Pre-existing arbitration agreement controls after stay under section 34; court cannot supersede arbitration using section 25 machinery.

Where a suit is filed in breach of a prior arbitration agreement and is stayed under section 34 of the Indian Arbitration Act, 1940, the dispute continues to be governed by the provisions applicable to pre-existing arbitration agreements. In that setting, the court cannot bypass the statutory scheme by invoking section 25, which applies to arbitration agreements entered into in a pending suit. If a vacancy arises in the tribunal after the stay, the machinery in the chapter governing pre-existing agreements, including section 9, controls. The court's inherent powers cannot be used to make an order inconsistent with the Act's express framework.

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Issues: Whether, after a suit had been stayed under section 34 of the Indian Arbitration Act, 1940, the Court could supersede the arbitration and proceed under section 25 of the Act, or whether the parties and the Court were bound to follow Chapter II and the provisions applicable to filling vacancies in the arbitral tribunal.

Analysis: An arbitration agreement preceding the suit attracts section 34 when a party commences proceedings contrary to the agreement; the Court in such a case does not make a fresh reference but only stays the suit. Chapter IV, including section 21 and the machinery of section 25, applies where the arbitration agreement is entered into in a pending suit. The Act separately preserves the validity of the arbitration agreement after stay, and where a vacancy arises in the tribunal after stay the provisions of Chapter II, including section 9, govern the matter. The Court's inherent powers cannot be invoked to make an order contrary to the express scheme of the Act.

Conclusion: The order superseding the arbitration under section 25 was without jurisdiction and a material irregularity. The revision was allowed and the impugned order was set aside.

Final Conclusion: After a stay under section 34, the arbitration had to proceed under the chapter governing pre-existing arbitration agreements, and the Court could not bypass that statutory scheme by resorting to section 25.

Ratio Decidendi: Where a suit is filed in breach of a prior arbitration agreement and is stayed under section 34 of the Indian Arbitration Act, 1940, the matter remains governed by the provisions applicable to pre-existing arbitration agreements, and the Court cannot supersede the arbitration by invoking the machinery meant for arbitration in suits.

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