P L D 1967 Karachi 698 (PLP)

Date of hearing : 23rd May 1966. This Miscellaneous Appeal is from the order of the First Additional District Judge, Hyderabad in First Class Suit No. 86 of 1962 dated 24th July 1963. By this order the learned Court stayed the suit under section 34 of the Arbitration Act.

2. In order to appreciate the dispute between the parties it may be mentioned that the parties had entered into five contracts for supply of cotton pods. Two of the contracts are dated 29th May 1959 and the rest are dated 12th June, 17th June and 24th June 1958 respectively. By these contracts the respondent agreed to supply 50,000 maunds of cotton pods. The appellant paid the respondent a total sum of Rs. 2,25,

000. It is not disputed that only a portion of the goods were supplied and the entire quantity of the goods had not been supplied.

3. On 6th March 1961, the appellant filed Suit No. 86 of 1962 far recovery of Rs. 1,81,202/11. In this suit an application was filed on 27th July 1962 on behalf of the respondent under section 34 of the Arbitration Act. The learned Court by order dated 24th July 1963, stayed the suit. This order is challenged in this miscellaneous appeal.

4. In support of the appeal Mr. Naimuddin, the learned counsel for the appellant, has contended that under clause 15 of agreement between the parties their dispute was to be referred to the Board consisting of 5 members of the Sind Cotton Ginners Association, Hyderabad. Each party was to appoint one arbitrator. The learned counsel has contended that in November 1959 the Sind Cotton Ginners Association was dissolved because the Government had withdrawn its recognition on 31st January 1959. It is further pointed out that on 21st April 1960, another Association known as Pakistan Cotton Ginners Association was formed and the arbitration clause was frustrated because the Sind Cotton Ginners Association is no longer in existence. In these circumstances the learned counsel contended that the learned Additional District Judge, Hyderabad was not justified in staying the proceedings under section 34 of the Arbitration Act.

5. It may be pointed out that under section 34 of the Arbitration Act the question whether a suit should be stayed on account of an arbitration clause agreed upon by the parties is left to the discretion of the Court. It would, therefore, be for consideration whether the learned Additional District Judge on the facts of the present case exercised his discretion properly or not. It is not disputed by Mr. Salim Akhtar, the learned counsel for the respondent, that the Sind Cotton Ginners Association was dissolved in November 1959, and another Association had come into existence. It is, therefore, quite clear that the forum to which the parties agreed to refer their disputes for arbitration no longer exists and clause 15 of the agreement between the parties cannot be implemented in the manner it was agreed upon between them. The contention, therefore, of the appellant's counsel that the arbitration clause has been frustrated appears to be well founded.

6. In reply Mr. Salim Akhtar, the learned counsel for the respondent, contended that although .the forum to which the dispute between the parties was to be referred for arbitration no longer exists; but there are provisions in the Arbitration Act under which the matter can be referred for the decision of the arbitrators under the direction of the Court. In support of his contention the learned counsel referred me to a decision of the Indian jurisdiction in Governor‑General‑In‑Council v. Associated Livestock Farm (India) Ltd. (A I R 1948 Cal. 230). In that, case it was observed that having regard to the provisions of the Arbitration Act for appointment of an arbitrator in place of the appointed arbitrator dying or refusing to act, there cannot be said to be any insuperable impediment to arbitration. That may be so. The question however is whether the respondent took any steps under the provisions of the Arbitra tion Act to invoke the aid of the Court for referring the dispute between the parties to arbitration. Nothing has been shown by Mr. Salim Akhtar to convince me that the respondent has ever been willing or ready to adopt this course for getting the dispute between the parties adjudicated through the forum of arbitrators. In my, opinion, therefore, this circumstance cannot be a good ground to support the order of learned trial Court.

7. Besides, Mr. Naimuddin has invited my attention to a decision by Qadeeruddin, J. in Messrs Hafiz Abdul Aziz Cotton Ginning Factory v. Messrs Haji Ali Muhammad Abdullah & Co. and another (P L D 1966 Kar. 197). In that case which was between the parties and relates to the arbitration clause which is before me my learned brother had revoked the arbitration clause on the ground that it had been frustrated. In view of this decision it cannot be legitimately argued that the arbitration clause is operative between the parties.

8. After hearing the learned counsel for the parties, I am satisfied that the learned trial Judge, on the facts of the present case, was not justified in staying the suit. I would, therefore, set aside the order of the learned trial Court and direct the Court below to proceed with the suit in accordance with law. In the circumstances of the present case the costs of this appeal would depend on the result of the suit. K . B. A. Appeal accepted.