The court's decision highlights the importance of arbitration agreements and the enforceability of arbitration clauses in resolving disputes between parties.

( 1 ) THIS appeal under Section 39 of the Arbitration Act, 1940 (hereafter called "the Act") is directed against the order of the learned single Judge of this Court dated March 11, 1974 directing that the arbitration agreement between the parties be filed and the dispute between them be decided by a sole arbitrator.

RESPONDENT, M/s. Allied Engineers, is a firm of Engineers. As per terms of the agreement dated January 20, 1969, they agreed to erect a building at Patiala for the appellant, M/s. Maltex Malsters Private Limited. The appellant is referred to in the. agreement as employer and the respondent as contractors . According to clause 33 of the Articles of Agreement, the respondent-contractor was to be paid by the Employer from time to time by instalments under interim certificates to be issued by the Architect to be appointed in terms of the agreement for the works executed when in the opinion of the Architect work to the approximate value had been done in accordance with the contract. Clause 35 provides that decision, opinion, direction and certificate of the Architect with respect to matters covered by this clause were final and conclusive. Clause 36 then sets out the arbitration clause according to which all differences and disputes between the parties falling within it had to be referred to arbitration in terms of the clause.

( 2 ) DISPUTES arose between the parties and on failure of the appellant to refer the same to arbitration, in October, 1971 the respondents applied under section 20 of the Arbitration Act (hereafter called "the Act") for an order of the court to make a reference to arbitration according to the arbitration clause. The appellant contested the application on several grounds. Amongst others, they maintained that the courts at Delhi had no jurisdiction to try the application and that in any case the application was liable to be stayed in view of a previous application filed by them at Patiala under section 33 of the Arbitration Act. The learned single Judge framed the following issues: (1) Whether this Court has jurisdiction to hear the application? (2) Whether this petition is liable to be stayed under sections 10 and 151 of the Code of Civil Procedure? (3) Whether there is an arbitration agreement between the parties ? If so, whether there are existing disputes which can be referred to arbitration ? (4) What is the effect of the suit filed by the petitioner against the respondent at Patiala on the arbitration agreement? (5) Relief.

( 3 ) ISSUES I and 2 were treated as preliminary issues and were decided by order dated February 13, 1974 and the application was directed to be tried on merits. Evidence of the parties was taken by affidavits and on this evidence the other issues were also decided against the appellant by order dated March II, 1974. It appears that during trial the appellants also applied for permission to lead oral and documentary evidence to substantiate the issues and this application was also dismissed on March II, 1974 but by a separate order.

( 4 ) ON issues 1, 2 and 4 the learned single Judge held that as the agreement was executed in Delhi and the building in pursuance of the agreement was constructed at Patiala, courts at both the places had jurisdiction to try the dispute arising out of the agreement but as clause (8) of the agreement specifically provided that courts at Delhi alone will have jurisdiction, Delhi courts alone could try the application and the question of its stay because of the pending application under section 33 filed by the appellant at Patiala did not arise. The institution of the suits by the respondent at Patiala, it was held, made no difference in view of the said clause (8) of the agreement. On issue No. 3, the learned single Judge held that there was a dispute between the parties that was covered by the arbitration clause and, therefore, directed the agreement to be filed and appointed Professor C. H. S. Jhabavala as sole arbitrator to