1999 PLP 288 (CLC)

This is an application under section 34 of the Arbitration Act, 1940 filed by the defendant No. l praying that the suit be stayed and the matter be referred to arbitration in view of the Article 52 of the Constitution of Institution of Engineers, Pakistan (hereinafter referred to as I.E.P.) and in view of Bye -Law 18.

2. This is a suit for declaration and injunction calling in question the election of the Chairman and Members of the Local Centre for Karachi declared by the defendant No.l on 26‑12‑1997 in the meeting of Central Council of I.E.P. held on the same day at Peshawar. It is the case of the plaintiff that he was duly nominated and seconded for the post of Chairman of the Karachi Centre which was confirmed by the defendant No.3 who is the Secretary of Karachi Centre; that the plaintiff submitted all the required information within time and paid the prescribed nomination fee. In addition to his personal election he has also called in question the election of defendants 7 to 19 as Members of the Karachi Centre; that on 24‑12‑1997 meeting of the Election Committee was conducted at Karachi which was also attended by defendants 4 to 6 which fact is admitted by Mr. Akram Zuberi representing these defendants; that as a result of such meeting, the plaintiff and some other six persons' nomination papers in respect of Chairman, Vice‑Chairman and Members of the Karachi Centre were accepted; that the Central Council in its meeting held at Peshawar on 26‑12‑1997 nominated defendant No.7, Engineer M.P. Gangwani as Chairman and defendants Nos.7 to 19 as Members of the Karachi Centre. The case of the plaintiff is fully supported by the defendants Nos.4 to 6.

3. Much emphasis has been placed on Article 52 of the Constitution and Bye‑Law 18(i)(iv) of I.E.P. which read as follows:‑‑ "

52. Arbitration: In case of any controversy regarding rights and liabilities of any member of the Institution under this Constitution, the same shall be settled by arbitration in accordance with the bye‑laws. 18(i) Completion of results of the Elections (i)

(ii)

(iii) In case of any non‑adherence of the election schedule mentioned in Clause (18) due to some unavoidable circumstances, the President/Council shall have power to shift the date of commencement or any other scheduled date fixed for election process. In such circumstances, the revised election time‑table must adhere to the scheduled interval of various election processes as per Clause (18). (iv) In the event the Chairman of any or all Local Centres fail to hold election within the specified period, the Council shall fill up all such vacancies and these nominated persons shall have the same power and be subject to the same responsibilities as if they had become duly elected. in the ordinary course. "

4. I have heard Mr. Muhammad Akram Khawaja for defendant No. l and Mr. Akhtar Hussain and Mr. Esa Shaikh in support of the plea that the suit is liable to be stayed under section 34 of the Arbitration Act while such plea was opposed vehemently by Mr. Balal A. Khawaja for the plaintiff and Mr. M. Akram Zuberi for defendants 4 to

6. Mr. Muhammad Akram Khawaja after relying upon the aforementioned provisions has argued that the election dispute being a question of the right of a member and that the plaintiff being member of I.E.P. it is to be referred to arbitration of I.E.P. He has relied upon the cases Pakistan Engineering Council and 2 others v. Engineer I.A. Osmani and 3 others 1991 SCMR 654, Messrs Uzin Export and Import Enterprises for Foreign Trade v.‑ Messrs M. Iftikhar & Co. Limited 1993 SCMR

866. To further elaborate the point of rights and liabilities, Mr. Akhtar Hussain has referred to Article 30 of the Constitution of I.E.P. On the other hand, it was argued by Mr. Balal A. Khawaja that in order to conduct an arbitration no rules and regulations have been finally framed and that the election dispute is not a controversy covering the rights and liabilities of a member. According to the learned counsel, the suit is maintainable as the defendant No. 1, namely, I. E. P. and its present office‑bearers have violated the Constitution and bye‑laws of I.E.P. It was also contended that where there are serious allegations and counter- allegations pertaining to any dispute between the parties to the suit then it would not be advisable to resort to the provisions of section

34. It was lastly contended that the provisions of section 34 of the Arbitration Act are to be construed narrowly. He has placed reliance on the following cases:‑‑

(a) Judson v. Ellesmere Fort Ex‑Servicemen's Club, Ltd. (1948) 1 All. E. R. 844; (b) Radford v. Hair and others (1971) 2 All. E.R. 1089; (c) Sir E. Haroon Jaffar & Sons Ltd. v. Haji E. Dossa & Sons and another PLD 1956 Sindh 4; (d) Avari Hotels Ltd. v. Hilton International Company PLD 1985 Kar. 445; (e) Messrs Aslo Marines Ltd. v. M.T. Magda and another PLD 1985 Kar. 745; (f) Government of Balochistan and others v. Mir Qadir Bakhsh & Sons PLD 1978 Quetta 215; (g) Lever Brothers Pakistan Limited v. Qazi Muhammad Atique 1992 CLC 1062; (h) Mst. Zohra Begum v. Messrs Abdul Razak & Co. and 10 others 1984 CLC 16431; and (i) Cotton Export Corporation of Pakistan (Pvt.) Ltd. v. Messrs Asif Cotton and 5 others 1995 CLC 1024.

5. In the case Judson (supra), there was a dispute between a member and a registered club. The member was suspended for breach of rule prohibiting gambling on the club premises whereafter he filed a suit for injunction and declaration. In that suit, the servicemen's club filed an application for stay of the proceedings which was declined by the Court of first instance. In appeal, the order of the learned trial Judge was upheld. In Radford (supra), the plaintiff and the defendants were partners. The plaintiff brought an action for dissolution of the partnership as well as for an inquiry as to the value of the goodwill of the partnership firm. The defendants applied for stay of the proceedings under section 4 of the England Arbitration Act, 1950. The defendant's application was dismissed and the suit was allowed to proceed on the ground that the defendants by imputing dishonesty and other like allegations towards the plaintiff have raised question of fraud for which the plaintiff is entitled to have his case tried by a Judge in open Court. In the case of Haroon Jaffar & Sons (supra), this Court declined to grant stay application moved by defendant under section 34 of the Arbitration Act, 1940 and held that where a plaintiff charged the defendant that he wanted stay of the suit with intention to do fraud, the stay is to be declined. The same view was held by a Single Judge of Balochistan High Court in the case of Mir Qadir Bakhsh & Sons (supra). In Mst. Zohra Begum (supra), a learned Single Judge of this Court, Saleem Akhtar, J., (as his Lordship then was) declined to grant defendant's application filed under section 34 of the Arbitration Act on the ground, inter alia, that the plaintiff had failed to establish, prima facie, any fraud committed by the defendant. However, a learned Division Bench of this Court in the case of Qazi Muhammad Hanif (supra) maintained a contrary view and held, inter alia, that in no case an application under section 34 of the Arbitration Act would be liable to be dismissed merely on the ground that a party by way of defence had alleged misrepresentation, coercion or fraud.

6. Recently, the Supreme Court of Pakistan in the case Messrs Uzin Export and Import Enterprises for Foreign Trade v. Messrs M. Iftikhar & Company Limited 1993 SCMR 866, considered the conditions precedent for stay of the proceedings of a suit as provided under section 34 of the Arbitration Act. The appeal filed against the order of a Division Bench of this Court in H.C.A.5 of 1985 was allowed reported as Uzin Export and Import Enterprises v. M. Iftikhar & Company Ltd. PLD 1986 Kar. 1 and granted stay of the suit under section 34 with one of the following observations:‑‑

"(7) Perusal of section 34 of the Arbitration Act as reproduced above clearly shows that if in a contract there is provision of resolution of dispute between the parties by way of arbitration and parties have agreed to such forum, then such forum is to be resorted to and given preference over filing of suit. If one of the parties to the contract by‑passing forum of arbitration files a suit, then the other party can file application for stay as contemplated under section 34 of the Arbitration Act and if the Court is satisfied then order of stay of proceedings in the suit can be passed to enable resolution of dispute between the parties by way of arbitration. Conditions precedent for grant of stay are that the party applying for stay has not filed written statement or taken any other steps in the proceedings indicating that right to invoke arbitration clause is intentionally abandoned in favour of Court proceedings. Whether to grant stay or not is dependent upon satisfaction of the Court and such order is to be passed by the Court only when it is satisfied that all the requirements and preconditions enumerated have been fulfilled. The Court has to satisfy itself that the party applying for stay has not relinquished or abandoned his right of invoking arbitration clause after filing of suit. In coming to such conclusion the facts and circumstances of each particular case are to be examined in the light of pleas and other steps taken by the parties. Facts and circumstances of two cases may not be alike and may differ. " .

7. It has not been denied that Article 52 of the I.E.P. Constitution provides for settlement of all controversies regarding rights and liabilities of all or any Member of the Institution through arbitration. In this connection, Mr. Akhtar Hussain has referred to Article 30 of the I.E.P. Constitution which provides that all members of the Institution shall enjoy all the rights and privileges as conferred by the I.E.P. under the Constitution or the bye‑laws made thereunder and that such rights and privileges shall be personal to himself and shall not be transferable. But nowhere it has been defined either in the Constitution or in the bye‑laws that what are the exact rights and privileges of the Members. In such circumstances, one should not ignore the dictionary meaning of rights. In Black's Law Dictionary (VIth Edition (1990) at page 1324 the word "right" has been defined to include a power, privilege or immunity guaranteed under a Constitution, statute or decisional laws, or claimed as a result of long usage. It has been further defined as "A legally enforceable claim of one person against another, that the other shall do a given act, or shall not do a given act." The term right was considered by a Full Bench of this Court in the case of Karachi Pipe Mills Ltd. v. Sindh Labour Appellate Tribunal and 2 others PLD 1984 Kar. 503 in reference to the Industrial Relations Ordinance, 1969, wherein the dictionary meaning of the word "right" was noted with approval as considered by the Ballentine Law Dictionary (IIIrd Edition at page 1118) which defines it as "that too which a person has a just and valid claim, whether it be land, a thing, for the privilege of doing something, or saying some thing, such as the right of free speech, property, interest, power, prerogative, immunity and privilege." Yet in another case Piran Ditta v. Noor Muhammad PLD 1966 (W.P.) Kar. 618, a learned Division Bench of this Court while defining the word "right" in reference to section 18 of the Karachi Small Causes Court Act, 1929, read with section 6 of the General Clauses Act, 1897, held, inter alia, that where a procedure constitutes a privilege or a remedy then such procedure is also a right. It was further held, "thus, the right of appeal is a procedural as well as a legal right. Where it is more of a procedure or more of a legal right, depends on which of the two aspects the more importance is given in a Constitution." To conclude, I may say that it is now well‑established that to hold an election is the duty and responsibility of the club/association and at the same time to participate in such elections and to seek office of such club or association is .the right and entitlement of every member. Therefore, an election dispute will also fall within the question of rights and liabilities of the member and its association. In the instant case, such dispute is liable to be referred to arbitration.

8. The plaintiff who claims to have been duly elected as Chairman of the Karachi Centre for I.E.P. is a member of that Institution and being a member, the provisions of Constitution and bye‑laws of the I.E.P. are binding on him. He cannot wriggle out from the consequences of Article 52 of the Constitution by alleging fraud and by saying that so far no rules for arbitration have been framed. At this stage, it would be pertinent to observe that it is the duty of the Central Council of the I.E.P. to formulate some procedure, prescribing rules for holding of arbitration proceedings. I have seen in other matters pertaining to the elected bodies where there are duly constituted election tribunals which are also regularly elected by their Members. However, even in the absence of any rules it will be the provisions of the Arbitration Act, 1940 which will govern the proceedings before the arbitration tribunal. It was observed by the Honourable Supreme Court in the case of Pakistan Engineering Council (supra) that it is important for the professionals whose discipline and conduct is under control of professional bodies that their conduct should come under review before their own peers before judicial review by the Courts is undertaken. The practice to directly approach Courts without exhausting the remedy under the statute was deprecated by the Honourable Supreme Court. The defendant No. l came into existence on 7th May, 1948 and, therefore, it is expected that after passing of over fifty years, the persons who are at the helm of the affairs should see that no provision of Constitution and bye‑laws are violated. With these observations, I am of the considered view that the matter of Chairman of Karachi Centre should be referred to the arbitration as prima facie a dispute has been established by the plaintiff. I would not like to dilate upon the legalities or otherwise of the meeting of the Central Council held on 26‑12‑1997 at Peshawar as this will now be considered by the learned Arbitrator. Suffice to observe that the plaintiff has made out a prima facie case or irregularities.

9. From 19th May, 1998 till 11th August, 1998, the office has not fixed the plaintiff's application under Order 36, Rules 1 and 2, C.P.C. (C.M.A.No.8 of 1998) for hearing. However, on 11‑8‑1998, by consent of parties, hearing of C.M.A. 168 of 1998 was taken up alongwith C.M.A. 5134 of 1998 which were being heard for last 3/4 hearings. In view of this matter, I am not inclined to pass any order on the stay application as the parties may be inclined to add something more than their respective cases on the question of stay of proceedings in this suit. At the same time, I am also conscious of the fact that if the proceedings in this suit are stayed without any interim measures it may cause prejudice to the plaintiff.

10. The object of an arbitration through a domestic Tribunal is to decide speedily by quasi‑judicial means by avoiding formalities, technicalities, delay, expenses and ordeal of litigation. (see a Division Bench judgment of this Court in Messrs Shafi Corporation Ltd. v. Government of Pakistan PLD 1994 Kar. 127 at 131). In so far hearing of application under Order 39, Rules 1 and 2, C.P.C. is concerned, which will take place after passing of this order it is observed that in a fit case the Court can proceed to determine interlocutory application. Reliance is placed on Messrs Commodities Trading International Corporation v. Trading Corporation of Pakistan and another 1987 CLC 2063, Fareed Yaqoob Ali v. Haji Muhammad Tahir PLD 1989 Quetta 16 and the case of Sunrise Textiles Ltd. v. Messrs Tomen Corporation and 4 others 1994 CLC 2000 at 2004. In the last mentioned case, a learned Judge of the Lahore High Court held as follows:‑‑

"Rule laid down in two cases decided in Quetta jurisdiction correctly enunciates the law to the effect that despite stay of proceedings in the suit on reference of the dispute for decision in arbitration, the Court retained control on the subject‑matter of the lis for making of ancillary orders envisaged by section 41 of the Arbitration Act read with its Second Schedule. It included jurisdiction to issue interim injunction. Therefore, unless the application for temporary injunction filed by the plaintiff in the suit was formally adjudicated upon by the trial Court either allowing it or dismissing it by a reasoned order, it could not be said that merely upon stay of further proceedings in the suit and reference to arbitration, status quo order already granted by it had come to an end or vacated or discharged. Powers of the Court and existence of jurisdiction in it to grant temporary injunction was amply preserved in section 41 (b) of Arbitration Act read with its Second Schedule." In his application under Order 39, Rules 1 and 2, C.P.C. the plaintiff is seeking injunction against defendants 7 to 19 from acting in any manner as the office bearers of the Karachi Centre of I.E.P. The nominations made on 26‑12‑1997 at Peshawar have been challenged through this suit by the plaintiff only, who claims that he was duly elected as Chairman of Karachi Centre on 24‑12‑1997. No other candidate who has contested against defendants 8 to 19 has come forward. In the circumstances, it would not be fair to stay the elections of defendants 8 to 19 as the other aggrieved members if any, as the losing candidates have not challenged their elections. I would like to refer here the case of a Division Bench of this Court in Malik Muhammad Aslam v. Vice-Chancellor, Karachi University and others 1983 CLC 2385 where the elections of the Students Union of Karachi University was challenged through a Constitutional petition by only one person who had contested the election for the President of the Students Union. In his petition, he sought declaration for nullifying the entire elections of the students union but a Division Bench of this Court declined to grant relief to the extent of other office‑bearers. Therefore, the petition was allowed to the extent that the election of the respondent No.3 as President of the students union was declared to be illegal, without lawful authority and of no legal effect.

11. The controversy in the suit pertains to an election dispute of a registered body of professionals. Since I am not inclined to stay the proceedings of the suit as provided under section 34 of the Arbitration Act, 1940 and at the same time since I am again inclined to restrain temporarily the defendant No.7 from acting as Chairman of the Karachi Centre, my further endeavour would be to prevent mischief to be committed by any of the party to frustrate the purpose of this order. Any delay in the finalisation of arbitration proceedings will not only cause serious prejudice to the plaintiff but it may also affect to the general members of the Karachi Centre. At the same time, there is an interim order in the nature of prohibitory injunction which is running against defendant No.7 and any delay will also cause serious prejudices to him. In order not to create any hurdle or hindrances in the smooth running of the affairs of defendant No.l/I.E.P. through a short order passed today both the applications were disposed of with the following directions. "For reasons to be recorded later on, the application (C.M.A. 168 of 1998) is granted and the proceedings in this suit are stayed till conclusion of the arbitration proceedings. In order to prevent any mischief in future and to resolve the election dispute as early as possible with a view to make the running of Institution more effective, representative and democratic, it is further ordered as follows. (i) That the election dispute to be referred to the arbitration is for the election of the Chairman of Karachi Centre. (ii) That the plaintiff, defendant No.l (I.E.P.) and defendant No.7, namely, Engineer M.P. Gangwani, are directed to propose the names of sole arbitrator within one week. (iii) That the arbit ration shall be conducted strictly in accordance with the provisions of the Arbitration Act, 1940. (iv) That till further orders and till disposal of C.M.A. 8 of 1998, the defendant No.7, namely, Engineer M.P. Gangwani, is restrained to act in any manner as Chairman, Karachi Centre. It is clarified that no stay or any prohibitory injunction is being granted against defendants 8 to 19 who claim to have been declared elected on 26th December, 1997 in the Central Council meeting held at Peshawar as Members, Karachi Centre for the period of 1998‑2000 since their adversaries/aggrieved parties have not approached this Court for any relief. (Reliance is placed on the case Malik Muhammad Aslam v. Vice‑Chancellor, Karachi University and others 1983 CLC 2385 at 2389. However, this order will not prejudice the rights of aggrieved members of I.E.P. to challenge their elections through the process of arbitration. This disposes of Civil Miscellaneous Application No.168 of 1998 as well as Civil Miscellaneous Application No.5134 of 1998."

12. Above are the reasons for the short order. H.B.T./K‑56/K Order accordingly.