2009 PLP 1396 (MLD)

EJAZ AFZAL KHAN, J.

Major General (Rtd.) Fazle Ghafoor, appellant herein, has assailed the order, dated 20-5-2008 of the learned Civil Judge, Peshawar, whereby he returned his plaint for presentation in the proper forum.

2. Learned counsel appearing on behalf of the appellant contended that jurisdiction of Civil Court at Peshawar was not barred when the subject matter of dispute is situated and cause of action has arisen within its territorial jurisdiction notwithstanding arbitration clause in the agreement, which too, does not bar its jurisdiction. The learned counsel next contended that if at all the respondents want that the dispute, in view of the arbitration clause be referred to arbitration, they instead of moving an application for the return of plaint under Rule 10 of Order VII could have moved an application for the stay of proceedings under section 34 of the Arbitration Act, 1940. While pressing C.M. No. 218 of 2009 moved under Rule 1(2)(a) and (b) of Order XXIII read with section 107 of the C.P.C., the learned counsel contended, that the appellant be permitted to withdraw the suit in hand with the permission to bring a fresh, as it suffers from a formal defect which is likely to culminate in its failure.

3. As against that, the learned counsel appearing on behalf of the respondents contended that since all the questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them, in view of the provisions contained in section 31 of the Act are to be decided by the Court in which the award under the agreement has been or may be filed, no other Court will have jurisdiction to proceed with the matter. The learned counsel by referring to the arbitration clause contended that since the arbitration proceedings are to take place at Lahore and the expression Court as defined in section 2(c) of the Act means a Civil Court having jurisdiction to entertain a suit with respect to the subject matter of reference, the Civil Court at Peshawar will not have jurisdiction -to proceed with the matter and that the Court below acted well within its rights by ordering the return of plaint.

4. We have gone through the record carefully and considered the submissions of the learned counsel for the parties.

5. Before we proceed ahead to discuss the merits of the case, it is worthwhile to refer to the relevant paragraph of the agreement dealing with arbitration, which reads as under:-- "If any question or difference or dispute regarding the terms of this Agreement shall arise between the parties which cannot be settled amicably, then, and in all such cases, the same shall be referred to arbitration by one Arbitrator to be appointed by the mutual consent of the parties and failing such mutual consent, to be appointed by the Court. The provisions of the Arbitration Act, 1940 shall apply to such arbitration, which shall be held in Lahore. The award under such Arbitration shall be final and binding on the parties."

6. A perusal of the above quoted clause, would reveal that it simply stipulates about the arbitration, place thereof and the application of the provisions of the Arbitration Act. This clause despite stipulating that arbitration shall be held at Lahore does not stipulate the ouster of jurisdiction of the Civil Court at Peshawar. Even 2(c) of the Act does not come in the way of the Civil Court at Peshawar by any stretch of imagination. What it requires and lays stress on is that the Court must be a Civil Court and it must have jurisdiction to entertain a suit vis-a-vis the dispute referred to arbitration. The Civil Court at Peshawar under no canons of interpretation would be shorn of jurisdiction, when the subject matter of dispute is admittedly situated and cause of action, as per .averments in the plaint, has arisen within its territorial jurisdiction. Section 31(2) of the Act, too, would not come in the way of the Civil Court when all the questions enumerated therein can be decided by the said Court. The respondents could, well, move an application for the stay of proceeding under section 34 of the Act in case they feel that the plaintiff has not done something good by leaping over the arbitration clause. There was hardly any occasion to ask for the return of the plaint in the hand. In the cases of Uzin Export Import Foreign Trade Co. v. Macdonald Layton and Co. Ltd., Karachi and another (1996 SCMR 690) and Messrs Eckhardt and Co., Marine GmbH v. Muhammad Hanif PLD 19.93 Supreme Court 42, the Hon'ble Supreme Court after considering a string of judgments held that even a clause in the agreement between the parties stipulating arbitration in a foreign country, cannot bar the jurisdiction of a Civil Court within the country. When seen in this context, we do not feel inclined to uphold the order of the trial Court, returning the plaint.

7. For the reasons discussed above, this appeal is allowed, the impugned order is set aside and the case is sent back to the learned trial Court for decision afresh in accordance with law. The appellant may, if so advised, move the trial Court for stay of proceedings under section 34 of the Act. Since we have allowed the appeal and sent the case back to the learned trial Court, the appellant may, if so advised, move the trial Court afresh for withdrawal of suit with the permission to bring a fresh one. H.B.T./171/P Appeal allowed.