JUDGMENT - 1. This appeal arises out of Notice of Motion taken out by the defendants for stay of plaintiffs suit under S. 34 of the Arbitration Act 1940.

(2) By two contracts dated 23rd June 1955 and 30th June 1955 defendants agreed to sell and plaintiffs agreed to purchase printed mercerised voil 41800 yards, July 1955 delivery. These contracts were provisional and were to be confirmed only on the production by the plaintiffs of the necessary purchase export licences. The licences were produced and the provisional contracts were confirmed by the parties on 1st July 1955.

(3) One of the terms of the contract was the defendants were to send samples of the goods in the first instance and that delivery of the goods was to be taken by plaintiffs only after they approved of the samples. It appears some time before 21st July 1955 samples of the goods were sent to plaintiffs.But plaintiffs did not approve of them and wrote to the defendants on 21st July 1955 asking them to prepare new samples according to the instructions contained in teir earlier letter of 5th July. They also asked the defendants to treat the July. They also asked the defendants to treat the matter as urgent as he delivery of the goods was to be given by the end of July 1955. On 25th July 1955 defendants sent a reply to plaintiffs letter of 21st July 1955. In their reply defendants stated:

"As desired by you we send you fresh samples for approval.

As regards delivery time we have to inform you tha till to-day the samples were not approved by you; hence it is not possible for us to give the delivery of the goods by the end of this month. We have still to send you fresh samplesfor approval which will be sent within two or three days. Naturally we will receive your approval by the end of this month and we shll be able to give the delivery by 15th August which please note.

Please let us know per return whether you will accept the delivery of the goods as mentioned above, I. e. 15th August 1955."

To this letter, plaintiffs sent a reply to the defendants on 29th July 1955 stating that they were agreeable to accept delivery of good on 15th August 1955. They however further stated:

"In case youare unable to deliver us the goods by that date, kindly note that you will have to honour our claim as well as that of our overseas buyers for loss of profit in this transaction."

(4) On 1st August 1955 defendants sent a reply to plaintiffs letter of 29th July. In their reply they stated:

"As regards delivery period of 15th August, please note that we shall try to give you they full quanitity after fifteen days from the date of receipt of your approval of finish quality and colours. . . . .

We shall be sending you the fresh samples tomorrow which please note."

(5) Plaintiffs sent a reply to the defendants on 2nd August 1957. They repeated what they had stated in their ealier letter regarding the delivery of goods and said:

"Kindly note that if you fail to deliver us the full quantity of the contracted goods on or before 15th of August 1955 after our due approval of the fresh samples that you are going to submit to us, we shall hold you solely responsible for non-delivery of the goods and will lodge with you ours as well as our overseas clients claims for loss of profit etc."

It appears that no fresh samples were sent to plaintiffs by defendants as promised in their letters of 25th July 1955 and 1st August 1955. No reply also was sent by them to plaintiffs letter of 2nd August 1955.

(6) The plaintiff waited till 15th August 1955 and on 17th August 1955, they sent a notice through their advocate to defendants. In that notice they said:

"The delivery time was by consent extended in 15th August 1955.

Thereafter you promised to send fresh samples but you have failed to send the same. My clients also finally wrote to you on 2nd August 1955 calling upon you to fulfil your part of the contract but you have failed to reply to the same.

You have committed breach of the contract and thus you are liable to pay da

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