1. ' MUHAMMAD ALI MAZHAR, J.---By this order, I will dispose of C.M.A. No,2298 of 2010 moved by the defendant No,5 under section 34 of the Arbitration Act for staying the instant suit during the pendency of the arbitration proceedings in the supporting affidavit, the defendant No,5 has stated that the dispute inter se parties is subject-matter of an arbitration proceedings pending before the Sole Arbitrator. The reference to the Sole Arbitrator was made by consent of all the parties in Criminal Transfer Application No,S-54 of 2009 vide order dated 20-11-2009, which envisages that all disputes between the parties are to be referred to and resolved in Arbitration proceedings. The present suit pertains to the immovable property which is also subject-matter in the Arbitration proceedings, therefore, the plaintiffs in this Suit cannot initiate and pursue the above proceedings.
2. The present suit is liable to be stayed till such time the Arbitration proceedings are pending. The plaintiffs cannot agitate the same cause of action before two fora under the law and during the pendency of Arbitration proceedings the suit involving the same subject-matter and agitating the same claim alleged to be based on same cause of action are liable to be stayed under section 34 of the Act.
3. ' The plaintiff No,1 in her counter-affidavit stated that the application is nothing but dilatory tactic in order to deprive the plaintiffs. It is also stated that the dispute between the plaintiffs and the defendant No,5 has been referred to by consent of all the parties to the Sole Arbitrator but the substance of the present suit is out of the purview of Arbitration proceedings. The suit is not liable to be stayed due to pendency of Arbitration proceedings. It is further stated that section 34 of Arbitration Act is not applicable rather payment of the rent by the tenants should be stayed till decision of Arbitration proceedings. The suit can proceed and it has no concern with the Arbitration proceedings. The defendant No,5 alone is collecting the rent and not placing true facts before this Court, therefore the application is liable to be dismissed with costs.
4. ' I have heard the learned counsel for the parties. The learned counsel for the defendant No,5, Mr. Khalid Hameed invited the attention of this Court to an order dated 20-11-2009 (Annexure P/4 to the plaint), which was passed by the learned Single Judge of this Court in Criminal Transfer Application No,S-54 of 2009 (at Circuit Bench, Hyderabad). In this order, the entire pending litigation between the parties has been discussed and by consent of the parties Mr. Justice (R)
5. Mujeebullah Siddiqui was appointed Sole Arbitrator to resolve the family disputes between the plaintiffs and defendant No,5. In the same order, another Suit No,1399 of 2007 is also reflected, which was pending adjudication at the Principal Seat and by consent it was directed that the said suit shall be withdrawn and the issues raised in the said proceedings will be subject-matter of arbitration proceedings before the Sole Arbitrator. Finally, it was directed in the above order that any other issue or dispute between the parties can also be raised by either party before the Sole Arbitrator but all such issues would be confined to the properties of the deceased Pir Fazl-eHussain and his deceased wife Shahjehan Begum. The learned counsel argued that during the pendency of arbitration proceedings, the suit is liable to be stayed and the plaintiffs have no right and authority to file suit for permanent injunction and possession against the tenants. The issue of gift between the deceased father Pir Fazl-e-Hussain and the defendant No,5 is also subject-matter of the arbitration proceedings. Unless award is delivered, no further steps can be taken in the present proceedings and at present, the suit is liable to be stayed. The issue of gift is pending, the plaintiffs cannot claim any relief against the defendants Nos.1 to 4 for the possession and or directions against them to pay rent of the shops to the plaintiffs. The learned counsel has also placed a copy of diary sheet, dated 8-1-2010, whereby the learned Arbitrator framed eleven (11) issues and according to him, specific issue has been framed in relation to a gift made by the deceased father of the plaintiffs in favour of defendant No,5. The learned counsel for the defendant No,5 in support of his arguments relied upon the following case-law:--
(1) AIR 1978 Supreme Court 1608 (State of Punjab v. Messrs Geeta Iron & Brass Works Ltd.). Section 34 of the Arbitration Act. In this case, the Indian Supreme Court has held that where parties have by contract agreed to refer their disputes to arbitration, the courts should as far as possible proceed to give an opportunity for resolution of dispute by arbitration rather than by judicial adjudication.
6. Even so, there is a residual discretion vested in the court to stay or not to stay having regard to the totality of circumstances. One weighty factor obviously is to find out whether the party whn invokes the arbitration clause has expressed his readiness to rely on it at the earliest stage. In this case, a special leave to appeal was sought against an order passed by the subordinate Judge declining to stay a suit under section 34 of the Arbitration Act. The order was challenged in appeal and High Court after an exhaustive consideration felt that exercise of discretion was not so improper as to deserve interference.
(2) PLD 1960 (W.P.) Karachi 916 (Messrs Haji Muhammad Ibrahim and Sons v. Karachi Municipal Corporation). Section 34 of the Arbitration Act. In this judgment, the learned Single Judge of this Court has held that as far as the contention that the defendants Nos.2, 3 and 4 are not parties to the agreement, the short answer is that the claim of the plaintiff being based upon the breach of the contract which contains the arbitration clause, it really is directed against the Municipal Corporation and the plaintiff cannot get out of the arbitration clause merely by impleading certain officers of the Corporation or the subsequent contractor to whom the work has not been awarded.
7. If this contention is accepted, it would amount to nullifying the arbitration clause to which the parties had bound themselves at the time of contract and to which they still adhere. It is further held that the law on the Point is well-settled. The jurisdiction of the Court is not ousted because the plaintiff in the suit was a party to an agreement to refer the matter in dispute to arbitration. But when the parties have preferred a private tribunal for the decision of their disputes, the Court should refer the parties to the tribunal which they have chosen, unless there be a good reason for not doing so.
(3) 1999 MLD 736 (Syed Muddasar Shah v. Managing Director, N. -W . F. P. Forest Develop- ment Corporation, Peshawar). Section 34 Arbitration Act. In this case, it is held that the object of section 34 is to minimize agony of parties from facing protracted trial/suit by referring matter for arbitration. The only condition precedent for staying proceedings under section 34 is that party filing the suit and the other party requesting for stay of proceedings should have agreed through an agreement that all matters would be referred to for arbitration when such dispute/ matter falls within compass of agreement itself. All statutes and enactments are to be given such interpretation as to make them operative and not to bye-pass them by advancing mere technical objections.
(4) PLD 1973 Karachi 31 (Jamshed Alam Khan v. Haq Nawaz).
8. ' Section 34 Arbitration Act. In this case, it is held that where the parties have agreed to refer a dispute to arbitration, and one of them notwithstanding that agreement, commences an action to have the dispute determined by the Court, the prima facie leaning of the Court is to stay the action and leave the plaintiff to the tribunal to which he has agreed. Burden of proof lies on plaintiff to show that for some cogent reasons his suit ought not to be stayed.
(5) PLD 1986 Karachi 1 (Uzin Export Import Enterprises v. M. Iftikhar and Company Ltd.). Section 34 Arbitration Act. In this case, the learned Divisional Bench of this Court has held that in order to grant stay under section 34, it is necessary that the conditions should be fulfilled (1) the proceeding must have been commenced by a party to an arbitration agreement against any other party to the agreement (2) the legal proceeding which is sought to be stayed must be in respect of a matter agreed to be referred (3) the applicant for stay must be a party to the legal proceeding and he must have taken no step in the proceeding after appearance. It is also necessary that he should satisfy the Court not only that he is but also was at the commencement of the proceedings ready and willing to do everything necessary for the proper conduct of the arbitration and (4) the Court must be satisfied that there is no sufficient reason why the matter should not be referred to an arbitration in accordance with the arbitration agreement.
(6) 1983 CLC 1498 (Muhammad Yousuf Burney v. S. Muhammad Ali). Section 34 Arbitration Act. In this case, the learned Single Judge of this Court has held that person applying for stay of suit has to satisfy Court that there being agreement to refer and that suit relates to any matter agreed to be referred i,e, there is dispute between parties covered by agreement.
9. ' The crux of the arguments advanced by the learned counsel for the defendants No,5 is that the issues in relation to the gift and ostensible ownership are pending adjudication before the Arbitrator and the plaintiffs have filed the present suit for injunction and possession to circumvent the arbitration proceedings and unless the factum of gift and ostensible ownership is decided, the plaintiffs have no right to claim any rent from defendants Nos.1 to 4 for the alleged shops unless an award is delivered.
10. ' The learned counsel for the plaintiffs Ms. Soofia Saeed in rebuttal argued that the defendants Nos.1 to 4 are the tenants and they were not parties in the previous litigation or arbitration proceedings, therefore the suit can proceed against them and the plaintiffs have rightly claimed the rent from them in thisproceeding. The plaintiffs are also entitled to get the possession of the shops. The learned counsel also invited my attention to an application dated 14-1-2010 (annexure P-5 to the plaint) which was filed before the learned Arbitrator. In this application, the plaintiffs counsel had prayed to the learned Arbitrator to pass a restraining order against the respondent (defendant No,5) from collecting rent with further directions to the tenants to deposit the rent with the applicant/plaintiffs. This application was heard by the Arbitrator on 16-1-2010. The learned counsel for the defendant No,5 Mr.Khalid Hameed raised the objection to this application before the Arbitrator that such relief can be sought from the Court and the Arbitrator is not empowered to entertain such application and cannot pass any directions as requested in the application. On this objection, without passing any order, the learned Arbitrator simply observed that claimants may approach the proper Court of law, if so advised. Since Arbitrator did not decide this application, therefore, the plaintiffs had left with no other option but to file the present suit. The learned counsel also invited my attention to the prayer clause in which permanent injunction has been claimed against the defendant No,5 from collecting the rent of the subject shops from defendants Nos.1 to 4 and further relief of possession has been claimed in favour of the plaintiffs against the defendants.
11. In the injunction application also, the plaintiffs have claimed that they are owners of Shops Nos.A- 27, A-27/A, 36 and 36-1, second floor, Phase 2, Karim Shopping Centre, Karachi and as an interim relief, the plaintiffs have prayed to this court for a restraining order against the defendants from paying the rent of the aforesaid shops to anyone except the plaintiffs. In support of arguments, the learned counsel for the plaintiffs has relied upon the following case-law:--
(1) PLD 1970 Lahore 840 (Taj Din v. Muhammad Shari. In this judgment, it has been held that the Arbitrator in the proceedings before him has touched the interests of strangers in giving the award, which would be void. This matter pertains to an allotment of land in favour of one Anjuman-eArthian and the award was set aside on the ground that the said Anjuman was a necessary party because the land had been allotted to it and on that land construction was raised by the firm.
(2) PLD 1956 Sind 95 (Siraj Farooqi v. Pir Elahi Bux Cooperative Housing Society Ltd.). This matter pertains to Bombay Cooperative Societies Act, 1925 in which it was held that some of the defendants were not members of Society. The learned Single Judge of this Court observed that section 54 does no apply to the facts of the case because defendants Nos.3 to 5 are not proved to be members or those claiming through the members. Power under section 34 of the Arbitration Act is discretionary and discretion is to be judicially exercised.
(3) 1993 MLD 993 (Hidayatullah v. Shamimuddin). Section 34 Arbitration Act. The learned Single Judge of this Court has held that only some of the defendants being a party to arbitration agreement, if the suit was to be stayed as between plaintiffs and other defendants (not party to arbitration agreement) possibility of conflicting decisions was so obvious as to render the whole process futile and self-defeating resulting in unnecessary inconvenience and expenditure.
12. Application under section 34, Arbitration Act, 1940 for stay of suit and referring the matter to arbitration, thus, could not be granted.
(4) PLD 1976 Karachi 1060 (Gulf Iran Co. v. Pakistan Refinery Ltd.). Section 34 Arbitration Act. The learned Divisional Bench of this Court has held that a possibility of a conflict of decisions on the fate of the cases between the two, cannot be ruled out, which will render the whole process as futile and self-defeating. The other consideration about the heavy expenditure and the hardship that the arbitration proceedings would entail in a foreign country for the respondent, if the Court proceedings were stayed under section 34 of the Arbitration Act, which has weighed with the Courts below in declining to exercise their discretion in favour of the appellants, is also not without merit in the circumstances of these cases. It was further held that the Courts below have exercised their discretion properly and judicially in disallowing the appellants' applications under section 34 of the Arbitration Act.
13. ' The bare bones of the matter lead to me a conclusion that prior filing this Suit, all disputes between the plaintiffs and defendant No,5 have already been referred to the arbitrator vide order dated 20-11-2009 passed in Criminal Transfer Application No,54 of 2009. This order was passed by consent of the parties and it was agreed that the Suit No,1399 of 2007 filed by the plaintiffs in this Court shall be withdrawn and any issue or dispute between the parties could be raised by either party before the Sole Arbitrator but all such issues would be confined to the properties of deceased Pir Fazl-e-Hussain and his deceased wife Shahjehan Begum. In spite of pendency of arbitration proceedings under the order of this Court, the plaintiffs have filed the present suit with the following prayers:--
(A) Restrain the defendants from paying the rent of subject shops to anybody else except the plaintiffs.
(B) Direct the defendants to pay the rent of the shops to the plaintiffs.
(C) Direct the defendants to handover the shop to the plaintiffs only.
(D) Cost of the suit and
(E) Any other relief(s) that this Hon'ble Court may deem fit and appropriate in the circumstances of the present case.
14. ' It is a also fact that before filing the suit, the plaintiffs had applied to the learned Arbitrator for issuing necessary directions to restrain the defendant No,5 from collecting the rent and directions to the tenants to deposit the rent with the applicant. On this application, the learned Arbitrator simply advised the claimants to approach the proper court of law on the basis of objection raised by the learned counsel for the defendant No,5 that such relief can be sought from the Court and the Arbitrator is not empowered to entertain such application. The learned counsel for the defendant No,5 has also shown me dairy sheet dated 8-1-2010, in which, the learned Arbitrator had settled eleven (11) issues covering the entire disputes between the plaintiffs and defendant Nos.5.
15. Issues Nos.6 and 7 are relevant to the present controversy, which are as under:-- "(6) Whether the claimants are merely Benami and Ostensible owners in the properties in dispute in their names and Pir Fazal-e-Hussain was real owner of all these properties ?
(7) Whether Pir Fazal-e-Hussain gifted all the properties held by him in his name or in the names of Shahjahan Begum and the claimants to respondent Pir Umar Khayyam"
16. ' In paragraph 10 of the plaint, the plaintiffs have stated that during proceeding of Suit No,1399 of 2007, the father of the plaintiffs namely Pir Fazal-e-Hussian expired on 6-10-2008 and since then Pir Omer Khayyam is collecting rent without any authority given by the plaintiffs. He is forcibly collecting rent from the defendants Nos.1 to 4 on the ground that properties were orally gifted to him by deceased father Pir Fazal-e-Hussain. In the same paragraph, the plaintiffs have admitted that the gift is subject-matter of arbitration proceedings. Similarly in paragraph 11 of the plaint, the appointment of Arbitrator and resolution of all dispute 'through arbitration have also been admitted by the plaintiffs.
17. If a person who has been a party to an arbitration agreement brings a suit ignoring that agreement, the defendant's remedy, if he wants to rely on that agreement is to proceed under section 34 and to ask for stay of the suit. Section 34 creates an exception to the general law relating to procedure and A empowers the Court which jurisdiction to decide the dispute or to refuse to do so in case of existence of an arbitration agreement. If in a contract there is a provision of resolution of dispute between the parties by way of arbitration and parties have agreed to such forum, then such forum is to be resorted to and given preference before filing a suit. It would be advantageous to reproduce Section 34 of the Arbitration Act as under:-- "(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 take an order staying the proceedings."
18. ' The implication of section 34 stipulates that when the party to an arbitration agreement commences any legal proceedings against any other party to the agreement for a dispute agreed to be decided through arbitration, it cannot pursue remedy through legal proceedings and the Court has power to stay the suit for a dispute agreed to be resolved by the parties through arbitration but in this case not only the plaintiffs and defendant No,5 agreed by consent for the appointment of Arbitrator but the arbitration proceedings have already been commenced and the learned Arbitrator has already framed eleven (11) issues including two specific issues for the alleged oral gift and ostensible ownership. In spite of arbitration proceedings, the plaintiffs in this suit again claiming the ownership of the shops and seeking directions against the defendants to handover the shops to the plaintiffs only. The relationship of landlord and tenant is regulated under the Rent Laws and it is clearly mentioned under section 13 of the Sindh Rented Premises Ordinance, 1979 that no tenant shall be evicted from the premises in his possession except in accordance with the provisions of this Ordinance and the grounds for eviction of tenants are provided under sections 14 and 15 of the Sindh Rented Premises Ordinance, 1979. In presence of Sindh Rented Premises Ordinance, 1979, the possession from the tenants cannot be claimed in the civil suits. The order dated 16-1-2010, passed by the learned Arbitrator did not decide the fate of application filed by the plaintiffs for restraining the defendants No,5 from collecting rent but the learned Arbitrator simply observed that the claimants may approach the proper court of law, if so advised. Section 22 of the Arbitration Act provides that the Arbitrator shall be appointed in such a manner as may be agreed upon between the parties while section 23 stipulates that the Court shall by order, refer to the arbitrator the matter in difference which he is required to determine and shall in the order specify such time as it thinks reasonable for the making of award. The procedure and powers of the Court are provided under section 41 of the Arbitration Act and clause (b) envisages that 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 any arbitrator or umpire for making order with respect to any of such matters. Section 41 relates to matter subsequent to an application to the Court to file an arbitration agreement and it also applies to proceedings pending before the Arbitrator. Despite stay of proceedings in the suit on reference of the dispute for decision in arbitration, the Court retained control on the subject-matter of the lis for making ancillary orders envisaged by section 41 read with Second Schedule of the Arbitration Act which confer this court following powers:--
(1) The preservation, interim custody or sale of any goods which are subject-matter of the reference.
(2) Securing the amount in difference in the reference.
(3) The detention, preservation or inspection of any property or thing which is the subject of the reference or as to which any question may arise therein and authorizing for any of the aforesaid purposes any person to enter upon or into any land or building in the possession or any party to the reference, or authorizing any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence.
(4) Interim injunction or the appointment of a receiver.
(5) The appointment of a guardian for a minor or person of unsound mind for the purposes of arbitration proceedings.
19. Since the issue of gift and ostensible ownership is pending adjudication before the learned Arbitrator, therefore, in my view unless the issue is decided in favour of the plaintiffs, no further steps can be taken in the present suit. The chance of plaintiffs success is dependent upon the findings on issue of gift in their favour, therefore, in my view, the plaintiffs are not entitled to claim the rent before award. However, it is also a matter of record that the learned counsel for the defendant No,5 took a plea before the arbitrator that no directions could be issued by the arbitrator against the strangers/tenants and for the purposes of the claim of rent, plaintiff must approach to the competent court of law. In order to avoid any miscarriage of justice and to secure the rights and interest of the plaintiffs if any sustained or declared in the award of the arbitrator, it would be appropriate for this court to exercise its powers under section 41 of the Arbitration Act which inter alia provides ample jurisdiction to grant interim injunction or the appointment of receiver. Accordingly, the defendant No,5 is directed to submit monthly accounts of rent of the shops to the Nazir of this Court from the date when he started to collect the rent, he is also restrained from collecting the rent, consequently, the defendants Nos.1 to 4 are directed to directly deposit the monthly rent of the shops in question with the Nazir of this Court with effect from October, 2010 till further orders of this Court. The case-law cited by the learned counsel for the defendant No,5 on the applicability and scope of section 34 of the Arbitration Act are quite applicable and attracted, while the case-law cited by the plaintiffs' counsel are distinguishable as in none of the case, the matter was under consideration before the Arbitrator with specific issue of gift and ostensible ownership. In the present case, the factum of ownership of the plaintiffs is under dispute, therefore at this stage no directions can be given to the alleged tenants for the payment of rent to the c plaintiffs. Any such order would amount to negate the very purpose of arbitration and tantamount to circumvent the arbitration proceedings. The application is allowed in the above terms. Suit is stayed accordingly.
20. ' The Nazir fee shall be Rs.15000 which will be paid by the plaintiffs. Nazir may contact to the defendants for the compliance of this order. Nazir may also invest the amount of rent in any Government profit bearing scheme for the benefit of party who may be found entitled to the rent amount under the terms of award. Since I have already passed an order for depositing rent of the shops in question with the Nazir, the C.M.A. No,823 of 2010 and C.M.A. No,824 of 2010 have become infructuous.