The Court has the discretion to stay a suit and refer the dispute to arbitration under S. 34 of the Arbitration Act, 1940. However, the Court will not exercise its discretion in favour of staying the suit if the dispute involves serious and complicated questions of law, or if the party against whom the charges of fraud, breach of trust and misrepresentation are made desires a public trial in court.

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 later, of the company consisted of two divisions, manufacturing and trading divisions. The trading division included its agency business, one among them being steamer agency. The plaintiff was appointed as Steamer agent of Clan Line Steamers Ltd., U.K., hereinafter refer red to as ‘Clan Lines’, as early as 1868. Since then the plaintiff has built up an extensive cargo business. The first defendant was appointed as an Assistant of the plaintiff company and in due course, he came to occupy the position of a senior Director and Chief executive of the company. In 1975, in supersession of his previous service agreement, a fresh agreement was entered into by him with the plaintiff for a period of five years. In June, 1974, after the Foreign Exchange Regulation Act of 1973 cam e into force, all foreign and foreign controlled companies had to make an application to seek the permission of the Reserve Bank of India to carry on their activities in India. The plaintiff made such an application for permission, but the Reserve Bank of India replied that it will not be possible to permit the plaintiff to continue its service agency activities unless the foreign share-holding is reduced to 40%. The plaintiff was corresponding with the Reserve Bank of India for extension of time for making further representations in the matter. The plaintiff was preparing alternative schemes for continuing the business with the permission of the Reserve Bank. The first defendant was directed to place alternative schemes before the Reserve Bank for continuing the steamer agency. Instead of making effective representation to the Reserve Bank, the first defendant unauthorisedly wrote a letter on 13th October 1977 to the Reserve Bank stating that the plaintiff will be giving up its service activities with effect from 1st February 1978. By doing so the first defendant had acted against the interest of the plaintiff. This he did with a view to grab the steamer agency business for himself. The first defendant had also misrepresented to Clane Line that the Reserve Bank of India has refused to grant permission to the plaintiff to continue its agency activities and, that therefore, the plaintiff had to stop its trading and agency activities from 31st January, 1978 onwards, and based on such misrepresentation Clan Line, terminated the agency of the plaintiff with effect from 31st January, 1978 by their letter, dated 19th October 1977 and informed the plaintiff that it had decided to entrust the agency to a firm to be started by the first defendant. When these matters became known to the other Directors of the Company, representations were made to the Clan Line, to continue the steamer agency as before and to withdraw the letter of termination of agency already sent to the plaintiff, but the Clan L