1994 PLP 2282 (MLD)

NAZIM HUSSAIN SIDDIQUI, J.

The learned Single Judge in Chambers has disposed of a number of civil miscellaneous applications by a single order, dated 20-4-1994. The appellants in the present High Court Appeals are aggrieved by orders passed on C.MA. No.1285/91, C.M.A. No.2044/92 and C.MA. No.653/92. The first miscellaneous application was moved on behalf of the appellant in High Court Appeal No.123/93. The said appellant who was defendant No.1 in the original proceedings had filed an application under Order 39, Rule 2(3), C.P.C. requesting the Court for taking action for contempt of Court against the respondents for having disobeyed the order of this Court passed on 5-11-1990 whereby the matter between the parties had been referred to arbitration. The last paragraph of the said order reads as follows:

"The validity for the performance of the bond furnished by the plaintiffs was extended for three months from 7-10-1990. It is further directed that its validity shall be further extended and this time, until further orders of this Court, the question of costs in regard to the extension of the bond shall also be decided by the Arbitrator." The contention raised on behalf of the appellants was that although the validity of the performance bond had been extended by respondents Nos.1 to 3 up to 25-10-1992 but the same was conditional on receipt of premium by respondent No.4 from the respondent No.3. This condition, according to the appellants, was not contemplated in the said order and hence the respondents had made themselves liable for action for contempt of Court. The learned Single Judge was however not impressed and we find ourselves in agreement with the reason given by him in the impugned order. It may be pointed out that in fact the validity of the performance bond in pursuance of the order of this Court was extended by the said respondents up to 25-10-1992 as is indicated by the letter of respondent No.4 dated 2-5-1991, a copy of which has been filed by the appellants themselves. No doubt, the said letter further indicates that such validity has been extended after having received premium from respondents Nos.1 to 3 but the mere fact that the validity was extended after receiving premium cannot constitute disobedience of the order passed by this Court. Although the validity of the performance bond was not extended beyond 25-10-1992, it is pertinent to point out that the order passed by this Court dated 5-11-1990 was vacated by another order passed on 21-10-1991. Consequently, when the validity of the performance bond expired after 25-10-1992 there was no order in this regard as the same had been vacated by another order dated 21-10-1991. Therefore, in case the validity of the performance bond was not extended beyond the said date, there was no contempt committed by the respondents in view of the second order passed on 21-10-1991 as the necessity to extend the period of validity no longer existed after passing of such order. Consequently, in our opinion, the order passed by the learned Single Judge in Chambers, in this regard, is not open to exception.

2. So far as the order passed on C.M.A. No.2044/92 is concerned, both the appellants in H.C.As. Nos.123/93 and 147/93 are aggrieved by the said order. The said miscellaneous application had been filed on behalf of the appellant in High Court Appeal No.147/93 who was one of the plaintiffs in the case. The main contention raised by Mr. Fazle Ghani Khan as well as Mr. Abdul Khair Ansari, learned counsel for the appellants in the two appeals has been that appellant Muhammad Rafiq & Company although was one of the parties to the joint venture agreement originally executed between them and two other plaintiffs in the case but subsequently after a compromise entered into by the said parties in Suit No.497/88 an order was passed by a learned Single Judge of this Court which shows that appellant had completely disassociated itself from the said joint venture entered into with two other plaintiffs in the case. Consequently, a prayer was made under Order 1, rule 10, C.P.C. for the deleting the name of the said appellants from the proceedings before the Arbitrator. It is pertinent to point out that the matter was referred to arbitration upon the request made by the said three plaintiffs in the case including the appellant Muhammad Rafiq & Company. However, Mr. Abdul Khair Ansari, learned counsel for the said appellant has advanced a novel argument to the effect that the respondent No.3 had neither authorised signing of the plaint nor it was actually interested in the matter. If this contention is to be accepted in other words what has been pleaded before us is that fraud had been committed upon the Court by respondents Nos. 1 and 2 who were co- plaintiffs with respondent No.3 in the suit. However, as has been observed by the learned Single Judge, if such an allegation was to be made by the said appellants then the same should have been made at the time when the order dated 5-11-1990 was passed whereby the matter was referred to arbitration. As has been further observed by the learned Single Judge, Mr. Abdul Khair Ansari had filed Vakalatnama on behalf of the said party on 9-5-1990 and therefore, an objection in this regard could have been raised before the Court at the time of passing of the said order but no such objection was raised by him before the Court. Since thereafter the matter was referred to the Arbitrator, there was no justification for considering such belated request made on behalf of the said appellants. We are also unable to find any fault with the said order passed by the learned Single Judge.

3. So far as the order passed on C.MA. No.653/92 is concerned, the said application had been filed by appellant in H.CA. No.123/93 under section 41 of the Arbitration Act read with section 35 of the said Act and Order 39, rules 1 and 2 read with section 151, C.P.C. A request had been made before the learned Single Judge to restrain the Arbitrator from proceeding with the arbitration proceedings as the subject-matter referred for arbitration and the same in the suit filed by the appellant against the respondent was identical. Section 35 of the Arbitration Act which has been invoked, provides as follows:

"

35. Effect of legal proceedings on arbitration: --(1) No reference nor award shall be rendered invalid by reason only of the commencement of legal proceedings upon the subject-matter of the reference, but when legal proceedings upon the whole of the subject-matter of the reference have been commenced between all the parties to the reference and a notice thereof has been given to the arbitrators or umpire, all further proceedings in a pending reference shall, unless a stay of proceedings is granted under section 34, be invalid. (2) In this section the expression "parties to the reference" includes any person claiming under any of the parties and litigating under the same title." As is evident from the above provisions, it is the identity of the subject-matter of a legal proceeding pending in a Court and the subject-matter of reference to arbitration that attracts the operation of section

35. Consequently, even if the dispute before the Arbitrator and that before the Court relate to the same contract yet they are not the same, we find no reason why the two proceedings, one before the Arbitrator and the other before the Court cannot proceed simultaneously under such circumstances. We are fortified, in our view, by an earlier decision of a learned Judge of this Court in Muhammad Amin Muhammad Bashir Ltd. v. Zafar Cotton Ginners PLD 1.974 Note 4 at p.

30. It is pertinent to point out that according to the averments made on behalf of the said appellant in the affidavit filed alongwith the said application, the said appellant has filed a suit for recovery of Rs.46.68 million in this Court which arose from the same contract which was the subject-matter of dispute between the parties in the arbitration proceedings. However, the matter which was referred to arbitration relates to damages claimed by the appellant in H.CA. No.147/93 alongwith two other co-plaintiffs on account of breach committed by the other appellant. It would thus be seen that the subject-matter of the two proceedings is not identical under such circumstances, in our opinion, the provisions of section 35 of the Arbitration Act were not attracted at all. Even otherwise it would be absurd to hold that a defendant by filing a counter-case before a Court of law can frustrate the arbitration proceedings pending before an Arbitrator. Although the learned Single Judge has dismissed C.MA. tvo.653/92 for somewhat different reasons but for the aforesaid reasons we are of a firm view that such application filed on behalf of the appellants was completely misconceived.

4. No other ground has been urged before us on behalf of the two appellants. However, for the aforesaid reasons, we find no force in the two appeals and the same are, therefore, dismissed in limine together with the miscellaneous applications respectively fixed for orders today alongwith the said appeals. H.B.T./M-1964/K Appeals dismissed.