Issues involved in the suit should be subject matter of arbitration agreement.

ORDER: The applicants in these applications, are the defendants 1 to 14 in the suit in C.S.No.430 of 2005. Respondents 1 and 2 herein are the plaintiffs and the 3rd respondent herein is 15th defendant in the above said suit.

2. Application No.2490 of 2005 has been filed under Sec.8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) to refer the suit in C.S.No.430 of 2005 for arbitration in terms of the arbitration Clause contained in ‘Escrow Agreement’ signed by the applicants and the second respondent dated 3.7.2000.

3. Application No.2491of 2005 has been filed by the applicants/defendants 1 to 14 for grant of interim stay of all further proceedings in C.S.No.430 of 2005 pending disposal of the application filed by the applicants for referring the suit to arbitration.

4. The brief facts which are required to be stated are that the second respondent/second plaintiff in C.S.No.430 of 2005 entered into an Agreement of Sale with the applicants/defendants 1 to 14 on 3.7.2000 in respect of suit schedule properties. The total sale consideration agreed between the parties was a sum of Rs.2,41,89,462. Simultaneously, the above said Escrow Agreement was also executed on 3.7.2000 between the very same parties which inter alia mentioned that with a view to protect the mutual interest of the owners and Alacrity, it became necessary to appoint an ‘Escrow’ for the purpose of having custody of the original title deeds pertaining to the property, pending payment of second, third and last instalments due to the owners by Alacrity as per the sale agreement dated 3.7.2000.

5. Clause 13 of the said Escrow Agreement contains an arbitration clause, which reads as under:

“13. In the event of there being any dispute, the owners and Alacrity may submit any question or issue for consideration by the Escrow, who will decide the same as if it were a dispute referred by way of Arbitration. The Escrow represented by any of its partners will also have all the powers of an arbitrator including passing of awards, interim orders, etc., on the basis of the disputes. The proceedings relating to such disputes shall be conducted by any of them and the venue of arbitration, if any, shall be at Chennai.”

6. A General Power of Attorney was also executed by defendants 1 to 14 in favour of the second plaintiff on 3.1.2001. Certain disputes arose as between the second plaintiff and the defendants 1 to 14. On behalf of the defendants 1 to 14, legal notices came to be issued on 6.9.2001, 3.10.2001 and 28.4.2002 to the second plaintiff. Through the above said legal notices, the second plaintiff was informed that the defendants 1 to 14 were no longer bound by the Agreement and that the Agreement stood revoked and cancelled from the date of issue of the notice.

7. On 26.10.2002, second plaintiff came forward with a proposal providing for an addi

tional sum of Rs.20,00,000 by way of compensation. One of the Agreement holders, viz., C.B.Ananthakrishnan who is stated to be no more and whose legal representatives are defendants 9, 10, and 11, made an endorsement in the said proposal dated 26.10.2002 to the following effect:

“Dear Sir,

Thank you for your letter dated 21st November, 2002 with regard to our clarification which has reference to your letter dated 26.10.2002. I hereby accept your offer given in your letter dated 26.10.2002.

Thanking You,

Yours faithfully,

(C.B.Ananthakrishnan)”

Sd/-xxxx,

In respect of the communication of the second plaintiff dated 26.10.2002, a reply was sent on 2.11.2002 stating that the defendants 1 to 14 were not agreeable to the arrangement mentioned in the letter dated 26.10.2002 and even though the earlier agreement was revoked due to breach committed by the second plaintiff, the parties are not averse to the idea of further negotiations on fresh and different terms.

9. On 23.10.2003, there was an agreement between the first plaintiff and the second plaintiff, wherein, the first plaintiff took over the rights of the

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