V.P. Mohan Kumar, J.

The defendant is the appellant. The proceedings were initiated by the plaintiff under S.20 of the Arbitration Act 1940 seeking filing of the agreement along with attachment and appointment of an Arbitrator. The plaint allegations were that the plaintiff had invited tenders for supply of materials namely electrical armoured cables and screened armoured cables for the construction of the Caprolactum Project and the plaintiff accepted the tender submitted by the defendant, that the defendant failed to supply the cables in terms of the tenders even within the extended time, that only small quantity was supplied by them, that the defendant committed breach of contract whereupon the plaintiff was forced to cancel the contract and arrange purchase of the items from alternate source which caused the plaintiff to suffer a loss of Rs. 17,77,545/-. The plaintiff called upon the defendant to pay the above amount. As the defendant failed, the plaintiff invoked the arbitration clause in the agreement and suggested the name of Mr. Ramachandran Nambiar, Advocate, Ernakulam as a sole arbitrator and called upon the defendant to communicate their approval. The defendant did not respond to the request. In addition to the amount named above in the plaint, the plaintiff has suffered liquidated damages to the tune of Rs. 3, 21,923.87 of which they could recover only Rs. 1,53,958.84. The balance is outstanding. The plaintiff claims, in addition to the above amount Rs. 9735.60 towards excess freight paid and Rs. 1395/-towards demurrage charges incurred. In aggregate, the plaintiff suffered a loss of Rs. 21,10,599.47 and after adjusting the amount recovered from the running bills, the plaintiff is entitled to recover Rs. 19,56,640.63. Under the terms of the contract there is provision for recovery of 10% towards retention amount and the plaintiff could realise only Rs. 2,12,405.19 under this head as the supplies were stopped abruptly by the defendant. The total amount realised from the defendant comes to Rs. 4,68,405.19 and the balance comes to Rs. 14,88,235.44. In Art.25 of the Standard Terms and conditions attached to the purchase orders, there exists an arbitration clause and the remedy available to the parties is only to settle the dispute by means of arbitration. Hence the plaintiff prayed for a direction to the defendant to file the agreement along with the attachment thereto before court and to appoint an arbitrator to decide all disputes and differences arising out of the contract between the parties.

2. The defendant filed a written statement contending that the suit is not maintainable. The plaintiff had placed two purchase orders and certain amendments were made to the said orders whereby the total value of the orders increased considerably. The defendant commenced executing the said orders on 30.4.1988. But due to the changes in the purchase orders the value of the goods increased and the overall cost of production of the work order had gone up very high resulting in substantial loss to the defendant. The plaintiff did not make payments as per the terms of the purchase orders. The defendant had assured the plaintiff delivery of the items provided. The defendant was not notified in regard to the breach of contract. The defendant contended that the plaintiff has no right to recover liquidated damages. The named arbitrator is not acceptable to the defendant. Aggrieved by the action of the plaintiff, the defendant had filed a suit O.S. No. 3603/90 before the High Court of Bombay under the Original Civil jurisdiction for the recovery of an amount of Rs. 24,00,545.03 with interest at the rate of 24% per annum. The present suit has been filed by the plaintiff suppressing these facts. In view of the pendency of the said suit, the present proceedings are not maintainable. The present suit is barred by the principle of res judicata and liable to be dismissed.

3. After settling the issues and trial the suit was decreed directing the parties to settle the dispute by appointment of an Arbitrator. The parties were directed to name the Arbitrator within three days and in the event of the defendant not amenable to name such an arbitrator it was directed that the plaintiff will file a panel of persons so as to appoint an arbitrator from that panel. It was further directed that the arbitrator so appointed will proceed with the matter as provided under the Indian Arbitration Act and file the award within six months from the date of his appointment.

4. Aggrieved by that judgment the defendant has come up in appeal.

5. We have heard Sri. O. Balanarayanan, learned counsel for the appellant and Mr. Shafique, learned counsel for the respondent-plaintiff.

6. Before this Court, the appellant had produced a set of documents which are certified copies of the proceedings before the Bombay High Court. The averments in support of the application state as under:

"There was communication gap between the two. I was not advised about the

relevancy of the pleadings and order in O.O.C.J. 3603 of 1990 and notice motion 1212 of 1991 of Bombay High Court on O.S.662 of 1991 of Sub Court, North Parur. Moreover it was impossible to get certified copy of the order and pleadings in Bombay High Court for filing them in Sub Court, North Parur in time in evidence in that suit. Under the above circumstances the documents listed in the petition could not be filed in court. These documents go to the root of the matter and the decision that arbitration clause cannot be invoked has become res judicata and the decree of the Sub Court, North Parur has to be reserved."

These averments are made in CMP 93/98 which has been filed to receive the documents in appeal.

7. We are not satisfied that they may constitute sufficient grounds within the meaning of O. XLI R.27 of the Code of Civil Procedure to receive the documents. However, since the respondents counsel does not object to the receiving of the documents and marking the same, they are received in evidence and marked as Exts. B1 to B10 in the proceedings. Hence we refer to these documents as such.

8. Mr. Balanarayanan, learned counsel for the appellant has produced Exts. B1 to B10 to contend that the present suit is barred by res judicata. These documents are the certified copies of the pleadings and orders in O.O.C.J. 3603 of 1990 on the file of the Bombay High Court. In particular, he wanted to rely on Ext. B7 to put forward the plea of res judicata. The said suit was instituted by the defendant for the alleged damage sustained out of the contract entered into between the plaintiff and the defendant which is the subject matter of the present proceedings. Ext. B7 is the certified copy of the order passed by the Bombay High Court in the application made by the plaintiff herein under S.34 of the Arbitration Act for stay of the suit pending before the Bombay High Court. They suffered an adverse order and according to him the said order would debar the present suit. We are afraid that the findings contained therein show that an issue that arises for consideration in the present proceedings had not been "heard and decided" therein. We will deal with this contention later.

9. Mr. Balanarayanan, learned counsel for the appellant urged five points for consideration before this Court.

(1) By reason of Ext. B7 order, the present proceedings are barred by res judicata.

(2) The Bombay suit having been filed earlier, the present arbitration O.P. is not maintainable.

(3) The Court which entertained the arbitration O.P. is not competent to entertain the suit.

(4) The plaintiff is not the same legal entity with whom the defendant contracted and as such they cannot maintain the suit.

(5) The order of the court below is vitiated by fraud brought up by suppression of facts.

10. We have carefully considered all the aspects and contentions. As regards the contention of res judicata on the basis of the order of the Bombay High Court, it is seen from the order that all that the court was considering was as to whether the power under S.34 be invoked to stay that suit. The court cautioned in the order itself by stating that it is not considering the scope of the application and the rights of the parties which mean that the claim that arose under S.20 of the is left open. An application under S.20 has to be decided independently. As long as the issues to be decided under S.34 is different from the issues arising under S.20 and do not overlap any observations made in the decision rendered therein would be obiter and cannot operate as res judicata.

11. The suit preferred by the defendant in the Bombay High Court is for recovery of the amounts from the respondent therein for an alleged breach of contract. A stay application was made by the defendant therein under S.34 of the Arbitration Act seeking to stay the suit on the ground of existence of an arbitration clause. While considering the application the learned judge of the Bombay High Court noted the contention of the appellant herein as under:

"He submits that the whole purpose of this application is to put plaintiff to unnecessary expenses, inconvenience and harassment and to stall the suit. Without prejudice to the right and contentions of the plaintiff including the contentions taken in these proceedings Mr. Modi states that plaintiffs are willing to go to arbitration of a senior counsel in Bombay."

In other words, the appellant was not averse to an arbitration proceeding.

12. While considering the plea of the defendant and the plaintiff on the stay application, the learned judge noticed as under:

"In my view, in this Notice of Motion the court is riot concerned with the S.20 application or questions arising therein."

Obviously the learned judge of the Bombay High Court held that it was not considering any of the questions arising under an application under S.20 and it left open that question to be decided elsewhere. The reason for declining the stay was as under:

"Thus on the ground that the defendants were not always ready and willing and/or were not ready and willing at time of commencement of suit to do all things necessary for the proper conduct of arbitration, this Notice of Motion must be and is dismissed."

(underlining supplied for emphasis).

Obviously the rejection of the application in the suit was not because that an arbitration clause does not exist. The sole reason stated by the court was that at the time of commencement of the suit, in which an application under S.34 was made, it is not shown that the defendant was ready and willing to do all that is necessary for the proper conduct of an arbitration case. Therefore Ext. B7 produced does not in any way entitle the appellant to urge the plea of res judicata. Except to establish the fact that an application was in fact moved before the Bombay High Court and that the same was rejected, Ext. B7 does not advance the case any further.

13. Besides, at this stage we may notice another contention advanced by the defendant namely that the present plaintiff is not the entity with whom they contracted and as such the suit is not maintainable. They contend that the present suit is brought by FEDO which is not a legal entity, that FACT is the entity with whom they contracted and the plaintiff who brought the suit cannot maintain the suit. If this be the contention being advanced, then Ext. B7 is not an adverse order suffered by the present plaintiff to debar the present proceedings initiated by a different plaintiff.

14. The next contention urged is that in view of the fact that the Bombay suit having been filed earlier, a subsequent arbitration suit invoking S.20 of the is not maintainable. We cannot accept this contention as well. The Bombay suit was not based on the arbitration clause and not invoking the said clause. Essentially, there is no statutory bar in proceeding with an arbitration proceeding parallel with a suit for recovery of money on the basis of breach of contract. The learned counsel in this behalf cited before us the decision of the Supreme Court in P.A. Ahammed Ibrahim v. Food Corporation of India (AIR 1999 SC 3033 [LQ/SC/1999/751] ). The said decision has no application to the facts of the present case. The facts in the present case is totally different from the facts in that case. There, what transpired was that a suit for recovery of certain amount under a contract was instituted by one of the parties to the contract. Pending the suit the defendant therein initiated proceedings invoking S.20 of the Arbitration, Act to appoint an arbitrator. A stay of the earlier suit was sought under S.34 of the by the defendant. Stay was declined and that order was allowed to become final. The unsuccessful defendant, namely the person who initiated the arbitration proceedings, thereafter made an application for amendment of the arbitration case and to convert it into a regular suit. The trial court rejected the said application. That order was reversed by the High Court and the arbitration case was allowed to be converted into a regular suit. That order was challenged before the Supreme Court. While reversing the order of the High Court the Supreme Court made the following observation which is relied on by the appellant herein.

7. Reading the order as above, it is apparent that the learned judge has not verified the provisions of S.20 of the Arbitration Act. Sub-s.(2) no doubt provides that the said application shall be in writing and shall be numbered and registered as a suit, but, at the same time, cannot be stated as a plaint filed under the Code of Civil Procedure. The language of sub-s.(1) is clear which provides that in case of arbitration agreement "before the institution by any suit with respect to the subject-matter of the agreement or any part thereof...." any persons may apply to a court having jurisdiction in the matter to which the agreement relates, that agreement be filed in court. This would clearly mean that it is a stage prior to the institution of the suit and is not a suit. Under the said section after notice is given to the other party and if no sufficient cause is shown, the court shall order that agreement be filed in the court and refer the matter for arbitration to the arbitrator appointed by the parties or to an arbitrator appointed by she Court, The procedure for deciding the said application is different from deciding the suit Final order which is required to be passed in the said application is either to refer the matter to the arbitrator or to reject the same and there is no question of passing any decree in favour of the applicant. S.20 nowhere provides that application filed for referring the dispute to the arbitrator is to be treated as a plaint as contemplated under C.F.C. Hence it cannot be considered to be a plaint".

The above observation was made with reference to an application made to convert an arbitration proceeding into a suit. The Court had no occasion as such to consider the question of an illegality of a parallel proceeding under S.20 of the, while the suit for the recovery of money on the basis of the alleged breach of agreement if pending. That apart it may be noticed that when the application for amendment was rejected, the resultant position would be that the arbitration proceedings revived and was to continue. The suit was already instituted and was also pending. Slay of the suit had already been rejected as well. The Supreme Court did not declare that in view of (the suit having been instituted already, the arbitration proceedings should be dropped in view of the pendency of the suit. Therefore by inference it is clear that there can be no objection in proceeding with the arbitration case even if a suit had already been instituted.

15. We may advert to S.20 once again. S.20(1) of the reads as under:

"20. Application to file in court arbitration agreement s- (1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject matter of the agreement or any part of it and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a court having jurisdiction in the matter to which the agreement relates that the agreement be filed in Court".

The intent and the meaning of the Section would be that where a difference has arisen in respect of a subject matter of a contract with respect to which the parties have entered into an arbitration agreement, then, before the institution of any suit, the parties may, instead of proceeding under Chapter II. may apply to a court under S.20 of the. To put it differently, all that the section contemplates is that where with respect to a transaction a dispute has arisen and a cause of action to file suit has come into being, then if there be an arbitration agreement executed before the arising of the cause of action, the parties may, Instead of proceeding under Chapter II of the apply under S.20 of the Arbitration Act, 1940. This meaning is sought to be conveyed by this section by employing the expression "before the institution of any suit". The existence of am arbitration agreement executed between the parties before the institution of the suit is a condition precedent to invoke S.20 of the act. The parties to a contract can invoke S.20 of the only in the event that with respect to that dispute an arbitration agreement existed between the parties and which agreement was executed before such suit was instituted. No penal consequence will befall if the party to that agreement does not invoke the arbitration agreement and he may abandon his right as well As such the words "may apply" occurring in the section would indicate that S.20 is only an enabling provision and is not to be interpreted as a mandatory provision debarring the right, if any, of the party to invoke the relief under S.20 of the for all times to come if once a party to the agreement had already instituted a civil suit. As such, it is difficult to infer from the wording of the section that it operates as a bar to entertain a proceeding under S..20, once one of the parties to the dispute has instituted a regular civil suit.

16. The next contention urged was that the contract was not concluded within the jurisdiction of the Parur Court where the proceedings under S 20 were initiated. It is an admitted fact that the offer was made by the plaintiff from Udyogamandal and acceptance was made by the defendant from Bombay and communicated at Udyogamandal which area is subject to the jurisdiction of the Parur court. The conclusion of the contract is in Udyogamandal and, as such Parur court has jurisdiction to entertain the arbitration suit.

17. The next contention alleged was that the plaintiff is not competent to maintain the suit. We do not find any merit in this contention as well The plaintiff is a wing of the FACT and is conducting the suit for and on behalf of the FACT.

18. The last contention urged was that the present order was obtained by fraud namely by suppressing the factum of pendency of the suit In the Bombay High Court This contention has only to be staled to be rejected- The appellant was fully participating in the present suit and was also aware of the suit pending in Bombay, The suit in the Bombay High Court was filed on 6.4.1990 and the application under S.34 was made on 24.9J 991 and the present suit was filed on 7.11.1991. The respondent did no! suppress these facts and on the contrary, the appellant was trying to gain an advantage by contesting the present suit and has raised the present contention only because he failed. Such a person who is party to the alleged so called fraud, cannot turn round and contend that the judgment is vitiated by fraud. The Bombay High Court passed the order on 25.8.1993 whereas the judgment in the arbitration O.P. was on 23.9.1993. We reject this contention as well.

We do not find any ground in this appeal Hence the appeal is dismissed. No costs.