PLD 2007 Lahore 678 (PLP)

SYED ZAHID HUSSAIN, J.

There is a suit instituted by the respondent, for recovery of Rs.100,000,000.00 as damages which is pending before the Civil Court at Lahore. In that, the appellants-defendants made an application under section 34 of the Arbitration Act, 1940 for staying the proceedings therein in view of arbitration clause in the Hiring Contract between the parties. The said application was contested by the respondent-plaintiff and was ultimately dismissed by the learned trial Court vide order dated 13-2-2006 primarily on the ground that in such a suit for damages the matter cannot be referred to arbitrator. This appeal under section 39 of the Arbitration Act, 1940 has been filed to assail the same.

2. The learned counsel contends that the view taken by the trial Court is unwarranted: by law as the arbitration clause was comprehensive enough to take care of any dispute arising in respect of the contract or in any way relating thereto. It is contended that the parties are bound by their commitment and agreement and the only forum for them was as indicated by clause 11 of the Hiring Contract. Makes reference to Director Housing A.G's Branch Rawalpindi v. Messrs Makhdum Consultants Engineers and Architects 1997 SCMR 988, Messrs Pakistan Associates Construction Ltd. v. WAPDA and another 1989 MLD 203, Ram Chandra Ram Nag Ram Rice and Oil Mills. Ltd. v. Howrah Oil Mills Ltd. and another AIR 1958 Cal. 620; Rungta Sons Private-Ltd. v. 3ugometal Trg. Republike and others AIR 1959 Cal.423 and Lalchand Dharamchand v. Alliance Jute Mills Co. Ltd. AIR 1973 .Cal- 243 to support his contentions.

3. The learned counsel for the respondent, on the other hand, has endeavored to support the order passed by the learned trial Court and contends that such a claim for damages made by the respondent-plaintiff is not covered by the arbitration clause in the Hiring Contract. He cites the Universal Life and General Insurance Co. Ltd., Lahore v. Ejaz Mahmood PLD 1978 Lah. 475 and Government of N.-W.F.P., v. Moheebullah 1990 CLC 1703.

4. The respective contentions of the learned counsel and precedents cited by them have been considered.

5. The existence of arbitration clause i.e. clause 11 of the Hiring Contract is not in dispute. Its binding nature is also beyond any controversy in view of the legal position stated in 1997 SCMR 988 (supra). It was observed therein that "The respondents at the time they entered into these contracts .were fully aware that in the event of a dispute arising between them and the appellant under the contracts, the same is to be referred to the A.G. or a .person nominated by him, as the sole arbitrator. The respondents having entered into the arbitration agreement voluntarily and knowing fully well the consequences of the arbitration clause could not be allowed to resile from it lightly'' . It emphasizes the importance of agreements between the parties and their contractual obligations.

6. In order to consider the scope of the relevant clause of the Hiring Contract, the same may be reproduced, which is as follows:-- "(11) If any disputed arises in respect of this .contract or in any way relating thereto, the decision of which. is not expressly A provided herein or in the conditions ,the same shall be referred for decision to an officer not below the rank of a General Manager T & T Department to be nominated by the Director-General, T & T and whose decision shall be final and binding on the parties. " The perusal of this clause would show that its amplitude is quite extensive and wide. It is comprehensive enough to cover "any dispute arising" in respect of the contract or "in any way relating thereto". The claim for damages made by the respondent necessarily stems from arises and relates to the Hiring Contract. It has direct nexus with the Hiring Contract. It is covered by this clause. The contention of the learned counsel for the appellants that even a claim for damages of the nature claimed by the respondent-plaintiff in the suit has substance and finds support from Rungta Sons Private Ltd. v. Jugometal Trg. Republike and others AIR 1959 Calcutta 423 and Lalchand Dharamchand v. Alliance Jute Mills Co. Ltd. AIR 1973 Calcutta

243. In such view of the matter when there was admittedly an arbitration clause, which had wide scope of referring disputes for decision to a specified arbitrator, the provisions of section 34 of the Arbitration Act, 1940 were duly attracted calling for the stay of proceedings in the suit. Therefore, the view taken by the learned trial Court was erroneous in law and is not sustainable. In view of the above, order dated 13-2-2006 is set aside. The appeal is accepted. No order as to costs. S. A. K./P-27/L Appeal accepte