Subsequent proceedings alone rendered invalid.

M.M. Ismail, J.

1. This is an application under Section 34 of the Arbitration Act, 1940, by the defendant in C. S. No. 4 of 1968 on the file of this Court. The applicant-defendant and the plaintiff-respondent entered into a hire-purchase agreement dated 11th February, 1964, for the sale of one complete plant of bolts and nuts making machine by the respondent-plaintiff to the applicant-defendant. The case of the respondent-plaintiff is that the machine was supplied to the applicant defendant but notwithstanding that supply the applicant-defendant failed to pay the first to sixth instalments payable under the agreement in accordance with the terms of the agreement. The respondent-plaintiff further avers in the plaint that the applicant-defendant failed to pay the instalments which fell due, in spite of repeated reminders made by the respondent-plaintiff and allowed the same to accumulate that the respondent-plaintiff took steps to retake possession of the machinery in exercise of the power conferred upon it under Clause (4) of the agreement and served a notice dated 8th September, 1966, on the applicant-defendant through its Junior Field Officer; that the respondent-plaintiff's agent was not able to seize the machinery as the applicant-defendant was assuring him that he would pay a substantial amount towards the arrears; that the applicant-defendant at last sent a cheque for Rs. 10,000 dated 29th October, 1966, drawn on the Syndicate Bank Ltd., Secunderabad, towards part-payment of the arrears of hire rent; that the said cheque was, however, dishonoured by the bank for want of funds; that the applicant-defendant's manager by his letter dated 12th December, 1966, informed the respondent-plaintiff that as the applicant-defendant was admitted in the hospital with a heart attack, he could not arrange funds for the said cheque, that the applicant-defendant was making efforts to send a draft for the said amount and that if the draft was not received the respondent-plaintiff may present the cheque again to the bank during the last week of January, 1967; that the cheque when so presented was again dishonoured and the applicant-defendant failed to pay the amount in spite of repeated letters written by the respondent-plaintiff that the respondent-plaintiff finally caused a Lawyer's notice to be issued through its Counsel on 16th September, 1967, calling upon the applicant-defendant to pay the arrears of instalments which had fallen due under the aforesaid agreement; and that the applicant-defendant duly received the said notice and sent a reply dated 21st September, 1967, containing false and untenable allegations and failed to pay the said arrears. The further case of the respondent-plaintiff in the plaint is that as the applicant-defendant disputed his liability to pay storage charges, demurrage charges and interest on blocked up capital which were occasioned by applicant-defendant's delay in completing the hire purchase formalities and in taking delivery of the machinery and_ as the applicant-defendant has also put forth fanciful and imaginary claims against the Corporation alleging loss of estimated profits on the ground that the delay in supplying the machinery was due to the Corporation's negligence and indifference the parties referred these specific matters of dispute to the arbitration of two arbitrators, one nominated by each party, under Clause 16 of the agreement; that the said proceedings were, on the date of the institution of the suit, pending before the arbitrators; that according to the respondent-plaintiff so far as the payment of instalments of hire rent which fell due under the agreement was concerned, there was no dispute and the same Was not the subject-matter of the arbitration proceedings and that the applicant-defendant's contention that the arrears were also covered by the arbitration proceedings was a clear after-thought and made with ulterior motive to gain time and delay the payment of the amount, in vi