1995 PLP 1024 (CLC)

SYED KHURSHEED HAIDER RIZVI, J.‑‑‑This Appeal is directed against the judgment dated 18‑3‑1990 passed by the learned Single .Judge in Suit No. 156 of 1988 between the parties whereby he allowed C.MA. No. 3280 of 1988 filed by the respondents‑under section 34 of the Arbitration Act 1940 and held that the respondent's application C.MA.No. 3281 of 1988 under Order 37, Rule 3, C.P.C. for leave to pear and defend the suit has become infructious. Briefly stated the facts of this case as disclosed in the plaint are as under: The suit bearing No. 156 of 1988 is for recovery of Rs. 206,498 with mark up at Rs.43 per one thousand per day‑ from 1‑1‑1988 till payment. In September/October, 1985, the plaintiffs negotiated to purchase from defendant No. 1, the entire production of cotton ginned and fully pressed by them at their factory during the year 1985‑86 Cotton Crop Season and on 12‑10‑1985 an agreement was executed between the parties: On 24‑10‑1985, the plaintiffs granted an advance of Rs. one Million to defendant No. 1, who, as a security for repayment thereof executed a Demand Promissory Note of the said amount. Earlier, vide letter of guarantee dated 22‑10‑1985, the defendant No.6 guaranteed repayment of the said amount with mark up payable within two days of receipt of demand from the plaintiffs. It was stipulated that in case of default on the part of the defendants to supply the cotton as per the agreement, the defendants would be liable to repay the entire amount of advance of such balance thereof as remains unadjusted by 31‑1‑1986 together with mark up at the said rate till payment. It is averred that the defendants have adjusted Rs.863,445 leaving a balance of Rs.126,555, together with accumulated mark up of Rs.206,498 as on 31‑12‑1987. The respondents moved both the applications and in the result the learned Single Judge passed the impugned order. Learned counsel appearing for the appellant has submitted that the agreement dated 12‑10‑1982 was not under Arbitration Act but it was an agreement for supply ~ booking of entire production of cotton ginned by the respondents Nos.1 to 5 in their factory and that the dispute and difference if any, between the parties thereto is not about the terms and conditions of the said agreement as contemplated in clause 8 thereof Learned counsel for the appellant further submitted that the application under section 34 of the Arbitration Act was not maintainable in terms of section 19 of the Arbitration Act as the respondents had taken steps in the proceedings . by moving application under Order 37, Rule 3, C.P.C.. He also submitted that the learned Single Judge had to look only into the plaint in deciding the application under Section 34 of the Arbitration Act 1940. Learned counsel referred to AIR 1917 Sindh 12, AIR 1954 Bombay 174 and PLD 1968 Dacca

361. While deciding an application under section 34 of the Arbitration Act Court is, bound to look into the pleadings in the plaint and not statement made in the application for determining whether section 34 of the Arbitration Act is applicable in the matter. For this view we refer PLD 19681 Dacca

361. In order to consider whether application under section 34 of the Arbitration Act was maintainable we refer clause 8 of the said agreement dated 12‑10‑1985 which reads as under:‑ "Any dispute/difference touching terms and conditions contained in this contract, failing mutual amicable settlement shall be referred to arbitrator to be nominated by each party buyer and seller. Should the so nominated Arbitrators fail to arrive at as agreement, they (the Arbitrators) will nominate an Umpire whose findings shall be final and binding on both the parties." A bare reading of this clause clearly indicates that the matter had to be referred to the Arbitrator only in case of dispute difference touching to the terms and conditions contained in the said agreement. As we have already held above, the Court had to look only into the plaint while deciding this application and not the statement made in the application. We have perused the plaint and in our view this is a suit based on promissory note for recovery of the amount claimed against the defendants in a summary manner. Since there was no dispute which could have been referred to the Arbitrator in terms of clause 8 of the aforesaid agreement between the parties, we hold that the said application was not maintainable at all and as such we do not consider it necessary to decide the point whether by moving application under Order 37, Rule 3, C.P.C. the respondents had taken any step in the proceedings and as such the said proceedings could not have been stayed under section 34 of the Arbitration Act. It would be worthwhile to mention here that the respondents had never taken any stand before filing the above stay application, C.MA. No.3280/88 and C.MA. No. 3281/88 that there was any dispute between the parties touching the terms and conditions contained in the agreement. The plaintiffs has filed an affidavit alongwith the two letters written to the plaintiff by the defendants on 5‑2‑1987 and 2‑3‑1987, reading of which letters clearly manifest that respondents had not taken stand for referring the matter to any arbitrator but on the contrary they had undertaken to refund the due amount. They also paid Rs.10,000 through Bank Draft No. 1810588 dated 12‑3‑1987. These circumstances also indicates that the respondents had not asked to refer the matter to the Arbitration as they had not found any dispute touching the terms and conditions contained in the aforesaid agreement, and that they were not at all on any issue with the appellant. For what we have said above, we, accepting the appeal, had set aside the impugned order dated 18‑3‑1990 by our short order dated 19‑4‑1993 and above are the reasons for the same. AA./C‑318/K Appeal accepted.