' This judgment will also dispose of F. A.
0. No, 8 of 1972 as both the cases is between the same parties and similar questions of law and facts are involved therein.
2. The Capital Development Authority (C. D. A.), Islamabad entered into an agreement of lease with Messrs Amin-Simard (a Joint Pakistani and Canadian venture) commencing from 1st of January 1966 whereby the premises known as Shahrazad Hotel situated in Sector G-5/l, Islamabad, were leased out to the lessee in terms of the said agreement. The said lease was terminated under Martial Law Order No, 5 on 14-7-1970 and possession of the premises was taken over, according to the Capital Development Authority on 22-7-1970. It was on 19-10-1970 that the Capital Development Authority demanded the payment of Rs, 14,23,383.30 from Mr. Hassan Amin as due from him in respect of the lease to be paid within a period of 15 days failing which legal action was to be taken and the amount was to be recovered as arrears of land revenue under section 49 of the Capital Development Authority Ordinance, 1960. Mr. Hassan Amin disputed the correctness of the demand notice as referred to above and under paragraph 9 of the lease agreement, served a notice through his counsel upon Capital Development Authority on 21-10-1970 that Mr. B. Z. Kaikaus, retired Judge of the Supreme Court of Pakistan had been appointed by him as his arbitrator. He requested the Capital Development Authority to nominate its own arbitrator in terms of the agreement so that the dispute with regard to demand may be settled under the law.
2. The Capital Development Authority did not nominate its arbitrator in compliance with the said notice within 15 days from the date of its service as required by section 9 of the Arbitration Act. Mr. B. Z. Kaikaus as such according to Mr. Hassan Amin was appointed as sole arbitrator.
3. The Capital Development Authority, however, intimated Mr. Hassan . Amin by its letter dated 7th of November 1970, that the appointment of Mr. B. Z. Kaikaus was illegal as reference to arbitration was to be made within 30 days of the arising of the dispute which according to the Capital Development Authority arose on 14-7-1970 when the lease was terminated and thereafter when possession was taken over on 22-7-1970. It was however intimated that if any dispute arose, the same arose on 22-7-1970 and reference to arbitration was to be made within 30 days of the said period.
4. Mr. B. Z. Kaikaus in the circumstances declined to enter upon the reference. Mr. Hassan Amin thereafter appointed Ch. Muhammad Siddiq, retired Judge of the High Court as his arbitrator and requested the Capital Development Authority through his counsel on 22nd of May 1971, to appoint his own arbitrator in terms of the relevant clause of the agreement. Since no arbitrator was appointed by the Capital Development Authority, therefore, Mr. Hassan Amin appointed Ch. Muhammad Siddiq as the sole arbitrator who later on apprised the Capital Development Authority that he would precede with the matter in his capacity as sole arbitrator on 22-6-1971 at Islamabad.
5. After the receipt of the said notice from Ch. Muhammad Siddiq, the Capital Development Authority submitted an application under sections 5, 9, 11 and 33 of the Arbitration Act, 1940, before the Administrative Civil Judge, Rawalpindi, praying for declaration of the appointment of Ch. Muhammad Siddiq as sole arbitrator, void and of no consequence. It was further prayed that if the Court was of the view that the said appointment was not lawful then further time may be granted to Capital Development Authority for the appointment of their own arbitrator.
6. An application under section 41 read with section 151 and Order XXXIX, rules 1 and 2, C. P. C. Was also made by the Capital Development Authority for grant of temporary injunction staying the arbitration proceedings. The said application was granted and arbitration proceedings in the matter were stayed pending the disposal of the main application.
7. Mr. Hassan Amin also filed an application under section 41(b) of the Arbitration Act read with Order XXXIX, rules 1 and 2, C. P. C. For grant of temporary injunction restraining the Capital Development Authority as well as the Collector Rawalpindi, from recovering the dues as mentioned above, as arrears of land revenue, pending the arbitration proceedings. This application was resisted by the Capital Development Authority and as many as seven preliminary objections were raised with regard to its maintainability. The said application was found to be incompetent as well as liable to be dismissed even on merits.
8. So far as the decision of the learned lower Court on the application of the Capital Development Authority filed under sections 5, 9, 11 and 33 of the Arbitration Act is concerned, I feel that the same should not be interfered with mainly for the reason that the inconvenience to be caused to the parties in case the reference to arbitration is ultimately found to be incompetent would be greater than the inconvenience to be caused on account of stay of the proceedings. I do not want to make any observation at this stage as to whether the said reference to arbitration is competent or not.
The contentions raised by the parties in this behalf need consideration and are to be adjudicated upon by the civil Court. The very locus stand of Mr. Hassan Amin has been challenged to make reference to arbitration as the agreement of lease was between the firm and the Capital Development Authority. It has, however, been contended on behalf of Mr. Hassan Amin that after Mr. Simard ceased to be partner of the venture be alone carried on the business in the name and style of Messrs Amin-Simard and as such is competent to take any legal action under the relevant provision of Order XXX, C. P. C. Further it has been argued that the demand notice has been addressed to him alone by the Capital Development Authority and the proceedings for the realization of the said amount as land revenue are to be started against him alone. It has also been contended on his behalf that the real dispute between the parties arose after specific amount was demanded by the Capital Development Authority from him, and since he challenged its correctness and on the contrary a much bigger amount than claimed by the Capital Development Authority was due to him, therefore, the said dispute according to him arose on the date when the said amount was demanded from him. According to him the said dispute is liable to be referred to arbitration under paragraph 9 of the lease agreement.' Since all the questions as referred to above require serious consideration and the inconvenience to be caused in case the reference to arbitration is found to be incompetent would be greater therefore, the impugned order passed by the learned lower Court in F. A.
0. No, 7 of 1972 cannot be interfered with. It is, however, directed that the application filed by the Capital Development Authority for declaring the appointment of arbitrator as null and void, would be decided at the earliest possible time without giving any unnecessary adjournment in the case.
9. It has been admitted by the learned lower Court in its impugned order that if temporary injunction is not granted to Mr. Hassan Amin, restraining the Capital Development Authority from realizing the arrears as land revenue then he would suffer irreparable injury. It has also been observed that the balance of convenience between the parties is equally poised. The learned lower Court has however, found the application to be incompetent for the reason that the same is not in relation to any proceedings in a suit or some main application pending for final adjudication. As such he has found that no prima facie case has been made out by Mr. Hassan Amin for grant of temporary injunction. It is now to be seen whether the application filed by Mr. Hassan Amin under section 41(b) of the Arbitration Act and Order XXXIX, rules 1 and 2, C. P. C. Is competent or not. If it is found to be competent then in view of the findings of the lower Court with regard to irreparable injury in favour of Mr. Hassan Amin and balance of convenience also being in his favour the temporary injunction, as prayed for, may have to be granted.
10. Similar point was involved in F. A. Q No, 187 of 1973 which was decided by my learned brother Saad Saood Jan, J., by his judgment dated 31st of October 1973. The facts of the case are that the appellant before the High Court had entered into a contract with the Forest Department for the collection of timber. There was some dispute between the parties consequent upon which the Divisional Forest Officer concerned stopped the petitioner from collecting timber. The petitioner approached the Commissioner, Lahore Division for the appointment of an arbitrator who appointed the Deputy Commissioner, Gujranwala, as the sole arbitrator. At the time when the Commissioner was approached for the appointment of arbitrator, an application under section 4l of the Arbitration Act was made in the civil. Court for the issuance of temporary injunction for the purpose of restraining the respondent therein from preventing the appellant from collecting timber as well as for directing it to prepare a proper account of the wood and making payment therefor.
This application was rejected being incompetent on the ground that the said provision of the Arbitration Act could be invoked only where some proceedings were pending in civil Court. His Lordship while accepting the appeal held as follows :- "The question that falls for consideration is whether a civil Court can under clause (b) of section 41 issue a temporary injunction when no proceedings are pending before it and the reference to arbitration is also without the intervention of Court. Section 41 reads as follows :- ' 'Subject to the provisions of this Act and rules made thereunder-
(a) the provisions of the Code of Civil Procedure, 1908, shall apply to all proceedings before the Court and to all appeals, under this Act, and
(b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to, any proceedings before the Court : ' Provided that nothing in clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or umpire for making orders with respect to any of such matters.'
' A reading of this section indicates that whereas clause (a) specifies the procedure which a Court acting under the Act may follow, clause (b) speaks of the powers of the Court with respect to arbitration proceedings. There are no words in clause (b) or in the entire section which may be taken as limiting the expression 'arbitration proceedings' occurring in clause (b) to such proceedings as have been initiated through the intervention of a Court. The words 'the same powers' as occurring in clause (b), when read in conjunction with the words 'as it has', make it abundantly clear that clause (b) has reference to proceedings other than those which may be pending before a Court. Otherwise clause (b) will be entirely redundant as clause (a) has already provided for the procedure which a Court is to follow while exercising its functious under the Act. In the presence of clause (a) it is entirely unnecessary to confer some specific powers on a Court under clause (b), for these are already available to it under clause (a).
' I have not been able to discover any decision from our own superior Courts in Pakistan dealing with the proposition before me. There is, however, a judgment of the Madras High Court in which this proposition has been discussed. It is reported as S. V. Seshmull v. S. N. Umajl & Co. AIR 1962 Mad.
436. It entirely supports the view which I have taken. I should, therefore, consider that the learned Administrative Civil Judge was not justified in dismissing the application of the appellant for the issuance of a temporary injunction on the ground of competency."
I am in respectful agreement with the view taken by my learned brother with regard to the matter in question and hold that the application filed by Mr. Hassan Amin under section 41(b) of the Arbitration Act for grant of temporary injunction is quite competent.
11. It has been argued on behalf of the Capital Development Authority that even if the application as well as the reference to , arbitration is competent then in view of the provision as contained in section 49(a) of the Capital Development Authority Ordinance, 1960, the sum due to the authority has to be paid and the same will be recoverable as arrears of land revenue. The question arises, as to what is the sum due to the authority. As discussed above the parties are at variance in this regard. Mr. Hassan Amin claims a much bigger amount due to him from the Capital Development Authority than one claimed from him. I am of the view that if there is dispute with regard to the actual amount due then) unless it is settled in accordance with law, the same cannot be said to be the sum due. Reliance has also been placed upon the stipulation as contained in paragraph 9 of the lease agreement to the effect that no payment due to or from the lessee shall be withheld on account of arbitration proceedings unless the same be the subject matter of the dispute. As discussed above the correctness of the amount as claimed by the Capital Development Authority as due from Mr. Hassan Amin having been challenged the same has become the subject-matter of the dispute.
12. In view of the above discussion, the application for grant of temporary injunction is accepted without any order as to costs and the recovery proceedings are stayed subject to appellant, furnishing security to the satisfaction of the trial Court in respect of the amount to be recovered. If such security has already been furnished in compliance with the order of this Court dated 13-1.1972 then fresh security may not be furnished. It will remain good till the disposal of the main application by the learned trial Court.