JUDGMENT

DESAI, J. :— A fond hope that a decision of this Court with the sanction of Art. 141 of the Constitution that the law laid down therein will be the law of the land would put an end to a raging controversy amongst various High Courts stands to some extent rudely shaken when the controversy with a slight variation has again been placed in the lap of this Court.

2. For highlighting and then resolving the controversy facts in dispute have a little or no relevance save and except mentioning certain events. Respondent Yadav Engineer and Contractor, a partnership firm filed a writ against Food Corporation of India, 1st defendant and Shyam Narain Nigam, District Manager of 1st defendant as 2nd defendant, for a declaration that the contract between the plaintiff and the 1st defendant for handling and transportation of the goods of the 1st Corporation was subsisting on the date of the suit and restraining the defendant from committing breach of the same by handing over that work to someone other than the plaintiff. The suit was instituted on June 1, 1981, in the Court of the III Civil Judge, Class I, Gwalior. In the suit a notice of motion was taken out purporting to be under O. XXXIX Rr. 1 and 2 read with Section 151, Civil P. C., for an interim injunction restraining the defendants from committing a breach of contract and from interfering with the work of handling and transport of goods of the 1st defendant Corporation by the plaintiff during the pendency of the suit. On the notice of motion being taken out the Court directed notice of the same to be served and the same was made returnable on the next day, June 2, 1981, On the returnable date the 2nd defendant District Manager of the 1st defendant-Corporation who had office in the city of Gwalior was served and he appeared through one Shri N. K. Modi, Advocate, filed the letter of authority (Vakalat) in favour of the learned Advocate on behalf of 2nd defendant and the learned advocate prayed for time for "reply and arguments to the plaintiffs application for temporary injunction". The Court acceded to the request and posted the matter on June 3, 1981. An endorsement appears in the record that the 1st defendant Food Corporation of India was not served though the endorsement reads absent. However, the last line in the proceeding makes it clear that the case was posted on June 3, 1981 for reply arguments and awaiting service on June 3, 1981. When the matter came up on the next day, i.e. June 3, 1981, an application was moved on behalf of 1st defendant inviting the attention of the Court to the subsisting arbitration agreement between the plaintiff and the 1st defendant and which agreement authorised the Managing Director of the 1st defendant to appoint an arbitrator in respect of any dispute arising out of the contract between the plaintiff and the 1st defendant. It was also stated that the 1st defendant desires to have the dispute, if any, resolved by arbitration under the subsisting arbitration agreement and that the defendant is fully ready and willing (ichhuk) to go to arbitration. The application concluded with a prayer that under the circumstances the suit may be stayed as provided in Section 34 of the Arbitration Act, 1940 (Act for short).

3. The learned trial Judge was of the view that the dispute between the parties is covered by the arbitration agreement set out in Article 19 of the contract between the plaintiff and the 1st defendant. The learned Judge negatived the contention that an application made by the 2nd defendant for filing reply to the notice of motion taken out by the plaintiff for interim injunction is a step taken in the proceedings in view of the binding decision of a Division Bench of the Madhya Pradesh High Court in Sansar Chand Deshraj v. State of Madh. Pra., AIR 1961 Madh Pra 322. The learned Judge accordingly granted stay of further proceedings in the suit as prayed for on behalf of the 1st defendant. Plaintiff preferred an appeal in the Court of the