STATE OF BIHAR Vs. GAYA ELECTRIC SUPPLY CO LTD

JUDGEMENT

(1.) THIS appeal is presented by the deft, against an order of the Subordinate Judge of Gaya refusing to stay Title Suit No. 83 of 1950 under the provisions of Section 34, Arbitration Act.

(2.) THE pltf. Gaya Electric Supply Co. Ltd., had obtained a license for the supply of electric energy in the town of Gaya under the Electricity Act. On 23-6-1949 the Govt. revoked the license by a notification. THEreupon the pltf. instituted a suit against the State of Bihar for a declaration that the revocation of the license was mala fide & ultra vires. Subsequent negotiation took place & as a result, the parties entered into an agreement to the effect (1) that the pltf. would withdraw the suit on 25-10-1949, (2) that within 3 days of the withdrawal of the suit the State of Bihar would make an advance payment of Rs. 5 lakhs to the pltf. but simultaneously the pltf. should formally hand over the, possession of the undertaking to an authorised officer of the Govt. & (3) that both the pltf. & the Govt. will make their respective valuation within three months of taking over the undertaking & (4) "in the case of any difference or dispute between the parties over the payment of balance which may be found due after valuation, such dispute shall be submitted to the sole arbitration of a single arbitrator who should be a high Govt. officer of the Provincial Govt. of rank equal to or higher than a Divisional Commissioner & his award shall be final & binding on both parties." THE arbitration clause was contained in a letter dated 13-10-1949 from the Chief Electrical Engineer Bihar & was accepted by the pltf. in its letter dated 17-10-1949.

(3.) THE question to be decided in this appeal is whether the dispute in the suit is within the scope of the arbitration clause and whether the suit should be stayed under Section 34, Arbitration Act.