2007K216 (PLP)

NADEEM AZHAR SIDDIQI, J.

The plaintiff has filed the suit with the prayer to restrain the defendants from seeking remedy by way of arbitration before FOSFA* in U.K. and in alternate to declare that no binding contract having been concluded between the parties. * Federation of Oil Seeds and Fats Association The facts necessary for the disposal of the suit are that the plaintiff invited tenders for purchase of Soyabeen Oil on deferred payment basis. The defendant No.1 through defendant No.2 offered to sell Soyabeen Oil at the rate of US $ 562.50 per metric ton. The plaintiff communicated a conditional acceptance by telex dated 10-3-1991 which stipulates signing of formal agreement and that defendant No.1 will submit .an acceptable performance bond for the due performance of the contract strictly in accordance with the prescribed form. The letter of credit was to be opened by the plaintiff within fourteen (14) days from the date of signing of contract which was subject to the receipt of the bank' guarantee in the prescribed form. On 16th March, 1991 the defendant No.2 submitted on its letterhead a signed contract form and performance bond. The bond was not in accordance with the lender enquiry. The plaintiff recalled the conditional. acceptance communicated on 10-3-1991 vide communication dated 31-3-1991 for reason that the defendants have not submitted the performance bond in accordance with the pro forma guarantee attached to the tender inquiry and the words "or 15th August 1991, whichever date is the earliest" has been added. The defendants first held the plaintiff in breach offered to sell commodity to the plaintiff and claim damages of US $ 1831250 and finally communicated to the plaintiff a notice of arbitration by Federation of Oil Seeds and Fats Association London. The plaintiff submitted that the defendants having failed to submit an acceptable performance bond/bank guarantee the plaintiff was within their right to recall the conditional acceptance communicated on 10-3-1991. The plaintiff further submits that the threatened arbitration proceedings are wholly unauthorised as no final binding contract between the parties were come into existence. The defendant No.1 filed written statement in which it was stated that offer was submitted through defendant No.2 and the plaintiff has accepted the offer by its telex, dated 10-3-1991 and submitted the contract to the plaintiff duly signed and complied its obligation, however, the plaintiff refused to sign the formal contract. It is stated in the written statement that the signed contract was not the requirement and that the requirement was for an acceptable performance bond and this requirement was duly complied with. It was further stated that the guarantee furnished contained the added words "on 15th August, 1991, whichever date is earlier". It was further clarified that the contract required shipment during the period March, 20th to April, 15th, 1991. The plaintiff had only required that the guarantee should be valid in force for ninety days after completion of discharge which means to keep the guarantee alive upto the end of July or early August, 1991. As against this a guarantee valid upto 15th August was submitted. The guarantee furnished contained a clause by which the bank has agreed to extend it for such further period as may be required by the buyers (plaintiff). It was further stated that on acceptance of offer the defendant No.1 chartered a vessel and informed the plaintiff on 12-3-1991 and the performance bond was handed over to the plaintiff on 17-3-1991 and that performance bond was accepted and bid bond was returned and the plaintiff appointed Messrs Thionville Surveying Company, ISA, as Pre-shipment Inspectors. It was further stated that the plaintiff changed its mind due to sharp downward movement of International prices for soyabeen oil. The defendant No.2 also filed written statement and submitted that the defendant No.2 acted as agent for the specific contract in suit and has no personal stake in the contract between the plaintiff and the defendant No.1. The defendant No.2 states that in accordance with the instructions of defendant No.1 the defendant No.2 for and on behalf of the defendant No.1 participated in the tender. The plaintiff has accepted the offer of the defendant No.1. The defendant No.2 further states that there it has no personal involvement in preparation of contract and other documents and the defendant No.2 has simply acted as agent for and on behalf of defendant No.1. From the pleadings of the parties the following issues have been framed on 19-3-1997:-- (1) Whether there was a concluded contract between the parties? If so whether it is binding upon them? (2) Could arbitration clause be invoked in the circumstances of the case? (3) Whether the suit is maintainable in its present form? (4) Whether the plaintiff altered its stand because of a fall in the international price? (5) What should the decree be? Zahid Ahmed, Deputy Manager of the plaintiff, was examined and produced documents as Exh.6 to Exh.20. On behalf of the defendant Muhammad Atiq was examined, who produced documents from Exh.21/1 to Exh.21/11. I have heard the learned counsel for the parties and perused the records and the case-law cited by the learned counsel. I will first take up Issue No.3 with regard to maintainability of the suit:-- Issue No.3 The defendant No.1 in para. 14 of the written statement submitted that the suit was framed is not maintainable in law. The learned counsel for the defendant submits that the suit is barred under sections 32 and 33 of the Arbitration Act, 1940. The learned counsel for the defendant submits that in terms of above sections the arbitration agreement or award can be contested only by an application and not by a regular suit. The learned counsel for the defendant has relied upon the following reported cases:-- (1) Messrs Awan Industries Ltd. v. The Executive Engineer, Lined Channel Division and another 1992 SCMR 65, (2) Hassan Ali & Co. (Pvt.) Ltd. v. Poly Cotton S.A. and others 1996 CLC 1812; (3) Messrs Badri Narayan Agarwala v. Messrs Pak Jute Balers Limited PLD 1970 SC 43, (4) Trading Corporation of Pakistan (Pvt.) Ltd. Karachi v. Messrs Nidera Handles Compagnie B.V. and another 2001 SCMR 646; (5) Port Qasim Authority, Karachi v. Al-Ghurair Group of Companies and others PLD 1997 Kar.

636. On the other hand, the learned counsel for the plaintiff has submitted that the main agreement was challenged and under attack wherein arbitration clause was included and that agreement cannot be challenged by way of an application under section 33 of Arbitration Act, 1940. He further submits that section 32 of the said Act would not bar suit where existence, effect and validity of main contract was challenged wherein arbitration clause was also included. The learned counsel for the plaintiff has relied upon the following reported cases:-- (1) Messrs Trading Corporation of Pakistan (Pvt.) Ltd. v. Messrs Nidera Handles Compagnie B.V. and another 1998 CLC 1610 and (2) Hafiz Abdul Muqtadir and another v. Mst. Mumtaz Be gum and others 1981 CLC 1271. In the prayer clause of the plaint the plaintiff has prayed as under:-- (1) In view of the above facts it is requested that this Honourable Court may be pleased to restrain the defendants from seeking remedy by way of arbitration threatened by him. (2) In the alternative declare that no binding contract having been concluded between the parties the defendants cannot seek and proceed with Arbitration proceedings before Federation of Oil Seeds and Fats Association. (3) Any relief more appropriate in the circumstances of the case. (4) Cost of the suit. The prayer clause (2) shows that the plaintiff has challenged the entire contract which includes the arbitration clause also on the plea that no binding contract having been concluded between the parties. Section 32 of the Arbitration Act, 1940, (hereinafter referred to as the said Act) bar to suit contesting arbitration agreement. The section of the said Act has a limited application and deals with the existence, effect or validity of arbitration agreement only. These sections cannot be invoked to challenge the contract as a whole. The existence and validity of the contract as a whole cannot be challenged by pressing into service sections 32 and 33 of the said Act. In the suit independent relief challenging the contract as a whole has been claimed and this cannot be done by filing application under section 33 of the said Act. The bar contained in section 32 of the said Act can only be invoked where the remedy is available under section 33 of the said Act. The civil court has jurisdiction to try all suits of civil nature unless expressly or impliedly barred. There is also a general presumption in law that civil courts have jurisdiction over all matters of civil nature. Any law taking away the jurisdiction of civil courts is to be strictly construed. In the matter in hand the learned Division Bench of this Court in the case of Messrs Trading Corporation of Pakistan (Pvt.) Ltd. v. Messrs Nidera Handles Compagnie B.V. and another 1998 CLC 1610 while dealing the appeal filed by the plaintiff against the dismissal of its injunction application with regard to maintainability of suit has observed as under:-- "What, therefore, emerges from the above discussion is that section 9 of the Code of Civil Procedure does not bar a suit where the existence, effect or validity of a contract is questioned in which contract an arbitration clause is also incidentally included. Indeed, such a broad contract cannot, as a whole, be challenged under section 33 of the Arbitration Act, though the arbitration clause therein separately may." In another reported case of Hafiz Abdul Muqtadir and another v. Mst. Mumtaz Begum and others 1981 CLC 1271 the learned Single Judge of this Court has observed as under:- "From the last para. of the plaint quoted hereinabove, it is evident that one of the reliefs prayed for, namely, relating to the restoration of articles/goods of the plaintiffs in marketable condition which were taken from their shops on 3-9-1975 allegedly valuing Rs.35,959, is an independent relief which does not involve determination of the existence of arbitration agreement or an award or their effect, and, therefore, prima facie it is not barred by aforesaid section 32 of the Arbitration Act." The Honourable Supreme Court of India in reported case of Orient Transport Co. Gulabra and another v. Messrs Jaya Bharat Credit and Investment Co. Ltd. and another .1988 PSC 997 has observed as under: "... The ease of the appellant was that there was no document containing any valid arbitration agreement in existence. This fact was raised in the plaint and issue to that effect was raised, in other words that the appellant/plaintiff in this case had contended that the agreements described as hire purchase agreements were untrue and void and procured fraudulently. The issues framed by the learned trial Judge also included this specific point section 32 of the Act does not contemplate the case suits challenging the validity of a contract because it contains an arbitration clause. if the intention of the Legislature were that all documents containing an arbitration clause should come within the purview of sections 32 and 33 the Legislature would have said so in appropriate words. These sections have a very limited application, namely, where the existence of validity of an arbitration agreement and not the contract containing the arbitration agreement is challenged. Every person, it has to be borne in mind, has a right to bring a suit which was of a civil nature and the Court had jurisdiction to try all suits of civil nature under section 9 of the Civil Procedure Code that right has not been taken away by section 32 of the Act. Such a right can only be taken away by express terms or by necessary implication. Section 32 of the Act does not have that effect." The Honourable Supreme Court of Pakistan in the case of Messrs Badri Narayan Agarwala v. Messrs Pak Jute Balers Ltd. PLD 1970 SC 43 relying upon the case reported as Shiva Jute Baling Limited v. Hindley and Company Limited AIR 1959 SC 1357 has held as under:-- "We respectfully agree with the above observations. The only point that could be raised by the appellant under section 33 was whether the clause relating to the arbitration agreement existed. Section 33 of the Act has nothing to do with the other terms of the contract which the appellant is said to have signed. It is true that the case of the appellant is that he never signed the agreement in question which contained the arbitration clause. Nonetheless his right to challenge the term relating to arbitration cannot be denied in view of the language of section 33 of the Arbitration Act." From the above discussion it is clear that since the plaintiff has challenged the contract as a whole the bar contained in section 32 of the said Act will not come in its way and the suit for the relief that no binding contract was concluded between the parties, is maintainable. Issue No.1. The defendant has claimed that there was a concluded contract between the parties. The plaintiff has denied the same and submits that for want of signing of formal agreement and for want of submission of performance bond in accordance with the prescribed form no binding contract was concluded between the parties. It is an admitted position that plaintiff has not signed the contract. It is also an admitted position that defendant has to furnish performance bond in the prescribed format which was attached with the tender form. It is also an admitted position that the words "15th August, 1991" were added in the performance bond. The offer made by the defendant was accepted by the plaintiff vide Exh.8, which apart from other details in Item No.7 provides as under:--

7. Other terms N conditions As per TCP's Enquiry No.IMP-I/1(22)/91 DD 19-2-1991 and Corrigendum DD' 28-2-1991 N Standard terms N conditions attached thereto. Para. 2 of the above Exh.8 read as under: "Para. 2 PLS submit performance bond FR 3% of total CNF value within 10 working days FM acceptance of YR OFR(.) You are requested to formalize contract immediately(.) L/C will be opened only on receipt of formal contract N acceptable performance bond(.)" From the reading or above it is clear that the acceptance of offer was subject to fulfilment of the conditions stipulated in the acceptance letter. The plaintiff in his examination-in-chief states that "the L.C. was to be established within 14 days after signing of the contract. As the performance bond was not in accordance with the pro forma of the plaintiff, the contract was never signed between the parties and, therefore, the question of establishment of L.C. does not arise". The witness of the plaintiff has further confirmed the above statement during cross-examination by saying that "it is incorrect to suggest that TCP committed breach of contract by not opening of L.C. voluntarily says that it has provided in the tender conditions that after the acceptance of tender, performance bond will be signed followed by execution and signing of a contract whereafter the L.C. would be established by T.C.P. and since no contract was signed, no L.C. was opened". From the above piece of evidence which was gone unrebutted it is clear that signing of formal agreement was necessary and within two weeks of the signing of the formal agreement L.C. was to be opened. This was not done on the part of the plaintiff. The defendant claims that since the bid bond was returned and Pre-shipment Inspector was appointed the plaintiff has taken the decisive steps which amounts to fulfil the contract and its obligations. The learned counsel for the defendant has pointed out from the cross-examination of the witness of the plaintiff that this fact was admitted. No doubt, the witness has admitted that decisive steps were taken but at the same time he clarified the position by saying that all steps were taken by TCP in good faith and those are the standard operational steps that are taken in advance. The witness of the defendant has also admitted in his cross-examination that letter of credit was to be opened after the acceptance of performance bond. The learned counsel for the defendant has submitted that signing of agreement is not necessary and the terms and conditions are to be inferred from the correspondence of the parties. The learned counsel relied upon the case of Messrs Jamal Jute Baling & Co. v. Messrs M. Sarkies & Sons PLD 1971 SC 784 wherein it has been held as under: "The same view was expressed in the case of Banarsi Das. If the fact of the present case is considered in the light of these principles, it is proved that the agreement between the parties was reduced to writing. Both the parties accepted its terms and have partially carried them out. In view of this the contract in dispute is established between them and the respondents are entitled to enforce it. Having regards to these facts, I am satisfied that there was a valid reference to arbitration and the Arbitrators were competent to enter on the reference in order to decide the dispute between the parties. I would, therefore, repel the contention of the appellant in this behalf." The learned counsel for the plaintiff has submitted that the acceptance contains formalization of contract and signing of agreement is essential. He further submits that when the acceptance is conditional upon execution of formal contract it will only come into existence if the formal contract is signed. He relied upon the case of Pakistan Steel Products v. Indus Steel Pipe Ltd. 1996 CLC

118. From the evidence on record it is established that signing of the formal agreement is necessary after acceptance of the performance bond and thereafter the L.C. was to be opened within two weeks after the date of contract as provided at page 5 of Exh.20. The acceptance letter Exh.8 also provides for formalization of contract. A contract is complete only upon acceptance of offer which acceptance should be absolute and unqualified. It is the communication of an offer and intimation of its acceptance which creates a contract. From the evidence it is established that for concluding the contract it is necessary that there should be a signed contract, the performance bond should be on prescribed pro forma and the L.C. was to be opened within two weeks after signing of the contract. In this matter admittedly performance bond was not in accordance with the pro forma attached with the tender document, no formal agreement was signed and no L.C. was established/opened. In view of the above there is no concluded and binding agreement between the parties. Issue No.2. In view of my finding on Issue No.1 since there is no concluded and binding contract between the parties the arbitration clause cannot be invoked. Issue No.4. There is no evidence available on record except the words of the defendant with regard to fall in the international price of Soyabeen Oil. The burden is upon the defendant to prove the fallen price. However, since I have held that there is no concluded contract between the parties this issue has become redundant and no further findings are required. Apart from the issues involved in the suit Mr. Afsar Ali Abidi has also submitted as under: The suit has become infructuous as the arbitration clause was invoked and award has been pronounced and has been filed in Court and is subject-matter of Suit No.1517 of 2000. (a) The suit is also not maintainable for want of board resolution and that the person appears as witness on behalf of the plaintiff was not duly authorised. (b) Mr. Samiuddin Sami replying the above submission has referred to the appellate judgment in the instant case and submitted that the Honourable Division Bench while dismissing the appeal has observed that outcome of the arbitration would abide the result of the suit. Regarding board resolution he submits that this objection was not taken while filing written statement and that no issue was framed and the questions asked in the cross-examination of the witness of the plaintiff is liable to be ignored as the same are without support of pleadings. I find force in the submission of Mr. Samiuddin Sami. In view of the judgment in H.C.A. No.I87 of 1996 reported as Messrs Trading Corporation of Pakistan (Pvt.) Ltd. v. Messrs Nidera Handles Compagnie B.V. and another 1998 CLC 1610 the learned Division Bench of this Court while dismissing the appeal refusing to grant injunction held as under:-- "For such reasons even though we think that the learned Single Judge was not entirely right in drawing the conclusion that he did, he was perfectly justified in refusing to stay the arbitration proceedings. This appeal, therefore, fails but the outcome of the arbitration would abide the result of the suit. The parties are left free to nominate their respective Arbitrators." From the above quotation it is clear that the suit has not become infructuous by pronouncement of the award and the outcome of the arbitration proceeding is subject to the result of this suit. Regarding the other submission of Mr. Afsar Ali Abidi, written statement has been perused and the contention of Mr. Samiuddin Sami appears to be correct. No party can be taken by surprise. The questions asked from the witness were without support of pleadings and cannot be considered. A party cannot lead evidence which is not supported by pleadings. In this respect. In the case of Binyameen and others v. Chaudhry Hakim and another 1996 SCMR 336 the Honourable Supreme Court has held as under:-- "... It is a well-settled principle of law that a party can prove a case which has been pleaded by it. In support of his contention, the learned counsel for the appellants referred to Government of Pakistan (now Punjab) through Collector, Bahawalpur v. Haji Muhammad PLD 1976 SC

469. It is also a well-settled principle that no evidence can be led or looked into in support of a plea which has not been taken in the pleading. A party is required to plead facts necessary to seek relief claimed and he would be entitled to produce evidence to prove those pleas. Variation in pleading and proof is not permissible in law." In view of above there appears no substance in the submission of Mr. Afsar Ali Abidi. provisions of Personal Law

Conduct of the father or mother must also be considered and choice of minor could not be taken lightly and must be given weight. Shafique-ur-Rehman v. Mst. Fazeelat Begum 1995 SCR 136. overruled. [pp. 477, 478, 481, 482, 483] A, B, C, D, E & F Mst. Hurbai v. Usman PLD 1963 Kar. 888; Zahoor Ahmed v. Mst. Rukhsana Kausar and 4 others 2000 SCMR 707; Irshad Begum v. Mirza Muhammad Haleem and another 2003 YLR 3245; Bashir Bibi v. Ghulam Rasool and 2 others 2005 YLR 547; Mst. Feroze Begum v. Lt.-Col. Muhammad Hussain 1978 SCMR 299; Mst. Rashida Bibi v. Muhammad Ismail 1981 SCMR 744; Sultana Begum v. Mir Afzal and others PLD 1988 Kar. 252; Mst. Hamida Begum and another v. Ubedullah and others 1989 CLC 604; Mst. Fazeelat Begum v. Public in General and another PLJ 1994 AJ&K 33; Muhammad Ramzan v. Mst. Rukhsana Bi 1996 SCR 265; Bashir Bibi v. Ghulam Rasool and 2 others 2004 SCR 561; Mst. Hamida Begum and another v. Ubedullah and others 1989 CLC 204; Tassadiq Hussain Shah v. Mst. Surraya Begum 1980 CLC 1802; Mst. Firdous Igbal v. Shifaat Ali and others 2000 SCMR 838 and Mehmood Akhtar v. District Judge, Attock and 2 others 2004 SCMR 1839 ref. Shafique-ur-Rehman v. Mst. Fazeelat Begum 1995 SCR 136 overruled. Mir Khalid Mehmood, Advocate for Appellant. Ch. Muhammad Afzal, Advocate for Respondent. ORDER KHAWAJA SHAHAD AHMED, J.

The instant appeal, by leave of the Court, is addressed against the judgment of the Shariat Court, dated 11-6-2005, whereby the appeal of the appellant was dismissed and the order of Judge, Family Court/Guardian Judge, Samahni, dated 5-3-2004 was maintained.

2. Brief facts of the case are that Mst. Sughra Bibi, appellant herein, was married with Akhtar Hussain, respondent, but due to the strained relations between the spouses, their marital tie ended and culminated into divorce. On 6-2-2003, respondent, herein, filed an application for guardianship of his minor daughter namely Yasrah Bibi, who was in the custody of the appellant and is still living with her. The main ground for the custody of his daughter which the respondent took before the trial Court, was that as Sughra Bibi, appellant herein, has contracted second marriage with another person, who is a stranger, the welfare of the minor could only be guarded by him as a real father of the minor. He also claimed custody on the grounds of his family and religious background, and that his mother (the paternal-grandmother of the minor) could also look after the minor. The Guardian Judge after relying upon a judgment of this Court reported as Shafique-ur-Rehman v. Issue No.5. In view of the above discussion the suit of the plaintiff is decreed to the extent that no binding contract was concluded between the parties. In view of the facts of the case the parties are left to bear their respective costs. The office is directed to prepare the decree in the above terms. M.B.A./T-1/K Suit decreed.