( 1 ) THIS is an appeal under Section 39 of the Indian Arbitration Act (hereinafter referred to as the Act) by the defendant in Civil Suit No. 2-B of 1958 against the order of the First Additional District Judge, Raipur, passed on 25-3-1960 dismissing its application for staying the trial of the suit under Section 34 of the Act.

( 2 ) THE plaintiff alleged that two previous contracts between the parties were settled on 26-9-1957 and replaced by a new contract and the defendant agreed to supply cloth on the terms contained in the new contract. At that time, the defendant had also agreed to pay compensation in respect of 54 bales of cloth which were not supplied under the earlier contracts. The suit is for recovery of damages for breach of the contract, dated 26-9-1957.

( 3 ) ACCORDING to the defendant, two contracts were entered into on 28-5-1957 by the parties according to which it agreed to supply cloth to the plaintiff. These contracts contained Clause 21 as follows :

"all disputes and questions whatsoever which shall arise between the parties hereto out of or in connection with this agreement or as to the construction or application thereof or the respective right