SYED QALB-I-HASSAN, J.---This is a petition under section 20 of the A Arbitration Act 1940 for a direction to defendants to file sale agreement/contract in terms of section 20(4) of the Act and for appointment of an arbitrator. That defendants filed a counter affidavit and contested the petition on merits as well as on legal objections essentially the objection is that according to clauses of the agreement this Court has no jurisdiction to entertain the arbitration petition, therefore, the same is liable to be rejected.
2. Arguments heard and record perused with able assistance of the learned counsel for the parties.
3. That defendant No,1 is private limited company duly incorporated and registered under the Companies Ordinance, 1984. That defendant No,2 is a public limited company duly incorporated and registered under the law of Holland and a parent company of defendant No,1 However, defendant No,1 is doing Its business of manufacturing tobacco machinery, exporting and trading, having its registered office at 53 and 54, Street No,1, I-10/3, Industrial Area Islamabad, Pakistan whereas defendant No,3 is a Chief Executive Officer and Director of defendants Nos.1 and 2. That defendants Nos.1 and 2 offered to sell their business and assets of the company in Pakistan to the petitioner. The business and assets have been defined by the agreement in clauses 2.3 and 2.10 of the agreement which are reproduced below:-- 2.3 "the Business" shall mean the business conducted by the Seller of manufacturing, export and trading of tobacco machinery, and other business activities conducted and operated under Commercial License issued by the Pakistan Licensing Authorities, at the premises, as constituted by the Sale Assets and Leased Assets, including the Commercial License and excluding the Trade Name of "International Tobacco Machinery".
2.10 "Leased Assets" shall mean the leasehold assets of the Company held by the Seller, as at the Effective Date, in terms of lease or rental, including Plot Nos.53-54, Street No,1, Sector I-10/3, Industrial Area, Islamabad Pakistan.
4. That the agreement further defines the sale in clauses 4.1 and 4.2 of the agreement which are also reproduced below:--
4. Sale 4.1 The Seller has sold to the purchaser, who hereby accepts, the business and assets in the Company "International Tobacco Company Pakistan (Pvt) Ltd." operated under Commercial License issued by Pakistani Licensing Authorities, conducted in the premises outlined in this Agreement.
4.2 The sale including all Sale Assets and the Transfer of all leased Assets. However, the sale does not include the trade name of "International Tobacco Machinery" and the purchaser shall, immediately after the Closing Date and as soon as may be practicable, change the name of the Company and register such change in relevant official records of Securities and Exchange Commission of Pakistan (SECP) and other registration authorities and shall take whatever action is necessary to discontinue the use of the name of "International Tobacco Machinery" by the Company so constituted.
5. That clause 11 of the agreement provides the law and place for arbitration in case of any dispute between the parties connected with the formation, performance, interpretation, nullification, termination and invalidation of the agreement of arising therefrom or related thereto in any manner. Clause 11 of the agreement read as follows:--
11. Governing Law and Arbitration.
' This agreement shall be governed by and construed in accordance with the laws of the United Arab Emirates.
' Any dispute connected with the formation performance, interpretation, nullification, termination or invalidation of this agreement or arising therefrom or related thereto in any manner whatsoever shall be referred to arbitration in accordance with the provisions set forth in the Arbitration Rules of the Dubai International Arbitration Center. The arbitration shall be conducted by one arbitrator, and proceedings shall be held in Dubai and the language of the arbitration proceedings shall be the English language.
6. Learned counsel for the defendants vehemently contended that under clause 11 reproduced above this Court has no jurisdiction and the petition is liable to be dismissed on this score alone.
That the petitioner has entered into an agreement for the purchase of the business and assets from defendants Nos.1 and 2. That defendant No,1 is a subsidiary company of defendant No,2 having its registered office at 53 54, Street No,1, 1-10/3, Industrial Area,. Islamabad. The agreement was regarding the sale of business and assets situated in Pakistan. The Honourable Supreme Court in Messrs Eckhardit and Co. Marine GmbH v. Muhammad Hanif PLD 1993 SC 42 on a question whether stay of suit could be granted under section 34 of the Arbitration Act in presence of foreign arbitration clause in the contract held in the following:-- "There is no cavil about the proposition that under section 34 of the Arbitration Act, stay can be refused by the Court if it is satisfied that there is no sufficient reason for making reference to Arbitration and substantial miscarriage of justice would take place or inconvenience would be caused to the parties if stay is granted. No hard and fast rule can be laid down or line of demarcation be drawn to say in what cases refusal can be made. Each case has different facts and grant or refusal of stay is dependent upon peculiar facts and circumstances of each. The Court can make objective assessment and come to the conclusion whether stay of legal proceedings can be granted or refused."
7. The petitioner, a registered partnership concern, having its head office at 145-A/2, Allama Iqbal Road, Karachi, entered into an agreement for purchase of business and assets with defendants Nos.1 and 2. Defendant No,1, a subsidiary company of defendant No,2, has its registered office at Islamabad, therefore, whole evidence on this point has to come, from Islamabad comprised of documents and oral evidence and taking of such evidence to Dubai would be inconvenient to C the parties and also would be expensive. Even otherwise the Honourable Supreme Court in Messrs Uzin Export and Import Enterprises for Foreign Trade v. Messrs M. Iftikhar and Company Ltd. 1993 SCM R 866 in a case, in the contract there was a provision for arbitration of international chamber of commerce in Penis held in the following : "In this case in the contract there was provision for arbitration of International Chamber of Commerce in Paris. This provision does not oust the jurisdiction of Courts in this country and this clause is to be treated at par with provision for arbitration within the country. In this case the main contract is between Attock Cement Company of Pakistan and appellants for construction and completion and successful operation of cement plant which provides for appointment of sub- constractors. Resultantly, respondents entered into contract as sub-contractor with appellants.
Contract from which present proceedings arise was executed in this country and the works had also to be executed here. In the circumstances arbitration proceedings cannot be allowed to be taken to Paris which would be inconvenient to the parties and also would prove to be expensive.
We, therefore, allow stay of suit proceedings and leave the parties to take steps for having their dispute decided through arbitration proceedings with venue at Karachi.
' With regard to the mode and other incidental matters, steps can be taken as contemplated under the Arbitration Act."
In view of what has been discussed above the objection of jurisdiction raised by the respondents has no force, therefore, same is rejected.