JUDGMENT O.P. SAXENA, J. 1. THIS is an appeal under Section 39 of the Arbitration Act against the order dated 20th January 1978 passed by Sri N.C. Singh, 1st Additional Civil Judge, Kanpur. 2. THE facts giving rise to this appeal are that the respondent is manufacturer of electric fans and water pumps. THE appellant used to purchase the same from the respondent. THE respondent used to draw Hundis on the appellant and the goods were delivered to the appellant on its accepting the Hundis. On 7th January 1970 the parties entered into an agreement for the sale of fans vide copy Annexure 1. On 24th January 1970, the parties entered into an agreement for sale of water pumps vide copy Annexure 2. Clause 19 in both the agreements provided for arbitration. The respondent filed Suit No. 294 of 1976 in the Court of First Civil Judge, Kanpur against the appellant for recovery of Rs. 46,020.97 paise with pendentilite and future interest at 6% per annum. 3. THE appellant gave an application under section 34 of the Arbitration Act. 4. THE Additional Civil Judge rejected the application. Hence, this appeal. In the case of Anderson Wright Ltd. v. Moron and Company, AIR 1955 SC page 53. the Supreme Court held on page 55:- "Thus in order that a stay may be granted under this section, it is necessary that the following conditions should be fulfilled: (1) The proceedings must have been commenced by a party to an arbitration agreement against any other party to the agreement; (2) The legal proceeding which is sought to be stayed must be in respect of the matter agreed to be referred; (3) the applicant for stay must be a party to the legal proceeding and he must have taken no steps in proceeding after appearance. It is also necessary that he should satisfy the Court not only that he is, but also was at the commencement of the proceedings, ready and willing to do every thing necessary for the proper conduct of the arbitration; and (4) the court must be satisfied that there is no sufficient reason why the; master should not be referred to arbitration in accordance with the arbitration agreement. 5. ANNEXURE I and II are copies of agreement dated 7th January 1970 and 24th January 1970. Clause 19 in both the agreements provides for arbitration. 5. ANNEXURE I and II are copies of agreement dated 7th January 1970 and 24th January 1970. Clause 19 in both the agreements provides for arbitration. It runs as below: "All disputes and differences between the Manufacturers and the purchasers arising out of or in connection with or touching these presents shall be referred to a sole; Arbitrator if the party hereto agree upon one, otherwise two Arbitrators, one to be appointed by each party and in case of the disagreement of the Arbitrators to am Umpire to be appointed by the Arbitrators before entering upon the reference in accordance with and subject to the provisions of the Indian Arbitration Act, 1940 or any statutory modification or the re-enactment thereof for the time being in force. A11 such arbitration proceedings shall be held and conducted in Bombay, and on all matters relating to these presents the Court in Bombay alone shall have jurist diction." 6. THE suit has been filed by the respondent, who was a party to the arbitration agreement against the appellant, who was the other party to the agreement. THE first condition laid down by the Supreme Court is fulfilled. There is a controversy between the parties regarding the suit being covered by the arbitration agreement. According to the appellant it is covered, whereas according to the respondent it is not covered. 7. WE are unable to accept the contention of Sri P. Gaur, learned counsel for the respondent, that the allegations in the plaint should show that the suit is in respect: of any matter agreed to be referred. Reliance was placed on the observation made in Sudhangshu Bhattacharjee v. Ruplekha puctyres, AIR, 1954 Calcutta 281, paragraph 12, that the reference under Section 34 appears to be to the constitution of the legal proceedings as laid in the plaint and if the plaint be the sole material to which attention must be confined, the present suit can in no way be said to involve any construction of or reference to the contract. It was further observed that there was a reference to the, film at the top of the statement of accounts and if the plaintiff's affidavit could at all be referred to, a question may arise as to whether a dispute regarding the liability, said to arise from the statement of accounts relating to advance made in pursuance of the agreement, is a dispute arising out of the contract, when the advances were being said to be recovered by means of considering his claim in a suit instead of by the method for which the contract provides. But the Hon'ble Judge added that he did not, however, consider it necessary to deal further with this aspect of the case, because in his opinion a different ground is sufficient for its disposal. It would, thus, appear that the earlier observation relied upon was conditioned by a 'if and it was not considered necessary to give any decisive opinion on the matter. WE are of the opinion that whenever a question arises as to whether a dispute is covered by an arbitration agreement, its decision cannot be confined to the averments made in the plaint. A party who does not want arbitration may avoid any reference to the arbitration agreement in the plaint. 8. SRI P. Gaur placed reliance on Bharat Construction Co. v. Union of India, AIR 1954 Calcutta 606, Dewoodhai v. Abdul Kadar, AIR 1931 Bombay 164, Mst. Cobindran v. M\s. Shayamji K and Co., AIR 1961 SC 1285 ; Dalip Construction Co, v. Hindustan Steel Ltd., AIR 1973 Madhya Pradesh 161, Daman Anand v. Hira Lal, AIR 1974 Punjab and Haryana 232 and Mis. Delux Silk Traders v. Mis. Satya Narain, AIR 1979 Bombay 149, in support of the contention that there should be a dispute between the parties before the matter could be referred to arbitration. He submitted that the record does not show that there is any such dispute. Sri K.M. Dayal, learned counsel for appellant, submitted that the parties carried on business dealings in pursuance of the agreements dated 7th January 1970 and 24th January 1970. The suit was filed on the allegations that the Hundis accepted by the appellant were dishonoured by the State Bank of India. The suit was in fact, for the price of goods supplied by the respondent to the appellant. Annexure IV is the copy of the plaint. The suit was filed on the allegations that the Hundis accepted by the appellant were dishonoured by the State Bank of India. The suit was in fact, for the price of goods supplied by the respondent to the appellant. Annexure IV is the copy of the plaint. In paragraph 3 there was a reference to the business dealings between the parties and it was said that it was agreed between the parties that the amount due to the plaintiff would be realised by drawing Hundis on the defendant. 9. ON 1st July 1976 the respondent's counsel gave native to the appellant vide copy Annexure III. In paragraph 1 it was stated:- "there were business dealings between you and them in respect of which claims and counter claims are being made by the parties and efforts for mutual settlement of claims have not resolved the disputes between the parties." 10. IN paragraph 2 there was specific reference to the arbitration clause according to which all disputes and differences between the parties arising out of or in connection with, the said agreements have to be referred to arbitration. Sri K.M. Dayal, therefore submitted that the respondent itself accepted - that there were claims and counter-claims between the parties and efforts for mutual settlement could not resolve the dispute between the parties. It was also admitted that the dispute and differences between the parties could be referred to arbitration. It was urged that after this admission, it is too late in the day for the respondent to deny the existence of disputes or differences between the parties which could be referred to arbitration. 11. SRI K.M. Dayal also referred to the judgment of the Supreme Court in Civil Appeal No. 1152 of 1966, Delhi Housing and Finance Corporation v. Beni Prasad Seth Gopal and Co., relied upon by the court below. It was said that paragraph 5 of the agreement in the said case gave a limited scope for arbitration. Only complaints, objections or claims, whatsoever, in respect of inferiority of quality, shortage or wrong width, etc. could be referred to arbitration. It was pointed out that the Supreme Court observed that the arbitration agreement did not provide for the settlement of the claim under the bills of exchange and took notice of the limited nature of the agreement. Only complaints, objections or claims, whatsoever, in respect of inferiority of quality, shortage or wrong width, etc. could be referred to arbitration. It was pointed out that the Supreme Court observed that the arbitration agreement did not provide for the settlement of the claim under the bills of exchange and took notice of the limited nature of the agreement. It was submitted that the Additional Civil Judge did not appreciate that clause 19 is much wider and covers all disputes and differences between the parties. The claim under the bills of exchange is also covered by clause 19. 12. WE find substance in the submissions of Sri K.M. Dayal. WE hold that the arbitration clause was wide enough to include the present suit in respect of bills of exchange. WE reject the contentions of Sri P. Gaur to the contrary. The second condition specified by the Supreme Court has been fulfilled. Sri P. Gaur submitted that the appellant was not ready and willing to do every thing necessary for the proper conduct of arbitration and as such the third condition laid down by the Supreme Court cannot to said to have been fulfilled. Hi placed, reliance on Food Corporation of Mia v. Theku Shipping Co,, AIR 1975 Supremo Court 409. In paragraph 5 it was held:- "Where a party to an arbitration agreement chooses to maintain silence in the face of repeated requests by the other party to take steps for arbitration, the case is not one of mere inaction failing to act when a party is called upon to do so is a positive gesture signifying unwillingness or want of readiness to go to arbitration". 13. SRI K.M. Dayal referred to Annexure V, Copy of the application under Section 34 of the Arbitration Act and the affidavit filed in support thereof. In paragraph 4 of the affidavit it was said that since there were differences between the parties, the defendant vide its letter dated 3rd August 1976 appointed SRI Soran Shah as its arbitrator and required the plaintiff either to accept him as the sole arbitrator or to appoint its own arbitrator treating SRI Soran Shah as the arbitrator of the defendant. 14. SRI P. Gaur did not dispute that the applicant sent notice on 3rd August 1976, as referred to above. 14. SRI P. Gaur did not dispute that the applicant sent notice on 3rd August 1976, as referred to above. He, however, submitted that the appellant filed an application under Section 5 of the Arbitration Act against the nomination of the arbitrator by respondent, vide copy Annexure 3, in the Bombay High Court. The respondent nominated SRI Gopi Shyam Nigam, Advocate, Kanpur as the sole arbitrator and in case the appellant did not agree, SRI Satyendra Kumar Nigam, Advocate, Kanpur as its arbitrator after having obtained his consent. It is against this that the appellant gave an application under section 5 of the Arbitration Act in the Bombay High Court. We are unable to accept the submissions of Sri P. Gaur. It is not a case in which the appellant may have remained- silent in spite of repeated request by the respondent to take steps for arbitration. Nor it is a case of any inaction on the part of the appellant. On 3rd August 1976 the appellant gave a notice appointing Sri Soran Shah as Arbitrator. It was hardly proper for the respondent to have rushed to the Court and filed the suit on 11th August 1976. It could have sent a reply to the appellant's notice and may have referred to its earlier notice dated 1st July 1976 appointing Sri Gopi Shyam Nigam, Advocate or Sri Satyendra Kumar Nigam, Advocate, Kanpur as arbitrator. The appellant filed application under Section 34 of the Arbitration Act immediately after the service of summons of the suit filed by the respondent. Thus, the appellant not only gave a notice on 3rd August 1976, but also filed an application under Section 34 of the Arbitration Act before the Court. It is a case in which the appellant was ready and willing to do every thing necessary for the proper conduct of arbitration and the third condition laid down by the Supreme Court is also fulfilled. 15. SRI P. Gaur submitted that Section 34 of the Arbitration Act provides that the Court may make an order staying the proceedings. The provision is discretionary. The Court would not pass such an order in case it appears that the claim of any party is barred by time. He referred to Section 37 (1) of the Arbitration Act which makes the provisions of the Indian Limitation Act applicable to arbitration. The provision is discretionary. The Court would not pass such an order in case it appears that the claim of any party is barred by time. He referred to Section 37 (1) of the Arbitration Act which makes the provisions of the Indian Limitation Act applicable to arbitration. He referred to the copy of the plaint vide Annexure IV and submitted that the first transaction was dated 19th August 1973, while the last transaction was dated 10th October 1973. The respondent's claim would be barred if it is called upon to seek arbitration after the expiry of three years and it is, therefore, a fit case in which this Court should not exercise its discretion and order the stay of proceedings. He placed reliance on Shalimar Painty. Om Prakash Singhania, AIR 1967 Calcutta 372. In paragraph 12 it was held:- In any event in the facts of this case and particularly taking into consideration that the claim of the plaintiff, if referred to arbitration will be completely barred. I do not consider that it will be just for me to excercise my discretion in favour of the applicant." 16. SRI K.M. Dayal referred to the following portion in the same paragraph:- "It is quite possible that the plaintiff was under the impression that the dispute in the suit might not be covered by the arbitration clause. The applicant also has never raised the contention that the disputes are covered by the arbitration clause and should be referred to arbitration. The plaintiff has been compelled to file the suit as the claim of the plaintiff would otherwise become barred." Sri K.M. Dayal submitted that the above observations clearly distinguish ' the case. In the present case the respondent could be under no misgiving that the suit was not covered by the arbitration clause. The respondent itself gave notice appointing an arbitrator vide copy Annexure III. The appellant had also given notice on 3rd August 1976 and after this notice the respondent could have no justification, whatsoever, for filing the suit. 17. In the present case the respondent could be under no misgiving that the suit was not covered by the arbitration clause. The respondent itself gave notice appointing an arbitrator vide copy Annexure III. The appellant had also given notice on 3rd August 1976 and after this notice the respondent could have no justification, whatsoever, for filing the suit. 17. SRI K.M. Dayal drew our attention to Section 37 (3) of the Arbitration Act, which provides as below:- "For the purpose of this section and of the Indian Limitation Act, 1908, an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties thereto a notice requiring the appointment of an arbitrator, or where the arbitration agreement provided that the reference shall be to a person named or designated in the agreement requiring that the difference be submitted to the person so named or designated." 18. SRI K.M. Dayal submitted that the arbitration shall be deemed to have commenced when the respondent gave the notice dated 1st July 1976, vide copy Annexure III. As the arbitration proceedings have already commenced there is no question of any claim of the respondent being barred by time. Sri K.M. Dayal drew our attention to Sec. 9(a) of the Arbitration Act and submitted that in case the arbitrator appointed by the respondent neglects or refuses to act, it is open to the respondent to appoint a new arbitrator in his place. 19. SRI K.M. Dayal referred to section 37(4) of the Arbitration Act which provides as below:- "Where the terms of an agreement to refer future difference to arbitration provide that any claims to which the agreement applies shall be barred unless notice to appoint an arbitrator is given or an arbitrator is appointed or some other step to commence arbitration proceedings is taken within a time fixed by the agreement and a difference arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper." 20. A reference was also made to Sterling General Insurance Co. Ltd. v. Plantiers Airways Pvt. Ltd., AIR 1975 SC 415 . A reference was also made to Sterling General Insurance Co. Ltd. v. Plantiers Airways Pvt. Ltd., AIR 1975 SC 415 . It was held that the Court could exercise jurisdiction in case of undue hardship and extend the time for referring the matter to arbitration. We are unable to accept the contention of Sri P. Gaur that the respondents' claim would be barred by time, if it is called upon to get the dispute decided by arbitration. We hold that the arbitration has already commenced when the respondent gave notice dated 1st July 1978 vide Annexure III. We further hold that the respondent may nominate a new arbitrator in case the arbitrator appointed by it neglects or refuses to act. This is not a case to which Clause 4 of Section 37 is applicable. There is no necessity of granting any extension of time. We are satisfied that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement and the fourth condition laid down by the Supreme Court is also fulfilled. 21. IN view of the above, we hold that the order passed by the Additional Civil Judge is erroneous and liable to be set aside. It was a fit case in, which the Additional Civil Judge should have stayed the proceedings, as provided under Section 34 of the Arbitration Act. 22. THE appeal is allowed with costs and the order passed by the Additional Civil Judge is set aside. THE proceedings in suit no. 29 of 1976, Mis. Som Engineering Corporation v. Mjs. Bajaj Electricals Ltd. of the Court of the First Civil Judge, Kanpur are stayed under Section 34 of the Arbitration Act. Appeal allowed.