Provisions of Section 34 of Arbitration Act held applicable.

RAMANUJAM, J. :- These two appeals arise out of the orders passed by the Court below allowing I. A.1802 of 1977 filed by the defendants 1 and 3 and I. A.89 of 1977 filed by defendants 2, 4 and 5 in O.S. 858 of 1977, and staying the said suit under Section 34 of the Arbitration Act. The plaintiff who is aggrieved against the orders passed by the Court below staying his suit has come forward with these appeals. The circumstances under which the suit was stayed by the Court below may briefly be stated :- The plaintiff has entered into a contract with the defendants for supply of cotton. In pursuance of the said contract, the plaintiff supplied cotton to the defendants and for the supplies made the defendants have issued five cheques on different dates, on 23-3-1976 for Rs. 790. on 29-1-1977 for Rs. 13,000; on 2-2-1977 for Rs. 13,000; on 10-2-1977 for Rs.14,000; and on 17-2-1977 for Rupees 14,736-77, out at the said five cheques, the plaintiff was able to realise only two cheques for the Rs. 26,000. The other three cheques had been dishonoured with the endorsement 'exceeds arrangement'. Consequently, the plaintiff filed the suit for realising the proceeds of the three cheques which had been dishonoured amounting to Rs.28,736-77 from the defendants with interest thereon from 6-1-1977. As soon as the summonses were served on the defendants in the said suit, they filed applications under Section 34 of the Arbitration Act contending that the contract to supply cotton entered into by the Plaintiff with the defendants is subject to the bye-laws of the East India cotton Association Ltd., Bombay, which contains among other things a provision for a settlement of quality and other disputes by arbitration.

2. The applications for stay filed by the defendants were opposed by the plaintiff in the suit the appellant herein, on the ground that the claim in the suit, is not a dispute arising out of the contract for supply of cotton, that the contract to supply cotton stands fully performed by the supply of cotton and the full payment made by the defendants towards the sale price of cotton by various cheques, that the cause of action for the suit was based on the dishonouring of the cheques issued by the defendants, and, therefore, the claim cannot be taken to arise out of the original contract to supply cotton.

3. After considering the relevant contentions of the parties in the applications for stay of the suit filed by the defendants, the Court below has held that the suit has to be stayed under Section 34 of the Arbitration Act, for the reasons (1) that since the sole contract was made subject to the bye-laws of the East India Cotton Association Ltd., Bombay which contained an arbitration clause the parties should resort to the remedy by way of arbitration under the said arbitration clause (2) that the Court must exercise a discretion in a judicial manner having regard to the relevant facts and circumstances of the case and that the discretion is to be exercised in favour of the grant of stay of the suit; and (3) that the suit is based on a commercial transaction and the disputes relate only to the question of fact which can easily be decided by the arbitrators.

4. The question is whether the said order of the Court below staying the suit under Section 34 of the Arbitration Act can be legally sustained.

On a due consideration of the matter, we are of the view that the Court below has not considered the matter in a proper perspective. Merely because the grant of stay of a suit is discretionary, it cannot be claimed by a party as of right and cannot be granted for the mere asking. In this case, from the facts already stated, it will be clear that the contract to supply cotton has been fully performed as between the parties to the contract by the actual supply of cotton by the plaintiff as per the terms of the contract and by the defendants making due payments for the supplies made in the form of five cheques. As a matter of fact, the five ch