A party to an arbitration agreement is entitled to a stay of any legal proceedings commenced against him by another party to the agreement with respect to the subject-matter of the arbitration agreement.

SABYASACHI MUKHARJI, J.

( 1 ) THIS is an application under Section 34 of the Arbitration Act, 1940, for stay of a suit. A suit has been instituted by Oriental Industrial Engineering Co. (P) Ltd. and Ghanshyamdas Rungta and Rajen-dra Prasad Rungta, two of its directors against another director Biswanath Rungta. In the suit Allahabad Bank has also been made a party. The suit mainly is on the ground that in the course of business of the plaintiff-company, namely, Oriental Industrial Engineering Co. (P) Ltd. a sum of Rupees 11,13,000/- became due and payable to the company by the Uranium Corporation of India Ltd. , a Government Company and with this amount of money the said defendant to the suit Biswanath Rungta had opened an account in the Allahabad Bank and is operating the said account acting upon certain lleged Board resolutions which are challeng- (sic) as being forged or not genuine and without authority. In essence what is being said is that the act and conduct of the defendant Biswanath Rungta were unauthorised and incorrect on behalf of the company and he should be restrained from operating or withdrawing any money deposited in the said account with the Allahabad Bank- It is stated in paragraph 3 (k) of the petition that the defendant No. 2, namely, Allahabad Bank has informed the company that unless it was restrained by an order of injunction the said defendant Allahabad Bank would allow operation of the said account by the defendant No. 1, as, indeed, it was bound to do. In the aforesaid view of the matter the suit was instituted asking for an appropriate order of injunction and declaration. The suit is by the company and two of its directors as mentioned hereinbefore. This is an application by the defendant for stay of the suit. It is stated that there is an arbitration clause contained in the Articles of Association in the following terms :--"in case any difference shall arise between the Company and the Directors relating to their remuneration, duties or privileges or otherwise, or any member of the Company, or between the Company or any other person to whom these presents shall apply, the same shall be referred to arbitration; and if the parties cannot agree upon a single arbitrator there shall be two arbitrators, who shall have power to choose an Umpire; and in either case such reference shall be so arranged, conducted and carried out as, with regard to the mode of consequence of that reference, and in all other respects to conform to the provisions in that behalf contained in the Arbitration Act or Acts in force for the time being in British India. "that there was such an article containing the aforesaid term is undisputed. It was contended, firstly, that the disputes in this case were covered by the said arbitration clause inasmuch as these disputes were those arising between the company and the directors relating to their dues or privileges or otherwise. Read in proper perspective the disputes raised in the suit were those that were within the ambit of the arbitration clause covered by the article. In support of the proposition reliance was placed on Section 36 of the Companies Act, 1956, which unlike Section 20 of the English Companies Act, 1948, makes the Articles of Association binding on the company in specific terms. Reliance was also placed in aid of the arguments that the Articles of Association bound the directors as well as the company on the decision in the case of Hickman v. Kent or Romney Marsh Sheep-Breeders' Association, reported in (1915) 1 Ch D 881 at p. 902 and also on the decision of the Supreme Court in the case of Hanuman Prasad Gupta v. Hiralal. The facts that the directors as well as the company are bound by the Articles of Association and the arbitration clause in the instant case was quite enough to cover the disputes raised in this case between the company and its directors are not seriously disputed. What is, however, urged in this case is that in the suit there i. s another party, nam

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