1989SCMR225 (PLP)

ZAFFAR HUSSAIN MIRZA, J.‑‑Petitioner entered into a contract with Attock Cement Company of Pakistan Limited, for the erection/construction completion of a cement plant. In pursuance of the terms of the contract the petitioner appointed the respondent‑company as sub‑contractor for carrying out certain works under the contract. According to the learned counsel for the petitioner it has made a huge payment of Rs. 64.5 million to the respondent as advance. The respondent under the terms of the contract between the parties brought certain machinery at the site of the work exclusively for the works of the petitioner. According to the petitioner, in breach of the contract, the respondent diverted the funds received from the petitioner to some other works undertaken by the latter and was about to remove the machinery away from the site of the work. In order to prevent the respondent from doing so and to save itself from loss the petitioner filed Suit No. 559 of 1983 against the respondent for permanent injunction to restrain them from removing machinery etc.

2. The respondent filed written‑statement and alongwith it also preferred a counter‑claim. The petitioner had also applied to the Court for temporary injunction and in the events that happened the application for temporary injunction was disposed of by a consent order dated 10th November, 1983. Earlier on 8th November, 1983, in view of the fact that the contract between the parties contained an arbitration clause, the petitioner moved the Court under section 34 of the Arbitration Act for stay of the proceedings of the counter‑claim preferred by the respondent.

3. On 27th May, 1984, the petitioner withdraw its Suit No. 559 of 83 and as a result the respondent's counter‑claim was treated and numbered as a separate Suit No. 383/84. The present controversy relates to the said last mentioned suit in which the petitioner is the defendant and the respondent is the plaintiff. The application filed by the petitioner under section 34 was dismissed by a learned Single Judge of the Sind High Court on the original side vide his order dated 24th October, 1984, on the ground that the. petitioner had accepted notice of respondent's application for amendment of its counter‑claim and had also presented a compromise application in its own suit, which amounted to taking steps in the proceedings within the mischief of section 34 of the Arbitration Act.

4. The petitioner's Intra‑Court Appeal was dismissed by a Division Bench of the High Court vide its judgment dated 24th October, 1985, whereby the view taken by the learned Single Judge was not only affirmed but it was further held that the petitioner having itself filed Suit No. 559 of 83 had bypassed the arbitration agreement, with the result that it cannot be deemed to be ready and willing to take the dispute to arbitration.

5. It is in these circumstances that the petitioner had filed this petition for leave to appeal from the judgment of the Division Bench.

6. It is contended by the learned counsel for the petitioner that mere acceptance of notice of an application for amendment of the counter‑claim did not constitute a step in the proceedings, that the compromise application, having been submitted after the application under section 34, had no nexus to the proceedings of the subsequent suit, and that, mere filing of the suit for permanent injunction by the petitioner before the commencement of proceedings relating to the counter‑claim, can in no circumstances be construed as a step in the proceedings of the subsequent suit or for any other purpose as an indication to bypass the arbitration agreement.

7. Learned counsel for the caveator opposed the petition and urged that the questions determined concurrently by the Courts below are questions of fact, not liable to be reopened in this petition. ,

8. After hearing the learned counsel for the parties we are, however, of the view that since it is a settled position that an arbitration agreement can give rise to successive arbitration proceedings in respect of different disputes, the questions raised by the petitioner are substantially questions of law which require consideration. Learned counsel for the caveator wished to raise other grounds of objection to support the impugned judgment but the consideration of these objections is deferred to the time when the appeal is heard. We, therefore, grant leave to appeal. Petitioner shall furnish security for costs in the sum of Rs. 5,

000. The appeal shall be prepared on the present record but it will be open to the parties to file additional documents if any. M.Y.H./U‑15/S Leave granted.