UTTAR PRADESH CO-OPERATIVE FEDERATION LTD. vs M/S SUNDER BROTHERS OF DELHI

The Supreme Court held that under Section 34 of the Indian Arbitration Act, the court has discretion to stay a suit if the parties have agreed to arbitration, but this discretion is subject to the circumstances of each case. The High Court's refusal to stay the suit was upheld, as it found that the arbitration process would be complicated by potential bias from the appointed arbitrator, the Registrar of Co-operative Societies. The Court emphasized that the sanctity of contract is not absolute and can be overridden if there are grounds to suspect unfairness in the arbitration process.