Judgment 1. THIS is an application under section 41 of the arbitration Act, 1940, and section 51 of the Civil Procedure Code, inter alia, for an injunction restraining the respondent No. 1 and its agents and servants from prosecuting, proceeding and taking any steps in the suit pending in the Court of Civil Judge, Varanasi. 2. THE facts of this case discloses how a party can abuse the process of the Court by harassive, vexatious legal proceedings and also render the provisions of the Arbitration Act, and arbitration agreements in fructuous if possible by adopting dilatory process. It is necessary to set out the relevant facts which would show the dishonest and dilatory tactics and the ingenious scheme adopted by the Respondents. The Respondent No. 1, Sri ram Sahakari Grih Nirman Samity limited, is a co-operative society registered under the provisions of the Uttar Pradesh Co-operative Societies act. One of the objects of the respondent No. 1 is to acquire lands plots, houses building and to construct building structures thereon. The respondent no. 2, Satya Narayan Kabra, was at all material times, the Chairman of the respondent No. 1. It appears that the petitioners granted accommodation loans to the respondent No. 1 for the purpose of enabling it to acquire plots of lands, houses etc. and an agreement in writing dated the 5th of October 1970, was entered into between the petitioner No. 1, Vishnu Agencies Private limited, and the respondent Nos. 1 and 2 in respect of the said loan and repayment thereof. The said loan agreement dated the 5th of October, 1970, contained an arbitration clause. It is alleged by the petitioner No. 1 that pursuant to the said agreement it duly lent and advanced various sums of moneys particulars of which are set out in paragraph 8 of the petition on different dates to the Respondent No. 1. As disputes and differences arose in respect of the said loan and repayment thereof the petitioner No. 1 made an application under section 20 of the arbitration Act, being Special Suit No. 29 of 1972 before this Court. The respondent No. 1 filed their affidavit -in- opposition in the said application and alleged collusion and conspiracy between the petitioners and the then office bearers of the Respondent No. 1 including Respondent Nos. 2 to 7. The respondent No. 1 filed their affidavit -in- opposition in the said application and alleged collusion and conspiracy between the petitioners and the then office bearers of the Respondent No. 1 including Respondent Nos. 2 to 7. Thereafter the Respondent No. 1 also made an application under section 33 of the arbitration Act, being Award Matter no. 265 of 1972 for determination of the existence, scope and effect of the said arbitration agreement dated the 5th of October, 1970. The said two applications, that is, the petitioners application under section 20 and the respondent No. 1 application under section 33 of the Arbitration Act, 1940, were heard together before me, by an order and judgment dated the 6th of February and 7th of February, 1974, I dismissed the application under section 33 of the Arbitration Act, made by the respondent No. 1 and by another judgment and order dated the 7th of February, 1974, I allowed the application under section 20 of the Arbitration act, made by the petitioner for filing the arbitration agreements and for order of reference. It appears that the Respondent No. 1 preferred an appeal from the said judgments and order dated the 7th of February, 1974, being the Appeal No. 64 of 1974 and obtained an interim stay of the operation of the said order from the Appeal court dated the 21st of February, 1974, the said application was finally disposed of by the Appeal Court by an order dated the 3rd of June, 1974, when the stay of the operation of the order of the Trial Court was continued for a period of eight weeks and directions were given for filing the statement of facts and counter statement of facts before the Arbitrator without prejudice to the rights of the respective parties and the Respondent No. 1 in case obtaining leave from the Supreme Court, the order of stay would continue till the disposal of the appeal. In case the application for stay before the Supreme Court is rejected, the stay granted by the Appeal Court will stand vacated. The substance of the said appeal Court order dated the 3rd of June, 1974, is set out in paragraph 19 of the petition. In case the application for stay before the Supreme Court is rejected, the stay granted by the Appeal Court will stand vacated. The substance of the said appeal Court order dated the 3rd of June, 1974, is set out in paragraph 19 of the petition. The Respondent No. 1 moved to the Supreme Court in or about July, 1974, under Article 136 of the Constitution of India for special leave to appeal from the said order of the Trial Court dated the 6th and 7th of February, 1974, in Matter No. 265 of 1972. The said application of the respondent No. 1 was dismissed by the Supreme Court by an order dated the 30th of July, 1974. Thereafter, the respondent No. 1 proceeded with the appeal No. 64 of 1974 in Special Suit no. 29 of 72 before this Court and by a judgment and order dated the 23rd of September, 1974, the Appeal Court dismissed the said appeal with costs. This relates to an agreement for loan containing an arbitration clause between the petitioner No. 1 and the Respondent No. 1 dated the 5th of October, 1971. Similar was the fate in respect of another loan agreement between the respondent No. 8, Kharkhari Coal Company Limited, and the Respondent no. 1 dated the 27th of February, 1971, which also contained an arbitration clause. Similar disputes were raised by the Respondent No. 1 in respect of the loan under the said agreement dated the 27th of February, 1971, and simultaneously with the other agreement dated the 5th October, 1970, between the petitioner No. 1 and the Respondent No. 1 another application under section 20 being Special Suit No. 28 of 1972 were filed by the Respondent no. 8 against the Respondent No. 1. and others and an application under section 33 was filed by the Respondent no. 1 against the Respondent No. 8 and others being Award Matter No. 266 of 1972 and all the proceedings before the appeal Court and the Supreme Court were ultimately rejected by the Supreme Court and the Appeal Court. 3. IT appears that after the disputes arose in respect of the said agreements dated the 5th of October, 1970, and 27th of February, 1971, with the petitioner no. 3. IT appears that after the disputes arose in respect of the said agreements dated the 5th of October, 1970, and 27th of February, 1971, with the petitioner no. 1 and the Respondent No. 8 respectively, the Respondent No. 1 failed in its attempt through its present management to frustrate and delay the arbitration proceeding and they were successful to the extent of protracting the matter by various proceedings before the Trial Court, Appeal court and the Supreme Court and gained nearly three years. Thereafter, it appears that the arbitration agreement dated the 5th of October, 1970, was filed in this Court on the 7th of April, 1974 and the Arbitrator by a letter dated the 2nd of May, 1975 gave directions for filing the statement of facts and counter statement of facts. After getting extension of time to file the statement of facts up to 6th of June, 1975 the petitioner No. 1 duly filed its statement of facts. The Respondent no. 1 by a letter dated the 16th of May, 1975, addressed to the Sole Arbitrator, the said letter is annexed to the petition and marked with annexure "f" it was, inter alia, contended that the Arbitrator was the Income-tax Lawyer of the Petitioner No. 1 and the Respondent no. 8 and as such was not competent to arbitrate in the matter and also in view of section 60 of the U. P. Co-operative Societies Act, 1965, and Rules 178 and 186 and Rule 200 framed there under and also in view of a notification published by the U. P. Government dated the 31st of December, 1968, pages 109 and 199 the loans which were the subject matter of the reference were unenforceable in law. The petitioner No. 1 and respondent no. 8 alleged that huge sums are now due and payable by the respondent No. 1 to the petitioner No. 1 and respondent No. 8 in respect of the said two loan agreements as set out in paragraphs 28 and 29 of the petition. It also transpires that there are serious disputes between the members of the committee of management of the Respondent No. 1. In fact, criminal proceedings are pending between them and the administration of the respondent no. 1 is at a stand still as no account has been audited and balance-sheet has been filed since July, 1971. It also transpires that there are serious disputes between the members of the committee of management of the Respondent No. 1. In fact, criminal proceedings are pending between them and the administration of the respondent no. 1 is at a stand still as no account has been audited and balance-sheet has been filed since July, 1971. It also transpires that the Respondent No. 1 was threatening and trying to take steps for disposing of its loan by allotment to its alleged members and were also threatening to dispose of the same. It is alleged by the petitioner No. 1 that it came to know about the same from a circular dated the 24th of April. 1975, issued on behalf of the Respondent no. 1. Thereafter, the petitioner No 1 made an application under section 41 of the Arbitration Act, 1940, in this court by taking out a notice of motion dated the 5th of June, 1975, and obtaining an interim order restraining the respondent No. 1 its agents and servants from dealing with or in any way alienating or allotting, transferring or charging, encumbering the property of the Respondent No. 1 mentioned in the schedule to the said petition'. The said application was finally disposed of by my order dated the 12th of June, 1975, by which the receiver was appointed on the lands and properties mentioned in the said order. The said order is set out in paragraph 33 (d) of the petition. Similar application was also made in respect of the agreement between the Respondent No. 8 and the respondent No. 1 under section 41 of the Arbitration Act, 1940, and a similar order was also made by me on the 12th of June, 1975. It appears that after the receivers have taken possession of the assets and properties of the Respondent No. 1 pursuant to the said order dated the 12th of June, 1975 the respondent No. 1 caused a suit to be filed in the Court of Civil Judge, Varanasi (Sriram Sahakari Grih Nirman samity Ltd. and Ors.) praying for a declaration that the agreement and contract dated the 5th of October, 1970, entered into between the petitioner no. 1 and respondent Nos. 1 and 2 and also the agreement dated the 27th of February, 1971 entered into between the Respondent No. 8 and the Respondent Nos. 1 and respondent Nos. 1 and 2 and also the agreement dated the 27th of February, 1971 entered into between the Respondent No. 8 and the Respondent Nos. 1 and 2 were not executed by the Respondent No. 1 and the same were not binding upon the Respondent no. 1 and the same were illegal, void ab initio and honest in law and for various other relief. It is alleged by the petitioners that the allegations in the plaint in the Varanasi Suit are identical as those which were raised in the said sections 20 and 33 applications under the Arbitration Act, before this Court which were terminated by the order of dismissal by the Supreme Court in both the said two matters as hereinbefore stated. The petitioner has set out their contentions in paragraph 35 of the petition. 4. IT also appears that the Arbitrator has entered upon the reference and proceeded with the same. The petitioner No. 1 and the Respondent no. 8 have filed their statement of facts and the Respondent No. 1 has appeared before the Arbitrator and filed its objection and is contesting the claim before the Arbitrator which is pending. It also appears that the allegations in the statements filed by the Respondent no. 1 before the Arbitrator are identical with the plaint which has been filed in the Varanasi Court. The Respondent No. 1 not only stopped there but also served notice under section 35 of the Arbitration Act, 1940, in the said two references on the Arbitrator a copy of which is annexed to the petition and marked with the letter "j". The copy of the said letter is set out hereunder. Annexure "j" To Sri K.K. Chakraborty Arbitrator. In the Matter of Arbitration Between Vishnu agencies Private Limited And Sriram Sahakari Grih Nirman Samity Ltd. & Anr. Dear Sir, In the above matter, you had directed by your letter dated June, 25th 1975, that respondent No. 1 may file its counter statement of facts up to 25th July, 1975. It is to inform you that respondent No. 1 has filed a suit in Court at Varanasi, a copy of which is enclosed and the same be treated as Counter Statement of facts in this matter. It is to inform you that respondent No. 1 has filed a suit in Court at Varanasi, a copy of which is enclosed and the same be treated as Counter Statement of facts in this matter. Please note that all transactions relating to this matter took place at Varanasi and all documents in respect of these matters are only available at Varanasi and cannot be produced in Calcutta and all proceedings in these matters should be taken at Varanasi, as neither documents nor witnesses can be made available. In view of the provisions of Section 35 of the Arbitration Act, further proceedings in this matter should be taken, as the suit covers whole of the subject matter of reference as would be found from the copy of the annexed herewith. This is without prejudice and under protest that you have no jurisdiction to decide this matter. For Sriram Sahakari Grih Nirman Samiti Ltd. Sd /- P. D. Modi Chairman . Enc: Copy of plaint filed on 24. 7. 75 Sd /- illegible 25. 7. 75. Thereafter, on the 2nd of September, 1975, the present application was moved and an interim injunction against the Respondent No. 1 its agents and servants from prosecuting and proceeding or taking any steps in the Varanasi Suit was passed by me and after directions were given for filing affidavits, the matter was adjourned from time to time and ultimately the matter was heard. The only question urged before me in this application is whether this application is maintainable in view of the fact that there are specific provisions under section 34 of the Arbitration act, 1940, for stay of the suit and as such, the only remedy available to the petitioner is to apply for stay under section 34 of the Arbitration Act, 1940, before the Varanasi Court. 5. MR. A. C. Bhabra, appearing with Mr. 5. MR. A. C. Bhabra, appearing with Mr. B. K. Bachawat, for the petitioner, submitted before me after referring me to the facts of this case which are not in dispute that is proceeding under sections 20 and 33 of the Arbitration act, 1940, which went up to Supreme court relating to the arbitration agreement between the parties and submitted that this is another attempt on the part of the Respondent No. 1 and its present management to harass the petitioner and to delay the reference before the Arbitrator which is pending and consequently, prevent the petitioner from realising its dues from the Respondent No. 1. Mr. Bhabra also submitted that by gaining time as much as possible the respondents are trying to dispose of the assets and funds of the company so that the petitioner will be deprived of its fruit of the arbitration if any. Mr. Bhabra referred to an unreported decision of mine in the Award Matter' no. 179 of 1974 (Kesoram Industries and cotton Mills Ltd. v. M. E. Writ and Co. India Limited and Anr.) delivered on the 13th of August, 1975, where the identical question arose and after considering the question I granted an injunction restraining the respondents therein from proceeding with a suit filed by it in Bombay High Court. Mr. Bhabra also referred to the Supreme Court decision in Jaharlal Barman v. Union of India A.I.R. 1962 S.C. 378 and submitted that the suit instituted by the respondents in the Varanasi Court is not maintainable as the same indirectly involved the question of determination of validity, existence and effect of the arbitration agreement which is barred under section 32 of the Arbitration Act, 1940. Mr. Bhabra also submitted that the facts of this case makes it quite clear that the entire intention of the Respondent No. 1 and its present management is malafide and the suit has been instituted only to harass the petitioner by prolonging the litigation and arbitration proceeding as long as possible. He submitted that the said suit in Varanasi Court is harassive, vexatious and frivolous and as such this Court has ample jurisdiction both under section 151 of the Civil Procedure Code or the inherent jurisdiction to adjunct the Respondent No. 1 from proceeding with the said Varanasi Suit. Mr. He submitted that the said suit in Varanasi Court is harassive, vexatious and frivolous and as such this Court has ample jurisdiction both under section 151 of the Civil Procedure Code or the inherent jurisdiction to adjunct the Respondent No. 1 from proceeding with the said Varanasi Suit. Mr. Bhabra also referred to the Supreme Court decision in Monoharlal Chopra v. Rai Bahadur Rao Raja Seth Hiralal A.I.R. 1962 S.C. 527 where the principles of Court's power of injunction restraining a party from proceeding with a suit in another Court is laid down. Mr. Bhabra submitted that in the facts of this case the Court should also exercise its power under section 41 (b)read with Clause 4 of Second Schedule of the Arbitration Act, 1940, and confirm the interim order in terms of prayer (b). 6. MRS. U. B. Mukherjee, appearing for the Respondent No. 1, submitted that in view of the provisions of sections 34 and 35 of the Arbitration Act, 1940, the court has no power either under section 151 of the Civil Procedure Code or under its inherent jurisdiction to issue injunction or stay the suit at varanasi instituted by the Respondent no. 1. Mrs. Mukherjee, after drawing my attention to the said Supreme Court decision in Monoharlal Chopra's case in A.I.R. 1962 S.C. 527 paragraph 39, submitted that when there is a specific provisions in the arbitration act under section 34 and section 151 of the Civil Procedure Code has no application. Mrs. Mukherjee submitted that only course left open to the petitioner is to apply for stay of the suit under section 34 of the Arbitration Act, before the Varanasi Court where the suit has been instituted and therefore, the present application should be dismissed. 7. AFTER carefully considering the respective contentions I am of the view that in the facts and circumstances of this case it must be held that the suit instituted by the Respondent No. 1 in the Varanasi Court is not maintainable as in substance it is instituted for the determination of the question of the validity, existence and effect of the arbitration agreement between the parties and, therefore, is barred under section 32 of the Arbitration Act. Secondly, the question as to the validity, legality and existence of the arbitration agreement between the parties that is between the petitioner and the respondent No. 1 dated the 5th of October, 1970 and the other between the Respondent No. 1 and the Respondent No. 8 dated the 27th of February, 1971, have already been determined in the applications under sections 20 and 33 of the Arbitration Act, 1940 which terminated in the Supreme Court when the special leave applications of the respondent No. 1 were dismissed. Therefore, issue as to the validity, existence and effect of the said two arbitration agreements are now finally determined and would operate as res-judicator and cannot be subject matter of any suit or proceedings between the same parties. Therefore, the Varanasi suit in which the said agreement containing the arbitration agreement is the subject matter as it is clear as the Respondent No. 1 itself has served a notice under section 35 of the Arbitration Act, 1940, on the Arbitrator before whom the reference in respect of the said agreement is still pending and lastly, from the conduct of the Respondent No. 1 it is clear from the facts which I have stated that by initiating proceeding after proceeding in this Court firstly opposing the section 20 application and there by simultaneously proceeding under section 33 and then after loosing the battle in the Trial Court preferred an appeal and also applied for special leave before the Supreme Court and the matter ended in favour of the petitioner and the Respondent No. 8 declaring or upholding that there was a valid arbitration agreement under the said two agreements dated the 5th of October, 1970, and 27th of February, 1971 and the reference under the said two arbitration agreements are pending and proceeding before the arbitrators. It is only to delay and harass the petitioner and the Respondent No. 8 the respondent No. 1 has caused a suit to be filed on the same subject mater which are before the Arbitrator regarding the said two loan agreements which contained the arbitration agreements only to drag the petitioner No. 1 and Respondent No. 8, if possible, before the Varanasi Court and apply under section 34 of the Arbitration Act, 1940, as it is now being contended. From this conduct it must be held that the said Varanasi Suit is harassive and vexatious both on fact and in law. In the Supreme Court decision in Monoharlal chopra v. Rai Bahadur Rao Raja seth Hiralal A.I.R. 1962 S.C. 527 which was referred by both the parties in paragraph 30 Raghubir Dayal, J., referred to the English decision where a suit can be said to be vexatious has been explained. It is true that mere institution of a suit in another Court in which it will be inconvenient for the other party to the suit to attend and defend would by itself amount to a vexatious suit. In the fact of that case Supreme Court held that the suit was not vexatious and also having regard to the specific provisions of section 10 of the Civil Procedure Code, section 151 of the Civil Procedure Code had no application. In my view, in the very same Supreme Court decision monoharlal Chopra's case in A.I.R. 1962 S.C. 527 the inherent power of the court is recognised for restraining a party by injunction from proceeding with a suit in another Court which is vexatious, harassive and frivolous. That power must be exercised only in very exceptional circumstances for which the Civil Procedure Code lays down no procedure. Further, in my view, whether a suit is frivolous, vexatious and harassive is entirely a question of fact of a particular case and the burden of proof always lies on the petitioner. It is further true as held by the said Supreme Court decision that merely showing that there is a multiplicity of action, it does not become a vexatious suit but something more has to be pleaded and proved. In the facts of this case as I have already noted that the whole intention and object of the respondent No. 1 is to frustrate the arbitration proceeding which they started by opposing the section 20 application on the ground of invalidity, illegality and non-existence of the arbitration agreement and simultaneously instituted proceeding under section 33 of the Arbitration Act, 1940, for declaring the arbitration agreement is void and illegal. Such proceedings were instituted by taking through the trial Court, Appeal Court and also supreme Court and after having failed to obstruct the arbitration proceeding as the arbitration agreement has been filed and the appointed Arbitrator has entered upon the reference which is pending before him caused the suit to be filed in Varanasi Court on the same subject matter after serving a notice under section 35 of the Arbitration Act, 1940, on the Arbitrator clearly admitting that the whole subject matter of the reference is covered by the subject matter of the Varanasi Suit. In these circumstances I am bound to hold that the said Varanasi Suit is harassive vexatious and frivolous on the ground which I have already enumerated before and, therefore, this Court has ample jurisdiction to both under section 41 of the Arbitration Act, 1940 and read with section 151 of the Civil Procedure Code and also under the inherent jurisdiction of the court as laid down in the Supreme Court decision ins monoharlal Chopra's case A.I.R. 1962 S.C. 527 at 534 paragraph 27. 8. NOW the only question which was canvassed on behalf of the Respondent No. 1 by Mrs. Mukherjee is that this Court has no jurisdiction to grant an injunction as there is specific provisions under section 34 of the Arbitration act for stay of the suit which can only be passed by the Court where the suit is pending that is the Varanasi Court. I am unable to accept the contention of Mrs. Mukherjee as the Code of Civil procedure in its entirety applies under the proceeding under section 41 of the arbitration Act, 1940. (See Hukam singh v. M/s. Gamon India Ltd., A.I.R. 1971 S.C. 740 at 741 paragraph 3. Further, the inherent jurisdiction of the Court in the facts and circumstances of a particular case to grant an injunction is well recognised and in fact, laid down in the Supreme Court decision in monoharlal Chopra's A.I.R. 1962 S.C. 527 which i have noted before. Any other view of the matter would lead to an absurdity and open up a rich field for harassive and vexatious tactics by a dishonest party to an arbitration agreement by instituting frivolous, vexatious and harassive suits in various courts pending the arbitration proceeding and thereby drag the other party to those Courts invoking the principles of the section 34 of the Arbitration Act. In a simple and ordinary case section 34 must apply but in exceptional cases like the present one where the Respondent No. 1 has not made secret about its intention to delay the adjudication of the disputes by arbitration and payment of the dues of the petitioner and the Respondent no. 8 as long as possible by various obstructive legal battles at every stage of the proceedings which have been made clear from the facts of this case narrated before. The Court cannot be said to be powerless to prevent such abuse of the process of the Court and restrain a party to proceed with vexatious, harassive and frivolous suit on the same subject matter which has been finally adjudicated and determined by a competent Court which ended up to Supreme Court. It is now well settled that the existence of a contract and an arbitration agreement is to be determined in an application under section 20 of the Arbitration Act, when it is raised and in fact the two applications under section 20 of the Arbitration Act, one instituted by the petitioner No. 1 and the other by the Respondent No. 8 in respect of their arbitration agreements, the Respondent No. 1 raised the questions of their validity, existence and not only that the respondent No. 1 have also instituted two independent applications under section 33 of the arbitration Act, 1940, for the determination of the validity, existence and effect of the arbitration agreement and it was finally determined that there is legal and valid arbitration agreements as hereinbefore stated and now it is no longer open to the Respondent No. 1 to institute a suit and re-agitate and reopen the very same issues which has been finally determined by Court leading up to Supreme Court in the previous proceeding. (See Dhanrajmal Govindram v. M/s. Shyamjee Kalidas and Co. A.I.R. 1961 S.C. 1285 paragraph 25 at pages 1293 and 1294. Therefore, in these circumstances of this case I hold that the Court has ample jurisdiction to entertain the present application which is maintainable and to prevent the abuse of the process of the Court and proceeding with a harassive and vexatious suit. A.I.R. 1961 S.C. 1285 paragraph 25 at pages 1293 and 1294. Therefore, in these circumstances of this case I hold that the Court has ample jurisdiction to entertain the present application which is maintainable and to prevent the abuse of the process of the Court and proceeding with a harassive and vexatious suit. The Court has ample jurisdiction to both under its inherent power and also under section 41 of the arbitration Act, 1940, read with section 151 of the Civil Procedure Code to restrain the Respondent No. 1 from proceeding with the suit in Varanasi. The facts of this case are exceptional and disclose obstructive, dishonest and highly dilatory tactics adopted by the respondent No. 1 for adjudication of the disputes between the parties which has been referred to arbitration after the previous chapter of the litigation under the Arbitration Act ended in the Supreme Court where the Respondent no. 1 failed miserably. The same question could not be agitated again and again and that would be pure and simple abuse of the process of the Court and highly harassive and vexatious proceeding which must be prevented by the Court particularly this Court which is Chartered High Court having inherent jurisdiction to do so. In the result, the interim order is made absolute. The Respondent No. 1 to pay the costs of this application to be taxed as that of a hearing of a suit as between an attorney and Client Certified for Two Counsel.