The court has the power to discharge a stay order and proceed with the suit if the arbitration becomes infructuous. The court is not bound to formally set aside the stay order before proceeding with the suit.

JUDGMENT :- This second appeal relates to a suit stayed by the trial court under S. 34 of the Arbitration Act. The stay of suit was granted to enable the parties to go to the arbitrator for resolving the dispute which was the subject-matter of the suit. The arbitration, however, became infructuous. The second appeal raises the question as to how the trial court should have proceeded in the circumstances stated above.

2. The suit in this case was filed in the District Munsif Court, Coimbatore, by a building contractor against a cooperative building society and two of its principal office-bearers. The suit was for accounts. The defendants entered appearance in the suit, but did not file any written statement. They moved the court, instead, for an order staying the suit under S. 34 of the Arbitration Act. They invoked the arbitration clause in the suit contract. The learned District Munsif granted the application of the defendants and stayed the suit. That was on 18-3-1966. For a long time thereafter, however, nothing happened in the arbitration. The defendants did not take any initiative in the matter. In fact, contrary to what was said before the learned District Munsif in the application for stay, the Society was neither ready nor willing to refer the matter to arbitration and get on with it. On the contrary, they thwarted the attempts of the plaintiff, in that direction. For instance, the plaintiff, on his own initiative, moved the arbitrator to take up the arbitration. The arbitrator was the Deputy Registrar of Co-operative Societies, Coimbatore, Before the Deputy Registrar, the Society raised all kinds of technicalities. It was contended that the Deputy Registrar had no power to enter into the arbitration under S. 73 of the Tamil Nadu Co-operative Societies Act. The defendants also pleaded before the Deputy Registrar that the plaintiff' s motion for arbitration was barred by limitation. These objections brought the arbitration under a stalemate. After adjourning the matter several times, the Deputy Registrar ultimately declined to take up the arbitration.

3. Meanwhile, seeing that nothing served in the arbitration, the learned District Munsif, set down the suit for hearing, but not before granting the defendants society time for filing their written statement. The defendants, however, excused themselves from filing their written statement, on the technical ground that the earlier order of the court granting stay of suit must first be formally set aside, on an application moved specifically for that purpose before the court. The learned District Munsif, however, declined to follow the procedure suggested by the defendants. And, in the absence of any written statement, filed, he proceeded with the trial of the suit and ultimately passed a preliminary decree for accounts as prayed for by the plaintiff. This preliminary decree was confirmed in appeal by the learned Subordinate Judge, Coimbatore.

4. In the present second appeal, the defendants question the correctness of the procedure adopted by the learned District Munsif in proceeding with the trial of the suit without formally setting aside the earlier order of stay passed under S. 34 of the Arbitration Act. Mr. Vanchinathan, appearing for the appellants, did not seriously contend that the trial court had no jurisdiction at all to get on with the trial of the suit when it became clear to it that the arbitration, for the purpose of which the suit had been earlier stayed, had become infructuous. All the same, I think it necessary to consider the legal position. For this has a bearing on the other contention raised by the learned counsel regarding procedure. Section 34 of the Arbitration Act expressly gives a discretion to the court to grant stay of trial of a suit on its file to enable the parties to go to arbitration. Where the court exercises the discretion in favour of the defendant, the court passes an order staying the suit. But once that happens, there is no express