ASLAM RIAZ HUSAIN, J.-This appeal is directed against the judgment dated 1-5-1970 of a Division Bench of the West Pakistan High Court at Karachi dismissing the present appellants' L. P. A. (No. 23 of 1972), against the order of a learned Single Judge of that Court passed on 19-1-1970 in suit No. 270 of 1969.
2. The facts leading to the present appeal are briefly that on 13-5-1966 the appellants entered into an agreement with the respondents whereby the appellants agreed to gin and press 24000 bales of cotton at their mills in Jhudo and Tando Allah Yar. The respondents were to act as the appellant's Commis--sion Agents and were to arrange for the sale of goods consigned to them by the petitioners whenever they were intimated to do so by telephone. Subsequent--ly, the parties entered into four other agreements of the same nature. All these agreements contained an arbitration clause which prescribed that any dispute between the parties will be referred for arbitration to the two members of the Karachi Cotton Association, one to be nominated by each party, who shall decide the matter according to the rules of the said Association.
3. On 26-6-1969 the appellants filed a suit against the respondents for the recovery of Rs. 4,35,000, in the Karachi Bench of the High Court of West Pakistan. In their plaint the plaintiffs/appellants made certain allegations of fraud against the respondents saying that they had been taking advantage of their position as Commission Agents.. They alleged that the respondents fraudulently refused or rejected the goods sent to them when the market was high and accepted the same when the market bad gone down and used to buy and purchase the petitioners' goods at cheaper rates, keeping an eye on the price fluctuation in the market.
4. Upon receiving the notice of the suit, the respondents filed an application for its stay, under section 34 of the Arbitration Act; 1940, on the basis of the arbitration clause in the agreement. The application was supported by an affidavit. The appellants opposed the application and filed a counter affidavit. The learned Single Judge of the High Court who was seized of the matter, allowed the application and stayed the suit. The plaintiffs/appellants filed an L. P. A. Against that order which was dismissed vide the impugned order dated 1-5-70. The appellants then filed a petition for Leave to Appeal before this Court. Leave was granted to consider whether in view of the allegations of fraud made by the appellants/plaintiffs against the respondents/defendants should the suit have been stayed on the application of the party charged with fraud. Leave was also granted to consider whether the dispute in this case should be allowed to be investigated by the Arbitrators in view of the fact that the appellants were not members of the Karacbi Cotton Association to adjudicate the matter in accordance with the rules of the said Association.
5. Before us, the learned counsel for the appellants only urged the first of the two above noted points on which leave was granted. He vehemently urged that since an allegation of fraud had been made in the plaint, the suit in this case ought not to have been stayed on an application of the defendants, under section 34 of the Arbitration Act. In support of this contention he relied on Russell v. Russell ((1880) 14 Ch. D 471=(1880) 42 L T R 112), Maharaia Sir Manindra Chandra Nandy v.
R. V. Law & Co. Ltd. (AIR 1924 Cal. 796), Narsing Prasad Boobra and others v. Dhanraj Mills (AIR 1943 Pat. 53), Sir Haroon Jaffar & Sons Ltd. v. Haji E. Dossa & Sons and others (PLD 1956 Sind 4) and Abdul Kadir Shamsuddin Bubera v. Madhey Brabhakar Oak and another (AIR 1962 SC 406).
6. We have carefully considered this contention and gone through the above noted judgments all of which involved the same question as in the case in band. We noticed that the basic principle has been laid down by the Chancery Division of the High Court of England in Russell v. Russell (which has been summarised as follows in the judgment as reported in 42 L T R 112: "Where a partnership deed contains an arbitration clause, and disputes occur between the partners, the mere fact that one partner makes a charge of actual fraud against his co-partner is not sufficient to prevent the co-partner from insisting on a reference to arbitration and the Court, having regard to the discretion given by the Common Law Procedure Act, 1854. Section 11, ought in the exercise of that discretion to allow the matters which have been expressly agreed to be referred to arbitration to be so referred, but not, if the partner charged with fraud desires a public examination into the truth of the stigma endeavoured to be cast upon him."
7. According to the above noted rule, in a case covered by an arbitra--tion clause Courts would ordinarily be inclined to stay a suit on the application of the party against whom fraud is alleged and allow the dispute to be settled through arbitration, unless that party itself wants the matter to be decided through a public inquiry by a Court of law. If, however,' that party does not wish the dirty linen to be washed in the public, the proceedings in the trial should be stayed: But even in such cases where a prima facie case of fraud is made out, the case may be allowed to proceed in al civil Court.
In the case in hand, the parties had agreed between themselves by virtue of an arbitration clause that in the event of a dispute arising out of the contract the matter shall be referred to arbitrators. It is the appellants who in disregard of the arbitration clause in the agreement, filed a suit in a Court of law, making allegations of fraud against the respondents. On receiving notice of the suit, the respondents moved an application for the stay of the suit under section 34 of the Arbitration Act praying that instead of being adjudicated by the civil Court, the dispute should be got settled through arbitration as agreed between the parties. As such in view of the principle enunciated by the judgment in Russell's case, the High Court was quite justified in staying the trial. Before doing so, however, the learned Single Judge did wish to ascertain whether a prima facie case of fraud had been made out. Therefore, on the date of hearing he waited for the learned counsel for the plaintiffs/appellants till the end of the day to afford him an opportunity to make his submissions in that respect. Rut since neither the appellants nor their counsel turned up, the learned Judge had to decide the matter ex parte, without any arguments on the aforementioned question and did not find that a prima facie case had been made out. The Division Bench of the High Court which heard the L. P. A. Also followed the dictum of the Chancery Division in Russell's care and found that the decision of the High Court in staying the trial, was in accordance with the principle laid down therein. We too are inclined to agree with the view expressed by the High Court and we find no flaw in the exercise of its discretion by the High Court which should not be lightly interfered with. We feel that whereever the parties to an Agreement expressly chose, through an arbitration clause, a forum other than a Court of law, for the settlement of their dispute, neither of them should normally be allowed to avoid that forum. The sole purpose of the Arbitration Act is to curtail litigation in Courts and to promote the settlement of the dispute amicably through persons in whom both the parties repose their trust. Therefore the course that the Courts should generally follow is to encourage the settlement of disputes by this method whereever the parties have themselves agreed to do so. That this was also the intention of the Legislature is evident from the manner in which section 34 of the Arbitration Act is worded. To allow one side to evade and wriggle out from the agreement merely by making allegations of fraud, even though the same may not ultimately be proved or even pressed, would amount to giving a handle to that party to circumvent the arbitration clause. This apprehension was also expressed by the Chancery Division in Russell's case in the following words : ------------------.If the mere making of a charge of fraud would entitle the person making it to call upon the Court, in the exercise of its discretion, to refuse to refer to arbitration, there would be a very easy way of getting rid of all these clauses of arbitration. I am satisfied that the mere making of a charge will not do that, even in a case where the Court ought to exercise its discretion by refusing to refer the case to arbitration . . . "
9. The present case is a lamentable example of such evasion on the part of the appellant, who filed a civil suit in disregard of their agreement, as far back as June, 1969, and notwithstanding the fact that they got an adverse verdict from the High Court, they persisted in filing appeal after appeal with the result that neither side has been able to get the dispute settled till today.
In view of the above discussion the appeal is dismissed with costs.