JUDGMENT

CHINNAPPA REDDY, J. - The appellant, General Electric Company, a multi-national, entered into a contract with the respondent, Renusagar Power Company Limited, an Indian Company, agreeing to sell equipment for a Thermal Electric generating plant to be erected at Renukoot on the terms and conditions set forth in the contract. For the purposes of this case, it is unnecessary to set out the terms of the contract and the details of what we envisaged to be done by the parties. It is also unnecessary to set out the various events that took place subsequently. It is sufficient to state that on March 2, 1982, the GEC submitted certain disputes between the GEC and Renusagar for arbitration to the International Chambers of Commerce. On June 11, 1982, Renusagar filed a suit in the Bombay High Court for a declaration that the claims purported to be referred to arbitration by GEC to ICC were beyond the scope and purview of the arbitration agreement contained in the contract and sought an injunction to restrain the GEC from taking any further steps pursuant to their request for arbitration addressed to ICC on March 2, 1982. In Renusagars suit, GEC, on August 11, 1982 filed a petition under Section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 seeking a stay of the suit. On August 19, 1982 GEC also filed a suit in the Calcutta High Court against the United Commercial Bank to enforce a bank guarantee given by the bank at the instance of Renusagar. On November 25, 1982, Renusagar filed a suit No. 127 of 1982 in the Court of Civil Judge, Mirzapur praying for a declaration that the guarantee given by the United Commercial Bank for and on behalf of the plaintiff stood discharged and had become ineffective and unenforceable and for a mandatory injunction against the GEC directing and ordering them to settle the plaintiffs claim regarding 75 MVA Transformers and to satisfy validly the settlement arrived at of the plaintiffs claim as mentioned in para 12 of the plaint.

2. It is useful to refer at this juncture to some of the happenings in the proceedings in the Bombay High Court. On April 20, 1983, a learned Single Judge of the Bombay High Court dismissed the notice of motion taken out by Renusagar for stay of the arbitration proceedings and allowed the application of GEC for stay of further proceedings in the Bombay High Court. Appeal filed by Renusagar to the Division Bench of the High Court were dismissed on October 21, 1983. Further appeals filed by Renusagar to the Supreme Court were also dismissed on August 16, 1984. The Supreme Court held that the claims of GEC were arbitrable and that the decision of the court was conclusive on that issue and would not arise before the court of arbitration of ICC.

3. On January 17, 1983, GEC filed an application (7-c) purporting to put on record their complaint that annexures to the plaint had not been received by them. On the same day, the Civil Judge made an order : "Copy of the plaint has been given to the defendant (GEC) so that the defendant may file a written statement." On the same day, the defendant GEC also filed another application (8-C) purporting to be under Section 20 and Order 7 Rule 11 read with Section 151 of the Code of Civil Procedure praying that the court may be pleased to reject the plaint and the suit. In this application, it was stated that the suit was an abuse of the process of the court and an attempt to harass the defendants. The court was requested to dismiss the plaintiffs suit on that ground as also on other grounds which were thereafter mentioned. It was stated that the defendant did not reside and no cause of action arose within the local limits of the jurisdiction of the court. There was a violation of the stipulation laid down in Section 20 of the Code of Civil Procedure resulting in an abuse of the process of the court. It should entail a dismissal of the suit. The suit had been fraudulently instituted on insufficient court fee and for that reason