( 1 ) THE appellant herein was the first defendant in O. S. No. 85 of 1987 which is pending on the file of the Subordinate Judge, Peddapalli. The plaintiff-1st respondent herein had instituted the aforesaid suit for declaration that the proceedings dated 4-6-1984 issued by the third defendant appointing the second defendant as sole arbitrator is illegal, arbitrary and without jurisdiction and also for refund of earnest money deposit and security deposit

( 2 ) THE averments made in the suit can briefly be narrated as follows: It was averred by the first respondent herein that the first defendant-Corporation issued a notice dated 1-6-1982 inviting the tenders for the work of transportation of cement from M/s. Kesoram Cement Factory, Basanthnagar to the stores of the first defendant-Corporation at Ramagundam by road and for unloading and stocking the cement gunny bags in the store of first defendant-Corporation.

( 3 ) IT is further stated by the plaintiff-first respondent herein that in response to the aforesaid tender notice, the plaintiff-1st respondent herein submitted tenders. The first defendant-Corporation i. e. , the appellant herein, addressed a letter dated 1-10-1982 to the plaintiff-lst respondent herein accepting her offer accompanied by another letter dated 1-10-1982 stating that she will adhere to all the conditions and regulations prescribed in the tender. The first defendant-corporation accepted the tender submitted by the plaintiff and issued a letter of award dated 8-11-1982 to the plaintiff informing her that the corporation had decided to accept her tender and awarded the work to her on the terms and conditions contained therein. The plaintiff accepted the said letter of award issued by the first defendant-corporation and thus the contract was concluded and execution of the formal agreement was not done. Thereafter some disputes arose and therefore the plaintiff filed the suit for recovery of earnest money and security deposit. Meanwhile the third respondent herein appointed second respondent herein as sole Arbitrator by the impugned order and therefore the suit in question came to be filed.

( 4 ) IT appears from the record that the appellant herein filed I. A. No. 43 of 1987 under Section 34 of the Indian Arbitration Act to stay all further proceedings in O. S. No. 85 of 1987 pending on the file of the Subordinate Judge, peddapalli. The learned Judge dismissed the said application with costs for the reasons mentioned by him in the order dated 30-9-1996. Aggrieved by the aforesaid order, the first defendant-appellant herein has approached this court in appeal on various grounds as stated in the appeal memo.

( 5 ) THE learned Counsel Mr. K. V. Subrahmanya Narsu appearing on behalf of the first defendant-appellant herein submitted at the Bar that the learned judge erred in not staying the suit. The learned Counsel further submitted that when the contract took place, it was reduced to writing and there was a covenant in the contract that any dispute arises out of the contract will be settled by an Arbitrator and thus it was contended by the learned Counsel that when there was a specific term to appoint an Arbitrator to resolve the dispute between the parties, the learned Judge ought to have stayed the suit till the work of Arbitrator is completed.

( 6 ) THE learned Counsel Mr. Subrahmanya Narsu appearing on behalf of the appellant invited my attention to Ex. A-1, which is dated 1-6-1982. It is a notice inviting the tenders. The learned Counsel further submitted that the tender form was issued to the plaintiff-lst respondent herein which contained all the terms in the contract and it was signed by both the parties. The learned counsel further submitted at the Bar that along with the tender notice, conditions of contract were included. Clause 21 of the said contract makes a provision of appointing the Arbitrator in case of dispute between the parties. Clause 21 of the said terms and conditions of the c