GAYA ELECTRIC SUPPLY CO., LTD. vs THE-STATE OF BIHAR.

The Supreme Court held that under Section 34 of the Indian Arbitration Act, if an arbitration clause is narrow and only pertains to specific disputes, such as valuation, it does not extend to broader issues like breach or rescission of the contract. The Court ruled that the arbitration clause in the agreement between the State of Bihar and the Electric Supply Company was limited to valuation disputes, thus the suit regarding breach could not be stayed. The Court distinguished this case from previous rulings where broader arbitration clauses were involved.