The main legal point established in the judgment is that an order to refer a dispute to arbitration under Section 20 of the Arbitration Act is invalid if made without a finding on the existence of the arbitration agreement and the dispute. Additionally, parties are not estopped from challenging the order if they have not acquiesced to the arbitration proceedings.

A. J. SADASHIVA, J.

( 1 ) THIS petition was listed for admission. The respondent had entered caveat. With the consent of the learned counsel appearing on both the sides, the petition was heard on merits and disposed of by this order. The respondents in Arbitration Case No. 387 of 1992 on the file of the learned Principal Civil Judge, Gulbarga, have presented this petition against the order dated 5-1-1994 directing them to express their choice regarding the arbitrators to refer the dispute for arbitration.

( 2 ) THE respondent herein is the applicant/ plaintiff in the arbitration case before the learned Civil Judge. That, under the provisions Section 20 of the Arbitration Act (for short 'the Act'), the parties should have been described as plaintiff and defendants. But, they have been described as petitioner and respondents therein. Hence they are referred to as plaintiff and defendants in this order.

( 3 ) THE plaintiff filed an application under Section 20 of the Act for an order to refer the dispute between him and the defendants to an arbitrator for arbitration.

( 4 ) IT is stated in the petition that the plaintiff is a registered partnership firm carrying on the contract business and it entered into a contract with the first defendant in respect of construction of office cum shopping complex of the Karnataka Housing Board, Gulbarga Division. It is the case of the plaintiff that under the terms and conditions of the contract that the plaintiff shall complete the construction within a period of 15 months including the monsoon extending from 15th June to, 15th September and, the defendants were to supply the materials such as cement and steel as required for construction. However due to the non-availability of the materials at the Divisional Stores, the defendants failed to supply cement and steel as and when required and necessary instructions were also not given, for the absence of the required technical personnel at the site and hence the work could not be completed. Further, it is stated by the plaintiff that differences arose between the parties resulting in non-completion of the work entrusted and as a result the defendants withheld the payment to the plaintiff and the plaintiff company suffered financially. Hence they addressed number of letters to the defendants for making payment at least for the construction done, for which also there was no response from the defendants and therefore ultimately they have requested the second defendant to adjudicate on the dispute which was also not acceded to. Therefore they have filed an application under Section 20 of the Act for relief mentioned in the preceding paragraph.

( 5 ) THE defendants having entered appearance, filed their objections denying the allegations made in the petition. The main objections of the defendants is that there is no dispute as such to be settled by the arbitrator and there is no clause in the agreement to refer the matter to the arbitrator.

( 6 ) IN view of the aforesaid contentions, the learned Civil Judge formulated a point as to, "whether the plaintiff has made out a case for referring the case to the arbitrator?" and after considering the rival contentions of the plaintiff and the defendants, with reference to Clause 30 of the agreement, passed an order that, the dispute between the parties shall be referred to an arbitrator and directed the defendants to express their choice regarding the arbitrator within 10 days from the date of the order.

( 7 ) THE defendants being aggrieved by the aforesaid order have presented this petition.

( 8 ) THE main contention of the defendants in this petition is that the learned Civil Judge has passed the order under revision in violation of sub-section (4) of Section 20 of the Act and therefore the order is unsustainable in law.

( 9 ) ELABORATING his contention Sri R. S. Hedge, the learned counsel appearing for the defendants, submits that the defendants have disputed the existence of the dispute. They contend that

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