R. A. MEHTA, J. ( 1 ) THE appellant original defendant No. 4, a foreign party, made an application before the trial court Ex. 48-D invoking the provisions of Foreign Avards (Recognition and enforcement) Act, 1961, Arbitration Protocal convetion Act, 1937 and Indian Arbitration Act, 1940 and pleaded that the suit against the defendant No. 4 should not proceed. The trial court having rejected that application, this appeal has been preferred. ( 2 ) THE plaintiff-State Trading Corporation is the purchaser and importer of the goods in question and the appellant defendant No. 4 is the supplier and vendor. The defendant No. 1 is the Shipping Company, defendent No. 2 is the agent of defendant No. l, and defendant No. 3 is the agent of defendant No. 4. The suit being special Civil Suit No. l 15 of 1979 is for recovery of Rs. 14,97,065. 00 with costs and interest on account of short delivery of goods. It is alleged that as per the assessment made, the goods were found to be less in quantity. Accourding to para 2 of the plaint, defendent No. 4 agreed to sell and the plaintiff agreed to purchase 10,000 MT (plus iminus 5% at sellers option) crude degummed soyabean oil and the cargo was to be delivered to Indian Ports. As per para 8 of the plaint, when the discharge commenced at the Indian Ports, it was noticed that the oil had contaminated and large quantity of water was found mixed with the oil: Samples were drawn and analysis report showed that 20% water was present alongwith the oil. On the basis of lease quantity and quality, the claim for damage has been made. In para 18 of the plaint, it is submitted that the suit consignment was to be delivered to the plaintiff in a sound condition and as per the Bill of Lading weight, and the defendants, their servants and agents failed and neglected and as a result thereof, the plaintiff has suffered a loss. It is further averred that the defendants Nos. 3 and 4 are also necessary parties because they are the supplier cum shipper and sellers. Thus, it would appear that primarily, the claim is against suppliers and not against the shippers. In any case, the plaintiff has prayed for a decree against the defendants jointly, severally or in the alternative. The defendant no. 3 and 4 are also necessary parties because they are the supplier cum shipper and sellers. Thus, it would appear that primarily, the claim is against suppliers and not against the shippers. In any case, the plaintiff has prayed for a decree against the defendants jointly, severally or in the alternative. The defendant no. 4 has placed reliance on clause 25 of the agreement which reads as follows :"any dispute arising out of this contract including any question of law arising in connection therewith shall be referred to arbitration in London (or elsewhere if so agreed) in accordance with the Rules of Arbitration and appeal of the Federation of Oils, Seeds and fats Association Ltd. , in force at the date of this contract and of which both parties hereto shall be deemed to be congnisant. Neither party hereto nor any person claiming either of them, shall bring any action or other legal preceedings against the other of them in respect of any such dispute unitl such dispute shall first have been heard and determined by the arbitrators, umpire of Board of Appeals (as the case my be), in accordance with the Rules of Arbitration and appeal of the Federation, and it is hereby expressly agreed and declared that the obtaining of an Award from the Arbitrators umpire of board of Appeal (as the case may be) shall be condition precedent to the right of either party hereto or of any person claiming under either of them or bring any action or other legal proceedings against the other of them in respect of any such dispute. " ( 3 ) IN para 7 of the application, the appellant submitted to the trial court that plaintiffs are not entitled to file the present suit in respect of the dispute until the award of the arbitrator has been obtained since Clause 25 is a Scot v. Avery Clause and the award of the arbitrator is a condition precedent to the institution of any legal action or other legal proceedings under clause 25. The trial court accepted the contention of the appellant defendant No. 4 that there was valid arbitration agreement between the plaintiff and the defendant No. 4 and if any dispute arises between the plaintiff and the defendant No. 4, then it should be referred to the arbitrator in the manner laid down in Clause 25. The trial court accepted the contention of the appellant defendant No. 4 that there was valid arbitration agreement between the plaintiff and the defendant No. 4 and if any dispute arises between the plaintiff and the defendant No. 4, then it should be referred to the arbitrator in the manner laid down in Clause 25. These findings are found in paras 9 and 11 of the judgment. However, the learned trial judge proceeded to hold that in the present case, the said arbitration clause is of no avail to the defendent No. 4 looking to the facts and circumstances of the case and those facts and circumstance are that the defendent Nos. 1 to 3 are not signatories to the contract and, therefore, the terms and conditions thereof are not binding to them and that the cause of action cannot be split up between the defendant Nos. 1 to 3 on one hand and the defendant No. 4 on the other hand. ( 4 ) THE learned Counsel for the appellant submitted that having regard to the applicability of the arbitration clause and the wordings of the arbitration clause (Scot v. Avery clause, condition precedent), as far as defendant No. 4 is concerned, the suit is not maintainable and the plaintiff cannot make such suit maintainable against the defendent No. 4 by impleading other defendants of his choice. If the plaintiff has any claim against defendants Nos. 1 to 3, the plaintiff may proceed with that claim. However, if the plaintiff wants to have any claim against the defendant No. 4, such claim has got to be made before the arbitrator under Clause 25 of the agreement. The plaintiff cannot defeat that arbitration clause by choosing to make claim against other parties. ( 5 ) ACCORDING to the defendant No. 4, even if the defendant No, 4 is to be held liable for short supply or defective delivery on account of the negligence of other defendants, then also, other defendants would be agents of defendant no. 4 and only on that basis, for the negligence of other defendants, the defendant No. 4 can be held liable to the plaintiff. Therefore, in any case, if the plaintiff wants to proceed against the defendant No. 4, the only remedy is the reference to the arbitrator as contemplated under clause 25 of the contract. 4 and only on that basis, for the negligence of other defendants, the defendant No. 4 can be held liable to the plaintiff. Therefore, in any case, if the plaintiff wants to proceed against the defendant No. 4, the only remedy is the reference to the arbitrator as contemplated under clause 25 of the contract. ( 6 ) THE learned Counsel for the respondent- plaintiff has submitted that practically there is no dispute about the short delivery and the defecitve delivery and that has been jointly assessed and surveyed and therefore, the arbitration has no application. It is also submitted that out of some sets of facts and clauses or Sections, the liability of the defendants has to be adjudicated and decided jointly, severally or individually and since the cause of action has arisen in India at Kandla, the Civil Court in India has jurisdiction. ( 7 ) THE question is whether the present suit against defendant No. 4 can proceed in spite of the statutory provision made in Section 3 of the Foreign Awards (Recognition and enforcement) Act; 1961. That Section reads as follows:"3. Stay of proceeding in respect of matters to be referred to arbitration: Notwithstanding anything contained in the Arbitration Act, 1940, or in the Code of Civil Procedure, 1908, if any party to an agreement to which Article II of the Convention set forth in the Schedule applies, or any person claiming through or under him commences any legal proceedings in any court against any other party to the agreement or any person claiming through or under him in respect of any matter agreed to be referred to arbitration in such agreement, any party to such legal proceedings may at any lime after appearance and before filing a written statement or taking any other step in the proceedings, apply to the court to stay the proceedings and the Court, unless satisfied that the agreement is null and void, inoperative or incapable of being performed or that there is not, in fact, any dispute between the parties with regard to the matter agreed to be referred shall make an order staying the proceedings. "in view of the aforesaid provision, if a party to such an agreement (as in the present case) commences any legal proceedings in any Court against the other party to the agreement or any person claiming through or under him, any party to such legal proceedings may apply to the Court to stay the proceedings. The Court shall make an order staying the proceedings unless the Court is satisfied that the agreement is null and void, inoperative or incapable of being performed or that there is no dispute between the parties with regard to the matter agreed to be referred to. In the present case, it is not the case of the plaintiff that the agreement is null and void nor is the case that the agreement is inoperative or incapable of being performed. An attempt has been made by the plaintiff to suggest that there is in fact no dispute between the parties. It is not possible to accept the submission that there is no dispute between the parties merely because there is a joint survey and assessment regarding short supply and defective quality. The question of liability to make good the loss is a dispute between the parties and such dispute is covered by clause 25 of the contract and it is an arbitrable dispute and it is a matter which is agreed to be referred to arbitration. Section 3 was ended by an Act No. 47 of 1973. This amendment was necessited because of the Supreme Court judgment in the case of V/o Tractors Export moscow v. Tarapore and Co. , (1970) II SCA 316. In that case, the Supreme Court held that Section 3 did not give full effect to Article II of the convention and, therefore, the Section was amended to make the intention clear and more existence of a valid arbitration agreement would render it mandatory for the Court to refer the matter to the arbitration and stay the proceedings. In that case, the Supreme Court held that Section 3 did not give full effect to Article II of the convention and, therefore, the Section was amended to make the intention clear and more existence of a valid arbitration agreement would render it mandatory for the Court to refer the matter to the arbitration and stay the proceedings. ( 8 ) THE whole purpose of arbitration is to see that in a dispute between the parties of different countries, litigation is avoided in domestic Courts of either country and it is referred to professional arbitration in accordance with the Rules of Oils, Seeds and Fat association Ltd. This is perhaps with a view to avoid an apprehension in the mind of any party of having to face a Court foreign to them and home ground for the other. Such apprehension may or may not be justified, but the parties in inter se agreements usually adopt this neutral forms in neutral territory (like neutral umpires in international cricket, i. e. umpires from countries not playing the match ). ( 9 ) HAVING regard to the mandatory nature of Section 3, the suit against defendant No. 4 cannot proceed having regard to this provision. ( 10 ) THE argument which appealed to the trial court is that the cause of action is one and cannot be split up: otherwise there will be posssibility of inconsistent judgement. Once it is found that the provision is mandatory and admits of no exception or discretion in the court, this argument becomes irrelevant. Even if it has some substance, it cannot override the mandatory provision. Really speaking, it is for the plaintiff to decide as to against whom it would like and proceed against them in accordance with law. If the plaintiffs want to proceed against defemdant No. 4, it has to proceed before the arbitrator under clause 25 of the contract and in no other manner. If the defendant Nos. 1 to 3 are to be held liable as agents of defendant No. 4, then the defendant no. 4 would be representing and covering these in arbitration proceeding because the defendant no. 4 may be said to have committed breach of the contract by not supplying the agreed quantity and quality of the goods; on the other hand, if there is any wrong committed by the defendants Nos. 4 would be representing and covering these in arbitration proceeding because the defendant no. 4 may be said to have committed breach of the contract by not supplying the agreed quantity and quality of the goods; on the other hand, if there is any wrong committed by the defendants Nos. 1 to 3 by way of negligence or breach or contract of shipping or any other breach independent of defendent No. 4, the plaintiff can proceed against them independently and separartely from defendant No. 4. Therefore, the apprehension regarding spliting up of the cause of action is more imaginery than real. The suit against defendants Nos. 1 to 3 can proceed and the plaintiff can be directed to resort to clause 25 as far as the defendent No. 4 is concerned. ( 11 ) THIS is more so having regard to the language of clause 25 which is " Scot versus avery " clause wherein arbitration award is a condition precedent to the institution of a legal proceeding and, therefore, the suit without such award would be premature and not maintainable. Therefore as far as the defendent no. 4 is concerned, the suit is not only required to be stayed, but required to be dismissed. 11. The analogy of Section 34 of the arbitration Act would be inapplicable to the cases covered by Section 3 of the Foreign awards ( Recognition and Enforcement) Act. Under Section 34 of the Arbitration Act, there is a discretion in the Court to stay or not to stay the civil suit. As far as Section 3 of the foreign Awards Act is concerned, it admits of no exception or no discretion of the Court if the Agreement is valid and operative and if there is an arbitrable dispute, the court has to stay the proceedings. This mandatory nature of provision is made by Amendment Act of 1973. ( 12 ) IN the case of Renusagar Power Co. Ltd. v. General Electric Co. and Anr. , AIR 1985 sc 1156 , the Supreme Court has also taken the same view that Section 3 opens with a non obstante clause giving overriding effect to the provisions contained therein and making it prevail over anything to the contrary contained in the Arbitration Act, 1940. Ltd. v. General Electric Co. and Anr. , AIR 1985 sc 1156 , the Supreme Court has also taken the same view that Section 3 opens with a non obstante clause giving overriding effect to the provisions contained therein and making it prevail over anything to the contrary contained in the Arbitration Act, 1940. It is further held that unlike Section 34 of the Arbitration Act which confers a discretion upon the Court, the section uses the mandatory expression "shall" and makes it obligatory upon the Court to pass the order staying the legal proceedings commenced by a party to the agreement if the conditions specified therein are fulfilled. In the present case, all those conditions are fulfilled. There is an agreement contemplated by Section 3; party to that agreement has commenced legal proceeding against another party and the proceeding is in respect of a matter agreed to be referred to the arbibtration and the application has been made before filing of the written statement or taking any other step in the legal proceeding and that the agreement is valid, operative and capable of being performed and that there is a dispute between the parties which arbitrable. ( 13 ) THE Supreme Court has again taken the same view in the case of General Electrical co. , v. Renusagar Power Co. , (1987) 4 SCC 137 and held that Section 3 of the Foreign awards ( Recognition and Enforcement ) Act vests no such discretion in the Court as is vested under Section 3 of the Arbitration Act. The stay of proceedings is mandatory and not discretionary. ( 14 ) WHEN Section 3 of the Foreign Awards act is applicable, ordinarily, there has to be only a stay of the suit against defendant No. 4. However, in the present case, there is one more factor and very vital factor that the arbitration clause is not only mandatory, but is a condition precedent and, therefore, the suit against defendent No. 4 is premature. Clause 25 has provided that obtaining of an arbitration award shall be condition precedent to the right of other party to bring any action or other legal proceeding and, therefore, the suit against the defendent No. 4 has to be dismissed at this stage. Clause 25 has provided that obtaining of an arbitration award shall be condition precedent to the right of other party to bring any action or other legal proceeding and, therefore, the suit against the defendent No. 4 has to be dismissed at this stage. ( 15 ) IN the result, the appeal is allowed and the suit of the respondent No. 1- original plaintiff against defendent No. 4 ( appellant) is dismissed as premature and not maintainable in view of Clause 25 of the arbitration agreement and the suit shall proceed against the other defendents. No order as to costs. Order accordingly. .