P L D 1982 Karachi 778 (PLP)

NAIMUDDIN, J.‑This is an Inter Court appeal under section 3 of the Law Reforms Ordinance, 1972 against the order dated 16‑4‑1981, passed by a learned Single Judge of this Court whereby he dismissed the application under section 34 of the Arbitration Act, 1940, filed by the appellant for stay of proceedings under section 33 of the Arbitration Act initiated by the respondent. The learned Single Judge in the impugned Order held that the applica tion under section 34 of the Arbitration Act, was totally misconceived for, in his view, stay of proceedings contemplated under section 34 of the Arbitration Act, ws8 not extendible to proceedings in the nature of an application under section 33 of the Arbitration Act which were filed by a party to seek adjudication as to the existence or otherwise of a valid Arbitra tion Clause in an agreement between the parties. We have heard Mr. Riazul Hasan, Advocate for the appellant and Mr. Abdul Rauf, Advocate for the respondents. Mr. Riazul Hasan has submitted that the provisions of section 34 of the Arbitration Act would equally apply to proceedings under section 33 of the Arbitration Act and in support of his contention he relies on a House of Lords decision in Heyman and another v. Darwins Ltd. (1942 A C 356). However, it is not shown to us that in the English Arbitration Act, 1889 under which that case was decided there were similar provisions as contained in section 33 of the Arbitration Act, 1940. In fact Mr. Riazul Hasan candidly stated that there was none. Therefore, this case is of no help to him. In our view whenever a question as to the existence or validity of an arbitration agreement or to have its effect determined, is raised by way of an application under section 33 of the Arbitration Act before a Court, the Court is bound to decide the same and to such proceedings, the provision of section 34 of the Arbitration Act would not apply, for the language employed in section 33 is couched in mandatory terms. Even otherwise under section 34 of the Arbitration Act a Court can stay the proceedings only after holding, if the existence of an arbitration agreement or its validity is challenged, that the same exists or is valid. It, therefore, follows that section 34 of the Arbitration Act could not apply to the same question when it is independently raised by proceedings under section 33 of the Arbitration Act. We are fortified in our view by a decision of Madhaya Pradesh High Court in Messrs Kamani Engineering Corporation Ltd. v. Madhya Pradesh Electricity Board, Jabalpur and another (A I R 1964 Madh. Pra. 268) wherein a learned Single Judge of that Court in paragraph 9 of the judgment while stating relevant facts, reasoned "(9) In the meantime, the Kamanies filed an application under section

34. According to that the sole arbitrator having already entered on the arbitration, the present application for setting aside the appointment as the sole arbitrator was hit by section

34. The Additional District Judge not having accepted the contention, the Kamanies have come up in appeal. Their appeal (Miscellaneous Appeal No. 51 of 1962) could be disposed of very briefly. Section 34 is to the effect that, when, independently of the arbitration, in respect of any matter covered by the arbitration agreement, a party to it commences legal proceedings they should be stayed. But where the legal proceedings are themselves under the Arbitration Act and relate to the competency of the appointment, as the case may be, of an arbitrator, sole arbitrator or umpire, there can be no stay under section 34 for the very simple reason that the legality of such appointment has to be investigated under the Act before the arbitration proceeds at all. This was obvious and it is unnecessary to discuss the matter any further." Reference may also be had to Balabux v. Lachmi Narain (1 L R Cal. 265) which has been referred to by N. D. Basu in his book "Arbitration Act", 5th Edition (1965), page

745. Since the report is not available, we may here quote the relevant paragraph from the book, which reads as follows :‑ "When the subject‑matter of an application under section 33 only relates to questions regarding the validity, effect or existence of the arbitration agreement, section 34 of the Act cannot of necessity be involved, unless there be a fresh arbitration agreement to refer those very disputes regarding the validity, effect or existence of the previous arbitration agreement." In support of the alternate reasons given by us for our view we may refer to another decision from Indian jurisdiction in C. M. Mathu Kutty v. Varee Kutty A I R 1950 Mad. 64, wherein in paragraph 8 of the judgment it was observed by a learned Judge of Madras High Court as follows; "The very foundation for the jurisdiction of the Court to stay the trial of a suit under section 34 is the existence of an arbitration agreement. The applicant comes to Court and asserts that there is such an agreement while the other side either disputes the truth of such an agreement or admitting its truth pleads that it is invalid by reason of other vitiating circumstances which are open under law for the objector to raise and prove. I do not see any reason why in that event when the question was raised and the validity of the jurisdiction of the Court depends upon the result of its decision on that question, the Court should not try that issue. Section 33, in my opinion, gives an independent right to a person who wishes to challenge the existence or validity of an arbitration agreement or award and to anticipate the other side and to initiate proceedings to have those questions determined before hand. It does not in my opinion, prohibit the Court acting under section 34 of the Act from deciding a question which is raised before it for its decision and the decision on which alone would depend the exercise of its jurisdiction." Since even for staying proceedings under section 34 of the Arbitration Ac Court is required to first give a finding as to the existence or validity of an arbitration agreement if raised and since in the application under section 33 of the Arbitration Act also the same question could be rail‑.d, we are, therefore; of 4he view that section 34 could not apply to such proceedings and the same could not be stayed. We accordingly, find no substance in this appeal and dismiss it with no order as to costs for Mr. Abdul Rauf does not claim the same. M. Y. M. Appeal dismissed