ecial Leave Petition CivilNo6536 of 1988
From the Judgment and Order dated 2641988 of the Bombay High Court in Appeal No 431 of 1988
G Ramaswami Additional Solicitor General and Mukul Mudgal for the Petitioner
Anil B Diwan DN Misra MP Bharucha and SJ Vajifdar for the Respondent
The Judgment of the Court was delivered by SABYASACHI MUKHARJIJ
This application for leave to appeal is from the decision of the Division Bench of the High Court of Bombay dated 26th April 1988
By the said decision the Division Bench summarily dismissed the appeal thereby affirming the order of the learned Single Judge of the High Court
On 12th January 1980 the petitioner herein signed what has been treated as the first contract with the respondent for the supply of 5000 Mts of Indian HPS Groundnut Kernels Javas hereinafter referred to as the said goods for the year 1979 8O
The second contract in respect of the same was signed for 4000 Mts
on 3rd April 1980
On 18th August 1980 since 3100 Mts
of the remaining first contract and total of 4000 Mts of the second contract had not been supplied the contract was extended for the balance quantity for the next crop season 1980 81
On 20th December
1980 the petitioner informed the respondent not to nominate any vessels to load goods as they were unable to get necessary clearance from the Government
PG NO 551 The petitioner on 27th January 1981 sent a telex informing the respondent that the goods could not be exported on account of executivelegislative ban on such exports
On 6th March 1981 the Federation of Oil Seeds and Fats Association FOSFA informed the petitioner by its letter of the appointment of an arbitrator because of non shipment due to Government s refusal
Thus the respondent invoked the arbitration proceedings with FOSFA
On 19th March 1981 the petitioner filed a petition in the Delhi High Court challenging the arbitration proceedings by FOSFA
The Delhi High Court on 23rd March 1981 passed a stay order and restrained the arbitration proceedings by FOSFA
On 11th December 1981 the Delhi High Court held that no arbitration agreement existed with regard to the second contract dated 3rd April 1980 and as such none was entitled to seek reference to arbitration
It was further held that vis a vis the first contract dated 12th January 1980 there was an arbitration clause existing
The National Agricultural Cooperative Marketing Federation of India Ltd filed a special leave petition in this Court on 1st April 1982 challenging the decision of the Delhi High Court on the ground that there was no valid FOSFA arbitration clause incorporated in the first contract dated 12th January 1980
On 2nd December 1983 this Court passed an interim order granting special permission to the respondent to file a money suit in any court against the petitioner since the claims were getting barred by time
The said order stated as follows The order of this court dated 3041982 is modified to the extent that Alimenta SA is at liberty to file suit against NAFED in respect of its claimsdisputes under the two contracts dated 1211980 and 341980
It is directed that such suit shall not constitute abandonment of the pending arbitrations institutedcommenced by Alimenta SA against NAFED or in any manner prejudice the said arbitrations or any awards made therein or the enforcement thereof and shall not prejudice Alimenta s contention in any of the cases
 On 17th December 1983 the respondent filed a regular money suit No 488 of 1984 for an amount of US 17039544 equivalent to Rs 179393440 and interest On the sum of US  1123500 equivalent to Rs112335000
Written statement was filed by the respondent raising several objections inter alia limitation maintainability etc
On or about 24th July 1984 the respondent filed another identical suit in the Bombay High Court being Suit No PG NO 552 265784 for recovering damages for which the written statement was filed on 20th March 1984
The respondent also filed another identical suit No 1241 of 1981 in the High Court on 21st March 1985 for which also the written statement was filed
The Supreme Court on 9th January 1987 held that there was a valid arbitration clause in the first contract dated 1211980
In January 1987 the respondents started arbitration proceedings in respect of FOSFA contract dated 1211980
In 1987 the petitioner s Solicitor in London issued summons to restrain the London arbitration
The arbitrator thereafter affirmed that they would not proceed with the arbitration until the petitioner s application for stay was finally disposed of
The petitioner moved an application in suit No 1241 of 1985 in the Bombay High Court stating that in the interests of justice pending disposal of the above three suits an injunction should be granted restraining the parties from proceeding with the arbitration and the arbitration be stayed under the principles of Section 35 of the Indian 
On 2nd January 1988 the Bombay High Court granted an interim injunction restraining the parties from proceeding with the arbitration
The learned Single Judge on 8th March 1988 dismissed the notice of motion holding inter alia that this Court s order dated 2nd December 1983 set out hereinbefore was clear and therefore stay could not be granted
There was an appeal to the Division Bench
On 28th March 1988 there was an interim order in appeal No 431 of 1988 permitting the respondent to seek clarification from this Court regarding its order dated 2nd December 1983
This Court disposed of the said application by stating that the Bombay High Court might make its own order
As mentioned hereinbefore the Division Bench of the High Court dismissed on 26th April 1988 the appeal preferred from the decision of the learned Single Judge of that High Court
Hence the petitioner seeks have to appeal to this Court
The question concerned here is whether the High Court was right
The High Court noted that it was an admitted position that under the first contract the defendant therein being the petitioner herein has supplied 1900 Mts while under the second contract the defendant has not supplied anything
The High Court noted that the petitioner has pleaded that the Government had not permitted supply of any further materials to the plaintiff being the respondent herein
The respondent is a Swiss Company
As per the contract the respondent had initiated arbitration proceedings against the petitioner with the Federation of Oil Seeds and Fat Association for brief called FOSFA London PG NO 553 in 1981 and had informed the petitioner by their letter dated 10th March 1981 for the appointment of an arbitrator on their behalf
The defendant had contended that there could not be any such arbitration and therefore it filed a petition in the High Court challenging the arbitration proceedings
The Delhi High Court on the 11th December 1981 came to the conclusion that as regards the first contract there was a valid arbitration agreement and as regards the second contract there was no such arbitration agreement
In other words as regards the first contract the respondent herein could have proceeded with the arbitration while with regard to the second contract there was no question of referring the dispute to the arbitrator as such
Both the parties had filed special leave petitions to this Court being 1755 of 1982 and 1756 of 1982 from the decision of the High Court of Delhi
This Court admitted the petition but did not decide the matter immediately
In the meanwhile the claim of the plaintiffs was getting barred by law of limitation and therefore they moved this Court for an early hearing
This Court instead of hearing the petition passed an order on 12th December 1988 giving liberty to the respondent to file suit in respect of its claims
It was further stated that filing of such a suit would not constitute abandonment of the pending arbitration proceedings instituted or commenced by the respondent against the petitioner
It is pursuant to this liberty that the respondent had filed suit No 488 of 1984
Thereafter without withdrawing the first suit but perhaps on the basis that there was some technical defect in the suit according to the Bombay High Court the respondent had filed a second suit No 265984 on 20th March 1984
It had filed another suit No 1241 of 1985 on the very next date
All these suits were pending in the High Court of Bombay
The cause of action in respect of these suits is the same
It has been stated that the present suit had been filed by way of an abundant caution and without prejudice to the rights and contentions including the arbitration proceedings
As a result of this decision the respondent started their arbitration proceedings from the stage at which it had been stayed earlier but only in respect of the first contract
The first notice of motion is for stay of these arbitration proceedings on the ground that the present suit as also the other two suits are pending and there cannot be any multiplicity of the proceedings in respect of the same cause of action
The High Court noted further that in view of the decision of this Court giving it liberty to file the proceedings the respondent was at liberty to proceed with the arbitration proceedings in respect of the first contract and having regard to this position it stated at the time of hearing of this petition PG NO 554 before the High Court and also in its affidavit that it was giving up claim in respect of the first contract
The learned Solicitor General who had appeared in the Bombay High Court on behalf of the petitioner which was the defendant contended that it was not open to the respondent to forego a part of its claim
The learned Solicitor General had also argued that the cause of action was one and it was not open to the respondent to split up its cause of action
The High Court however did not find any substance in that argument
The High Court was of the view that there were two claims arising out of the two contracts and the claims could easily be segregated or separated and that was the reason that the High Court held that the respondent could give up part of its claims which related to the first contract
In our opinion the High Court was right
Relying upon the decision of this Court in VC Tractoroexport Moscow vs Ms Tarapore  Co  Anr   the learned Solicitor General had submitted before the Bombay High Court that though Section 35 of the does not apply the principles underlying the same would apply and those principles were that arbitrators should not proceed with arbitration side by side and in rivalry or in competition with the Civil Court
It Was further submitted before the High Court that it can exercise cognate or similar powers possessed by it under Section 151 of the Code of Civil Procedure and should avoid the possibility of conflict of decisions
Reliance was placed on a decision of the Calcutta High Court in Serajuddin  Co vs Michael Goldetz  Ors AIR 1960 Cal
In the said circumstance it was submitted that the proper course was to restrain the plaintiffs from getting the matter decided in London so long as the suit was pending and had not been disposed of
In view of the fact that the subject matter of the reference was the same as in the plattings of the suit the public tribunal should have precedence it was submitted by the learned Solicitor General
Reliance was also placed on the decision of India Groundnut Syndicate Ltd Though there was no averment relating to inconvenience with regard to the contract or proceedings in a foreign Contract learned Solicitor had relied on the decision of this Court in Ramji Dayawala  Sons P Ltd vs Invest Import   and submitted that it was more convenient for adjudication in India then in London
In addition to this the high costs of the arbitration and the restrictions on the availability of foreign exchange were also highlighted before the High Court of Bombay and in as much as the defence in action in PG NO 555 India as also the arbitration in London was the same and the evidence was the same and the entire contract had to be performed by shipping the goods from India
Therefore it was submitted that it was not necessary that the parties should be allowed to proceed with the arbitration in London
It was also submitted that no prejudice would be caused to the respondent if they are required to proceed with the present suit and not with the arbitration proceedings
On behalf of the petitioner however it had been contended that the respondent was interested in delaying the proceedings somehow or the other
In support of this the petitioner brought to the notice of the High Court that in 1980 when the breach of contract took place the plaintiff instituted arbitration proceedings and the respondent promptly filed petition in the Delhi High Court and got stay of the arbitration proceedings
Thereafter they lost interest in the matter and the matter came to be decided by this Court and this Court by its order dated 911987 expressed and directed that the first contract was subject to the arbitration agreement and there was no reason why the defendants could not have proceeded with such arbitration
It further appears that sometime in October 1987 the petitioner had taken out an originating summons in the High Court of Justice in London but the summons were not served on the respondent
The arbitrators had given the directions that they would proceed and not wait any further
And it was upon this that the respondent had brought the present proceedings in the Bombay High Court
The High Court further felt that in view of the decision of this Court on 2nd December 1983 there was no abandonment of the pending arbitration proceedings by the respondent
It is well settled that in particular facts and circumstances it a party files a suit to save limitation the same would not Vitiate the award or make the award bad under Section 35 of the 
Reference in this connection may be made to the observations of the Punjab and Haryana High Court in Sujant Singh vs Seth Mohinder Paul AIR 1964 Punj 395
The High Court felt that in the facts and circumstances of this case Section 35 of the does not apply which postulates that neither any reference nor any award shall be rendered invalid by reason only of the commencement of the legal proceedings upon the subject matter of the reference but when the legal proceedings upon the whole subject matter of the reference have been commenced between all the parties to the reference and notice has been given to the arbitrator or the umpire all further proceedings in a pending reference shall unless a stay of proceedings is granted under Section 34 be invalid
The High Court held and in our opinion rightly that PG NO 556 Section 35 does not apply
The order of this Court set out hereinbefore clearly permits the continuation of legal proceedings in suit and cannot operate to nullify the arbitration proceedings in London
The High Court therefore declined to grant stay of the arbitration proceedings
Was the High Court right is the question in this application
Reliance was placed by the learned Additional Solicitor General Mr G Ramaswamy before us on a decision of this Court in Oil  Natural Gas Commn
vs Western Co of N America for the proposition that in a situation of the present type it would be improper to ask the petitioner to go on with the arbitration in London
The facts there were entirely different from the facts before us
Section 151 of the Code of Civil Procedure on the bais of which and on the principle of which stay of proceedings in London was sought are well settled and these principles are whether in a particular case it would be just and equitable to the parties to direct them to proceed with the arbitration must depend upon the facts and circumstances of a particular case having regard to the legal provisions applicable to a particular situation
In the decision referred to hereinbefore this Court took into consideration the fact that there was an application under Sections 30  33 of the for setting aside the awards rendered by the umpire in that case and that there was a possibility of the award rendered by the Umpire being stayed by the Indian court
This Court also took into consideration that in that event an extremely anomalous situation would arise inasmuch as the successful party the Western Company might well have recovered the amount awarded as per the award from the assets of the losing party in USA after procuring the judgment in terms of the award from the USA court
Such possibility of damage and danger is absent in the present case
In the said decision before this Court by the contract therein the Indian courts had exclusive Jurisdiction and it would however be improper to proceed on the basis that the Indian courts have exclusive jurisdiction to affirm or set aside the award in terms of the proper law of the contract or in terms of the actual contrast between the parties
Foreign awards automatically are not lifeless awards 
They can be enforced in this country in accordance with law
See in this connection the Foreign Awards Recognition and Enforcement Act 1961
Furthermore unlike the case of Oil  Natural Gas Commission this is not a case of restraining the respondent from proceeding in a foreign court
This is a case of binding the parties to their bargain for going to the arbitration
The learned Single Judge of the High Court in PG NO 557 the instant case had taken into account all the relevant facts
It had considered the contract of the parties the arbitration agreement the statement made on behalf of the respondent and had thereafter exercised its jurisdiction not to stay the proceedings of arbitration in relation to the first contract
There is a valid arbitration agreement Between the parties
In view of the direction of this Court the continuation of the arbitration proceedings in respect of the filing of the suit would not be bad
In those circumstances if the court declined to exercise its jurisdiction under Section 151 of the Code of Civil Procedure to grant stay of the proceedings of arbitration in London the court in our opinion has not acted in excess of jurisdiction or has not exercised its jurisdiction improperly
In such a situation the Appellate Court should not normally interfere
In the premises it would have been improper to exercise any jurisdiction to interfere
See the observations of this Court in Ramji Dayawala  Sons P Ltd supra
There will be no stay of the arbitration in relation to the first contract only
In the Premises it would not be proper for us to interfere with the judgment of the Division Bench of the High Court
The application therefore fails and is accordingly dismissed


Summary:
The petitioners were working as Grade A officers on the appointed date ie 1101979 when the State Bank of Patiala Officers  Service Regulation 1979 pertaining to the placement and fitment of existing officers in the new grades and scales of pay became effective
By virtue of Regulation 7 read with Schedule 1 the pre existing Grade A officers were placed in two different grades Senior Management Grade and Middle Management Grade Depending on their date of promotion to Grade A being before or after 31121975
The petitioners who were placed in the Middle Management Grade have challenged in their writ petition to this Court the validity of Regulation 7 read with Schedule I of the Regulations on the grounds that i the Regulations merely brought about a revision of pay scales ii to divide the officers of the same cadre and doing the same nature of work into two groups for the purposes of mere revision of pay scales purely on the basis of the fortuitous circumstance of the date of their promotion to the existing Grade A would be arbitrary and violative of Article 14 and iii the number of posts in the revised senior grade were far more than the officers arbitrarily cut off and initially placed in that grade
P Savita vs Union of India 1985 Suppl I SCR 101 and Randhir Singh vs Union of India   relied upon
PG NO 479 PG NO 480 On behalf of the Bank it was contended that i the Regulations did not contemplate revision simpliciter of pay scales of the existing cadres of officers ii new categories of posts and new scales of pay not corresponding to the pre existing categories of posts and scales had been created and therefore new criteria had to be evolved and applied for the placement and fitment of the existing officers into the new categories of posts and scales of pay iii all the officers of any particular pre existing category could not en bloc be grafted on a particular new category or scale of pay and iv there was a rational differentia in placing certain officers in the Senior Management Posts as the cut off date was fixed having regard to the number of posts vacant in that grade on the appointed date
Dismissing the petition it was HELD l The Regulations did not bring about a mere revision of pay
490B C 2 This was not a case to which the principle of equal pay for equal work  could straight away be applied
490E 3 The qualitative differences in regard to degrees of reliability and responsibility could not be put aside as irrelevant
There could not be any Thumb Rule to decide the invalidity of the provisions which recognised and provided for differentiation on the basis of higher experience reliability and responsibility
490E F Randhir Singh vs Union of India   All Customs  Central Excise Stenographers recognised vs Union of India1988 2 JT 519 and State of UP vJPChaurasiaCANo 56 of 1987 dated 2791988 referred to
P Savita vs Union of India 1985 1 SUPP
SCR 101 distinguished
4 The principle of classification amongst the existing Grade A officers for purposes of fitment in the new dispensation brought about by the statutory regulations could not be said to be unreasonable and arbitrary requiring to be struck down as violative of Article 14
492C D 5 If more number of posts were categorised under Senior Management Grade Scale IV than the number of existing officers placed into the higher scale pursuant to PG NO 481 Regulation 7 read with Schedule 1 those extra number of posts in the higher scale would have to be filled up by promotion under Regulation 17 and not by a continuing process of placement and fitment
492F