2001 PLP 646 (SCMR)

AJMAL MIAN, C.J.

This is a petition for leave to appeal against the judgment, dated 4-5-1998 passed by a learned Division Bench of the High Court of Sindh in High Court Appeal No. 187 of 1996, filed by the petitioner against the order, dated 22-10-1996 of a learned Single Judge of the above High Court in Suit No.588 of 1991, dismissing the petitioner's application for injunction (CMA No.2563 of 1991), declining the same and thus affirming the above order of the learned Judge in Chamber.'

2. The brief facts are that the petitioner i.e. Trading Corporation of Pakistan (hereinafter referred to as TCP) through a tender notice, dated 19-2-1991 inter alia published in daily 'Dawn' dated 21-2-1991, invited tenders for supply of soyabean oil on C & F Karachi free out basis for import of one cargo of 26000 metric tons plus/minus 5% at seller's option. According to the above notice, tenders were required to furnish alongwith their offers bid bonds in the form of Bank Guarantee on TCP's prescribed pro forma. It was also provided in the above notice the TCP reserved the right to accept or reject any or all the tenders, partly or wholly without assigning or intimating any reason. It appears that respondent No. 1, who is carrying on business in Netherlands, through their local agent respondent No.2 offered to sell soyabean oil at the rate of US$ 65 per metric ton plus interest at the rate of US$ 23.90 for credit of 180 days and local agent's commission of US$ 0.50 per metric ton.

3. The above offer was accepted by the petitioner through their telex dated lb-3-1991 with the following two conditions:-- "(i) That a signed formal contract would be executed. (ii) that defendant No. l would submit an acceptable performance Bond for the due performance of the contract strictly in accordance with the prescribed pro forma. Under clause 6(b) of the enquiry, Letter of Credit was to be opened by the plaintiffs within fourteen days from the date of signing of contract which was subject to the receipt of the bank guarantee for the purpose.."

4. It appears that on 16-3-1991, respondent No.2 submitted a signed contract form for itself on a performance pond which was not accepted by the petitioner on the plea that it was not in accordance with the tender enquiry. Eventually, TCP filed Suit No.588/1 of 1991, for the following relief:-- "(1) In view of the above facts it is requested that this Hon'ble Court may be pleased to restrain the defendants from seeking remedy by way of arbitration before FOSFA in U.K. as 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."

5. Alongwith the plaint of the suit, the above Civil Miscellaneous Application No.2563 of 1991 was filed under Order

39. Rules 1 and 2 read with section 151 of C.P.C. for the following relief:-- "For the reasons stated in the accompanying affidavit, it is prayed' on, behalf of the plaintiff abovenamed that this Hon'ble Court may be pleased to restrain the defendants from seeking remedy from and proceedings by way of Arbitration before Federation of Oil Seeds and Fats Association (FOSFA), as no binding contract exists between the parties. Ad interim orders are also, solicited."

6. The above application was declined for the following reasons:-- "In view of the aforesaid facts and circumstances. I am of the considered view that the plaintiffs have miserably failed to make out, a strong prima facie case for the grant of discretionary and equitable relief of injunction. It may further be observed that in the given circumstances they have not been able to convince this Court that the balance of convenience would lie in their favour. Indeed defendants shall be put to great inconvenience and hardship in the event of restraint on arbitration proceedings before the agreed arbitrators. It may likewise be said with a greater justification that by recourse to arbitration proceedings, the plaintiffs are unlikely- to suffer an irreparable injury. Should the plaintiffs think that the proceedings before the Arbitrator are without jurisdiction, they tray take this ground before the Arbitrator or before the Court after making of the award."

7. Against the above order the petitioner filed the above High Court Appeal, which was dismissed by the impugned judgment inter alia for the following reasons:-- "Having said as much, we are of the view that, as a general rule, in cases of this character since all the essential ingredients for grant of an injunction, namely, prima facie case, irreparable loss and balance of convenience cannot normally subsist conjointly; an interim relief in the way of injunction can neither be granted nor sustained. 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."

8. The petitioner has, therefore, filed the present petition for leave to appeal.

9. In support of the above petition, Mr. Samiuddin Sami, learned counsel for the petitioner, has vehemently contended as follows: -- (i) That there was no concluded contract between the parties and therefore, the arbitration clause contained in the tender documents could not have been invoked. (ii) That since TCP had pleaded fraud on the part of the respondents, the alleged contract could not have been relied upon for arbitration, and (iii) That in any case, it was a fit case for grant' of ad interim injunction prayed for in the above application. 9-A. On the other hand, Mr. G.H. Malik learned counsel appearing for the respondents has contended:-- (i) That there was a binding contract between the parties upon acceptance of the tender of respondent No. l and the condition of execution of a contract document and furnishing of a performance Bond had no relevance to the question of the binding contract. (ii) That according to the terms of the tender, respondent No. l executed the contract document as well as furnished performance bond, but TCP illegally repudiated the contract, and (iii) That the suit was barred by section 32 of the Arbitration Act, 1940 (hereinafter referred to as the Act).

10. We would not like to comment on the merits of the case. However,' from the reading of the two impugned orders/judgments of the Courts below, we have noticed that both. the Courts found that the petitioner had no prima facie case; inasmuch as prima facie section 32 of the Act is attracted. The above section 32 of the Act reads as follows:-- "

32. Bar to suit contesting arbitration agreement or award.-- Notwithstanding any law for the time being to force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act." From the above-quoted section 32 of the Act it is evident that notwithstanding any law for the time being in force, no suit shall be on any, ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award. It may further be observed that under section 33 of the Act, a party can file an application in the competent Court for challenging the existence or validity of arbitration agreement or an award's or to have the effect of either determined.

11. In the present case, we do not find any infirmity in the order of the learned Judge in Chamber and the judgment of the learned Division Bench. Both the Courts have exercised discretion in refusing to grant the ad interim order prayed for in accordance with law and therefore, it does not call for interference. Leave is refused and the petition stands dismissed. Q.M.H./M.A.K./T-9/S Petition dismissed.