DURRANI ORIENTAL CARPETS Vs. OBEETEE LTD

JUDGEMENT

(1.) This appeal is directed against the order of the Civil Judge (Senior Division), Mlrzapur dated 17.3.1999 rejecting the application of the appellants for stay of the suit under Section 34 of the Arbitration Act. 1940.

(2.) Briefly staled the facts are that respondent is a registered company. It carries on its business of manufacture and export of hand knotted woollen carpets under the name and style of Obeetee Ltd. The defendant-appellant No. 1 is a partnership firm and appellant No. 2 is one of the partners. They entered into an agreement on 10.8.1988. Under the said agreement, it was provided that the respondent shall sell to the appellants all the raw materials for the manufacture of its floor coverings on the price mutually agreed between the parties from time to time. The floor coverings, after manufacture, shall be utilised by the appellants for the execution of the orders given by the respondent. There were other clauses in the agreement. Clause No. 13 was an arbitration clause which reads as under :

(3.) The parties, however, changed some of the terms of the agreement in March, 1990. The respondent claimed certain amount as due against the appellants and a-legal notice was issued to the appellants on 29.7.1994 demanding the amount. The appellants sent a reply dated 30.9.1994 denying its liability. The respondent again sent a notice dated 19.10.1994 indicating that the amount be paid and the matter be settled.