JUDGMENT :

Sanjiv Khanna, J.

The legal issue arising in the present appeal is whether the parties had agreed that the subject matter of the suit or a part thereof should be referred to arbitration under Section 21 of the Arbitration Act, 1940.¹[We are examining the provisions of the Arbitration Act, 1940 and consequently, the observations and the findings recorded should not be without proper appreciation of the principles applied to the proceedings under the Arbitration and Conciliation Act, 1996.]

2. On 03rd September 1993, the respondent before us - M/s. Modi Transport Service, ²[The plaintiff', for short.] a partnership firm, had filed a civil suit in the Court of the District Judge, Sehore Camp, Astha, Madhya Pradesh, for the settlement of accounts of transportation of coal undertaken by them according to the agreement dated 01st October 1990 and the supplementary agreement dated 13th December 1991, with M.P. Rajya Tilhan Utpadak Sahkari Sangh Maryadit, Pachama, District Sehore, Madhya Pradesh (the first defendant). The General Manager and Managing Director of the said Sahkari Sangh were impleaded as second and third defendants. ³[Collectively three defendants are referred to as