POLAR ELECTROTECHS LIMITED Vs. SINGH ENGINEER

JUDGEMENT

(1.) JUDGMENT , J.-

(2.) THIS is an application moved by defendants 1 and 2 under Section 34 of the Indian Arbitration Act seeking stay of the suit. Earlier, defendant No. 3 had moved a similar application but the same was dismissed in default on February 21, 1990 and that application has not been got restored although Mr. H.C. Malhotra represents defendants 1 to3.

(3.) APART from this lacuna in the case of defendants 1 and 2 Seeking stay of the suit, it is to be made. clear that the damages which have been claimed by the plaintiff do not arise out of any controversy with regard to the supply of materials by the plaintiff to defendants 1 and 2 under the purchase orders. Damages had been claimed on the basis of the independent agreement entered into between the plaintiff and defendants and thus, as a part of the clause of action pertaining to claim of Rs. 1,50,000 is not covered by any arbitration clause, it would not be in the interest of justice to stay the suit. It is true that defendants 3 and 4 are not parties to the purchase orders which contains the arbitration clause but they are parties to the independent agreement executed which does not contain arbitration clause. In Lovely Benefit Chit Fund v. Puran Dutt Sood etc.1, it has been held that the liability of surety is co-extensive with that of principal debtor under Section 128 of the Contract Act. Thus, dispute between the principal debtor and the creditor, if subject to arbitration clause, binds the surety even if the surety has not signed the agreement containing the arbitration clause. By that as it may in view of the facts that defendants 1 and 2 have not shown their readiness and willingness at all materials times to refer the disputes for arbitration and the fact that claim of Rs. 1,50,000 as damages having arisen from an agreement which does not contain arbitration clause leads me to exercise the discretion in not staying the suit.