2004 PLP 2154 (YLR)

4. After dismissal of the application under section 34 of the Arbitration Act, matter was fixed before Additional Registrar (OS) for filing written statement, after three opportunities defendant was debarred from filing written statement and, the suit was fixed in Court for final disposal. The defendant instead of seeking recall of the debarring order or the restoration of application dismissed in default chose to file second application under section 34 of the Arbitration Act.‑ Mr. Imran Ahmed, learned counsel for the defendant contended that, a dispute had arisen between the parties prior to the filing of the suit and plaintiffs had approached the law‑enforcing agencies, where the parties agreed to resolve the dispute through Pakistan Poultry Association. Learned counsel, has drawn my attention to statement of plaintiff recorded by the Investigating Officer, Police Station Sharafi Goth, Police Station Malir, Karachi, annexure 'A' to the application. From perusal of annexure ' A' , it appears that the plaintiff No.1 had made a complaint against the threat of dire consequence and kidnapping extended by the defendant, personnel of the Rangers '' intervened; it was agreed that both the parties would sit with Ch. Muhammad Ashraf, Chairman, Sindh Zone, Pakistan Poultry Association (P.P.A.), who will decide the dispute between the parties. One Captain Rashid, who represented the defendant, took responsibility to seek appointment with the Chairman, P.P.A. but, till date, no such appointment was notified. Now the plaintiff has no fear or danger, and dispute of accounts will be resolved through P.P.A., some time may be given. Plaintiff, therefore, withdrew his complaint. Such statement is dated 31‑3‑2000.

5. Mr. Imran Ahmed, learned counsel for the defendant pointed out that, C.M.A. No.733 of 2000 under section 34 of the Arbitration Act, filed earlier, on 15‑2‑2000 was dismissed in default on 4‑11‑2002. Listed application was repeated on 8‑5‑2003. He contends that, there is no bar to file successive application under section 34 of the Arbitration Act, according to him, such application could be filed any time before filing written statement and since no written statement .has been filed, application is very much competent. He further urged that neither estoppel nor waiver comes in his way to obtain finding on question of law. He urged that application under section 34 (ibid), is analogous to application under Order 7, rule 11, C.P.C., which application could be repeated, if earlier application is dismissed in default. He places reliance on. 'The Marriage Hall Association v. KBCA' reported in 1999 YLR 2317. He further urged that, no form is prescribed to record Arbitration Agreement, such agreement is reflected from the statement of the parties annexures 'A' and 'B' to the application, reliance is placed on 'Province of Punjab v. Industrial Machine Pool' PLD 1978 Lah. 829 (834(C).

6. Syed Ahmed. Ali Tariq, learned counsel for the plaintiff contended that, similar application was dismissed earlier, second application is not maintainable. He urged that, after dismissal of the application under section 34 of the Arbitration Act, suit was adjourned for filing written statement. According to him, Court had taken further steps in suit and the defendant was debarred from filing written statement. According to him, annexure ' A' is the statement of one of the plaintiff only. Other plaintiffs are not bound by such statement therefore, there is no Arbitration Agreement. Alternately, he contends that the annexure 'A' is a statement recorded by the Investigating Officer on the complaint of the plaintiff, such statement was obtained under duress and pressure it is not binding on the plaintiff. Secondly that the plaintiffs are not member of Pakistan Poultry Association and Arbitration in terms of the Article and memorandum of association under section 19 could only be held between the members of association inter se. therefore, such provision cannot be invoked. He otherwise, states that in terms of the purported agreement it was duty of the defendant's representative to obtain time from the Chairman of Pakistan Poultry Association which was never obtained. He, therefore, urged that neither before nor, at the time of making the application, there was any intention of the defendant to enter into arbitration. According to him, unwillingness is manifest from the fact that similar application on similar facts and grounds was dismissed earlier, no efforts were made by the defendant to have it restored.

7. Arguments were heard and record was perused.

8. From the record it appears that, the suit was filed on 15‑6‑2002, defendant was served on 24‑6‑2000. In the summon, directions to the defendant were to appear in Court on 15‑8‑2000 and file written statement, on which date Mr. Imran Ahmed, appeared and filed his Vakalatnama for the defendant. Four weeks time for filing written statement was granted. Suit was adjourned to 5‑10‑2000. The defendant instead of filing written statement. On 15‑8‑2000 chose to file C.M.A. No.733 of 2000 under section 34 of the Arbitration B Act. Said application was adjourned from time to time, ultimately it was dismissed in default on 4‑11‑2002.

9. On 19‑11‑2002 when the suit was fixed before the Additional Registrar (OS), dismissal of the application was noted and the, defendant was directed to file written statement within two weeks. Matter was adjourned to 18‑12‑2002, on which date also, written statement was not filed, however, two weeks more time was extended, case was adjourned to 29‑1‑2003. On 29‑1‑2003 no written statement was filed, two weeks further time, as 'a last time' was granted, matter was adjourned to 6‑3‑2003, on which date, the position remain unaltered, consequently, the defendant was debarred from filing written statement.

10. On 2‑5‑2003 suit was fixed in Court for final disposal, when Mr. Imran, sought time and Syed Tariq, also sought time to file affidavit in ex parte proof, suit was adj6urned to 12‑5‑2003. It appears that, on 8‑5‑2003 an application (C.M.A. No.2655 of 2003) under section 34 of Arbitration Act was repeated. Affidavit, counter‑affidavit and rejoinder were exchanged.

11. A party to an arbitration agreement has option to compel the other party to the agreement; to abide by the bargain struck between them before commencement of legal proceeding. In case one of the parties to the agreement, attempts to fall out of the bargain and commences legal proceedings, by‑passing the arbitration, other party, may exercise its option to enforce the arbitration agreement. The option available to the defendant, in terms of section 34 of the Act could only be exercised at any time, but C before filing a written statement or, taking any other steps in the proceedings. 'Any other steps in the proceedings' means a step taken before the filing of written statement. The word 'before' in section clearly indicates that the option to seek stay of proceeding has to be exercised before and not even simultaneously with the filing of the written statement (see Belsand Sugar Co. v. Gijra Nandan Singh AIR 1969 Pat. 8). Manner, in which, such option could be exercised, is by applying to the Court, before which the legal proceedings are commenced, generally Courts do enforce such bargain. Provided the defendant at all the relevant time, that is to say, at the time when the legal proceedings commenced and still remain ready and willing to do all things necessary to the proper conduct of C the arbitration. Once the defendant exercises such option then the plaintiff has to satisfy the Court that there is sufficient reason why the matter should, not be referred to the arbitration. In case the defendant files written statement and or takes any other step into proceedings then, option or right to enforce arbitration, if any, extinguishes. Phrase, "Any other step into proceedings" as used in the section 34, is not relatable to any step, action or inaction on the part of the Court, as suggested by Mr. Ali Ahmed Tariq. Such phrase is referable to a step, action or inaction on the part of the defendant, which may demonstrate that, he has submitted to the jurisdiction of the Court. The option given to the defendant to invoke section 34 (ibid) must be invoked before the opportunity to file written statement lapses. The defendant must, therefore, avail of such option promptly, as delay may D adversely reflect on his intention to enforce the bargain as mandated under section 34 (ibid). The period contemplated under section 34 (ibid) to invoke the arbitration agreement, is definite period, end, limit is upto time available under relevant law to file written statement. In the instant case proviso to rule 1 of Order 8, C.P.C. ordinarily provides 30 days from the date of service. It is not the intention of section 34 of the Arbitration Act that the defendant may invoke arbitration clause any time at his leisure upto the date case is finally set up, for final hearing. Otherwise, it will not only put premium on the defaulter but, will also be in negation of spirit of Arbitration Act, which aims at expeditions decision of the controversy before the forum, agreed to by the parties, free from procedural, legal and technical rigours encountered in formal Court proceedings.

12. As noted above, in terms of section 34 (ibid), a defendant play exercise his option to compel a party who has filed legal proceedings by‑passing arbitration, to stick to the bargain. The option must be exercised any time, but before the written statement is filed and before the time to file written statement lapses. Once the time to file written statement runs out and the case is advances to another stage the option to invoke section 34.(ibid) extinguishes. In the instant case, as noted above, defendant in the very first instance availed of time, when the first summons were served on 24‑6‑2000 and secondly, when the first E application under section 34 of the Arbitration Act, was dismissed in default on 4‑11‑2002 i.e. after more than two years. Even further time was availed of from 19‑11‑2002 till 6‑3‑2003, ' when ultimately he was debarred from filing the written statement. In the instant case as noted above, the defendant availed of more a than sufficient time, even after dismissal of first application under section 34 of the Arbitration Act, he was granted three months more time before he was debarred from filing written statement.

13. Even otherwise, the phrase "at any time before filing written statement" used in section 34 connote that, option to invoke section 34 (ibid) is only available during a period the matter is fixed for filing written statement. In case any step is taken in between, that may demonstrate that the defendant has relinquished his option to press for the arbitration, then the option to invoke arbitration is lost. In some cases, even adjournment application, was considered to be step into the proceeding debarring the defendant to invoke arbitration, (see also 1990 MLD 1383). Somewhat similar situation had arisen in the case of Shroof Bros. v. Diyal AIR 1974 Cal. 83, which case came up for consideration before a Division Bench of a Madras High Court, in Indian Oil Corporation v. Nainsukdas Baldooads AIR 1982 Madras

323. Learned Division Bench in para.5 at page 325 cited with the approval following passage from the case of Shroof Bros. (supra):‑‑ "In order to enable the Court to grant stay the petitioner must make the application within the said period, that is before the expiry of the time for filing the written' statement. It is now well‑settled that if the applicant makes an application for extension of time to file written statement that becomes a step in the proceeding and that also goes against the readiness and willingness of the petitioner at the time of making the application for stay or at the time of hearing. It is true that the section provides that application for stay under section 34 can be made, at any time before filing of written statement that in my view fixes the time upto the last date fixed for filing of the written statement under the provisions of the rules of the Original Side which I have mentioned before. Otherwise, the petitioner would simply wait till the date of expiry and without making any application for extension of 'time to file the written statement formally get extension if it is permitted to make an application under section 34 of the Arbitration Act, 1940, beyond that, as if the time has not expired or it has been by necessary implication extended by Court. That in my view, would be extending the meaning of the words at any time before filing of written statement in section 34 of the Arbitration Act, 1940. In my view, what is required under the section is that the application for stay must be made promptly and before the last date fixed for filing of the written statement under the provisions of the Civil Procedure Code or the rules of this Court. It would not be a correct application of the said section 34 of the Arbitration Act, if an application is entertained after, the expiry of the time for filing of the written statement, because on principle there is no difference between a formal application for extend of time to file the written statement or allowing the time for filing the written statement to expire and then make an application for stay under section 34 of the Arbitration Act, 1940. A defendant who has been served with a writ of summons alongwith the plaint must file his written statement within the time, fixed under the Civil Procedure Code or rules of this Court for filing its written statement. Beyond the time so fixed he ‑ must make an application to the Court for getting the extension of time to file written statement which the Court may allow or not, in the facts and circumstances of each case. So, in my view making the application for stay beyond the time fixed for filing the written statement by the writ of summons served on the defendant implies an application for extension of time to file the written statement which has already expired. That is an absurd position and the petitioner must be said to be debarred from getting any order for stay under section 34 of the Arbitration Act, 1940, if it makes the application for the expiry of the time for filing the written statement. " Therefore, in my opinion the defendant failed to avail the option to enforce the arbitration available to him, before the time to file written statement lapsed and the matter was posted for next stage of final disposal, the Court assumed the jurisdiction to decide the case on its own merit. Under the circumstances and in view of the above discussion, second application under section 34 of the Arbitration Act, after the defendant was debarred from filing written statement is not maintainable.

14. Viewing the case from another angle. In order to enforce arbitration, defendant must demonstrate that in order to invoke section 34 (ibid), not only at the commencement of the proceeding he was ready and willing to take all such steps and measures but is still ready for the proper conduct of the arbitration. From annexure ' A' , the purported arbitration agreement, it appears that one Captain Rashid who appeared at the behest of defendant took responsibility to obtain time from the Chairman, Pakistan Poultry Association, which time it is not shown was ever obtained. Willingness and readiness on the part of the defendant should not only be specifically pleaded but demonstrated from his conduct and should not be left to the inference of the Court. Listed application is lacking in such material particulars, even otherwise, conduct of the defendant, his inaction to seek restoration of the application or to seek setting aside of debarring order, demonstrate his intention, to be otherwise. Accordingly, I do not consider it a fit case to exercise such jurisdiction to stay the proceeding in suit. Since, it has been held that the Second Application under section 34 of the Arbitration Act after the defendant was I debarred from filing written statement is not maintainable.

15. I do not consider any necessity to enter into controversy, whether the annexure 'A' to the application, constituted Arbitration Agreement or that it was obtained under duress or pressure. The application is accordingly dismissed. H.B.T./N‑18/K Application dismissed. accordingly.