P L D 1989 Karachi 645 (PLP)

"In the case under this ruling there was a clause in the Bill -of Lading providing that any dispute arising thereunder shall be governed by a foreign law and a foreign Court. It was held by the Supreme Court that this provision must be construed as a submission clause for arbitration and was barred by section 28 of the Contract Act and was however really in nature of Arbitration clauses within exception to section 28 and should be dealt with as such. The burden was, therefore, on the party invoking foreign jurisdiction to satisfy the Court as to justification for stay of proceeding." He also relied upon 1979 C L C 307 (Island Textile Mills Limited v. Vlo Techno-Expert and another) where it was held by Ajmal Mian, J. (as he then was) sitting alone, that when the plaintiff knew at the time of entering into the contract that in case they would file any claim against the defendant the arbitration would be through Foreign Trade Arbitration for Chambers of Commerce in Moscow while the subject-matter of dispute was at Karachi and their evidence would be in Pakistan. In such a situation the arbitration clause cannot be defeated merely on the ground of inconvenience. The above view of Mr. Ajmal Mian, J. , was examined by Saleem Akhtar, J., in the case of Muhammad Hanif v . Eckhard & C o. Marine Bmbh reported in P L D 1983 Kar. 613 and was not approved in view of the following contrary decisions: Mercantile Fire and General Insurance Co. of Pakistan v. Arcepey Shipping' Co., U.S.A. P L D 1978 Kar. 273; M.M. Yaseen v. M(s Irving R. Boddy & Co. P L D 1957 Kar. 755; Serajuddin Co. v. Michael Golodetz A I R 1960 Cal. 47 and Swedish East Asia Co. Ltd. v. Herman Mohatta (Ind) Prv. Ltd., A I R 1962 Cal.

601. It was held by Saleem Akhtar, J., on the strength of above rulings as well as two English authorities as follows: "There seems to be a string of cases where the Courts have refused to stay the proceedings if they come to the conclusion that the foreign exclusive jurisdiction clause or foreign arbitration would be inconvenient. In exercising its discretion the Court is influenced by the facts and circumstances of each case. In the Athene, where goods were carried under a French bill of lading which contained a clause to the effect that any dispute arising under it shall be before a Tribunal of Commerce at Marseilles the Court refused to stay action inter alia on the ground that the material facts and evidence were all in England. Fehman, affirmed the same view." The above judgment of Saleem Akhtar, J. was taken in an inter-Court appeal. A D.B. consisting of Naimuddin, J. (as he then was) and Ibadat Yar Khan, J. approved of the views of Saleem, Akhtar, J. in P L D 1986 Kar. 138 (D.B.) Eckhard & Co. Marine Gmbh v. Muhammad Hanif and enunciated following principles for granting or refusing stay of proceedings in cases of foreign arbitration clause: "(1)????? where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign Court and thq defendants apply for stay, the English Court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant stay but has a discretion whether to do so or not; (2)??????? the discretion should be exercised by granting a stay unless strong cause for not doing so is shown; (3)??????? the burden of proving such a strong cause is or, the plaintiff; (4)??????? in exercising its discretion the Court should take into account all the circumstances of a particular case; (5)??????? without prejudice to (4) above the following matters, where they arise can properly be taken into account; (a)??????? in what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts; (b)??????? whether the law of the foreign Court applies and, if so, whether it differs from English law in any material respects; (c)??????? with what country either party is connected, and how closely; (d)??????? whether the defendants genuinely desire trial in the foreign country, or are only seeking a procedural advantage; (e)??????? whether the plaintiffs would be prejudiced by having to sue in the foreign Court, because they would-- (i)???????? be deprived of security for that claim; (ii)??????? be unable to enforce any judgment obtained; (iii) be faced with a time bar not applicable in England; or (iv)?????? for political, racial, religious or other reasons be unlikely to get a fair trial." I am therefore satisfied that the provision of foreign arbitration clause in the agreement does not necessarily require the Court to stay proceedings and 'refer the dispute to the arbitration when it causes inconvenience to the parties and when the evidence is not available in the country where the arbitration is agreed to be held. Admittedly in the present case the contract was entered into in Pakistan where the defendants had agreed to perform the construction work of a huge cement factor. The entire evidence is located in Pakistan: The plaintiff as well as defendant No.2 both reside in Pakistan. In these circumstances to carry the entire burden of this litigation to Paris before the Arbitrators will be most inconvenient and expensive for both of them. The defendant No. l also does not reside in France. It will also be inconvenient and expensive for him to proceed before the Arbitrators et Paris as admitted by him. The plaintiff has already joined defendant No.2 as a party who will ultimately be the person for whose benefit the cement factory has been constructed and shall have to pay for the same to the plaintiff although through defendant No.l. In these circumstances to compel the plaintiff to seek his remedy at the forum which is situated at Paris will not only cause inconvenience, unreasonable expenses and hardship to the plaintiff but will also cause the loss of valuable foreign exchange to Pakistan. Under these circumstances I am of the clear view that the stay of the suit and reference to the Arbitrator in accordance with the agreement would not be in the interest of justice. Hence I do not propose to stay the suit and to refer the matter to the arbitration. C.M.A. No.3727 of 1986 is therefore dismissed. I would now take up C . M . A . No.3120 of 1987. By this application the plaintiffs have stated that defendant No. l has during the pendency of the suit admitted the plaintiff's running dues as per specified payment contained in their letter annexed with the application amounting to Rs.43,99,

688. The letter reads as under: "Messrs MAC Donald Layton & Co. Ltd., Site, Re: Interim Certificate No.21 for December, $

6. Dear Sir, We submit you hereinafter the 21st Interim certificate for the month December, 1986 for Civil Works, checked and approved for the amount of Rs.43,99,688 which is to be paid to you. Thanking you, we remain. Yours faithfully, UZINE EXPORT IMPORT ??????????? (Sd.) Rusu Ch. M.Sc. 2,83,626." The defendant No.l has contested this application and has stated that letters were not admission of claim but were in discharge of duties in contract. They have further submitted that they have not received the amount from defendant No.2 for being paid to the plaintiff and therefore they cannot be compelled to make payment of this amount to the plaintiff by means of a decree on admission. Moreover, according to them it was within the knowledge of the plaintiff that defendant No.2 was the principal and that the work was being done for his benefit. lie has alleged that it was the duty of defendant No.2 to make payments to the plaintiff. Defendant No.2 has pleaded absence of privity of contract between him and the plaintiff. He has stated that these letters are written by defendant No.l and therefore cannot bind defendant No.2. Mr. Muhammad Sharif who appeared for defendant No.l relied upon P L D 1966 Kar. 75 (Kassamali Alibhoy v. Abdul Sattar) where it was held that in order to base a decree thereupon the admission should be unqualified and absolute. In another ruling reported in AIR 1944 Cal. 190/192 Gobind Dad Bhatter v. Fajanand Pandey it has been held that the admission should be clear and should show that the money was due and irrevocable in the suit. Mr. Muhammad Sharif has also placed reliance on a case from English jurisdiction. reported in 55 Law Times Report 42-43 where it was admitted that the sum was due but plea was taker.- that time was still there for payment, hence the Court did not pass a decree on admission. He also relied upon 55 Indian Cases 836 and A I R 1927 Sind 25 Devsi Narain Patel v. Hassan and another in support of this contention. Finally he relied upon P L D 1960 Kar. 885 (Pakistan Development Corporation v. Bank of Bahawalpur) and 1973 S C M R

228. The former ruling was to the effect that an admission was not binding unless it amounted to an estoppel, whereas in the latter ruling it was held that no decree was to be passed on an admission of claim by one of the defendants if cause of action of the suit itself was false. There can be no cavil with the rulings cited .by counsel for the defendant No.l, and the principles of law enunciated therein. It may be pointed out that this is a suit against a contractor and an owner for recovery of amount due on account of construction work done by a sub contractor. The first letter is quite clear and unequivocal admission of his partial liability by the defendant No.l towards the plaintiff. There is no condition or reservation regarding the payment or the liability. Even in the second letter dated 28-7-1987 the defendant No.l has checked and approved for net payable amount of the said 22nd final bill for civil work done at Attock Cement Plant Lasbella in favour of the plaintiff for Rs.40,50,

752. The admission amounts to an estoppel. The cause of action is not false. Hence on facts these rulings are not applicable to the present case. It was then contended that the provisions of Order XII, Rule 6 no doubt are discretionary and not mandatory and it is not incumbent on the Courts in all cases to pass a judgment upon admission. If a case involves questions which cannot conveniently be disposed of on an application under this rule or if the case is such that it is not safe to pass a judgment on admission, the Court may in exercise of its discretion refuse the motion. Reference in this connection may be made. to (1877) 5 Ch. Div. 342/344 Melbor v . Side Bottom, A I R 1962 J & K 66(67) Union of India v. Messrs Feroze & Company A I R 1918 C 467/470 (Prem Suk v. Udairam). There can, be no cavil to the above proposition of law, but it may be reminded that the discretion has to be exercised judicially and on equitable principles and should not defeat the ends of justice. "In Union of India v. Messrs Feroze & Co., it was held that a judgment on admission under Order 12, Rule 6 is a matter of discretion and not a matter of right and the Court would not entertain an application for such a judgment when the case involves question which cannot be conveniently deal with in a motion under the rule. In this case the admission was to the effect that the plaintiff was entitled to certain securities deposit subject to production of No Demand Certificate. The condition, it was held, could not be ignored, as being void under section 28 of the Contract Act. The ruling therefore cannot be applied to this case. In- the case of Prem Suk v. Udairam a judgment .was passed on admission by the defendant in respect of a portion of claim and the plaintiff was given the liberty to prove the claim in respect of the remaining claim in the suit in the ordinary claim. It was held that a judgment on admission by the defendant under Order, 12, Rule 6, C.P.C. is not a matter of right, it is in the discretion of the Court. If a, case involves question which could not be conveniently disposed of on a motion under the rule, the Court may in exercise of discretion refuse the motion. It was further held that the discretion was a judicial one and an erroneous exercise thereof was open to correction by a Court of appeal which will be slow to interfere unless either of the parties have been manifestly and unfairly prejudiced." Both the defendants admit that the plaintiff was given the sub-contract and that the plaintiff has by now completed the work of this project. Neither the defendant No.l nor defendant No.2 has denied that the plaintiff, has to be paid for this work. The defence of both these defendants rests on attempts to throw the liability for payment on one another. Defendant No.l who is liable for payment primarily is a ? Romanian firm which has practically no assets in Pakistan. In these circumstances it will be in the interest of justice to pass a partial decree on admission, so that on the one hand some relief is provided, to the plaintiff while on the other hand it is ascertained as to whether the defendant No.l is bona fide defending the suit and will satisfy the decree if it is eventually passed against him, or is protracting the proceedings with some ulterior motives. I, therefore, allow C.M.A. No.3120 of 1987 and pass a partial decree for Rs.40,50,752 on admission against the defendant No.l. The defendant No.2 can make payment of this amount to the plaintiff on account of defendant No.l, as he had been doing in the past. A . A . /M-864/ K??????????????????????????????????????????????????????????????????????????????????????????????????????? Suit partially decreed.