Orissa Mining Corporation Limited Vs. Klockner and Company and ors. - Court Judgment

Excerpt:
- motor vehicles act, 1988 [c.a. no. 59/1988]section 173(1) proviso; [d. biswas, amitava roy & i.a.ansari, jj] appeal without statutory deposit but within limitation/or extended period of limitation maintainability - held, if the provision of a statute speaks of entertainment of appeal, it denotes that the appeal cannot be admitted to consideration unless other requirements are complied with. the provision of sub-section (1) of section 173 permits filing of an appeal against an award within 90 days with a rider in the first proviso that such appeal filed cannot be entertained unless the statutory deposit is made. the period of limitation is applicable only to the filing of the appeal and not to the deposit to be made. it, therefore, appears that an appeal filed under section 173 cannot be entertained i.e. cannot be admitted for consideration unless the statutory deposit is made and for this purpose the court has the discretion either to grant time to make the deposit or not. no formal order condoning the delay is necessary, an order of adjournment would suffice. the provisions of limitation embodied in the substantive provision of the sub-section (1) of section 173 of the act does not extend to the provision relating to the deposit of statutory amount as embodies in the first proviso. therefore an appeal filed within the period of limitation or within the extended period of limitation, cannot be admitted for hearing on merit unless the statutory deposit is made either with the memo of appeal or on such date as may be permitted by the court. no specific order condoning any delay for the purpose of deposit under first proviso to sub-section (1) of section 173 is necessary. [new india assurance co. ltd. v md. makubur rahman, 1993 (2) glr 430 and new india assurance co. ltd. v smt rita devi, 1997(2) glt 406, approved. new india assurance co. ltd. v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - of india being precarious the plaintiff company may not get sufficient foreign exchange to conduct its defence and resist the claim before the international chamber of commerce and that the plaintiff has a strong prima facie case based not on oral evidence but on undisputed and genuine documents for the reliefs claimed in the plaint; 1, on the other hand contended that in view of the specific provision in the agreement between the parties dated 28-4-1982 that the substantive law applicable to the contract as well as the arbitration agreement is swiss law and the venue of arbitration is london, the learned trial judge is right in holding that the plaintiff has no cause of action to file the suit. provided that the time fixed by the court for the correction of the valuation or supplying of the requisite stamp papers shall not be extended unless the court, for reserves to be recorded, is satisfied that the plaintiff was prevented by any cause of an exceptional nature from correcting the valuation or supplying the requisite stamp papers, as the case may be, within the time fixed by the court and that refusal to extend such time would cause grave injustice to the plaintiff. in appreciating the affect of these two provisions it would be relevant to remember that the object of the legislature is enacting the two sections quite clearly was to prevent the abuse of the process of the court. more aften than not these plant ultimately failed but it meant considerable delay and waste of time and substantial expenses. therefore the effect of an arbitration agreement is treated as distinct from the existence of the agreement, and where it was intended to refer to the existence as well as the effect of such an agreement both the words 'existence and effect' have been specifically used. the court held that though grant of stay is a discretionary remedy but it is equally settled that ordinarily if the cause of action is covered by an arbitration clause in the agreement, then the suit should be stayed and that the grant of injunction is a discre-tionary remedy and in exercise of judicial discretion in granting or refusing to grant, the court will take into reckoning the guidelines like whether the person seeking temporary injunction has made out a prima facie case, whether the balance of convenience is in his favour and whether the person seeking temporary injunction would suffer irreparable injury. , air 1987 sc 2289) (supra) has 'clearly laid down that there is a distinction between a case in which the validity, affect and existence of the arbitration agreement is challenged and the suit in which the validity of the contract which contains an arbitration clause is challenged. on this question too the learned trial judge has failed to maintain the distinction between the two types of cases. he has failed to notice that the case pleaded by the plaintiff is that the entire agreement including the arbitration clause is null and void, and unenforceable and not that the arbitration agreement is null and void. it is clear that the main case pleaded by the applicant was that the parties had agreed that the swiss law will be applicable to the contract as well as the arbitration agreement and the venue of arbitration will be at london and, therefore, the indian law in general and the arbitration act in particular, have no application to the case.1. orissa mining corporation limited, a company incoropratcd under the companies act, 1956 has filed this appeal challenging the order/decree of the civil judge (senior division), bhubaneswar dated 26-3-1994 in misc. case no. 75 of 1993 rejecting the plaint in title suit no. 231 of 1992-] under order 7, rule 11(a) and (d) of the code of civil procedure (c.p.c.). the misc. case was registered on the application filed by defendant no. 1 m/s. klockner and compny, a company registered under the laws of the federal republic of germany under order 7, rule 11 of c.p.c.2. orissa mining corporation limited filed title suit no. 231 of 1992 against klockner & company international chamber of commerce and the state of orissa, represented through its chief secretary seeking the following relief:'(a) a decree for declaration that document dated 20-4-1982 nomenclatured 'marketing agreement' is not an agreement/ contract enforceable under law and that plaintiff has no liability under the said document to deliver to the defendant any charge chrome or to indemnify the defendant,(b) a decree for declaration that the document dated 20-4-1982 is inoperative since its ' inception or at least since 1985 or 1987.(c) a decree for declaration that the agreement, if any, in the said document dated 20-4-1982 stands abandoned by the parties to the document since 1982 or since 1985 or since 1987.(d) a decree for declaration that agreement, if any, in the document dated 20-4-1982 is not in existence.(e) a decree for declaration that the document date 20-4-1982 has become null and void.(f) a decree for declaration that agreement, if any, in the document dated 20-4-1982 stands exstinguished/frustrated/voided by operation of orissa ordinance no. 8 of 1991 and is incapable of being performed.(f/l.) declaration declaring that the notice/letter dated 28-4-1993 of defendant no. 2 received by the plaintiff from defendant no, 2 on 3-5-1993 is illegal, invalid and without jurisdiction and the claim of defendant no. i mentioned therein in respect of which the plaintiff and defendant no. 3 has been called upon to reply, are illegal/invalid and without jurisdiction.(g) a decree for permanent injunction injuncting the defendant no. 1 from referring the disputes to international chamber of commerce on the strength of clause 15.1 of the document dated 20-4-1982 and/or prosecuting such reference before the international chamber of commerce if already made.(g/1.) a decree for permanent injunction injuncting defendant no. 1 from proceeding with arbitration before defendant no. 2 against plaintiff and defendant no. 3 in the request dated 21-4-1993 of defendant no. 1 to defendant no. 2 containing the statement of claim of defendant no. 1.(h) such other relief or reliefs as the hon'ble court deems fit and proper in the facts and circumstances of the case.'the case of the plaintiff as averred in the plaint, shortly stated, is that the marketing arrangement made in the document dated 20-4-1982 is not an unforceable agreement/ contract; that the said agreement was abandoned; that the document dated 20-4-1982 is not an agreement but is a mere record of arrangement and understanding between the parties in respect of sale of charge chrome to foreign buyers; that the arrangement made in the document of' 20-4-1982 is dependant on the uncertain eventually of the plaintiff setting up a plaint or production of charge chrome and more particularly at bamnipal; that the agreement of 20-4-1982 is inoperative and incapable of being performed and as such null and void; that the recitals in the document reveal that the defendant no. 1 was selling charge chrome to foreign buyers for and on account of the omc alloys ltd.; that force majure has frustrated the agreement; that the agreement stood extinguished and frustrated by operation of orissa ordinance no. 8 of 1991; and that no dispute between the parties with regard to the matters allegedly agreed to be referred had arisen and could not possibly have arisen and cannot possibly arise in fact. on these averments the plaintiff sought the reliefs noted earlier. in paragraph 11-b of the plaint it is averred:'11b. between 1487 to 1991 defendant no. 1 concluded in total 120 contracts for sale of charge chrome on behalf of gmc alloys as its exclusive marketing agent or on behalf of plaintiff acting as exclusive agent of m/s. omc alloys limited and sent copies of the same to omc alloys. all the charge chrome of about 1 lac and 8 thousand m. t. sold under these contracts were delivered to the foreign buyers.as on 14-4-1992 the date of the letter of the defendant no. 1 demanding from plaintiff to supply to it balance quantity of 1,41,000 m.t. there were no such concluded contracts in respect of which delivery to foreign buyers had not been made and no copies of such concluded contracts sent by defendant were pending either with the plaintiff acting as agent of omc alloys or with omc alloys against which deliveries were to be made, no copy of any such concluded contract was received either by the plaintiff or by the omc alloys prior to, on or after 14-4-1992.in this view of the matter no dispute between the plaintiff and the defendant under document dated 20-4-1982 existed on 14-4-92 or thereafter to attract arbitration clause in the document dated 20-4-1982,'in paragraph 11-c of the plaint it is averred:'11-c. international chamber of commerce by its letters/ notice notes 28-4-93 received by the plaintiff on 3-5-93 forwordcd copy of the request of defendant no. 1 for arbitration containing a statement of claim for u. s. doller 2'949-938.42 jointly against plaintiff and state of orissa defendant no. 3 and has called upon plaintiff and defendant no. 3 to reply to the claim of defendant no. 1.all the obligation of the plaintiff to the defendant in the matter of delivery/supply of charge chrome under document dated 20-4-1982 was to deliver to the foreign buyers charge chrome against concluded contracts and receipt of details of such concluded contracts in respect of sale of charge chronic (sold under contracts of sale executed by the defendant on behalf of the plaintiff in favour of foreign buyers) after receipt by the plaintiff of copies of, such concluded contracts of sale from the defendant and after opening of irrecoverable letters of credit by defendant no. i. in fact plaintiff did not deliver any charge chrome to the defendant no. 1 acting on its own or acting as the agent of omc alloys limited under agreement dated 16-2-1967 between itself and omc alloys.in this view of the matter the demand for supply of charge chrome to it by defendant in its letters dated 14-4-92 and 20-6-92 and demand of indemnification in default is beyond and outside the purview of the said document dated 20-4-82. along with the said letter/notice dated 28-4-93 international chamber of commerce, defendant no. 2 forwarded a copy of the letter of request of the defendant to it requesting it for arbitration of its claim for u. s. $ 2'949'938.42 against the plaintiff (identical to the dispute and subject matter of the plaint filed in the present suit that is demand for supply/delivery of balance quantity of 1,41,000 m.t. of charge chrome and indemnification for a sum of 2'949'938.42 in default). the said letter of request of the defendant no. i to defendant no. 2 and its statement of claim therein would show that the entire claim/dispute raised by the defendant before the international chamber of commerce is covered by the plaint and the prayers mentioned therein.the plaintiff states the claim/dispute raised by the defendant before international chamber of commerce are not matters agreed to be referred to arbitration under the said document dated 20-4-82, though the dispute and claim has been raised by the defendant no. 1 before defendant no. 2 as arising out of the said document dated 20-4-1982,for reasons stated above and for other reasons stated in the plaint the plaintiff states that reference of the dispute/claim by the defendant no. 1 to international chamber of commerce defendant no. 2 is incompetent invalid and illegal and the notice dated 28-4-93 from the international chamber of commerce received by the plaintiff at its office at bhubaneswar is illegal, incompetent, invalid and without jurisdiction.all civil courts have jurisdiction to grant relief to the suitor before it in respect of injury/threatened injury/infringement of legal rights and for that purpose to pass appropriate injunction order under section 151, c.p.c. independantly and/or read with order 39, c.p.c.the plaintiff received the notice/letter dated 28-4-93 defendant no. 2 international chamber of commerce on 3-5-93 at its office within the jurisdiction of this hon'ble court. the receipt of this letter/notice from international chamber of commerce gave rise to cause of action against international chamber of commerce, within the jurisdiction of this hon'ble court.'in paragraph 11-c of the plaint it is averred:'11-d. since defendant no. 1 has raised a claim of u. s. dollar 2'949'938.42 jointly against the plaintiff 'and defendant no. 3 state of orissa, on the basis of state of orissa, defendant no. 3 being successor of the plaintiff and since by its notice dated 28-4-93, defendant no. 2 international chamber of commerce have noticed both plaintiff and state of orissa, defendant no. 3, and has called upon them to reply to the claim of the defendant no. 1 state of orissa, defendant no. 3 is a necessary party to the suit.the plaintiff states that state of orissa is not a successor of the plaintiff and the joint claim against both of them by defendant no. 1 and the notice on both of them by defendant no. 2 international chamber of commerce are incompetent and invalid.'3. in the aforementioned suit the defendant no. 1 m/s. klockner and co. filed the application under order 7, rule 11 of c.p.c. seeking rejection of plaint (misc. case no. 75 of 1993) contending, inter alia, that the plain- tiff has made out no cause of action to sue the defendant inasmuch as no where in the plaint has it mentioned about the precise nature of an existing legal right vested on it or precise obligation of which there has been a breach of threatened violation by the defendant, and in those circumstances no suit for injunction would lie. the defendant-applicant submitted that even if all the allegations in the plaint are proved, the plaintiff under law is not entitled to any relief, particularly the reliefs of declaration and injunction, as prayed for; the maximum that the plaintiff can prove is that the arbitration proceeding, even if it results in an award, could only terminate in an award which would be a nullity and could not possibly affect the rights of the plaintiff, if the arbitrators made an award in favour of the applicant. the defendant-applicant has further contended that it is an admitted position that the agreement of 20-4-1982 between the parties were entered into in germany and it was expressly set out in the said agreement that the law governing the contract will be the swiss law and the venus of the arbitration was fixed at london; therefore it is only the swiss law which will decide whether the arbitration clause is wide enough to cover the dispute between the parties and it is only the swiss law which will decide whether the arbitration clause binds the parties even one of them alleges that the contract is void or discharged by frustration. it is also contended that the marketing agreement of 25-4-1982 having expressly chosen the swiss legal system as the system which will govern the contract, the indian courts cannot entertain any suit of the nature and mind that has been instituted. in view of that it is submitted that the suit is barred and as such the plaint deserves to be rejected under order 7, rule 11 of c.p.c.alternatively the applicant has submitted that assuming without admitting that the indian law is applicable, in such case the suit will stand barred by virtue of section 12 of the indian arbitration act.4. the plaintiff did not file any separate objection to the file application filed under order 7, rule 11 of c.p.c. it adopted the averments in the petition filed by it under order 39, rules 1 and 2 of c.p.c. for interim injunction (misc. case no. 433 of 1992). therein the plaintiff reiterated the case stated in the plaint and contended that if the purported dispute arising out of the demand by the defendant in its letter dated 14-4-92 is referred by the defendant to the international chamber of commence or such a reference is pursued before the international chamber of commence the petitioner company will suffer irreparable injury by way of heavy expenditure in foreign exchange in sending its officers and witnesses to london and by way of engaging advocates at london; reserves of foreign exchange of govt. of india being precarious the plaintiff company may not get sufficient foreign exchange to conduct its defence and resist the claim before the international chamber of commerce and that the plaintiff has a strong prima facie case based not on oral evidence but on undisputed and genuine documents for the reliefs claimed in the plaint; that the balance of convenience lies in favour of grant of injunction and the plaintiff will suffer irreparable loss if injunction prayed for is not granted.5. the learned trial judge in the impugn-ed order has considered the case of the defendant-applicant under order 7, rule 11 of c.p.c. on two counts; that the plaint disclosed a cause of action and that the suit is barred under section 32 of the arbitration act, 1940 and has held that the plaint is liable. to be rejected under order 7, rule 1 l(a) and (d) of c.p.c.6. the thrust of the submissions of shri b. m. patnaik, learned counsel for the appellant was that the learned trial judge has mis-construed and misinterpreted the provisions in order 7, rule 11(c) and (d) of c.p.c. and the order is vitiated on that score. his further submission was that the learned trial judge has erred in holding that the suit is barred under section 32 of the arbitration act in as much as the suit has not been filed for a decision upon the existence, of fact or validity of an arbitration agreement or award, but the suit has been filed for a decision regarding existence or. otherwise of the contract alleged to have been entered between the parties.shri o. s. vaidyanathan, learned counsel for the respondent no. 1, on the other hand contended that in view of the specific provision in the agreement between the parties dated 28-4-1982 that the substantive law applicable to the contract as well as the arbitration agreement is swiss law and the venue of arbitration is london, the learned trial judge is right in holding that the plaintiff has no cause of action to file the suit. he also supported the finding of the learned trial judge that the suit is barred under section 32 of the arbitration act.7. since the case rests on the provision of order 7, rule 11 (a) and (d) of c.p.c., it will be convenient to own to the said provision at the outset:'11. rejection of plaint - the plaint shall be rejected in the following cases:-(a) where it does not disclose a cause of action.xx xx xx(d) where the suit appears from the statement on the plaint to be barred by any law.provided that the time fixed by the court for the correction of the valuation or supplying of the requisite stamp papers shall not be extended unless the court, for reserves to be recorded, is satisfied that the plaintiff was prevented by any cause of an exceptional nature from correcting the valuation or supplying the requisite stamp papers, as the case may be, within the time fixed by the court and that refusal to extend such time would cause grave injustice to the plaintiff.'rule 11 of order 7 enacts that the plaint shall be rejected in four classes of cases mentioned in clauses (a) to (d), but it is settled position that the instances given cannot be regarded as exhaustive of all the cases in which a court can reject a plaint or as limiting the inherent powers of the court in respect thereof. in disposing of a suit under this rule the court ought not to dismiss the suit, but should reject the plaint. a distinction must be drawn between a case where plaint itself does not disclose a cause of action and another in which after considering the entire material on record the court comes to the conclusion that there is no cause of action. in the letter case the plaint cannot be rejected (see (1985) 89 cal wn 1112 : british airways v. art. works export ltd.) to reject a plaint under clause (a) rule 11 of order 7, the court should look at. the. plaint only and if the plaint is based on a document the court can consider it to see if a cause of action is disclosed, but the validity of the document cannot be considered at that stage. (see air 1983 raj 3, bhagwan das v. goswami brijesh kumarji). the power to reject the plaint under this clause can be exercised only if the court comes to the conclusion that even if all the allegations are proved, the plaintiff would not be entitled to any relief whatever. where the court dismisses a suit not on the ground that the plaint discloses no cause of action but on the ground that the facts alleged in the plaint oust the jurisdiction of the court, such an order cannot be said to be an order rejecting the plaint.clause (d) of rule 11 of order 7 authorises rejection of a plaint where the suit appears from the statement in the plaint to be barred by any law. where a legal bar against maintainability of a suit is not made out from the statements in the plaint but facts showing such a bar are brought to the notice of the court by the defendant, the court is not powerless to take notice of those facts and give relief to him. in such a case the court may raise an issue on the point and dismiss the suit itself instead of rejecting the plaint.8. the other statutory provision relevant for the purpose of the case is section 32 of the arbitration act. the said section reads as follows:'32. bar to suits contesting arbitration agreement or award- notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be enforced, set aside, amended modified or in any way affected otherwise than as provided in this act.'the apex court in the case of orient transport company v. m/s. jaya bharat credit and investment co. ltd, reported in air 1987 sc 2289 construing the provision in section 32 ruled:'section 32 of the act does not contemplate the case of a suit challenging the validity of a contract merely because it contains an arbitration clause. if the intention of the legislature were that all documents containing an arbitration clause should come within the purview of sections 32 and 33 the legislature would have said so in appropriate words. these sections have a very limited application, namely where the existence or validity of an arbitration agreement and not the contract containing the arbitration agreement is challenged. every person, it has to be borne in mind, has a right to bring a suit which is of a civil nature and the court has jurisdiction to try all suits of civil nature under section 9 of the civil p. c. that right has not been taken away section 32. such a right can only be taken away by express terms or by necessary implication. section 32 does not have that affect. sections 32 and 33 of the act on the true construction do not purport to a deal with suits for declaration that there was never any contract or that contract is void.'the court held that a suit for declaration that the agreements contracts executed between the plaintiff and the defendant were not 'hire purchase agreements' but were agreements relating to transaction of loan and for injunction restraining the defendant from enforcing them until the decision of the suit is not barred by the provisions of section 32. the court approved the decision of the calcutta high court in the case of the state of bombay v. adumjee hajee dawood and co., reported in air 1951 cal 147.the apex court in the case of jawahar lal barmen v. union of india, reported in air 1962 sc 378 considering the scope, object and interpretation of sections 28, 31, 32 and 33 observed:'in appreciating the affect of these two provisions it would be relevant to remember that the object of the legislature is enacting the two sections quite clearly was to prevent the abuse of the process of the court. before the present act was passed experience showed that unscrupulous and dishonest parties to the arbitration agreements frequently chose to deny the existence of the said agreements even after the arbitration proceedings had concluded and ended in awards and that tended to make all arbitration proceedings futile. more aften than not these plant ultimately failed but it meant considerable delay and waste of time and substantial expenses. that is why sections 32 and 33 have been enacted with the object of bringing the relevant disputed for decision before the specified courts in the form of petitions. it is significant that under section 31(2) of the act all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the court in which the award under the agreement has been, or may be filed, and by no other court. indeed, section 2(c) defines a court as meaning a civil court having jurisdiction to decide the questions forming the subject matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under section 21, include a small cause court. therefore, stated broadly, it would be correct to assume that the main object of introduction the new provisions of sections 31, 32 and 33 was to entrust the decision of the relevant disputes to the specified court and to require the parties to bring the said disputes for the decision of the said court in the form of petitions. remedy by a regular suit is intended to be excluded.section 32 creates a bar against the institution of suits, and it provides that if the existence, affect or validity of an arbitration agreement or award is in dispute on any ground whatsoever no suit shall lie for the adjudication of the said dispute. it also provides that no suit shall lie to set aside, amend or modify or in any way affect an arbitration agreement or an award. it would be noticed that the clause 'on any ground whatsoever' is very wide and it denotes inter alia that if the existence or validity of an arbitration agreement is questioned on any ground whatever it cannot be the subject-matter of a suit; the said dispute shall be tried as provided in this act. thus there can be no doubt that if a party affirms the existence of an arbitration agreement or its validity it is not open to the party to file a suit for the purpose of obtaining a declaration about the existence of the said agreement or its validity. such a suit in terms is barred by section 32. this position is not disputed. the bar to the suit thus created by section 32 inevitably raises the question as to what remedy it is open to a party to adopt in order to obtain an appropriate declaration about the existence or validity of an arbitration agreement; and it is on the decision of this question that the parties are at issue before us.'before answering this question we may conveniently consider the scopeof section 33 and its effect. section 33 consists of two parts. the first deals with a challenge to the existence or validity of an arbitration agreement, or an award and it provides that the persons therein specified can apply to the court to have a decision on its challenge to the existence or validity of an arbitration agreement or an award. in other words, there is no doubt that it is only persons who challenge the existence of the arbitration agreement that can apply under the first part of section 33. this position is also not disputed. the second part of the section refers to applications made to have the effect of either the arbitration agreement or the award determined. the question which we have to consider is whether a person affirming an arbiration agreement can apply under the latter part of section 33. even assuming that the requirement that an application can be made under the first part of section 33 only by persons desiring to challenge the arbitration agreement does not apply to its latter part, it is difficult to hold that an application to have the effect of the arbitration agreement determined can legitimately cover the dispute as to the existence of the said arbitration agreement. it is clear that the first part of section 33 refers to the existence or validity in terms and sections 31 and 32 also refer separately to the existence, affect or validity. therefore the effect of an arbitration agreement is treated as distinct from the existence of the agreement, and where it was intended to refer to the existence as well as the effect of such an agreement both the words 'existence and effect' have been specifically used. thus under the latter part of section 33 an application can be made to have the effect or purport of the agreement determined but not its existence. that means that an application to have the effect of the agreement can be made provided the existence of the agreement is not in dispute. besides if a person affirming the existence of an agreement is held entitled to apply to the court under the latter part of section 33 for getting a declaration about the said existing agreement than the first part of section 33 would be wholly superfluous. therefore it seems to as that a party affirming the existence of an arbitration agreement cannot apply under section 33 for obtaining a decision that the agreement in question exists. in fairness we ought to and that the learned solicitor general who appeared for the respondent did not dispute this position.'following the aforementioned apex court decision the andhra pradesh high court in the case of n. v. chowdhary v. hindustan steel works construction ltd., reported in air 1984 ap 110 held that where a contract for earth work entered into by a govt. company contained an arbitration clause cauched in very wide terms so as to include every dispute between the parties and yet the contractor when a notice to terminate the contract was given on noticing appallingly slow progress of the work, filed a suit for injunction to restrain the govt. company from terminating the contract on the grounds, inter alia, that time is not the essence of the contract and the contractual period expiring on certain date was gain subject to existence from time to time the necessary mobilisation advance promised was not made in time as per the agreement so as to keep pace with the work, the act of filing the suit, whole giving a go by to the arbitration agreement impinged upon the very arbitration agreement challenging the validity and therefore they contractor ought to be deterred from filing the same. considering the plea for stay under section 34 of the arbitration act and for temporary injunction under order 39, rules 1 and 2 of c.p.c. the court held that though grant of stay is a discretionary remedy but it is equally settled that ordinarily if the cause of action is covered by an arbitration clause in the agreement, then the suit should be stayed and that the grant of injunction is a discre-tionary remedy and in exercise of judicial discretion in granting or refusing to grant, the court will take into reckoning the guidelines like whether the person seeking temporary injunction has made out a prima facie case, whether the balance of convenience is in his favour and whether the person seeking temporary injunction would suffer irreparable injury.9. in the present case on a fair reading of the petition filed by defendant no. 1 under order 7, rule 11 of c.p.c. it is clear that the case of the applicant is that the plaintiff has no cause of action to file the suit. it is not specifically pleaded by the applicant that the plaint does not disclose any cause of action. the learned trial judge has also not recorded any specific finding to this affect. from the discussions in the order it appears that the learned trial judge has not maintained the distinction between the plea that there was no cause of action for the suit and the plea that the plaint does not disclose a cause of action. no specific reason or ground is stated in the order on support of the finding that the plaint is to be rejected under order 7, rule 11(a). from the averments in the plaint it is clear that the plaintiff has pleaded a cause of action for filing the suit seeking the reliefs stated in it. that is not to say that the plaintiff has cause of action to file the suit for the reliefs sought; that question is to be determined on the basis of materials (other than the plaint) which may be produced by the parties at appropriate stage in the suit. for the limited purpose of determining the question whether the suit is to be wiped out under order 7, rule 11(a)or not the averments in the plaint are only to be looked into. the position noted above is also clear from the petition filed by defendant no. 1 under order 7, rule 11 in which the thrust of the case pleased is that on the stipulations in the agreement of 27-4-1982 the plaintiff is not entitled to false suit seeking any of the reliefs stated in the plaint.10. coming to the question whether the plaint is to be rejected under clause (d) of rule 11 of order 7, the supreme court in the case of orient transport co., air 1987 sc 2289) (supra) has 'clearly laid down that there is a distinction between a case in which the validity, affect and existence of the arbitration agreement is challenged and the suit in which the validity of the contract which contains an arbitration clause is challenged. the bar to suit under section 32 of the arbitration act extends to a case where the existence, effect or validity of an arbitration agreement is challenged and not to the latter type of the suit. on this question too the learned trial judge has failed to maintain the distinction between the two types of cases. he has failed to notice that the case pleaded by the plaintiff is that the entire agreement including the arbitration clause is null and void, and unenforceable and not that the arbitration agreement is null and void.11. from the lower court record in the case and also the records in a similar suit filed by the state of orissa, title suit no. 152 of 1993 in which c.p.c. ltd. is a defendant, it appears that in both the cases the defendant no. 1 - klockner and co. filed applications under section 3 of the foreign awards (recognition and enforcement) act, 1961. such application presupposes that the applicant accepts the position that the said act applies to the case and the arbitration act, 1940 has no application to the case. under the foreign awards act, there is no specific provision for bar of suit. further, from the averments in the application filed under order 7, rule 11 of c.p.c. it is clear that the main case pleaded by the applicant was that the parties had agreed that the swiss law will be applicable to the contract as well as the arbitration agreement and the venue of arbitration will be at london and, therefore, the indian law in general and the arbitration act in particular, have no application to the case. alternatively the applicant has pleaded that even assuming that the indian law of arbitration applies to the case than the suit is barred under section 32 of the act. the learned trial judge does not appear to have considered the main case pleaded by the applicant but diseased of the petition on consideration of the alternative case pleaded by it. therefore his finding against bar of the suit under order 7, rule 11(d) is also vitiated.12. on the analysis and discussions in the foregoing paragraphs it is my considered view that the order passed by the learned trial judge rejecting the plant under order 7, rule 11(a) and (d) of c.p.c. is unsustainable and has to be set aside. accordingly the appeal is allowed and the order dated 26-3-1994 of the civil judge (senior division), bhubaneswar in misc. case no. 75 of 1993 is set aside. there will be no order for costs of this court.