2008 PLP 1592 (CLC)

MUSHIR ALAM, J.

In this suit for recovery of Rs.1,30,53,800 filed by the plaintiffs against the defendant. Before filing the written statement defendant moved an application under section 34 of the Arbitration Act, inter alia, contending that the Agreement on the basis of which the instant suit has been filed contains the Arbitration Clause. It was further asserted that the earlier Agreement was succeeded by supplementary agreement which retained such arbitration clause, therefore, in terms of section 34 of the Arbitration Act the matter is to be referred to the Arbitrator. Mr. M.G. Dastgir, learned counsel for the defendant, in support of his contention, has placed reliance on Messrs Uzin Export and Import Enterprises for Foreign Trade v. Messrs M. Iftikhar and Company Limited 1993 SCMR 866 (872-A) and Director Housing, A.G's Branch, Rawalpindi v. Messrs Makhdum Consultants Engineers and Architects 1997 SCMR 988 (995-A and 997-C). As against above, Mr. Muhammad Ikram Siddiqui, learned counsel for the plaintiffs vehemently opposed the application, he contends that the suit is based on subsequent agreement which does not contain arbitration clause in so many words. In support of his contention, he cited the case-laws reported as (1) Messrs Hafiz Abdul Aziz Yousufani v. Messrs Haji Ali Muhammad Abdullah and Co. PLD 1967 Kar. 698, (2) Jamshed Alam Khan v. Haq Nawaz and another PLD 1973 Kar. 31, (3) Maganlal Jhawar and others v. Messrs M.R. Khan and Co. (Jute) Ltd. PLD 1968 Dacca 361, and (4) State Bank of Pakistan, Karachi v. Messrs Naqson and 2 others PLD 1970 Kar.

490. I have heard the arguments and perused the record. From the record, it appears that the parties entered into an Agreement of sale of immovable property dated 30-1-1989 on terms and conditions stipulated therein including Clause 8 incorporating provision for arbitration which clause read as under:

"That in case of any dispute between the parties regarding terms and conditions of this agreement or regarding the interpretation of any of the clauses the same shall be referred for adjudication to an arbitrator to be nominated with the mutual consent of both the parties. The decision of such arbitrator shall be final and binding on the parties and their nominees." It further appears that on account of some renegotiation a supplementary Agreement was executed between the parties on 1st October, 1997. The Supplementary Agreement only substituted Paras. 1 and 4 of the earlier sale agreement referred to above. Under Clause 10 of the Supplementary Agreement all the other terms and conditions of the earlier Agreement remained intact. Clause 10 of the Supplementary Agreement dated 1st October, 1997 reads as follows:

"That all other terms and conditions of the said Agreement of sale dated 30-1-1989 shall remain in the same." Section 34 of the Arbitration Act, 1940 provides for the resolution of the disputes in case where one of the party to an agreement attempts to fallout of the agreement and resort to legal proceedings in Court. Other party to the agreement in terms of section-34 of the Arbitration Act, 1940 may compel party falling out of the bargain entered into prior to the institution of the suit to resort to Arbitration. Mr. Muhammad Ikram Siddiqui, learned counsel has contended that since the earlier agreement was succeeded by the Supplementary Agreement, therefore, suit is not covered by section 34 of the Arbitration Act. For such proposition, he has placed reliance on a Division Bench case reported as Maganlal Jhawar and others v. Messrs M.R. Khan and Co. PLD 1968 Dacca 361, the facts of the reported case appears to be that earlier agreement between the parties contained arbitration clause, some difference arose between the parties such differences were settled and. another agreement was executed. Difference again cropped up, matter came up in Court. Application under section 34 of the Arbitration Act was made. Such application, was dismissed, observing that subsequent agreement in fact was the settlement between the parties and formed independent understanding between them. It did not contain any arbitration clause. Therefore, the facts of the said are quite distinguishable. In the instant case, subsequent agreement has kept all the terms and conditions of earlier agreement intact and alive including arbitration clause. In the case of State Bank of Pakistan (supra), the only some of the claims raised in suit were referable to arbitration. Arbitration clause was invoked. Under the circumstances, the Court refused to refer some part of the claim in suit to the arbitrators, Court preferred to decide entire dispute itself, in the instant case the plaintiff was not able to show that some of the dispute in suit are not triable by the arbitrators, as such, Court should decide the whole controversy. In the case of Messrs Hafiz Abdul Aziz Yousufani & Co. (supra), the Court refused to stay the proceeding. In said particular case, the forum agreed for reference of the dispute since had ceased to exist. The Court concluded the arbitration clause since has frustrated, suit could not be stayed. It is not the position in this case. In the case of Jamshed Alam Khan (supra), the arbitration clause was held to be unworkable such clause was opined by the Court to be vague and uncertain and same could not be effectively enforced. In the instant case the arbitration clause as reproduced above clearly demonstrates, desire and intention of both the parties to resolve the dispute under the agreement by reference to the decision of the arbitration to be appointed by mutual consent. Such clause was retained in terms of Clause 10 of the Supplementary Agreement which has already been produced above. It is settled position in law that once a party enter into a bargain to refer a dispute to the arbitration then unless it is shown that the 'defendants are not ready and willing to abide by such terms the Court generally enforces such bargain. Mr. Ikram vehemently urged that claim in suit is not based on breach of earlier agreement but on breach of Supplementary Agreement, whether the claim is on account of breach of main agreement or of Supplementary Agreement, both are covered by arbitration clause, as discussed above. Accordingly, this application is allowed and the proceedings of the instant suit are stayed. It is further ordered that the dispute raised in the suit be referred to the arbitrator in terms of Clause 8 as reproduced above. Learned counsel for the plaintiffs, Mr. Ikram requests two weeks time to suggest three names of the arbitrators to the defendants, in case no appeal is preferred against the orders passed today. He may file the name of the proposed arbitrator with advance copy to Mr. M.G. Dastgir, learned counsel for the defendant, who undertakes to sit with plaintiff and appoint arbitrator by consent. The listed application stands disposed of in terms set out above. M.B.A./A-93/K Order accordingly.