P L D 1952 Lahore 249 (PLP)

S. A. RAHMAN, J.‑This judgment will dispose of a first appeal from an order passed by Syed Mohsin Tirmizey, Sub- Judge 1st Class, Lahore, rejecting a plaint in a suit brought by Malik Ali Akbar against Metro Goldwyn Mayer India Ltd., Dinga Singh Building, The Mall, Lahore, for recovery of Rs. 18,000 as damages for an alleged breach of contract. The plaintiff appellant is running the Plaza Cinema at Lahore and in that capacity he worked as exhibitor of films of which the defendant was a distributor. The defendant company has its head office at Bombay and a branch office at Lahore. The contract on which the suit was founded was entered into at Lahore on the 8th April 1949. It has been placed on the file and marked Exhibit P. 1. The suit was resisted on the ground that clause 52 of the agreement inter-parties ousted the jurisdiction of the Lahore Courts. The agreement consists of several printed clauses to which some typed clauses have been added. Clause 52 is included in the printed part of the agreement and is in the following terms :‑ "This agreement is accepted in Bombay and all matters, claims and disputes arising in respect of the terms and con ditions hereof are to be settled and paid by the parties in Bombay and any legal proceedings in respect of any claims, matters or disputes on any account whatsoever shall be instituted by the exhibitor in the High Court of Judicature at Bombay which Court shall alone have jurisdiction. Noth ing in this clause contained shall, however, affect or lessen the distributor's rights as to arbitration as provided for in the succeeding clause." The next clause 53 reads as follows :‑ "All disputes, differences or claims arising out of and/or in connection with this agreement or any other agreement between the parties hereto shall, should be distributor so elect and at the distributor's option, be referred to the arbitration of the Bombay Chamber of Commerce, according to its rules for the time being in force. Any award made shall be binding on the parties and may be filed by either party without notice to the other in the High Court of judicature at Bombay, or should the distributor so agree, an independent arbitrator agreed to by both parties may be appointed." The defendant distributor had to supply films which the plaintiff had to exhibit at his cinema in Lahore. The agree ment was to last for a year commencing from the 1st July 1949. The claim for damages was based on the fact that the defendant had served the plaintiff with a notice on the 1st April 1950, intimating that he had terminated the contract on the allegation that the plaintiff had been guilty of contravening certain conditions of the agreement. The plaintiff's case was that he had not been guilty of any such breach. It was set out in the plaint that the defendant company did not supply certain pictures to the plaintiff in accordance with the contract as a result of which the plaintiff had suffered a loss of Rs. 18,000 as his share of the profits. On the facts admitted in this case in the written statement it is clear that part at least of the cause of action for the suit had arisen in Lahore. The contract, of which a breach was alleged, had admittedly been entered into at Lahore. The pictures which were to be supplied were also to be exhibited at Lahore. The question, therefore that falls for determina tion is whether clause 52 of the agreement precludes the plaintiff from having recourse to the Lahore Courts which undoubtedly have jurisdiction. Malik Muhammad Amin appeared for the appellant before me, but the respondent was unrepresented. I, therefore, did not have the advantage of hearing a full argument in the case. Malik Muhammad Amin has drawn my attention to the pro visions of section 28 of the Contract Act. This section lays down that every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract by the usual legal proceedings in the ordinary tribunals or which limits the time within which he may thus enforce his rights, is void to that extent. Exception (1) to the section, however, enacts a saving clause in favour of contracts to refer to arbitration any dispute that may arise between the parties. Learned counsel contends that inasmuch as the plaintiff under clause 52 was forced to go to the Courts at Bombay, which are foreign Courts, he was restricted absolutely from enforcing his rights under the contract by the usual legal proceedings in the ordinary tri bunals of this country, within the meaning of this section. He has been unable, however, to cite any authority directly in support of this contention: He has relied on the Full Bench judgment of this Court reported as Musa Ji Lukman Ji v. Durga Das, A I R 1946 Lah. 57. In that case, the agreement between the parties provided to that effect that a suit concern ing disputes arising between them on the basis of that contract should be instituted in one only out of two competent Courts having territorial jurisdiction over the subject‑matter of that suit. Such an agreement was held to be not within the mischief of section 28 of the Contract Act. The authority, therefore, is not apt in the circumstances of the present case. Learned counsel merely referred to the observations of Sir Abdur Rahman, J. in that case at page 61 of the published report to the effect that agreements of the character that fell for consideration in that case could not attract section 28, Contract Act, inasmuch as they do not absolutely restrict any party from enforcing his rights under the contracts by the usual legal proceedings in the ordinary tribunals of the country. The words "of the country" in this observation were particularly stressed by the learned counsel. The question, however whether a clause in a contract providing that all disputes will be referred .for decision to a foreign tribunal would be hit by section 28 of the Contract Act or not, was not directly touched upon in that judgment. The arguments advanced at the Bar by the learned counsel for the appellant were not very helpful. I, therefore, reserved judgment and looked up the case‑law on the point myself. The correct rule in such cases seems to be that a clause of this character in a contract providing for determina tion of all disputes arising between the parties to the contract, by a foreign tribunal, must be construed as a submission clause for arbitration purposes. It does not really oust the jurisdiction of the local Courts but the clause has been invoked for the purpose of asking for stay of a suit brought before the local tribunals in order that agreement by which the parties bound themselves, might be given effect to as an arbitration agreement. Reference in this connection may be made to Law v. Garret, (1878) 8 Ch. D 26 C A ; Austrian Lloyd Steamship Co. v. Gresham Life Assurance Society Ltd. (1903) 1 K B 249 ; Kirchner c Co. v. Gruban (1909) 1 Ch. 413 ; The Cap Blanco (1913) p 130 ; Kureshi & Sons v. Soomar Haji, A I R 1921 Sind 202 (S. B.) and Haji Abdulla v. G. R. Stamp, A I R 1924 Bom. 381. It is clear, therefore, on a persual of these authorities that the jurisdiction of the local Courts is by no means ousted, and it is only a question for consideration whether a suit brought before a local tribunal should be stayed or not, in the face of such an arbitration clause which would clearly fall within section 34 of the Arbitration Act. Under, this section it is not incumbent to stay proceedings but the Court has a discretion in the matter. This section corres ponds to section 4 of the English Arbitration Act, 1889, which has been referred to in some of the English authorities cited above. The rule is stated in similar terms in Halsbury's Laws of England, para. 42, p. 42 Volume I (Second Edition Hailsham). The circumstances in the present case are peculiar. The defendant company has itself brought a suit against the plaintiff in a Lahore Court claiming damages for breach of certain clauses of the agreement between the parties. It seems anomalous that in the circumstances the defendant company should insist that the plaintiff should be forced to go to the Bombay Courts to obtain relief against the defendant. It is well‑known that there are difficulties in the way of Pakistanis going to India‑ inasmuch as they have to obtain permits even for temporary visits to the country. It would be necessary for' the plaintiff to contract his counsel person ally, frequently, if he has to lodge a suit at Bombay. He would be accordingly inconvenienced by these permit restric tions. He would even have the right to claim a set off in plaintiff's suit here. In Kureshi of Sons v. Soomar Hafi A I R 1921 Sind 202 Crouch A. J. C. decided on the facts of the case under consideration that there were excellent reasons why the parties should not be compelled to resort to the tribunal at Bushire (Iran) to which they had agreed to refer their dis putes. I find that the circumstances of the present litigation would justify a refusal on the part of the Lahore Courts to staty the suit lodged by plaintiff here. The view taken by the learned Sub‑Judge that the Lahore Courts had no jurisdiction at all is obviously erroneous. I, therefore, allow this appeal, set aside the order passed by the learned Sub‑Judge and direct him to proceed with the case in accordance with law. As the respondent is not represented before me, I make no order as to costs in this Court. A. H. Appeal allowed.