Judgment

RAMASWAMI, J. : This appeal is brought, by special leave, from the judgment of the Punjab High Court, dated February 22, 1962 Civil Revision No. 331-D of 1958 whereby the High Court upheld and confirmed the judgment of the Appellate Court and set aside the judgment of the trial Court staying proceedings in the suit.

2. The Uttar Pradesh Co-operative Federation Limited (hereinafter referred to as the Society ) was registered under the Co-operative Societies Act No. II of 1912 at Lucknow and was carrying on the business of plying public carriers on Kanpur Delhi route. The Society had been granted, for this purpose, permits by the Uttar Pradesh Government and Delhi Administration for seven vehicles. In March 1954, the Society entered into an agreement with the plaintiffs M/s. Sunder Brothers - through Bimal Kumar Jain and Dhan Kumar Jain by which they were appointed as Managing Agents for carrying on the business as public carriers. The terms of the Managing Agency agreement were embodied in a letter, dated March 2, 1954 written by the Secretary of the Society. Clause 28 of the agreement reads as follows :

"That in the event of there being any dispute regarding the terms and conditions of this agreement and your appointment hereunder as Managing Agents of the aforesaid business or any matter arising from and relating thereto or the subject matter thereof, such dispute shall be decided by arbitration as provided under Co-operative Societies Act II of 1912 and you undertake and agree to be bound by the provisions for arbitration in the said Act".

The agreement was to last for a period of three years but on July 5, 1954 the Society terminated the agreement by its letter, dated July 5, 1954. The plaintiffs, therefore, brought a suit on August 18, 1954 in the Court of the Subordinate Judge, First Class, Delhi, praying for a declaration that the termination of the Managing Agency agreement by the Society was illegal and the plaintiffs were entitled to continue the business of Managing Agents in accordance with the terms and conditions of the agreement. The plaintiffs prayed for a mandatory injunction restraining the defendant Society from terminating the agreement. The Society made an application under Section 34 of the Indian Arbitration Act, 1940 before the Subordinate Judge, Delhi, for an order for staying the suit. It was claimed by the Society that the suit was not maintainable because under S. 51 of the Co-operative Societies Act the dispute was to be adjudicated upon by the Registrar of Co-operative Societies. In the alternative it was alleged that by agreement between the parties the dispute was to be referred to arbitration in accordance with the Cooperative Societies Act and consequently proceedings should be stayed. The trial Court stayed the proceedings but on the appeal of the plaintiffs the order of the trial Court was set aside and the application of the plaintiffs under S. 34 of the Indian Arbitration Act was dismissed. The Society moved the Punjab High Court in revision but the revision application was dismissed and the order of the lower appellate Court was confirmed.

3. It is necessary at this stage to set out the relevant provisions of the Indian Arbitration Act Act X of 1940). Section 34 of this Act states :

"34. Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings, and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willin