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Issues Involved:
1. Whether the suit filed by the respondent should be stayed due to the arbitration agreement between the parties. 2. Interpretation of the arbitration clause in the contracts between the parties. 3. Discretionary power of the court under Section 34 of the Indian Arbitration Act, 1940. 4. The propriety of the exercise of discretion by the trial court and the High Court in refusing to stay the proceedings. Issue-Wise Detailed Analysis: 1. Whether the suit filed by the respondent should be stayed due to the arbitration agreement between the parties: The appellant contended that the suit should be stayed under Section 34 of the Indian Arbitration Act, 1940, due to an arbitration agreement in the contracts. The trial court and the High Court refused to stay the proceedings. The trial judge found no dispute between the parties that could attract the arbitration agreement and believed that the limitation plea should be tried by a competent court rather than arbitrators. The High Court confirmed the trial court's decision, noting the appellant's change of stance and the lack of a meeting ground between the parties. 2. Interpretation of the arbitration clause in the contracts between the parties: The contracts between the parties contained an arbitration clause stating that any difference in the "interpretation or application of the contract" should be referred to arbitration. The High Court interpreted "application" to mean disputes regarding the applicability of the contract, concluding that the present dispute did not fall within the arbitration clause. The Supreme Court disagreed, stating that "application" generally covers disputes regarding the working out of the contract or giving effect to its terms. Thus, the Supreme Court held that the dispute was within the scope of the arbitration agreement. 3. Discretionary power of the court under Section 34 of the Indian Arbitration Act, 1940: Section 34 confers discretionary power on the court to stay legal proceedings where there is an arbitration agreement, subject to certain conditions. The court may refuse to grant a stay if there are sufficient reasons why the matter should not be referred to arbitration. The Supreme Court emphasized that this discretion must be exercised judicially and reasonably, considering relevant facts and circumstances. 4. The propriety of the exercise of discretion by the trial court and the High Court in refusing to stay the proceedings: The trial court and the High Court exercised their discretion in refusing to stay the proceedings. The Supreme Court noted that the appellate court should be slow to interfere with the trial court's exercise of discretion unless it is shown to be unreasonable, capricious, or perverse. The Supreme Court considered the facts, including the parties' attempts to mediate, the appellant's lack of seriousness in arbitration, and the complicated nature of the dispute. Despite differing from the lower courts on the interpretation of the arbitration clause, the Supreme Court found no reason to interfere with the concurrent exercise of discretion by the lower courts, as it was not manifestly unreasonable or perverse. Conclusion: The Supreme Court dismissed the appeal, upholding the decisions of the trial court and the High Court to refuse the stay of proceedings. The Court emphasized the importance of judicial discretion under Section 34 and found that the lower courts had exercised their discretion properly and judicially. The appeal was dismissed with no order as to costs.
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