AVADH BEHARI ROHATGI, J. ORAL ( 1 ) THIS case is a good example of delay in litigation. An application under section 20 of the Arbitration Act, 1940 was made by the petitioners Mehta Teja Singh and Co. (Agencies) and its three partners on 27th November, 1973. The respondent, Official Liquidator of Globe Motors Limited (in liquidation), opposes it. Oral evidence was taken in this case. Witnesses were examined on both sides. The court has power to order that the evidence be given by affidavit. The matter ought to have been decided on affidavits. But for some reason which is not clear from the record oral evidence was adduced which has resulted in delay of 8 years in deciding a simple application under section 20. Apart from this pleadings in the case are neither precise nor concise. The Official Liquidator has raised the plea of fraud but has given no particulars of the plea. He. has alleged breach of the provisions of Companies Act but. has not specified which particular provision has been breached. ( 2 ) THE petitioners Mehta Teja Singh and Co. (Agenices) are a partnership firm (referred to as firm ). Mehta Ham am Singh and his two sons were the partners. The respondent Globe Motors Limited was a public limited company (company ). It fell on evil days. It sustained heavy losses. It went into liquidation. The Official Liquidator then appeared on the scene. Though originally the petition was made against Globe, the Official Liquidator contested the petition after the order of winding up was made in May, 1977. . ( 3 ) MEHTA Harnam Single was one of the 18 directors of Globe. He was also a partner of the firm M/s. Mehta Teja Singh and Co. (Agencies ). The company wanted to appoint a distrbutor for marketing the produce of Globe Steels, a division Globe. The directors of Globe decided to appoint Mehta Teja Singh and Co. (Agencies) as their distributors on certain is and conditions which were reduced to writing. On June 967 an agreement was made between the company and the firm. This was an agreement for distribution and marketing of 1/6th of the produce of Globe Steels. The firm was to promote the sale of Globe Steels. The Company was to pay to the firm fee @ 4. On June 967 an agreement was made between the company and the firm. This was an agreement for distribution and marketing of 1/6th of the produce of Globe Steels. The firm was to promote the sale of Globe Steels. The Company was to pay to the firm fee @ 4. 8% on the total proceeds of the sate of Globe Steels sold either through the distributors or directly by the company. In case the sale proceeds fell below. Rs. 1,50,00,000. 00 in any financial year, the firm was to get Rs. 1,20,000. 00 ax the minimum fee. in a financial year. This minimum fee of Rs. 1,20,000. 00 was to be paid to the firm nequal monthly instalment of Rs. 10,000. 00 each irrespective of the sales of each month. The firm was appointed iis distributors but it was forbidden to represent itself as company s agent for any purpose "ir make any promise or representation as agent of the Company". This contract was for a period of 5 years. Though the agreement was made on 1st June, 1967 it wast to come into force on June 16, 1967 and was to continue till 15th June, 1972. On behalf of the company it was executed by the governing director and chairman Mr. B. K. Bedi. It was recited in the agreement that the Board of Directors of the Company in their meeting held on 15th December, 1967 had authorised Mr. B. K. Bedi to execute the agreement on behalf of the company. On behalf of Mehta Teja Singh and Co. (Ageacies) its partner Mehta Harnam Singh signed the agreement. ( 4 ) THERE is an arbitration clause in the agreement. It says : "any dispute or difference arising in regard to any of the terms contained in this agreement shall be settled in accordance with the provisions of the Indian Arbitration Act, 1940. "it is the case of the firm that it was entitled to get Rs. 10,000. 00 per month as its fee under the agreement. The company did not pay this amount. Disputes and differences arose. The firm asked for arbitration. The company did not agree. Hence the petition. ( 5 ) THE Official Liquidator in his amended written statement has raised a large number of objections. 10,000. 00 per month as its fee under the agreement. The company did not pay this amount. Disputes and differences arose. The firm asked for arbitration. The company did not agree. Hence the petition. ( 5 ) THE Official Liquidator in his amended written statement has raised a large number of objections. These objections are reflected in the following issues which were framed on the pleadings of the parties : Whether the arbitration agreements relied upon by the plaintiff are void on account of undue influence and misuse of fiduciary position or non-compliance with the provisions of the Companies Act ? 2. Whether there is suflicient cause for refusing to make an arbitration on account of circumstances of the case including the allegation of the defendant that the claim is belater ? 3. Is the main contract containing the arbitration clause without consideration and hence the arbitration clause cannot be acted upon ? 4. Relief. These issues were framed on 14th February, 1975 when the company was still functioning. After the order of winding up, following two additional issues were framed at the instance of the Official Liquidator on December 5, 1978 : 5. Whether mere failure to pay the amount claimed amounts to a dispute which would attract the provisions of the Arbitration Act ? (Onus of proof on the defendants ). 6. Whether the disputes raised do not fall within the Arbitration Clause ? (Onus of proof on the defendants ). Though the issues are six, the questions for decision are only three. The first and foremost is the question of limitation which is the subject matter of issue No. 2. The second qustion is about the validity of the contract dated 1st June, 1967. This is the subject matter of issues No. I and 3. The third question will be about the scope of the arbitration clause. This is the subject of issues No. 5 and 6. ( 6 ) LIMITATION. The Official Liquidator says that the present application is barred by limitation. He relise on Article 137 of the Limitation Act, 1963. There is no dispute that Article 137 applies to all applications under the Arbitration Act. The period of limitation is three years. The time. from which the period begins to run is "when the right to apply accrues . He relise on Article 137 of the Limitation Act, 1963. There is no dispute that Article 137 applies to all applications under the Arbitration Act. The period of limitation is three years. The time. from which the period begins to run is "when the right to apply accrues . " Now it is said that the application under section 20 of the Arbitration Act ought to have been made within three years from 16th June, 1967. It is submitted that as the petition was filed on 27th November. 1973 it is barred by time. ( 7 ) IN my opinion this contention is unsound. Limitation will not run from the date of the agreement. It will run from the time when "the right to apply" accrues. The main question is : when did the "right to apply" accrue to the firm. ? The farm s cax is that the right to apply accrued to it when the company rejected its claim to fees. Counsel relies on the letter of 19th June. 1973 (Ex. P/19), wherein the company repudiated the firm s claim for payment of Rs. 6,00,000. 00. ( 8 ) IN this connection it is important to refer to certain correspondence between the parties. On 24th October, 1970 the. firm wrote to the company that they were willing to receive Rs. 2,15,000. 00 due on account of their commission upto March, 31, 1969 in instalments in accordance with the scheme or arrangement sanctioned by the High Court. The company at this time was in a financial crisis. Under a scheme propounded by one Mr. Mundra this court ha^ allowed money to be paid by one Mr. Mundra this court had allowed money to be paid to the creditors in instalments. By its letter of October 24. 1970 (Ex. D/3 or Ex. P/6) hte firm expressed its willingness to receive its commission in instalments in terms of the scheme sanctioned by the High Court. On this very letter the company noted on 6th November, 1970 " register the option". However on 4th February, 1971 the company wrote to the firm that they are in receipt of the firm s letter dated 24th October, 1970. But they said "we do not find in our records the amount mentioned by you as due to you. Accordingly, we are unable to take further action on your aforesaid letter. However on 4th February, 1971 the company wrote to the firm that they are in receipt of the firm s letter dated 24th October, 1970. But they said "we do not find in our records the amount mentioned by you as due to you. Accordingly, we are unable to take further action on your aforesaid letter. If you have any details kindly let us have the same. " (Ex. P/io ). On 29th April, 1971 the company wrote to the firm that it had wrongfully taken from the company Rs. 32,7501- "purporting to be sole selling agency commission without rendering any services or properly performing your obligation and without the sanction and approval ol the said, agency commission from the General Body of the Company. " The firm was asked to refund Rs. 32,750. 00 to the company. After this letter the directors in their 12th Annual Report dated 22nd February, 1972 reported that "the company made payment of selling agency commission in Globe Steels Division and on sale of Vehicles, Exide Batteries etc. to v arious directors or their friends and relations or firms or companies in which they were interested under agreements executed by them. In the opinion of the directors, no service was rendered by such persons and appropriate steps are being taken to claim back the amounts. " ( 9 ) FROM these proceedings it would appear that the firm s claim was rtpudiated for the first time on 29th April, 1971 (E P/15) and this stand was reiterated in the 12th Annual Report dated 22nd February, 1972 (Ex. DWI (6 ). This stand was again repeated in the letter dated June 19, 1973 (Ex. P/19 ). This is the result of the entire correspondence on this subject. "the right to apply" therefore did not accrue before 29th April. 1971. If 29th April, 1971 is taken as the starting point of limitation, then the firm is well within time. Because it filed the petition on 27th November, 1973. It is true that the contract was for a period of 5 years. But as the contract was repudiated on 29th April, 1971 on grounds substantially those which have been taken in defence before me, I think the period of limitation started running, from this date. Because it filed the petition on 27th November, 1973. It is true that the contract was for a period of 5 years. But as the contract was repudiated on 29th April, 1971 on grounds substantially those which have been taken in defence before me, I think the period of limitation started running, from this date. The reason is that the disputes arose on that day and "the right to apply" to the court for appointment of an arbitrator accrued to the firm from this starting point. ( 10 ) THE Official Liquidator says that the right to apply to the court arose to the firm at the end of every month because under the agreement dated 1st June, 1967 the minimum fee. Rs. 10,0001- was payable in equal monthly instalments if the far get of Rs. 1,50,00,0001- was not reached in any financial year. do not agree. There is a capital distinction between the limitation. for the claim and the limitation for filing the application under section 20 of the Arbitration Act. Here we are concerned with the limitation for filing the application. To that Article 137 of the Limitation Act applies. I therefore hold that "hie right to apply" to the court for the appointment of the arbitrator accrued when the company repudiated the claim of the firm. (See Union of India y. Vijay Construction Company. AIR 1981 Delhi 193) (1)] VALIDITY OF CONTRACT. ( 11 ) IN the forefront of his argument counsel for the Official Liquidator submitted that the agreement dated 1st June, 1967. (Ex. D/2) is void and therefore the arbitration clause is also void Relying on Hayman v. Darwins Ltd. 1942 AC 356 (2) counsel s-ubmitted that if the agreement is void the arbitration clause would perish with the agreement. Therefore, the central question in the case is whether the agreement between the firm and the company is a binding contract as is the case of the firm or it is void as is the case of the Official Liquidator. This contract is said to be vitiated by undue influence, misuse of fiduciary position, non-compliance with the provisions of the Companies Act and want of consideration. ( 12 ) THE Official Liquidator says that the. agreement dated 1st June, 1967 required the approval of the general body of shareholders, and since it was never approved by them it is not binding on the company. ( 12 ) THE Official Liquidator says that the. agreement dated 1st June, 1967 required the approval of the general body of shareholders, and since it was never approved by them it is not binding on the company. We have to see what actually happened when the contract was made. A duly constituted Board of Directors met on 15th June. 1967. They passed a resolution. They acted collectively and collegiately. They resolved that the firm Mehta Teja Singh and Co. (Agencies) be appointed as distributors for 116th of the produce of Globe Steels. This appointment was approved for a period of 5 years commencing from 16th June, 1967. The firm was to get commission @4. % on the sales subject to aminimum of Rs. 1,20,0001- in one financial year. On these terms the governing director was authorised to execute the agreement on behalf of the company. Mehta Harnam Singh was present at this meeting but he neither took part in the discussion nor voted on this resolution. In the minutes of the meeting it is clearly recorded that Mehta Harnam Singh, director of the company being an interested party in this contract neither took part in the discussion nor voted on the resolution. This is in accord with Section 297 of the Companies Act, 1956 (the Act ). The Act require^ directors of all companies, public or private, to disclose to the Board of Directors any interest, direct or indirect, which they might have in a contract or proposed contract with the company and that this minimum requirement cannot be abrogated by the articles. The director has to declare the nature of his interest at a meeting of the Board of Directors. In this case Mehta Harnam Singh had direct interest in the contract because he was a partner of the firm with which the company was entering into contract. The minutes of the meeting record this disclosure. Such disclosures put the other directors on notice to scrutinise the terms of the contract, knowing the interest of one of their body. (Imperial, etc. Association v. Coleman (1873) LR 6 HL 189 (3); Southall v. British Mutual, etc. (1871) 6 Ch. App. 614 (4), 619; Adamson s cas e (1874) LR 18 Eq. 670 (5); Costa Rica Ry. etc. (1901) I Ch. 746. ( 13 ) SUB-SECTION (5) of Section 297 is important. (Imperial, etc. Association v. Coleman (1873) LR 6 HL 189 (3); Southall v. British Mutual, etc. (1871) 6 Ch. App. 614 (4), 619; Adamson s cas e (1874) LR 18 Eq. 670 (5); Costa Rica Ry. etc. (1901) I Ch. 746. ( 13 ) SUB-SECTION (5) of Section 297 is important. The consent of the Board of Directors has to be accorded by a resolution passed in a meeting of the Board and not otherwise [s. 297 (4)]. Sub-section (5) says- : "if consent is not accorded to any contract under this section, anything done in pursuance of the contract, shall be voidable at the option of the Board. "therefore if the provisions of Sod. 297 are -not followed. the contract is voidable at the option of theBoard . Not void. Non-disclosure does not render the contract void or a nullity. It renders the contract voidable at the instance of the company 6 HCD/82 11 and makes the director accountable for any secret profit which he has made. But in this case the provisions of Sec. 297 have been strictly complied with. The Official Liquidator cannot, therefore, complain of uadue influence or misuse of fiduciary position. Nor can be contain of the non-compliance with the provisions of the Act. It is true that the directors occupy a fiduciary position in relation to the company. They must act bona fide. They must act for the benefit of the company. This duty of good faith which fiduciary relationship imposes is virtually identical with those imposed on trustees. In this. sense directors are. trustees. If one of them takes a contract and does not disclose his interest, he will be committing breach of trust. But if he disdoses his interest and dees not vote on the resolution and does not take part in the discussion it cannot be said that he has acted improperly or is guilty of undue infiuence or fraud. ( 14 ) THE plea of fraud has been raised. But it is the vaguest of the pleas. No particulars have been given. The Board could have avoidled the contract because if is voidable at. the option of the Board. But they gave the contract with full knowledge of the material facts and free -from undue influence. There is no fraud in the transaction. The directed were acting bona fide. They did not contravene their fiduciary duty when. No particulars have been given. The Board could have avoidled the contract because if is voidable at. the option of the Board. But they gave the contract with full knowledge of the material facts and free -from undue influence. There is no fraud in the transaction. The directed were acting bona fide. They did not contravene their fiduciary duty when. they awarded contract to one of themselves because there was perfect disclosure on the part of Mehta Harnam Singh. Mehta acted in a personal capacity as a partner. He had another capacity as a director of the company. Therefore disclosure was essential. This is why he disclosed his interest. The directors are in a fiduciary position. They must exercise their powers for the henefit of the company, as I have said. Nothing has been shown in this case to convince me that the contract. made with the firm was not for the benefit of the company or was in any way prejudicial to its interest. ( 15 ) NOR am I impressed with the argument that the contract was without consideration. Consideration is stated in the contract itself. It was a service contract. A contract of employment to boost sales. The firm was to push up sales of the company. There was a target point. It was Rs. l50,00,00. If the sales reached the target, the firm was to get a fee of 4. 8 per cent of the total proceeds of the sale. Otherwise it was to get a minimum sum Of Rs. 1,2ki,000. 00 per year for the services rendered by it. The promotion of sales of Globe Steels was the service in consideration of which the company agreed to pay. the fee and the minimum fee. ( 16 ) THE Official Liquidator says that: the firm had agreed to invest a sum of Rs. 5,00,0001- in the company and BO such amount was invested and therefore the contract is without consideration. In paragraph 6 of the petition: the firm states that it poured this money in the company as it needed financial assistance. Satinder Kohli, Chief Accountant of the company, produced by the Official Liquidator, has categorically admitted that Rs. 5,00,0001- were injected in the company by the firm at the time the contract was entered Info. So I dismiss the plea that the agreement was without consideration. Satinder Kohli, Chief Accountant of the company, produced by the Official Liquidator, has categorically admitted that Rs. 5,00,0001- were injected in the company by the firm at the time the contract was entered Info. So I dismiss the plea that the agreement was without consideration. ( 17 ) THE Official Liquidator then raised another point. He. said that the agreement dated 1st June, 1967 was to be approved by the shareholders at the geaeral meeting, and as this was not done, the company 19 not bound by the agreement. I have read the agreement. I have not found any such condition. It is nof the term of the agreement that it shall come Into force only if the approval of the shareholders has been accorded. The Official Liquidator referred me to the proceedings of the 11th General Meeting of the shareholders of the company held on 6flh August, 1968. A resolution to obtain the consent of the company under sections 314 and 294 " (if applicable)" of the Act in relation to the extract dated-June 1, 1967 was proposed at the said meeting. It was resolved that a committee consisting of certain persons be constituted to negotiate with the firm and to submit their recommendations for the adoption of the shareholders in the next annual general meeting, or extraordinaiy meeting of the shareholders of the company. Founding himself on this, the Official Liquidator says that though the matter was put to the general meeting of the shareholders they never passed the resolution adopting the contract or affirming it. In support of the submission he invited my attention to the 13th annual report where the directors in their reports observed that the agreement was "fraudulent and to the detriment of the company and not having been approved by the. shareholders has not been given effect to. No services were rendered by any of these entities for the sale of the products of Globe Steels. The present management considers these agreements fraudulent, collusive and void and has therefore made no provision Jn these accounts for any liability for any commission. In November 1973 Messrs. Mehta Teja Siagh and Co. (Agencies) have filed a suit in the Delhi High Court requiring, the company to file the said agreement under the Arbitration Act. The company is strongly resisting the suit. In November 1973 Messrs. Mehta Teja Siagh and Co. (Agencies) have filed a suit in the Delhi High Court requiring, the company to file the said agreement under the Arbitration Act. The company is strongly resisting the suit. " ( 18 ) THE,real question for decision is : Did die agreement dated 1st June, 1967 require the approval of the shareholders ? The agreement had the approval of the Board of Directors. Was it necessary for the shareholders to give their approval before the agreement could have effect ? This is the question. The answer to this question is simple. Neither the articles nor the provisions of the Act require the matter to be put to the shareholders for approval. The spheres of the directors and the general body of the shareholders are quite separate and distinct. In exercising their powers the directors do not act as agents for the majority or even all of the members, and so the members cannot by a resolution passed by a majority or even unanimously supersede the director s power?, or instruct them how they shall exercise their powers. This sovereignity of the directors within the limits of the powers conferred on them by the articles of the company was clearly expressed by Greer LJ, in the following words : "a company is an entity distinct alike from its shareholders and it s directors. Some of its powers may. according to its articles, be exercised by directors. certain other powers may be reserved for the shareholders in. general meeting. If powers of management are vested in the directors, they and they alone can exercise these powers. The only way in which the general body of the shareholders can control the exercise of the powers vested by the articles In the directors is by altering the articles, or if opportunity arises under the articles, by refusing to reelect the directors of whose actions they disapprove. They cannot themselves usurp the powers which by the articles are vested in the directors any more than the directors can usurp the powers vested by the articles in the general body of shareholders. "[john Shaw and Sons (Salford) Ltd. v. Shaw (1935) 2 KB 113 (6)1 (Penningtons Company Law, Fourth edition, p. 523-524 ). They cannot themselves usurp the powers which by the articles are vested in the directors any more than the directors can usurp the powers vested by the articles in the general body of shareholders. "[john Shaw and Sons (Salford) Ltd. v. Shaw (1935) 2 KB 113 (6)1 (Penningtons Company Law, Fourth edition, p. 523-524 ). As in a federal government there is a division of powers between the Centre and the States, so in a company the spheres of the directors and the shareholders are separate and distinct. One cannot override the other. The shareholders cannot overrule the decision of the directors. All that the shareholders can do is to amend the articles or refuse to re-elect directors and replace them by others more to their liking. The company s powers are divided between the directors and the shareholders. The general meeting retains ultimate control, but only though its powers to amend the articles (so as to take away, for the future, certain powers from the directors) and to remove the directors and to substitute others more to its taste. Until it takes one or other of these steps the directors can, if they arc so advised, disregard the wishes and instructions of the members in all matters not specifically reserved (either by the Act or the articles) to a general meeting Prof. Cower has shown that the old idea that the general meeting alone is the company s primary organ no longer holds the field. There are practical difficulties in the way of effectively exercising the supervision by the general body owing to the directors control over the proxy-voting machinery. He says: "the old idea that the general meeting alone- is the company s primary organ arid the directors merely the company s agents orservahts, at all times subservient to the general meeting, seems no longer to be the law as it is certainly not the fact. " (Gower s Principles of Modem Company Law, Fourth Edition, p. 152 ).- The result of the discussion appears to be that the directors have ceased to be mere agents of the company. The doctrine of "sovereignty of the directors" within the limits of the powers specifically reserved to them, as Prof. Pennington has phrased it, represents the modern view. Apply these principles here. The doctrine of "sovereignty of the directors" within the limits of the powers specifically reserved to them, as Prof. Pennington has phrased it, represents the modern view. Apply these principles here. Now it has not been shown that there is any article of the company which requires this contract to be approved by the shareholders at the annual general meeting. Nor is there any statutory provision requiring this to be done. So my conclusion is that the directors were given the powers to manage the affairs of the company and they were perfectly competent to make this contract with the firm as this matter was one which related to the actual management of the company and was in the allotted field of the directors. The assent of the shareholders was not at all required. The contract is therefore binding on the company. ( 19 ) THERE is another way of looking at this question. The life of the contract was 5 years. The contract was operative from June 16, 1967 and continued till June 15, 1972. If the transaction embodied in the contract was to be repudiated it ought to have been done during the currency of the contract. The company in a voidable contract can decide whether to affirm or avoid the contract. But a contract cannot be rescinded after it has come to an end, You cannot slay the slain. The right to avoidance of the contract is lost on the expiry of five years. The contract was avoided on 19th June, 1973 vide Ex. P/l9. This was obviously beyond the expiry of 5 years. Such a rescission has no effect in law. (Hely-Hutchinson v. Brayhead Ltd. and another, 1967 (3) All E. R. 98 (l04) (7 ). So I hold that the contract is valid and enforceable. The petitioners are entitled to demand arbitration because the contract contains an arbitration clause. ( 20 ) THE Official Liquidator says that the firm is not entitled to any remuneration because it rendered no services. This defence relates to the merits of the claim. This relates to the performance of the contract and not its formation. It is for the arbitrator to decide whether the- firm is entitled to the money it claims. Whether the claim will succeed or fail before the arbitrator is not the question. This defence relates to the merits of the claim. This relates to the performance of the contract and not its formation. It is for the arbitrator to decide whether the- firm is entitled to the money it claims. Whether the claim will succeed or fail before the arbitrator is not the question. All that has to be seen is whether there is a dispute and whether the dispute is covered by the terms of the arbitration clause. If the court comes to the conclusion that it is covered by the clause the matter must go to arbitration. ( 21 ) THE Official Liquidator says that the contract dated June 1, 1967 was a contract of sole selling agency and to such a contract, section 294 of the Act applies. Section 294 says that the appointment of the sole selling agents requires the approval of the company in a general meeting. But the question is : Was this a contract of sole selling agency ? In my opinion the answer is "no". The contract was a service contract. The firm is described as distributors. It was forbidden to use the term "agent". It was "not to represent itself to be the company s agent for any purpose or assume, create or incur any obligation or make any. promise or representation as agent of the company. " In view of this emphatic declaration if is impossible to hold that the firm was the agent or sole selling agent, as the official liquidator contends. The firm s obligation was "to provide for the company the services of its selling organisation, whose duties shall, be to promote in every reasonable manner to the satisfaction of the company the sale of the products of Globe Steels. " That contract provides that in consideration of the services" the company was to pay to the firm a fee at the rate of 4. 8 per cent or a minimum of Rs. 1,20,000 if the target of sales is not achieved. This is the purport of the contract. T cannot see how it can be. said to be a sole selling agency. More so in view of the fact that only 116th of the products of Globe Steels was given to the firm. The remaining l]6th was given to another person, namely. Urvinder Singh Kohli as is recited in the agreement; itself. T cannot see how it can be. said to be a sole selling agency. More so in view of the fact that only 116th of the products of Globe Steels was given to the firm. The remaining l]6th was given to another person, namely. Urvinder Singh Kohli as is recited in the agreement; itself. For a sole selling agent it is necessary to define the area of the agency. No such area has been defined in this agreement. I cannot therefore, hold that the contract in question was a contract of sole selling agency as has been contended by the official liquidator. . ( 22 ) THE official liquidator then referred me to section 314 of the Act. This section in my opinion has no application. Thatsection says that a director shall not hold office or pb. . . of profit in. the company. It is not shown how Mehta Harnam Singh was disqualified from entering into a contract on behalf of the firm of which he was a partner. ( 23 ) SCOPE of Arbitration Clause. This brings me to the third question. The question is : what is the dispute and whether it is covered by the arbitration clause ? It is said that mere failure to pay the amount daimed does not amount to a dispute. T agree. But this is not case of mere failure to pay. It is a case where the transaction" has been repudiated. The contract was sought to be rescinded. I have held that a contract cannot be rescinded after it has run its course. The question is not one of failure to pay the amount. The question is whether any amount is due to the firm. I- has been strongly argued that the firm is not entitled to any anount from the company. The arbitrator will decide this question. T find there is a real and substantial dispute between the parties which ought to be referred to arbitration. The question whether any services were rendered by the firm and whether tl - y are entitled to any remuneration in. consideration of the ^" dees are matters which are within the province of the arbkn. iu r. ( 24 ) I was referred to S. 20 (4) of the Arbitration Act and Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak and another, AIR 1962 Supreme Court 406 (8 ). consideration of the ^" dees are matters which are within the province of the arbkn. iu r. ( 24 ) I was referred to S. 20 (4) of the Arbitration Act and Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak and another, AIR 1962 Supreme Court 406 (8 ). In my opinion no sufficient cause has been shown why the order of reference to the arbitrator should not be made. The plea of fraud lacks all particulars. It deserves no notice. Once it is shown that there is no sufficient cause why the agreement be nut fild the court has no discretion in the matter. (Jiwanlal Raj N arain Khanna and others v. Radhey Lal, AIR 1968 Delhi " (961 (9 ). ( 25 ) THIS dispute fulls within the arbitration, clause: The arbitration clause says: "any dispute or difference arising in regard to any of the terms contained in this agreement shall be settled in accordance with the provisions of the Indian Arbitration Act, 1940. " The dispute between the parties one which falls within the ambit of this clause. In my opinion the clause is wide enough to comprehend it. The Oflicial Liquidator says that there is no dispute in regard to terms" contained in the agreement. He laid a great deal of stress on the expression "term" used in the clause. In my opinion this is not the meaning of the word "terms". It means articles of agreement, bargain or transaction. It means any dispute or difference arising out of the contract, terms whereof are set forth h;, ihe document, shall be settled by arbitration. I therefore hold that there is a dispute and the dispute is referable to arbitration. ( 26 ) FOR these reasons I order the agreement to be filed and refer the matter to arbitration. I appoint Mr. M. S. Joshi, a retired Judge of this Court, to act as the sole arbitrator in this case and to give his award on the dispute between the parties. I fix his fee at Rs. 4,000 to be paid in equal shares by the- petitioners and the Official Liquidator. Ultimately it will be in the arbitrator s discretion to decide the question of costs. ( 27 ) THE partics are directed to appear before the arbitrator on 9th January, 1982 at II a. m. at his residence