P L D 1960 (W (PLP)

6. Mr. Ishanul Haq for the plaintiff, has opposed the application, and has raised the following four contentions :‑ (1) That the defendants 2, 3 and 4 are not parties to the arbitration agreement. (2) That the conduct of defendants 2, and 3 who were accused of mala fides is the subject‑matter of the suit, and they being the subordinates of the Municipal Commissioner, the matter should not go to him for arbitration. (3) That the plaintiffs had themselves invoked the arbitration clause earlier, but the defendant No. 1 had not agreed to go to arbitration ; (4) That the defendant No. 1 has filed a written statement in the earlier suit (S. No. 247 of 1958) wherein a written statement was filed by the Municipal Commissioner in which the plaintiff's claim was denied on merits, and that, therefore, they cannot now ask for the stay of this suit under section 34 of the Arbitration Act. I shall now proceed to deal with these contentions :

7. As for the first contention that the defendants 2, 3 and 4 are not parties to the agreement, the short answer is that the claim of the plaintiff being based upon the breach of the contract which contains the arbitration clause, it really is directed against the Municipal Corporation, and the plaintiff cannot get out of the arbitration clause merely by impleading certain officers of the f Corporation or the subsequent contractor to whom the work has now been awarded. If I was to accept this contention, it would amount to nullifying the arbitration clause to which the parties had bound themselves at the time of the contract, and to which they still adhere. I, therefore, have no hesitation in rejecting this contention.

8. As regards the second contention that the conduct of defendants 2 and 3 would be a subject‑matter of inquiry in this case and that, therefore, the Municipal Commissioner to whom these officers were subordinate should not be allowed to arbitrate, it appears to me that if this plea was to be countenanced it could be urged in almost every such suit that the arbitration clause should not be given effect to, because normally in every case of a dispute between the Corporation and the contractor, the conduct of some of its officers who were concerned with the execution of the work and the performance of the contract, would be in question. When a contractor signs an agreement with the Corporation for the execution of certain work, he should be deemed to be fully aware of the fact that in case of any dispute between him and any officer of the Corporation regarding the work, the matter will go for the arbitration of the Municipal Commissioner. The Contractor, therefore, cannot get out of the arbitration clause merely by impleading some of the officers of the Corporation as defendants in the suit which the contractor may choose to institute in respect of this contract. 1, therefore, find no force in this contention.

9. As regards the third contention that the plaintiffs themselves invoked the arbitration clause at an earlier occasion, and the Corporation have not availed of it, the only document to which Mr. Ihsanul Haq could refer me to, is a letter dated 30‑9‑1957. marked D. This letter was addressed by the plaintiff No. 1 to the Executive Engineer Karachi Municipal Corporation, and this is what was said with regard to arbitration :‑ "As by your attitude and dealings which have now reached to an intolerable stage and caused disputes of various nature, we would like to refer the matter to the Chief Officer, Karachi Municipal Corporation for arbitration under clause 39 of the agreement and in the meantime we shall be obliged to have your reply as early as possible." This is not the way to invoke the arbitration clause and I find that all that the plaintiff No. 1 had done was that he had written to the Executive Engineer that he would like to refer the matter to the Chief Officer for arbitration under clause

39. But did he write to the Chief Officer or the Municipal Commissioner asking for arbitration and invoking clause 39 ? There is no evidence C on record that he did. A mere passing reference like this in a letter addressed to the Executive Engineer does not amount to the invoking of arbitration clause against the Corporation, and as such it cannot be said that the Corporation failed to avail of this clause. I accordingly reject this contention.

10. The fourth contention is, however, substantial. The copy of the plaint in the earlier suit (S. No. 247/53) is on the file of this case and is marked H. In reply to this plaint, a written statement was filed on behalf of the Corporation. A copy of it was also produced and is on the record of this case. This written statement, which was on merits, was verified by the Municipal Commissioner Mr. S. H. Qureshi on his personal knowledge. I would only like to reproduce paras. 4, 5 and 9 of this written statement :‑ "

4. That para. 5 is denied It is submitted that according to the terms and conditions of the agreement obtaining between the parties, enclosed herewith and marked annexures 'D' and `E', the defendant was not to grant a permit for materials to the plaintiffs, but the staff of the defendant however accommodated the plaintiffs in this regard and granted to them letters in support of their application to the Iron and Steel Controller for the grant of the said permit. It is further submitted that all co‑operation was extended by the staff of the defendant to the plaintiff for the completion of the market in question and the plaintiff's allegations are wholly untrue.

5. That para. 6 is denied. It is further submitted that the defendant ever withheld payment of the rightful dues to the plaintiff, excepting once, when under the orders of the High Court of West Pakistan in Civil Suit No. 66/57‑Mumtaz Begum v. Haji Ibrahim and others‑a sum of Rs. 5,399‑6‑0 was withheld by the Accounts Department of the defendant. The value of the material that had been left by the plaintiff on the site is Rs. 1,978 only and not Rs. 20,000 as alleged in the plaint, and the plaintiff has already been informed of it per list of materials annexed with the Executive Engineer's letter dated 7‑2‑58, enclosed herewith and marked annexures `F' and `G'.

9. That para. 10 is denied. It is further submitted that the incomplete work in question has formally been entrusted to the defendant No. 2 on 13‑1‑58 since when he has started the actual construction of the incomplete building and the plaintiff's request for grant of injunction is therefore wholly misconceived. It is further submitted that the action taken by the defendant against the plaintiff is warranted both by the law and the facts of the case, and the plaintiffs are not entitled to claim any accounting from defendant No. 1 till the defendant No. 2 has completed the building and his final bills are settled and paid up by defendant No. 1 and the plaintiff's suit for accounting is therefore premature."

11. The matters referred to in the above paragraphs of the Written Statement are again to be directly and substantially in issue in the present suit, and though it is true that ‑ the present incumbent of the office of the Municipal Commissioner is another person. I am of the view that in view of the categorical assertions and denials made on behalf of the Corporation in its Written Statement in the earlier suit arising out of the same contract and substantially on the same cause of action and verified by the then Municipal Commissioner, it would embarrass the present Commis sioner in an arbitration proceeding which will go to him if this suit is stayed in consequence of this application.

12. The law on the point is well settled. The jurisdiction of the Court is not ousted because the plaintiff in the suit was a party to an agreement to refer the matter in dispute to arbitra tion. But when the parties have preferred a private tribunal s for the decision of their disputes, the Court should refer the parties to the tribunal which they have chosen, unless there be a good reason for not doing so. It is, therefore, incumbent upon the defendant who prays for the stay of this suit, to make out a sufficient case why the matter should be referred to arbitration in accordance with the arbitration agreement. In my opinion, however, there is a sufficient reason in this case for not referring the matter to arbitration, because the Municipal Commissioner had filed a Written Statement on the same matter to which I have referred to earlier. I may also note that the defendant No. 4 has already filed his Written Statement in this suit.

13. I do not, therefore, find it to be a fit case for the stay of the suit, and accordingly dismiss the defendant's application under section 34 of the Arbitration Act. There will, however, be no order as to costs. K. M. A. Application dismissed.