1999 PLP 736 (MLD)

5. Aggrieved of the order dated 1-2-1995, appeal was filed before District Judge, which failed and hence this revision.

6. Facts in dispute have been elaborately given in the plaint, which I need not reproduce here for brevity. The question which require determination is the maintainability of application under section 34 of the Arbitration Act, 1940, and interpretation of clause (26) of the Agreement dated 3-4-1990 executed between the parties. Section 34 of the Arbitration Act is given below for convenience: -

34. Power to stay legal proceedings where there is an arbitration agreement.

Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings." Clause (26) of the agreement is in the following words:- "that every dispute, difference or question which may at any time arise between the parties hereto or any person claiming under them, touching or arising out of or in respect of this deed or the subject-matter thereof shall be referred to the arbitration of the General Manager Operation of the Corporation and the decision of the arbitration shall be final binding on the parties."

7. Learned counsel for the petitioner argued that section 34 is in?applicable for, it is not every, arbitration clause in an agreement, which bound down the parties to refer every matter to arbitrator, that, as the penalty was imposed and loss claimed from petitioner under clauses (8) and (9) of the agreement itself, therefore, there is nothing left to be referred to arbitrator, that, action of the respondent being pregnant with mala fide and assertion having been made in the plaint, the matter could only be resolved in suit and not by arbitrator. He also made reference to number of letters documents annexed with the petition and argued that all these facts require recording of evidence, and therefore, the order dated 1-2-1995 by learned trial Judge confirmed in appeal by the D.J. on 7-6-1995 be set aside and trial be ordered. Reference was made to 1994 SCMR 1829, PLD 1993 SC 42 PLD 1985 Karachi 425/345.

8. Conversely learned counsel for the respondents submitted that once a party to agreement has bound down itself to arbitration clause, then every dispute, arising out of such agreement is to be first referred to Arbitrator. Further, that, clause (26) of the agreement dated 3-4-1990, is exhaustive and cover all matter, and if either of the party feels dissatisfied the matter can be resolved by the trial Court, which is still seized of the matter and has only stayed the proceedings to the suit. Learned counsel relied on 1981 SCMR 129 and PLD 1993 SC 42.

9. Before making any observation as to the merits of this case 1, with advantage would reproduce two head notes of 1981 SCMR 129 (Haji Soomar Haji Hajjan v. Muhammad Amin Muhammad Bashir Ltd.):.- (b) S.4

Arbitration

Parties to an agreement expressly choosing through an arbitration clause, a forum other than a Court of law for settlement of their dispute, neither of them, held should normally be allowed to avoid that forum. (c) S.4

Purpose-Sole of Arbitration Act to curtail litigation in Courts and promote settlement of disputes amicably through persons in whom both parties repose their trusts."

10. Similarly, the para matter of application of section 34 of Arbitration Act has been laid down in PLD 1993 SCE 42 (Messrs Eckhardt & Co, Marina Gmbh v. Muhammad Hanif) as under:- "(a) S.34. Stay of suit for reference of dispute to arbitration as per terms of contract between parties

Refusal to stay suit

Essentials--?Considerations weighing with the Court in refusing or allowing stay--?Stay of suit could be refused by Court on its satisfaction that there was no sufficient reason for making reference to arbitration and substantial miscarriage of justice would take place or inconvenience would be caused to parties if stay was granted

No hard and fast rule could be laid down or line of demarcation could be drawn to say in what cases refusal could be made

Grant or refusal of stay was dependent upon peculiar facts and circumstances of each case

Court could make objective assessment and come to conclusion whether stay of legal proceedings (suit) could be granted or refused."

11. Learned counsel for the petitioner has relied on 1994 SCMR 1829????????????????????? (Govt: of N.-W . F. P . through Secretary Forest v. The Devli Kund Forest etc.). The ratio decidendi as laid in the above cited judgment is that where Arbitration clause in the agreement has expressly excluded matter the decision of which has been provided in procedure for dealing with unauthorised cutting of trees, not marked, the dispute of such unauthorised cutting cannot be referred to arbitrator, but only through a civil suit

12. In the instant case, before any proceeding could be held in the suit, the application under section 34 of the Arbitration Act was filed. Although, in the heading of the plaint, a reference is made to mala fide, but without any specification of any act on the part of defendant.

13. The documents referred to in the revision can be brought to the notice of the arbitrator and all other facts including the loss claimed and penalty imposed can be determined. However, if either of the party feels dissatisfied, can object to the decision of the Arbitrator and suit thereafter shall proceed.

14. A bare reading of section 34 of the Arbitration Act shows its object which is to minimize the agony of the parties from facing of protracted trial of suit by referring the matter for arbitration. The only condition precedent for staying the proceedings under the section is that party filing the suit and the party requesting for the stay of the proceeding should have agreed through an agreement that all matters would be referred for arbitration provided that such dispute/matter falls within the compass of the agreement itself.

15. The power to stay the proceedings is not obligatory on the Court but is discretionary. The, court is to see if there are sufficient reasons why the matter should not be referred for arbitration in accordance with agreement reached upon between the parties instead of proceedings with the suit. Of course, this discretion would be exercised by a Court which has got the jurisdiction over the matter otherwise.

16. The submission of the learned counsel that after resorting to clauses (8) and (9) of the agreement and having imposed penalty, the application of clause (26) has become redundant is not of any weight. Clause (26) appears latter than clauses (8) and (9). It caters for all disputes which may arise between the parties or any person claiming under them hence the judgment reported in 1994 SCMR 1829 become in applicable to the facts of the present case. .

17. The insertion of section 34 in the Arbitration Act has got its own object and its effect should not be nullified by the argument that once fraud is alleged in the plaint then the civil Court should not stay the proceedings i.e. should not invoke the provisions of section 34 is misconceived. All statutes and enactments are to be given such interpretation so to make them operative and not to bye-pass them by advancing mere technical objections.

18. In the case in hand, the two Courts below have agreed on the stay of proceedings in the suit after having considered the view point of both the sides. I have also given my anxious consideration to the arguments advanced and, I am of the view that since there exists an all embarrassing clause in the agreement between the parties for referring a dispute to the Arbitrator it would be in the fitness of the things that the matter be referred to the Arbitrator.

19. The civil suit having been stayed by the trial Court and latter confirmed by the appellate Court, I see no force in the instant revision petition and the same is, therefore, dismissed. Clause (26) of the agreement executed between the parties could be invoked in the circumstances of the case if either of the parties so desire and in case of reference/application made to the Arbitrator the same shall be disposed of expeditiously as the very object of the section 34 of the Arbitration Act is to avoid unnecessary litigation between the parties who have earlier mutually agreed to resolve their dispute through Arbitration. Parties are left to bear their own costs. C. M.A./140/P? ?????????????????????????????????????????????????????????????????????????????????? Revision dismissed