RAMANUJAM, J.

1. This Appeal is directed against the order of Natarajan, J. in Application No. 3959 of 1977 in C.S. No. 450 of 1977 dismissing the appellants-first defendants application for stay of the suit under S.

34 of the Arbitration Act.

2. The said suit had been filed by the respondent (plaintiff): (1) for a permanent injunction against defendants 1 and 2 restraining them from taking over the Clan Line Steamer agency for the ports of Madras, Kakinada and Vizagapatnam and functioning as Clan Line co-ordinating agents for Cuddalore, Masulipatnam, Nagapattinam and Trivandrum acting as agents for the Clan Line Steamers Ltd., London either by themselves or through their agents, and (2) for a direction to the first defendant to pay a sum of Rs, 5 lakhs to the plaintiff towards damages on account of the first defendants breach of the service agreement, dated 3rd January 1975 entered into between the plaintiff and the first defendant.

3. The case as put forward in the plaint is briefly as follows: The plaintiff company was originally started as a partnership concern in 1868 and later converted into a private limited company in 1924. The business of the partnership, and lat