Rajamannar, C.J.:- This is an appeal from the judgment of Ramaswami, J., in A.A.O. No. 531 of 1954. That appeal was preferred against the order made by the learned City Civil Judge, Madras, in I.A. No. 676 of 1954 in O.S. No. 538 of 1954. The application was made under section 34 of the Indian Arbitration Act for stay of the suit on the ground that the remedy of the plaintiff was to resort to arbitration. The learned City Civil Judge, however, dismissed the application and refused to grant stay. There was an appeal to this Court (C.M.A. No. 531 of 1954). The appeal itself was filed under section 39 (1) (v). of the Indian Arbitration Act. Ramaswami, J., allowed the appeal and set aside the order of the learned City Civil Judge, and granted the application for stay of the suit. This appeal is by the plaintiff from that order. A preliminary objection was taken on behalf of the respondent before us that the appeal is incompetent, and reliance was placed on section 39(2) of the Indian Arbitration Act and the rulings of this Court in Radhakrishnamurthy v. Ethirajulu Chetty & Co1, and Co-operative Insurance Society v. Bapi Raju2. Undoubtedly, the decision in Radhakrishnamurthy v. Ethirajulu Chetty & Co1, directly supports, the preliminary objection. There, it was held by Sir Lionel Leach, C.J., and Shahabuddin, J., that an appeal under clause 15 of the Letters Patent against the judgment of a single Judge of the High Court setting aside an order of the City Civil Court under the provisions of section 39 of the Indian Arbitration Act, 1940, is barred by reason of sub-section (2) of the said section. The reasoning of this decision is contained in the following passage from the judgment of the learned Chief Justice: “It is true that clause 15 of the Letters Patent if it stood alone, would allow the appeal; but clause 44 of the Letters Patent says that the provisions are subject inter alia to the legislative powers of the Governor-General in Legislative Council. The Indian Arbitration Act is an Act of the Central Legislature and the provisions of section 39 must prevail”. This ruling was followed by another Division Bench in Co-operative Insurance Society v. Bapi Raju2. The Indian Arbitration Act is an Act of the Central Legislature and the provisions of section 39 must prevail”. This ruling was followed by another Division Bench in Co-operative Insurance Society v. Bapi Raju2. The same view has been taken by the Bombay High Court in Madhavdas Devidas v. Vithaldas Vasudevdas3, and by the Calcutta High Court in R. Wright and Partner, Ltd. v. Governor-General in Council4. On the other hand, a contrary view was taken by the Lahore High Court in Hanuman Chamber of Commerce v. Jassa Ram5, and by the East Punjab High Court in Mohindra Supply Co. v. GovernorGeneral in Council6, the latter being the decision of a Full Bench. it is true that clause 44 gives ample power to the Legislature to take away-right of appeal conferred by clause 15 of the Letters Patent. But, before it can be held that such a right of appeal has been abrogated, there should be an express provision to that effect, or there should be some provision necessarily implying such abrogation. We find nothing prima facie in section 39 (2) of the Indian Arbitration Act which expressly takes away the right of appeal from one learned Judge to a Division Bench of this Court; nor can we find any language in section 39 (2), which of necessity would imply that such an appeal would be incompetent. We are not expressing any final opinion, as we are bound by the decisions in Radhakrishnamurthy v. Ethirajulu Chetty and Co.1and Co-operative Insurance Society v. Bapi Raju2. But, we are convinced that the decisions in Radhakrishnamurthy v. Ethirajulu Chetty and Co.1, should be re-considered. The appeal will be posted before a Full Bench. In pursuance of the order of reference the appeal came on for hearing before a Full Bench. D. Ramaswami Ayyangar and V. Krishnaswami, for Appellant. S. Vaidyanathan for A.K. Muthuswami, for Respondent. The opinion of the Full Bench was delivered by Rajamannar C.J.†-This appeal originally came before a Division Bench of this Court. A preliminary objection was taken on behalf of the respondent that the appeal was incompetent. The ruling of this Court in Radhakrishnamurthy v. Ethirajulu Chetty and Co.1, directly supported the preliminary objection. But, after some argument, it was considered that that decision required reconsideration. Hence, this reference to a Full Bench. A preliminary objection was taken on behalf of the respondent that the appeal was incompetent. The ruling of this Court in Radhakrishnamurthy v. Ethirajulu Chetty and Co.1, directly supported the preliminary objection. But, after some argument, it was considered that that decision required reconsideration. Hence, this reference to a Full Bench. The appeal purports to be filed under clause 15 of the Letters Patent against the Judgment of Ramaswami, J. in C.M.A. No. 531 of 1954. That appeal was against an order of the City Civil Court, dismissing an application filed by the respondent under section 34 of the Arbitration Act for stay of a suit (O.S. No. 538 of 1954) on the file of the City Civil Court. Section 39 (1) inter alia provides for an appeal from an order staying or refusing to stay legal proceedings where there is an arbitration agreement (clause (v)). The question is whether an appeal under the Letters Patent is maintainable against the order of Ramaswami, J. It was not contended before us on behalf of the respondent that the order of Ramaswami, J., was not a judgment within the meaning of clause 15 of the Letters Patent. Prima facie, therefore, this appeal would be competent. But the respondent’s contention is that section 39 (2) of the Arbitration Act prohibits this appeal under the Letters Patent. That provision runs as follows:- “No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.” As mentioned above, the preliminary objection is supported by the decision in Radhakrishnamurthy v. Ethirajulu Chetty and Co.1, the material passage from which has already been extracted in the order of reference. Clause 44 of the Letters Patent runs thus:- “And we do further ordain and declare that all the provisions of these our Letters Patent are subject to the legislative powers of the Governor-General in Legislative Council, and also the Governor-General under section 71 of the Government of India Act, 1915, and also of the Governor-General, in cases of emergency under section 72 of that Act and may be in all respects amended and altered thereby.” The learned Judges in Radhakrishnamurthy v. Ethirajulu Chetty and Co.1, took the view that, as the Indian Arbitration Act was an Act of the Central Legislature, the provisions of section 39 should prevail, with the result that sub-section (2) of section 39 would take away the right of appeal conferred by clause 15 of the Letters Patent. This decision was followed by another Division Bench in Co-operative Insurance Society v. Bapi Raju1. Krishnaswami Nayudu, J. dealing with this point construed the second appeal contemplated under section 39 (2) as a further appeal and not a second appeal under section 100, Civil Procedure Code. The same view was taken by the Bombay High Court in Madhavdas Devidas v. Vithaldas Vasudevdas.2In this decision, unlike in the decisions of our Court, the question has been discussed at some length. Bavdekar, J., who delivered the Judgment on behalf of the Division Bench, referred to the sharp difference of opinion between our Court in Radhakrishnamurthy v. Ethirajulu Chetty and Co3., and the Lahore and East Punjab High Courts, which had taken a contrary view in Hanuman Chamber of Commerce v. Jassa Ram4and Banwari Lal v. Hindu College, Delhi5. It may be mentioned that the decision in Banwari Lal v. Hindu College, Delhi5, was affirmed by a Full Bench of the East Punjab High Court in Mohindra Supply Co. v. Governor-General in Council6. After setting out the two possible interpretations which could be placed on the words. “second appeal” the learned Judge refused to accept the interpretation, according to which the class of appeals contemplated would be appeals under section 100, Civil Procedure Code. “Second appeal” is a technical expression to denote an appeal under section 100, Civil Procedure Code. Such an Appeal is only against a decree as defined in the Civil Procedure Code. An order under any of the provisions of the Arbitration Act would not be a decree. “Second appeal” is a technical expression to denote an appeal under section 100, Civil Procedure Code. Such an Appeal is only against a decree as defined in the Civil Procedure Code. An order under any of the provisions of the Arbitration Act would not be a decree. Therefore, the learned Judge held that it would be inappropriate to construe the expression “second appeal” as referring to the “second appeal” provided in and by section 100, Civil Procedure Code. The learned Judge therefore adopted the other interpretation. He observed at page 577:- “When there is an appeal provided from an order in appeal from an order, then, that appeal would be numerically and in the dictionary meaning of the word "second" a second appeal.” His conclusion was as follows: “Sub-section (2) of section 39 is obviously, therefore, intended to take away any right of appeal which may lie under any other enactment, and, in our view, therefore, the right of appeal, which was given by clause 15 of the Letters Patent, is by necessary implication taken away by sub-section (2) of section 39.” The decision of the Calcutta High Court in R. Wright and Partner, Ltd. v. Governor-General in Council7, related to an order passed by a learned Judge of the High Court; but it was not one of the orders mentioned in section 39 (1) of the Arbitration Act. It was held that no appeal would lie from such an order under clause 15 of the Letters Patent, because the right of appeal given by the Letters Patent should be deemed to have been curtailed, modified and restricted by section 39 (1) of the Arbitration Act. The decision of this Court in Radhakrishnamurthy v. Ethirajulu Chetty and Co.3, and the decision of the Bombay High Court in Madhavdas Devidas v. Vithaldas Vasudevdas2, were followed by the learned Judges in coming to the conclusion that the right of appeal conferred by clause 15 of the Letters Patent had been curtailed and modified by section 39 of the Arbitration Act, because the provisions of clause 15 of the Letters Patent had to be taken subject to the legislative powers of the GovernorGeneral in Legislative Council. As the order of the single learned Judge of the High Court was itself the original order, there was no scope for the application of section 39 (2) of the Arbitration Act. As the order of the single learned Judge of the High Court was itself the original order, there was no scope for the application of section 39 (2) of the Arbitration Act. A contrary view has been taken by the Lahore High Court and East Punjab High Court. In Hanuman Chamber of Commerce v. Jassa Ram4, A Division Bench of the Lahore High Court (Abdul Rashid, C.J. and Mahajan, J.) held that section 39 (2) of the Arbitration Act did not take away the right of appeal conferred by clause 10 of the Letters Patent of the Lahore High Court (corresponding to clause 15 of the Madras Letters Patent) either expressly or by necessary implication. In the Judgment of Mahajan, J. as he then was who delivered the Judgment on behalf of the Court, express reference is made to the decision of our Court in Radhakrishna- murthy v. Ethirajulu Chetty and Co.1, and this is what the learned Judge says in dissenting from that decision: "With great respect, I might observe that, as the decision states no reasons in support of this view, it cannot be used as a precedent for a decision of similar cases when the point arises before another Court. I am, therefore, with due deference to the learned Judges who decided the above case, not prepared to follow it, as, in my opinion, it does not lay down sound law." The learned Judge was inclined to construe the expression "second appeal" in section 39 (2) of the Arbitration Act as meaning appeals falling under section 100, Civil Procedure Code. He pointed out that the expression "second appeal" has seldom been used in respect of appeals which arise within the High Court and which are very commonly described as inter-Court appeals. In Mohindra Supply Co. v. Governor-General in Council2, there is an elaborate discussion by a Full Bench of the Punjab High Court. Kapur, J., (as he then was) delivered the leading judgment. In Mohindra Supply Co. v. Governor-General in Council2, there is an elaborate discussion by a Full Bench of the Punjab High Court. Kapur, J., (as he then was) delivered the leading judgment. The learned Judge’s reasoning and conclusion can be summed up in his own words:- "I am therefore of the opinion that: (1) Section 39, Arbitration Act, is a re-enactment of section 588 and second part of section 589 of the Code of 1882 and also of section 104 of the Code of 1908 minus the phrase added in that Code and a portion of section 106, and the interpretation which has been put on sections 588 and 589 of the Code would apply equally to section 39 of the Arbitration Act; (2) In section 39 of the Arbitration Act as in section 588 of the Code of 1882 or section 104 of the Code of 1908 the word used is ‘Order’ and therefore this section cannot restrict an appeal which would fall under clause 10 of the Letters Patent of this Court which is against a Judgement; (3) the mere fact that a saving clause was introduced in section 104 (1) of the Code of 190 and words similar to that saving clause do not find place in section 39 is no ground for interpreting section 39 in a manner different from the interpretation which was put on section 588 of the Code of 1882; (4) The Abtitration Act is not a special Act ‘vis-a-vis’ the Letters Patent; on the other hand, it is clause 10 which is a special Act as it provided for intra-Court appeals; (5) the word ‘second appeal’ must be construed in its ordinary connotation as it is understood by lawyers; (6) Even if it were to be used in the sense that it was used in cases decided under section 588. it applies only to appeals from an appellate order of a District Judge to the High Court, but it is not used in the sense of an appeal from one Judge of a High Court to two or more Judges of the same Court; (7) There is no modification of clause 10 of the Letters Patent by section 39 of the Arbitration Act either expressly or by necessary intendment; and (8) The fact that appeals were expressly provided to the King in Council presupposes that an appeal would lie from the Judgment of a single Judge to two or more Judges of that Court under clause 10 of the Letters Patent, otherwise the appeal to the King in Council would be only an illusory right. The same argument would apply to appeals to the Supreme Court. No other decision of any Court directly bearing on the point was brought to our notice. Having regard to this pronounced conflict of judicial opinion, we would discuss the question as if it were res Integra. The order under appeal is a judgment within the meaning of clause 15 of the Letters Patent, and, therefore, prima facie, this appeal is competent under that clause. The contention that the appeal is incompetent is ultimately founded on clause 44 of the Letters Patent, read of course, with sub-section (2) of section 39. Clause 44 is in general terms and is of an omnibus nature. It does not specifically refer to any right of appeal conferred by any of the clauses of the Letters Patent. It declares that the provisions of the Letters Patent are subject to the legislative powers of the Governor-General in Legislative Council and the Governor-General in Council under section 71 of the Government of India Act, 1915, and of the Governor-General in cases of emergency under section 72 of that Act. What can be done in the exercise of such legislative power is also mentioned in clause 44 itself namely, that all the provisions of the Letters Patent may in all respects be amended and altered. Clause 15 is one of the provisions of the Letters Patent and it must be conceded that this clause may in all respects be amended and altered in exercise of the legislative powers of the GovernorGeneral in Council. Clause 15 is one of the provisions of the Letters Patent and it must be conceded that this clause may in all respects be amended and altered in exercise of the legislative powers of the GovernorGeneral in Council. It is not pretended that clause 15 has been expressly amended and altered so as to take away the right of appeal conferred by it in certain cases arising under the Indian Arbitration Act. All that is contended is that, by necessary intendment, the clause should be deemed to have been amended and altered by section 39 (2) of the Arbitration Act, which is no doubt an Act passed by the Governor-General in Legislative Council. Before we can hold that such an important provision as clause 15 of the Letters Patent has been amended and altered by necessary implication, we should be satisfied beyond doubt that the implication is so compelling that to hold otherwise would be practically rendering a provision of an Act of the Central Legislature useless and inoperative. The question which falls for our decision, therefore, is whether section 39 (2) of the Arbitration Act compels us to hold that clause 15 of the Letters Patent must have been intended to be amended and altered. It is clear that section 39 of the Arbitration Act is a section generally dealing with appeals from orders passed under the Arbitration Act. “Court” is defined in section 2 of the Act thus: “‘Court’ means a civil Court having jurisdiction to decide the question 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.” It is obvious that, in the majority of cases, the ‘Court’ would be one of the subordinate Courts in the country, though some of the orders might be passed by the High Court itself. All that we wish to stress upon is that section 39 covers not only appeals from orders passed by the High Court, but also appeals from orders passed by the other Courts. In some cases, the ‘Court’ might be the Court of the Subordinate Judge. The “appellate Court” in certain cases may be the District Court though in other cases it may be the High Court. In some cases, the ‘Court’ might be the Court of the Subordinate Judge. The “appellate Court” in certain cases may be the District Court though in other cases it may be the High Court. Under section 39 (1), the “appellate Court” is described as the Court authorised by law to hear appeals from original decrees of the Court passing the order. When a single learned Judge of this Court hears and disposes of an appeal preferred against one of the orders specified in section 39 (1) and passed by a subordinate Court, the learned Judge would constitute the Court authorised to hear appeals from the original decree of the Subordinate Court passing the order, namely, the High Court. There is no provision in the Code of Civil Procedure or in the Arbitration Act for an appeal from the order passed by a subordinate Court to a single learned Judge of this Court. The appeal lies to the High Court as such. There is nothing to prevent the Chief Justice of a High Court directing appeals preferred under section 39 (1) of the Arbitration Act to be disposed of by a Division Bench. The Appellate Side Rules may provide for certain of the appeals having regard to the value of the subject-matter involved, being heard by a single learned Judge and others by a Division Bench. Whether an appeal under section 39 (1) is heard by a single learned Judge or by more than one learned Judge, the matter is entirely one of internal arrangement of the High Court and is not provided by the Arbitration Act. There has been a great controversy as to the meaning to be attached to the expression “second appeal” in section 39 (2) of the Arbitration Act. Some of the learned Judges were prepared to construe that expression as referring to appeals falling under section 100, Civil Procedure Code. It cannot be denied that, in commonparlance, the expression “second appeal” is used to describe appeals falling under that section. But, with great deference to the learned Judges who would construe that expression in section 39 (2) as referring to appeals under section 100, Civil Procedure Code, we are unable to agree with them, and for this reason. A Second Appeal under section 100, Civil Procedure Code, is only against a decree passed in appeal by any Court subordinate to a High Court. A Second Appeal under section 100, Civil Procedure Code, is only against a decree passed in appeal by any Court subordinate to a High Court. None of the orders mentioned in section 39 (1) of the Arbitration Act would be a decree within the meaning of the definition in the Civil Procedure Code. Therefore, even without any specific provision, no Second Appeal would lie to the High Court under section 100, Civil Procedure Code. We are inclined to agree with those learned Judges who held that “second appeal” means a further appeal, that is, numerically second appeal. At the same time, we are clearly of opinion that the second appeal contemplated is a further appeal to a Court of a higher grade. Section 39 (1) refers to an appeal from an original order to an appellate Court, which is a Court of a higher category. So, when there is a reference to a second appeal from an order passed in appeal under the section, that is, section 39 (1), the second appeal contemplated is a further appeal to a Court higher than the Court which passed the order in appeal. To illustrate: If the original order was passed by the Court of a Subordinate Judge and an appeal has been preferred under section 39 (1) of the Act to the District Judge, there will not be a further appeal to the High Court against the appellate order of the District Court. In our opinion, an appeal under clause 15 of the Letters Patent from one learned Judge of a High Court to two or more Judges of the same High Court cannot fall within the category of “second appeal” mentioned in section 39 (2) of the Act. This point is really covered by the high authority of the Judicial Committee of the Privy Council in the early case of Hurrish Chunder Chowdry v. Kalisunderi Debi1. It was held therein that a decision by a single Judge of the High Court appointed to dispose of matters relating to appeals to Her Majesty in Council, refusing to transmit for execution her order restoring a decree, is a judgment within the meaning of section 15 of the Letters Patent of 1865 and was appealable to a Division Bench of the High Court. It was contended before the Judicial Committee that section 588 of the Civil Procedure Code of 1877 restricted appeals against orders to the list of orders enumerated therein. Their Lordships repelled this contention briefly, but clearly, thus: “It only remains to observe that their Lordships do not think that section 588 of Act (X of 1877), which has the effect of restricting certain appeals, applies to such a case as this, where the appeal is from one of the Judges of the Court to the Full Court.” Some of the learned Judges appear to have treated this pronouncement of the Privy Council as in the nature of an obiter dictum. We think otherwise. It is a definite and unambiguous pronouncement of the scope of section 588 of Act X of 1877. We need only refer to the following observation of Subramania Ayyar, J., in Chappan v. Mohidin Kutti2. “This contention is, however, opposed to the ruling of the Judicial Committee in Hurrish Chunder Chowdry v. Kalisundari Debi1, in which their Lordships laid down that that section does not apply to a case such as the present, where the appeal is from one of the Judges of the Court to the Full Court. I am unable to persuade myself, as I have already stated on a previous occasion that the observations of the Committee on the point are mere obiter dicta. The contention that section 588 modified clause 15 was not only distinctly raised, but was also strongly pressed by Counsel in the argument. "......Their Lordships had therefore to give a decision upon the soundness or unsoundness of the contention. That, it appears to me, they did in unmistakable terms." The importance of the dictum of the Privy Council lies in the fact that section 39 is substantially a re-enactment of section 588 and second part of section 589 of the old Code of Civil Procedure and the corresponding section 104 of the Code of 1908 except for slight alteration. Section 104 of the Code of 1908 has been construed by this Court as not restricting the right of appeal conferred by clause 15 of the Letters Patent. A Full Bench of this Court in Paramasivam Pillai v. Ramaswami Chettiar3, held that section 104 of the Code did not control clause 15 of the Letters Patent. Section 104 of the Code of 1908 has been construed by this Court as not restricting the right of appeal conferred by clause 15 of the Letters Patent. A Full Bench of this Court in Paramasivam Pillai v. Ramaswami Chettiar3, held that section 104 of the Code did not control clause 15 of the Letters Patent. Anantakrishna Ayyar, J., after referring to the earlier decision of this Court in Sabhapathi Chetti v. Narayanaswami Chetty4, Muthuvaien v. Periasami Iyen5, and Chappan v. Mohidin Kutti2, summed up the position in the following way: "It was remarked that the prohibition contained in the Code of Civil Procedure related only to the entertainment of a further appeal by another Court of a higher grade in such cases, and that the provisions of the Letters Patent conferring a right of appeal from the judgment of one Judge of the High Court to the same Court were not in any way interfered with by the provisions of Code of Civil Procedure. That view has been accepted all along in this Court." Learned Counsel for the respondent tried to whittle down the effect of the Full Bench ruling in Paramasivan Pillai v. Ramaswami Chettiar1by supporting it by reference to section 4 of the Code of Civil Procedure. However plausible may be the argument based on section 4, the fact remains that the actual decisions of the Full Bench in Paramasivan Pillai v. Ramaswami Chettiar1, is not based on section 4, but is based on the principle that the appeal under clause 15 of the Letters Patent is not an appeal from a subordinate Court to a higher Court. The saving provision in sub-section (2) of section 39 regarding the right of appeal to the Privy Council, and now, to the Supreme Court, appears to have given a little difficulty to some of the Judges. It is probably unnecessary; but having regard to the use of the general expression "second appeal" it was necessary in any event by way of abundant caution. The first part of section 39 (2) prohibits a second appeal from an order passed in appeal preferred under section 39 (1) of the Act. It is probably unnecessary; but having regard to the use of the general expression "second appeal" it was necessary in any event by way of abundant caution. The first part of section 39 (2) prohibits a second appeal from an order passed in appeal preferred under section 39 (1) of the Act. Where the High Court passes such an order on appeal, an appeal therefrom to the Supreme Court would numerically be a second appeal, and it may be open to argument that the prohibition of a second appeal might be understood as a restriction on the right to appeal to Supreme Court. This was not the intention of the Legislature, and that was made plain by the saving clause that nothing in the section shall affect or take away right to appeal to the Supreme Court. We may advert to an anomaly, if the contention of the respondent is accepted. If the judgment of a single learned Judge cannot be carried in appeal to a Division Bench then, the aggrieved party would not be entitled to prefer an appeal to the Supreme Court. Article 133 (3) of the Constitution specifically provides that no appeal shall, unless Parliament by law otherwise provides, lie to the Supreme Court from the judgment, decree or final order of one Judge of a High Court. On a consideration of all the aspects of the question, we have arrived at the conclusion that the expression "second appeal" in section 39 (2) of the Arbitration Act would not apply to an appeal under clause 15 of the Letters Patent from one Judge of the High Court to two or more Judges of the same Court. We are therefore of opinion that there is nothing in section 39 (2) of the Arbitration Act which compels us to hold that clause 15 of the Letters Patent has been amended and altered thereby and the right of appeal conferred by that clause restricted in any way. It follows that the decision in Radhakrishnamurthy v. Ethirajulu Chetty and Co.2, cannot be accepted as good law. The preliminary objection is overruled. The appeal will be posted for hearing before a Division Bench in the usual course. It follows that the decision in Radhakrishnamurthy v. Ethirajulu Chetty and Co.2, cannot be accepted as good law. The preliminary objection is overruled. The appeal will be posted for hearing before a Division Bench in the usual course. This appeal coming on for final hearing before the Division Bench (Rajamannar, C.J. and Kailasam, J.) the Order of the Court was delivered by Rajamannar, C.J.†-This is an appeal against the judgment of Ramaswami, J. in C.M.A. No. 531 of 1954 which arose in the following circumstances. The appellant and the respondent were parties to certain transactions which consisted of contracts for purchase of art silk yarn. Disputes arose between them and the parties appear to have settled their disputes amicably. The terms of the settlement were that the respondent should pay to the appellant a sum of Rs. 4,000 in full quit of all claims in respect of 150 Japan Art silk yarn thirty cases purchased and sold to the respondent during the month of July, 1951. Out of this, an amount of Rs. 2,000 was paid by the respondent to the appellant by cheque on Indian Bank on 8th August, 1951. For the balance a promissory note was executed by the respondent in favour of the appellant. There was a letter which was passed by the appellant to the respondent, setting out these facts and also containing the following statement. “We have not any claim on you in the art silk transactions up to date”. It was agreed that there would not be a demand of the amount due under the promissory note for a period of one year from the date of execution. The appellant filed a suit in the City Civil Court, Madras, O.S. No. 538 of 1954, for recovery of the amount due for principal and interest under the abovesaid promissory note. In the plaint no doubt, there was only a bare averment in accordance with the recital in the promissory note that it had been executed for value received. The respondent filed a written statement, but also took out an application under section 34 of the Arbitration Act, praying that the Court should stay the suit, because the proper remedy of the appellant was to resort to the arbitration of the special panel of arbitrators constituted by the Madras Yarn Merchants’ Association. The respondent filed a written statement, but also took out an application under section 34 of the Arbitration Act, praying that the Court should stay the suit, because the proper remedy of the appellant was to resort to the arbitration of the special panel of arbitrators constituted by the Madras Yarn Merchants’ Association. In the affidavit filed in support of this application, the respondent alleged that the parties were members of the Madras Yarn Merchants’ Association and there was a clause in the contract between the parties, that all disputes in respect of contracts between members of the Association should be decided only by arbitration because of rule 10 (a) to (c) of the Madras Yarn Merchants’ Association, Madras. That rule runs thus:- “10 (a) All disputes between members, brokers, members and non-members and vice-versa, ‘relating to or incidental to yarn trade, such as "Ready business", "shipment", "forward (vaida)' 'f.o.r.', ‘ex-godown’, ‘ex-mill’, and any other contracts shall be decided by arbitration under these rules. (b) Every written contract between members, non-member and a member, relating to yarn business, of any description shall contain the arbitration clause as provided for in rule 12 (a) herein, and no member shall enter into any written contract with a non-member without expressly including in the contract the said Arbitration Clause. (c) The Clause shall cover all disputes including disputes arising out of non-payment of money due for the sale of yarn or such other dues which are incidental to the yarn trade.” Presumably, the contract between the parties contained the arbitration clause as provided under these rules. The contention on behalf of the respondent was that the subject-matter of the suit was really a claim for non-payment of money in respect of art silk yarn forward business. Therefore, it was covered by the arbitration agreement between the parties and the rule mentioned above. The application for stay was opposed by the appellant on the ground that the promissory note, on the foot of which a suit had been brought, was executed for an amount actually found due after mutual settlement between the parties and therefore there was no dispute or difference relating to the contract as such. The learned Judge of the City Civil Court dismissed the application. The learned Judge of the City Civil Court dismissed the application. The learned Judge held that the suit was based only on a claim arising out of a promissory note which had remained unpaid and it did not in any way relate to the contract between the parties. On appeal to this Court in C.M.A. No. 531 of 1954, Ramaswami, J., set aside the order of the learned City Civil Judge and allowed the application for stay. This Letters Patent Appeal has been filed against this order of Ramaswami, J. At the outset, there was a preliminary objection raised by the respondent to the maintainability of the appeal, which was filed under clause 15 of the Letters Patent. The question was referred to a Full Bench of this Court, which has since decided that the appeal was competent. It now comes up before us for final disposal on the merits. We find it impossible to sustain the order of Ramaswami, J. The suit is based expressly on a promissory note. We shall assume that, for the purpose of disposing of this appeal, we can take into account the actual circumstances under which the promissory note came to be executed. Even so, all that can be said is that the promissory note was executed for an amount which was agreed to be paid by the respondent to the appellant to carry out the terms of the settlement arrived at between the two in respect of certain yarn transactions. The basis of the liability of the respondent is the compromise. The basis is not the primary liability of the respondent under the contracts. Learned counsel for the respondent was unable to draw our attention to any authority which lays down that, when there is an arbitration clause and a rule like rule 10 of the Madras Yarn Merchants’ Association the parties, if they happen to be members of the Association, are precluded from coming to an amicable settlement of disputes between them. It is really an extraordinary contention to accept, if advanced. Once therefore, there is no impediment in the way of parties having disputes in respect of contracts settling their disputes, we fail to see now the carrying out of the terms of the settlement can form the subject-matter of arbitration proceeding by virtue of the arbitration clause in the original contracts. Once therefore, there is no impediment in the way of parties having disputes in respect of contracts settling their disputes, we fail to see now the carrying out of the terms of the settlement can form the subject-matter of arbitration proceeding by virtue of the arbitration clause in the original contracts. Learned counsel for the respondent would have us to go this length, namely, that, even if the entire amount of Rs. 4,000 has been paid in cash, there may be still the possibility of having recourse to arbitration by the person receiving the said sum. Logically, it should be so. We are, however, not constrained to hold that this is the legal effect of the arbitration clause. Learned counsel for the respondent cited to us certain decisions which have absolutely no bearing on the question which falls for decision in this appeal. The first is the decision of the House of Lords reported as a footnote2 to the case of Uttam Chand Saligram v. Jewa Mamooji1. The facts of that case (Chandanmull v. Donald Campbell & Co., (1916), unreported)2are extremely peculiar. Disputes having arisen under a contract of sale of jute, they were referred to the arbitration of the London Jute Association under the arbitration clause contained therein. The arbitrator determined the default of the sellers and also fixed the default prices, but failed to make an award directing one party to pay to the other party a specified sum. In pursuance of the basic principles of the award, there was a demand made by the appellants therein; but the respondents did not make the payment. Apparently, the award could not straightaway be enforced in execution, because of the technical defect that the award did not direct the respondents to pay any specific sum of money to the appellants. Therefore, the appellants again resorted to a second arbitration alleging that there was a dispute, that is, there was no concensus of opinion as regards the actual amount to be paid by the respondents to the appellants. A second arbitrator then determined the amount and made a direction for the payment of a definite sum of money. It was contended that this second arbitration and award were illegal, because, there was no dispute between the parties. A second arbitrator then determined the amount and made a direction for the payment of a definite sum of money. It was contended that this second arbitration and award were illegal, because, there was no dispute between the parties. The House of Lords overruled the contention and held that the second award was valid because a dispute must be deemed to have existed as regards the actual sum of money payable by the respondents to the appellants. Lord Sumner thus disposed of the objections: “The question how much Mr. Chandanmul should pay was not submitted to Mr. Ritchie (the first arbitrator); as is usual in trade, he was only asked to fix default and the market value as the basis, if default, for a calculation for damages, The clerks were left to do the rest. Mr. Ritchie’s award was valid, but, in view of the appellant’s attitude towards it a second dispute arose and a second award was needed to resolve the first. That second award of Mr. Nevill was duly made.” Nothing like this has happened in the present case. The next decision cited by learned counsel for the respondent is that of the Calcutta High Court in Uttam Chand Salingram v. Jewa Mamooji1. He referred us to this case only because there is a reference in it to the House of Lords’ case mentioned above. The decision itself is not very relevant. We are unable to follow how the decision in Nandram v. Raghunath3, helps the the respondent in any way. All that was laid down in that case is that the existence of dispute or differences contemplated by an arbitration clause is an essential condition of and pre-requisite to the exercise of the jurisdiction by the arbitrator and the failure to perform the contract and to pay the amount claimed may lead to the inference of a dispute. The fallacy in applying the principle of this case to the case under consideration lies in overlooking that, in the present case, the plaintiff does not sue for the recovery of any sum payable under any contract. He only sues to recover the amount due under a promissory note which was executed in pursuance of a settlement between the parties. The respondent contended that there would be a valid defence to the claim, because the contract was in the nature of a wagering contract which could not be enforced. He only sues to recover the amount due under a promissory note which was executed in pursuance of a settlement between the parties. The respondent contended that there would be a valid defence to the claim, because the contract was in the nature of a wagering contract which could not be enforced. We are not concerned with that defence so far as this appeal is concerned. All that we are concerned with in this appeal is to find if under section 34 of the Arbitration Act the suit filed by the appellant on the promissory note should be stayed and the matter referred to arbitration. We are clearly of opinion that section 34 has no application to this case. The application for stay was misconceived. This appeal is allowed and the order of the learned City Civil Judge dismissing the application is restored with costs throughout. R.M. ------ Appeal allowed.