. 4,25,343. Now, just contemplate taking witnesses
aad books· of accounts to Paris for leading evidence before the Inter-
national Chamber of Commerce. The cost would certainly be dis-
proportronately high. One need not go into the mathematical calcula-
1
tions _for tbis obvious and self-evide nt proposition. . c
The next circumstances relied upon is restriction on availability
of foreign exchange as a relevant consideration. If wi1nesses ·are
required to be taken to Paris, if lawyers are to be engaged in Paris
and ·if documents• are to be sent to Paris, all this would require
foreign exchange. Foreign exchange is a scarce and controlled com- D
modity. It can be obtained for prescrrbed purpose. Both in the case
of Michael Golode,tz (Supra) and in V/O Tractoroexport, Moscow v.
M/s. Tarapore & Company and Anr.(1), this Court held that restric-
tion on availability of foreign exchange is a relevant consideration
which should enter into judicral verdict for exercising the discretion
one way or the other. The High1Court in this connection observed E
that if the Managing Director of the appellant company could obtain
r foreign exchange for going to Belgrade to sign the contract, why
should it be assumed that he would not get foreign exchange this
time too to plead his cause - a cause which owes its existence to
the grant of foreign exchange in 1961 ? This casual approach is
F
none-too-convincing. Foreign exchange for a visit for few days can-
not be equated with heavy requirement of foreign exchange for
engaging counsel, taking witnesses and transporting documents from
India to Parrs so as to substantiate a claim of Rs. 4,25,343. And
the judicial approach is not whether the appellant would get neces-
sary foreign exchange but the approach is should this valuable natio- G
nal asset of foreign exchange be frittered away for resolving a petty
matter which can be conveniently resolved even in this country.

The next circumstance canvassed is thait the Cour.t should not
lend its assis tance by granting the stay of .the sutt to one who insis,ts
1

on arbitxation not as a matter of principle but with a view to thwart-
H
ing, stifling or exhausting the other side. Respondent insists that
(l) (1970] 3 S.C.R. 53.
17-645 S. C. India/SO
922 SUPREME COURT REPORTS [1981] 1 S.C.R.

A by staying the suit the appellant should be forced to go to arbitration
if i,t desires to vindicate its claim. Is this approach clictated by some
1

principle or was the respondent aware of the fact that looking to
the quanrum of cl<tim the appellant would not undertake the hazar-
duous and expensive adventure of going to ~oreign arbitration tribunal
stationed at Paris and that thereby the respondent would be able to
B thwart or stifle the claim of the appellant? If the relief to be grant-
ed i~, discretionary, the approach of each party persuading the Court I
1t'o exercise the discretion one way or the other would be a vital· and ~
relevant consideration. The respondent has anyhow either to appear ~
before the Court in India or a foreign arbitral tribunal in Paris. .J
c The respondent is from Yugoslavia. Apart from this, the respondent..-~/
has an office at Calcutta and the responsible officer like a Manager
was stationed at Calcutta. The correspondence between the parties
prior to the institution of the suit shows that the relevant documents
were in India on the basis of which certain !"eplies were given by
the respondent to ,the claims advanced on behalf of the appellant.
D But once the suit was filed, the respondent insists that arbitration
agreement should be given full effect. Having regard to all the
circumstances of the case it appears crystal clear that the respondent
is motivated to seek s.tay neither ito vindicate any principle nor to
hold the appellant to the bargain but to force ithe appellant to go
to Paris incurring disproportionaitely heavy cost or to give up the
E claim. In Michael Go/odetz (Supnt) the fact that arbitration in New
York would proceed ex parte was viewed with disfavour and stay
was refused. Similarly, in The Fehmarn( 1 ), the principal object of
the defendant was not to achieve a trial in Russia bu~ merely make
it more difficult to the plaintiffs to assert their claim, was emphasised
while refusing stay. In such a si,tuation if there are other weighty
F circumstances which indic:ate that the Court should not lend its
assistance to the respondent by staying 1the suit, 1this aspect of the
approach of ,the respondent would reinforce the conclusion.

The next circumstance urged is thait even where parties have
agreed to refer a dispute to foreign arbitral tribunal it is always
G subject to a rider that the agreement i:s subject to the law of the
land, viz., that it does not prevent the parties from coming to the
courit but only gives ito the Cou~t the power to refuse its assistance +
in appropriate cases. And enforcing the agreement would work
hardship or injustice, the Court would take iV into consideration
H before holding the parties to their bargain. In The Fehmarn, a
cargo was loaded at a Russian port by a Russian shipper on board
(I) [1957] 2 All E.R. 707.
R. D. & SONS v. INVEST IMPORT (Desai, J.) 923

-the Fehmarn, a ship owned by a German Company. The cargo was, .A
by terms of the bill of lading, shipped in apparent good order and
.condition and was to be delivered at the port of London in like order
A and condition. The plaintiffs, an English company, purchased the
.cargo and became the holders of the bill of lading, thereby agreeing
to be bound by iris ,terms, one of which was that all questions and
B
·disputes should be determined in the U.S.S.R. At the Port of London
the cargo was discovered, according to the plaintiff, to be contaminat-

l
·ed and the damage was . surveyed. The plaintiffs issued a writ
'Claiming against .the defendants damages for breach of the contract
. evidenced by the bill of lading. The only matter for evidence, so
far as the plaintiffs' case was concerned, that did not arise in England c
was the condition of the goods when shipped, as regards which the
"' bill of lading contained the statement mentioned above. The
,defendants moved to set aside the writ for want of jurisdiction on
the ground that by the contract the parties had agreed that all
·disputes arising under it should be judged in the U.S.S.R. and contend-
·ed alternatively that all proceedings should be stayed. Willmer, J. D
in Admirality Division, held that where there is a~ provision in the
contract providing that disputes are to be referred to a foreign
tribunal prima facie the court will stay the proceedings instituted
in England in breach of such agreement and will only allow them to
proceed when satisfied W,at it is just and proper toi do so. That
according .to the Court was the principle. After further holding E
that the matter is in the discretion of the Court, stay was refused
~ on the ground that the plaintiffs were persons domrciled in England,
the claim arose in England, the ·damage sued for was discovered
in England, the cargo was surveyed in England, and the
damage was ascertained after the survey. The fact that the
entire evidence was• in England was emphasised as a relevant con- F
sideration. The Court also observed that from the correspondence
, . one is left with the suspicion that the principal object of tbe defen-
dants was not to' achieve a trial in Russia, but merely to make it
.more difficult for the plaintiffs to assert their claim. On all these
considerations stay was re~sed. And thi'S decision was affirmed
by the Court of Appeal in The, Fehmarn(1) Denning, L. J., observed G
_... that the dispute is more closely connected with England than with
Russia. We cannot resist the temptation to point out that the fact
situation in the case before us is almost similar, if not identical,
to the one in The Feflmar.n (Supra).
The last circumstance relied upon is that in all cases of arbi-
H
tration by a foreign arbitral tribunal there. is always a rider that in
(I) [1958] 1 All E.R. 333.
9 24 SUPREME COURT REPORTS [1981] 1 S.C.R.

A. case of hardship or injustice Courts of the country of the party being
forced to go to foreign arbitral tribunal will protect him. Ordinarily,
the Court where the cause of action has arisen would try to resolve
the dispute brought before it from the cause of action arising out of
its jurisdiction. If parties have agreed to another mode of resolu-
tion of dispute, the Court may hold the parties ,to their bargain but
B when the Court is. deprived of the jurisdiction by an agreement
between the parties and if the Court is called upon to enforce it,

J
the matter will still be within the discretion of the Court. As was
stated in Bristol Corporation (Supra) case when the Court refused
· to stay an action it cannot be said that the Court is not carrying
out the bargain between the parties because that does not fairly
c describe the position. The Court is carrying out the bargain between
the parties because the bargain to substitute for the Courts of the
land a domestic tribunal was bargain into which was written, by
reason of the existing legislation, the condition that it should only
be enforced if the Court thought it a proper case for its being so
D enforced. And that is where. the discretion of the Court creeps in.
Further, Russel on Arbitration, 19th Edn., p. 194, neatly sums up
the relevant considerations for granting or refusing stay. It reads :
"The principfos established by the authorities can, I think,
be summarised as follows : (1) Where plaintiffs sue in England
in breach of an agreement to refer disputes to a foreign Court,
E
and the defendants apply for a stay, the English court, assuming
the claim to be otherwise within its jurisdiction, is not bound -,,.,.

i
to grant a stay but has a discretion whether to do so or not.
(2) the discretion should be exercised by granting a stay
unless strong cause for not doing so is shown. (3) The burden
F of proving such strong cause is on the plaintiffs. ( 4) In
exercising its discretion the court should take in to account all
the circumstances of the particular case. ( 5) In particular,
but without prejudice to ( 4), the following matters, where they
arise, may properly be regarded : - (a) In what country the
evidence on the issues of fact is situated, or more readily
G available, and the effect of that on the relatrve convenience
and expense of trial as between the English and foreign courts.
(b) Whether the law of the foreign court applies and, if so, +
whether it differs from Engfoh law in any material respects.
(c) With what country either party is connected, and how closely.
(d) Whether the defendants genuinely desire trial in the foreign
H country, or are onlJ seeking procedural advantages. (e) Whether
the plaintiffs would be prejudiced by having to sue in the foreign
court because they would : (i) be deprived of security for their
R. o·. & SONS v. INVEST IMPORT (Desai, J.) 925

claim; (ii) be unable to enforce any judgme11t obtained; (iii) be A
faced with a time-bar not applicable in England; or (iv) for
political, racial, religious or other reasons be unlikely to get a
fair trial".
>-..
To sum up, the entire evidence both of the apppellant and the
respondent is in this country; the contract as a whole was executed
B
and carried out in this country; the claim as a whole arose in this
country; the appellant is a company incorporated in this country
and the respondent is having its office in this country; and that the
respondent is not motivated by any principle to have the decision
of the foreign arbitral tribunal at Paris but the principal object of
the respondent is merely to make it more difficult, if not impossible, c
for the appellant to assert the claim. Add to this two other vital
considerations, viz., that the· cost of arbitration at Paris will be so
disproportionately high to the claim involved in adjudication that
one would never think of incurring such a huge cost to realise such
a small sum claimed, and the restriction on the availability of D
foreign exchange, another vital relevant consideration. The sum
total of all these well established circumstances clearly indicate that
this was a suit in which when discretion is exercised on well settled
judicial considerations no _court would grant stay and the stay has
to be refused.
And now to the approach of the appellate Bench of the High E
Court relevant to the point. Says the Court :
"Here is a contract solemnly entered into between the ap-
pellant, an Indian company, and the respondent, a Yugoslav
company, in aid of another contract entered into between the
latter and the State of Bihar through its· Electricity Board for F
erection of a thermal power station at Barauni. What a valu-
able possession for the nation such thermal power station means
is plain to be seen. We do not, Yugoslavs do, know the know-
how, of erecting a thermal power station. Hence they are here
on the role of collaborators to help us make such an invaluable
acquisition. And to get it built the authorities spare from their G
none too adequate resources the requisite foreign exchange for
the appellant's managing director, Lalbhai, in order to enable
him to proceed to Belgrade with a view to signing the contract,
which he does, his signature being "only one centimetre away"
from the contract's arbitration clause".
Does it call for any· comment or analysis that the division bench H
completely misdirected itself while examining the question of granting
discretionary relief one way or the other ? Does it disclose exercise
926 SUPREME COURT REPORTS [1981] 1 S.C.R.

A of discretion on sound judicial principles or the Court is carried away
by the considerations wholly extraneous and irrelevant? Yugoslavs
did not undertake constructron of thermal power station actuated by
any altruistic motive but guided by sound business considerations.
One who comes here to earn by going into business need not be put A
on a pedestal. The High Court overlooked the global competition
B for obtaining international contracts and it is not a philanthropic
motive. The extracted passage clearly indicates an approach not
dictated by sound judicial· principles but considerations wholly
extraneous to the issue under discussion. It is in these circumstances
that this Court is constrained to interfere with the discretionary relief
granted in this case.
J
c
The next contention is that i:n view of the provisions contained
in Arbitration (Protocol and Convention) Act, 1937, ('1937 Act'
for short), the Court could not invoke its inherent jurJsdiction under '7'
s. 151, C.P.C., and the special Act would not assist the respondent
because the present cas~ is· not covered by the provisi:ons of the Act.
D Mr. Majumdar urged that the 1937 Act was enacted to give effect
to the protocol on arbitration clause set forth in the First Schedule
and to the convention on the execution of foreign arbitral awards set
forth in the Second Schedule as India was a signatory to the proto-
col. Mr. Majumdar urged that even if the applicati:on for stay is
not entertainable under s. 34 of the Arbitration Act on the ground·
E that this is a foreign arbitration to which Arbitration Act, 1g4o, will
not apply, nor could he invoke inherent juri:sdiction of the Coart
under s. 151 of the Code of Civil Procedure, yet the application is
maintainable under s. 3 of the 1937 Act.. Section reads as under: ~

"3. Notwithstanding anything contained in lhe Arbitration
F Act X of 1940, or rn the Code of Civil Procedure, 1908, if any
party to a submission made in pursuance of an agreement to ~
which the Protocol set forth in the First Schedule as modified by
the reservation subject to which it was signed by India applies,
or any person claiming through or under him, commences any
legal proceeding i:n any court against any other party to the sub-
G mission or any person claiming through or under him iri respect
of any matter agreed to be referred, any party to such legal
proceeding may, at any time after appearance and before filing
a written statement or taking any other steps in the proceedings, +
apply to the Court to stay the proceedings; and the Court unless
satisfied that the agreement or arbitratron has become inopera-
H tive or cannot proceed, or that there is not in fact any dispute
between the parties with regard to the matter agreed to be
referred, shall make an order staying the proceedings".
R. D. & SONS v. INVEST IMPORT (Desai, J.) 927

India and Yugoslavia have ratified the protocol. The question, A
however, is whether s. 3 is attracted in this case. The important
expression in s. 3 to be noted is : "if any party to a submission made
in pursuance of an arbitration agreement to which the Protocol set
forth in the First Schedule as modified by the reservation subject to
whrch it was signed by India applies". This expression postulates an
B
agreement to which the protocol set forth in the First Schedule as
modified by the reservation subject to which it was signed by India
applies and a ~ubmission made in pursuance of such agreement. Now,

l_ both India and Yugoslavia have ratified the protocol modified by the
reservation subject to which it was signed by India. It may be
assumed that arbitration agreement between the parties to this appeal
is governed by the 1937 Act. Section 3 is, however, not attracted
c
merely where an agreement as set forth in the First Schedule is sub-
sisting between the partie8 but the next step ought to have been taken
before proceedings can be stayed in exercise of the power conferred
by s. 3, viz., submission made in pursuance of such an agreement.
A reference to s. 3 of the Foreign Awards (Recognition & Enforce- D
ment) Act, 1961, ('1961 Act' for short), prior to its amendment by
the Amending Act of 1973 and a decision of this Court interpreting
the expression : "if any party to a submission made in pursuance of
an agreement to whrch" would clearly establish that mere existence
of an agreement as envisaged by the First Schedule would not attract
s. 3 of the 1937 Act but it would only be attracted '-':here there is a E
submission pursuant to that agreement. Section 3 of the 1961 Act
prior to its amendment in 1973 read as under:
"3. Stay of pro~eedings in respect of matter to be referred
to arbitration : Notwithstanding anything contamed in the
Arbitration Act X of 1940 or in the Code of Civil Procedure, F
1908, if any party to a submission made in pursuance of an
agreement to which the Convention set forth in the Schedule
applres, or any person claiming through or under him, com-
mences any legal proceedings in any Court against any other
party to the submission or any person claiming through oninder
him in respect of any matter agreed to be referred, any party G
to such legal proceedings may at any time after appearance or
before filing a written statement or taking any other steps in the
-+ proceedings, apply to the Court to stay the proceedings and the
Court, unless satisfied that the agreement is null and void in-
operative or incapable of being performed or that there is not in
fact any dispute between the parties with regards to the matter H
agreed to be referred, shall make an order staying the
proceedings".
928 SUPREME COURT REPORTS [1981] 1 S.C.R.

A This section came in for interpretation in V / 0 Tractoro-Export,
Moscow. Interpreting this section this Court held as under :
"But in the present case a suit is being tried in the courts
of this country which, for the reasons already stated, cannot be
stayed under section 3 of the Act in the absence of an actual
submission of the disputes to the arbitral tribunal at Moscow
B
prior to the institution of the suit".
Section 3 of 1937 Act is in pari materia with s. 3 of 1961 Act.
It, therefore, becomes crystal clear that s. 3 of the 1937 Act would
only be attracted if there is a submission pursuant to an agreement
to that effect. In fact, the decision in VI 0 Tractoro-export, Moscow,
c (Supra) made it necessary for the Parliament to amend s. 3 of the
1961 Act. In this case we are concerned with s. 3 of the 1937
Act which is not amended. It must, therefore, receive the same
interpretation which an identical provision received at the hands of
this Court. Viewed from that angle, in this case while there is an
agreement as contemplated by First Schedule to 1937 Act, there
D is no submission made in pursuance of such agreement and, therefore,
the apjplication of the respondent could not have been entertained
under s. 3 of the 1937 Act. As far as the 1961 Act is concerned,
Mr. Majumdar conceded that Yugoslavia has not ratified the protocol
pursuant to which 1961 Act was enacted and, therefore, the respon-
dent cannot maintain its application under s. 3 of the 1961 Act.
E
The last submission is that this being an arbitration agreement
to refer a dispute to a foreign arbitral tribunal, s. 34 of the Arbitra-
tion Act would not be applicable and hence the application of the
respondent for stay of the suit is not maintainable. It is not necessary
to examine this contention on its merits because we have assumed
F for the purpose of this appeal that s. 34 of the 1940 Act would be
attracted even where the agreement is to refer a dispute to a foreign
arbitral tribunal.
Having examined the matter from all angles it is clear that both
the learned single judge and the division bench of the High Court
were in error in granting stay of the suit in this matter and, therefore,
G Civil Appeal No. 2407 of 1968 is allowed and the stay of suit
granted by the ·learned single judge and affirmed by the division
bench of the Calcutta High Court is vacated. The suit should
accordingly proceed further from the stage where it was stayed.
As the suit is a very old one, we hope the trial court would give
priority to it and dispose it of as expeditiously as possible. The
H
appeal is allowed with costs throughout.
N.V.K. Appeal allowed.