2013 PLP 451 (CLD)

ABDUS SATTAR ASGHAR, J.

Petitioner has invoked the revisional jurisdiction of this Court under section 115 of Code of Civil Procedure 1908 to impugn the order dated 26-10-2011 passed by learned Civil Judge 1st Class Lahore.

2. Succinctly the facts leading to this Civil Revision are that the petitioner a private limited company incorporated under the Companies Ordinance, 1984 is running educational institutions in the name and style of 'The City Schools'. The petitioner had employed the respondent Azmat Nawaz as Chief Executive Officer on 1-8-2009 initially for a period of three years vide contract dated 29-5-2009 enumerating various terms and conditions. On 7-10-2009, the petitioner company removed the respondent from the post of Chief Executive Officer and directed him to act as Vice-Chairman and thereafter also lodged a suit for recovery, compensation and damages amounting to Rs.697,195,270 against the respondent on 24-3-2010. On 8-5-2010 respondent filed an application under section 34 read with section 8 of the Arbitration Act 1940 with a prayer to stay the proceedings of the said suit and appointment of Arbitrator in terms of Clause 15 of the employment contract dated 29-5-2009. The said application was resisted by the petitioner. The learned Civil Judge after providing opportunity of hearing to the parties accepted the said application vide order dated 1-3-2011 in the following manner:-- "(5) Admittedly, defendant join the plaintiff and a contract dated 29-5-2009 was prepared and signed by both the parties. There is no dispute to this extent between the parties. I have perused the said document and clause 15 of the said contract between the parties regarding arbitration and is very much clear, Clause 15 is hereby reproduced as under:- "Any dispute of difference whatsoever arising out of or in connection with this contract or breach thereof shall be referred to and finally resolved by arbitration by a sole arbitrator to be jointly appointed by the parties from amongst the retired judges of the High Courts or of the Supreme Court of Pakistan. The decision of the sole arbitrator shall be conclusive and binding on the parties. The arbitration shall take place in Lahore and shall be governed by the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment hereof. (6) I have also taken consideration of the arguments of the learned counsel for the parties and material present on record as well as the contents of the plaint. Certainly, a dispute arose between the parties regarding violation of the contract executed between the parties. Both the parties blamed each other for its violation. This suit has been filed on the basis that defendant violated the contract and thus caused a great loss to the plaintiff and it also embezzled some amount which he got with regard to said contract dated 29-5-2009. Certainly, it is outcome of the contract. Clause 15 of the said contract is very much clear according to which any dispute or differences which would arise in connection of the contract or breach thereof shall be referred to and finally resolved by arbitration by a sole arbitrator. Hence, clause 15 is also binding upon both the parties including plaintiff. Arbitration clause in the contract is neither vague nor defective. In the circumstances, parties are bound by arbitration clause to get their disputes resolved by form agreed upon. Certainly, grant or refusal of stay was depended upon peculiar facts and circumstances of each case and which required a stay. In this case as per law i.e. under section 34 of the Arbitration Act, 1940. It is also note worthy that already applicant/defendant had issued a notice to respondent/plaintiff for the appointment of arbitrator while suggesting three names and same had been acknowledged by the respondent/plaintiff in para 3 of the written reply of the application in hand. It is also alleged in para 3 of the preliminary objections of the written reply submitted by the respondent/plaintiff that plaintiff/defendant 'never ever contacted the plaintiff nor tried to settle the dispute mutually and amicably in any way'. Thus respondent/plaintiff himself had acknowledged the necessity to resolve the dispute amicably. In the circumstances, this application is hereby accepted and proceedings of this case is hereby stayed under section 34 of the Arbitration Act, 1940. File be consigned to the record room after its necessary completion." Being aggrieved of the order dated 1-3-2011 the petitioner filed F.A.O. No.266 of 2011 under section 39(1)(V) of the Act which is sub judice before this Court. In the meanwhile on 10-3-2011 respondent filed another application under section 8 read with section 20 of the Arbitration Act 1940 with a prayer to appoint an Arbitrator out of the proposed Hon'ble retired Judges of Superior Courts. Consequently petitioner-company lodged application under Order VII, Rule 11, of Code of Civil Procedure 1908 seeking rejection of the application under section 8 read with section 20 of the Act. The said application was resisted by the respondent. The learned Civil Judge vide order dated 26-10-2011 dismissed the petitioner's application under Order VII, Rule 11, C.P.C. The said order dated 26-10-2011 is impugned through this Civil Revision.

3. It is argued by learned counsel for the petitioner that learned Civil Judge fell in gross error while dismissing the petitioner's application under Order VII, Rule 11, C.P.C.; that in the earlier order dated 1-3-2011 the learned Civil Judge had not passed any order with regard to appointment of Arbitrator, therefore, subsequent application under section 8 read with section 20 of the Act is not maintainable; that principle of res judicata in terms of section 11 of the C.P.C. is applicable. He has taken reliance upon Atta Muhammad Khan and another v. Lasbella Cement Ltd. (1999 CLC 1795) and Muhammad Anwar v. Messrs Associated Trading Co. Ltd. and others (1989 MLD 4750).

4. On the other hand learned counsel for the respondent has contended that petitioner's prayer in his earlier application for appointment of Arbitrator was not finally decided by the learned trial Court in its order dated 1-3-2011, therefore, provisions of section 11 of the C.P.C. are not applicable and there is no bar upon the petitioner to lodge application under section 8 read with section 20 of the Arbitration Act, 1940 to seek appointment of the Arbitrator in terms of Clause 15 of the employment contract; that the learned trial Court has rightly rejected the petitioner's application under Order VII, Rule 11, C.P.C.; that the impugned order dated 26-10-2011 does not suffer from any legal infirmity and that petitioner has no cause to invoke the revisional jurisdiction of this Court.

5. Arguments heard. Record perused.

6. It is settle principle of law that in order to apply the bar of res judicata it is imperative for the Court to first determine as to whether issue was raised, determined and decided in the former proceedings before the parties. In this case bare reading of the earlier order dated 1-3-2011 passed by learned trial Court on an application under section 8 read with section 34 of the Act makes it crystal clear that only the proceedings of the suit for recovery lodged by the petitioner were stayed and no order was passed with regard to appointment of Arbitrator. Since no findings were recorded by the learned trial Court on this specific dimension of the matter, therefore, invocation of doctrine of res judicata is out of place in the circumstances of this case. Reliance be made upon Hafiz Noor Muhammad and others v. Ghulam Rasul and others (1999 SCMR 705) and Mst. Iram Cheema v. Auqaf Department (1999 SCMR 2289).

7. Needless to say that application under section 20 of the Arbitration Act 1940 is till pending before the learned trial Court, therefore, the petitioner's objection with regard to the maintainability of the said application is pre-mature. The petitioner can raise this plea before the learned trial Court if so solicited. I have gone through the facts of the cited case of Muhammad Anwar which are altogether distinct and distinguishable from the facts of this case. In the cited case matter had already been decided between the parties before filing of the subsequent proceedings, therefore, the dictum laid down in the cited case cannot by siphoned on to the facts of this case.

8. For the above reasons, I do not find any legal infirmity in the impugned order dated 26-10-2011 passed by learned trial Court, therefore, this Civil Revision having no merit is dismissed. KMZ/C-2/L Petition dismissed.