Judgement

MAHAJAN, J.: This appeal by special leave arises out of an application made by the State of Bihar against the Gaya Electric supply Co. Ltd., under S. 34, Arbitration Act, for stay of proceedings in a suit filed by the company on 28-9-1950. The facts relevant to this enquiry are these :

A licence for the supply of electric energy in the town of Gaya was obtained by one Khandelwal in the year 1928 under the Electricity Act, 1910. With the required sanction of the Government the licence was transferred to the company In 1932. By a notification dated 23-6-1949 the licence was revoked by the Government with effect from 9-7-1949. Thereupon, the Company filed a suit against the State for a declaration that the revocation of the licence was arbitrary, mala fide and ultra vires. During the pendency of the suit, negotiations started between the company and the State for a settlement of the dispute and ultimately on 28-10-1949 a deed of agreement was arrived at between them. The effect of the agreement and the correspondence referred to therein was substantially as follows :

(a) That the Company would withdraw the suit No. 58 of 1949 unconditionally on 25-10-1949.

(b) That within three