Law:

Section:

(a) Negotiable Instruments Act (XXVI of 1881)-Suit on negotiable instrument--Plea that it is not f or consideration can be raised-Onus on defendant to show that it is not for consideration. (b) Arbitration Act (X of 1940), S. 34-Application for stay-Issue of consideration-Question as to what are rights of parties under a previous agreement which was the basis f or con­sideration and which was within arbitration clause becomes directly matter of dispute-Question whether plaintiff has performed his part of agreement is to be decided by arbitrator and not by Court. (c) Arbitration Act (X of 1940), S. 34-Existence of agreement for reference must be alleged-Existence or validity of very agreement containing arbitration clause challenged­ Alternative ground that even if there was a valid agreement to refer suit maybe stayed for reference to arbitration, not maintain­able. (d) Arbitration Act (X of 1940), S. 34-Dispute may be specified in application under section 34. There seems to be a general impression that the dispute cannot possibly be specified in the application because the defendant is debarred from filing a written statement if he puts in an application for stay, and a statement as to what is the dispute will amount to the filing of a written state­ment. This is a misapprehension. When a person applies under section 34, he has to satisfy the Court firstly that there is an agreement to refer and secondly that the suit relates to any matter agreed to be referred, that is, there is a dispute between the parties which is covered by the agreement. Unless that is shown the suit cannot be stayed. If a suit is filed on the basis of an agreement which contains an arbitration clause, the mere fact that the defendant is not prepared to pay the amount to which he is liable under the agreement does not mean that there is a dispute between the parties. A dispute does not mean simply a refusal to pay money for which a person is liable. A dispute is constituted by a proposition of fact or law being alleged by one party and denied by the other. The defendant must state, though not in detail, the matters which the other party alleges and which he denies or he alleges and the…

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