' MUHAMMAD ATHAR SAEED, J.--- This High Court Appeal has been filed against the order of the learned Single Judge dated 3-2-2010 in Suit No,668 of 2008 on CMA No,10031 of 2008 whereby the learned single Judge had allowed the application of the respondent filed under section 34 of the Arbitration Act, 1940 seeking to stay the proceeding of the suit and to refer the matter to Arbitrator under Clause 40-A of the Lease Agreement dated 15-5-2008 and section 24 of the Export Processing Zones Authority Ordinance, 1980.
2. The respondents are not present despite the fact that on the last date of hearing Mr. Ather, Assistant Manager of the respondent had attended and sought time for engaging an Advocate but no one was present on their behalf. Since we had already cautioned them in our order dated 29-3- 2011 that if they do not appear on the next date then we will hear and dispose of the matter with the assistance of the learned counsel for the appellant and since date had been giv,:n in presence of the Assistant Manager of the respondent but he was not present therefore we decided to hear and dispose of the case with assistance of the learned counsel for the petitioner.
3. We have heard Mr. H.A. Rahmani Advocate for the appellant and we requested Mr. Ali Mumtaz Shaikh the learned counsel, who is on the panel of respondents but had not been engaged by the respondents and was present in Court in some other case, to assist us in this appeal and also heard him.
4. Mr. H.A. Rahmani has strongly attacked the order of the learned Single Judge and submitted that the learned Single Judge had failed to take into consideration that the agreement in which there was a clause for referring the matter to Arbitrator was not the subject-matter of the suit and had no nexus with the dispute before the Court and therefore on the basis of the arbitration clause present in that agreement the matter could not be referred to arbitrator since this agreement has no nexus with the matter in dispute. He submitted that he filed the suit because the respondent had initially accepted his application dated 18-4-2005 and vide their letter No,INV-14-154 dated 19th October, 2006 approved their investment proposal under the name and style of "Messrs Danish Textile Recycling EZC" for undertaking the activity of grading, sorting and processing of used clothing with the offer of two plots in KEPZ Phase-II subject to payment of security deposit of US $ 10,000 and annual ground rent of US $ 3000 within thirty days of issuance of this letter. He further submitted that he has vide his letter dated 11-12-2006 informed the respondent that he had already deposited the security deposit and ground rent vide receipt S.No,2006110089 and requested for issuance of allocation letter. However, on 10th April, 2007 he received another letter from the respondent, being letter No,INV-14-15, whereby he was informed that since used clothing business had already reached saturation level in KEPZ in view of plots scarce position the authority was looking to attract investment in certain other target areas and therefore advised him that he should consider to change his line of activity. However, according to the learned counsel, the appellant vide his letter dated 3-5-2007 informed them that it was not possible for him to change line of activity and therefore they should allocate the two plots offered to him as soon as possible.
In reply to this letter he received another letter No,Fin-FR(IND)II/032 whereby a cheque amounting to US $ 13,000 was returned to him and he was informed that his project was cancelled. Against this letter he filed Suit No,668 of 2007 in which he had made the following prayers:--- i. It be declared that the contract between the plaintiff and the defendant for the allocation of two plots of land of the total area of 2000 square meters situated in Phase-II of the defendant in Landhi Industrial Area Extension Karachi subsists and is in full force, and the plaintiffs are entitled to its specific performance through process of law. Ii. The defendant be directed to issue formal Allocation Letter of contracted plots of land in Phase-11 of its ?ONE VIZ PLOTS No,2 and 10 in Sector D- II measuring 2000 square meters and to deliver physical possession thereof to the plaintiffs. Iii. In addition to the above relief, decree in the sum of Rs,50,00,000 (five million) as compensation be passed in favour of the plaintiffs. Iv. The defendant be directed to withdraw letter dated 4-6-2007 (annexure P/5) as well as letter dated 10-4-2007 (Annexure P/3). v. Any other further or better relief which this honourable Court may deem just and proper, under circumstances of the case, be granted to the plaintiffs. Vi. Costs of the suit be awarded to the plaintiffs.
5. The learned counsel submitted that then the respondent/ defendant filed an application under section 34 of the Arbitration Act, 1940 requesting the Court that the matter in dispute between the parties are to be resolved by arbitration as contemplated under the arbitration clause 40-A of the Lease Agreement dated 15-5-2008 between the parties and section 24 of the Export Processing Zone Authority Ordinance, 1980. The appellant/plaintiff filed a counter-affidavit to this application in which he had requested that the application under section 34 of the Arbitration Act, 1940 deserved to be rejected. He further submitted that on this application for arbitration the impugned order was passed allowing the application and being aggrieved by said order he filed this High Court Appeal.
6. The second argument advanced by the learned counsel was that the basis of dispute was not mentioned in the arbitration agreement. He submitted that there is a plethora of judgments in which it has been held that where the basis of dispute between the parties is not mentioned in the arbitration application then such application cannot be allowed and has to be rejected. In this connection he relied on the judgment of the learned Lahore High Court in the case of NOVELTY CINEMA, LYALLPUR v. FIRDAUS FILMS and another (PLD 1958 (W.P.) Lahore 208). In this connection he relied on the following other judgments:--
1. MUHAMMAD YOUSUF BURNEY, v. S. MUHAMMAD ALI (1983 CLC 1498).
2. Messrs COSMPLITAN DEVELOPMENT COMPANY v. Messrs SO DI.ME,-S.P.A. AND ANOTHER (1983 MLD 2832).
3. Syed ARSHAD ALI v. SARWAT ALI ABBASI (1988 CLC 1350).
4. Mst. ZOHRA BEGUM v. Messrs ABDUL RAZAK & CO. AND 10 OTHERS (1984 CLC 1643).
5. UNION OF INDIA v. BIRLA COTTON SPINNING AND WEAVING MILLS LTD. (AIR 1967 Supreme Court 688)
6. Messrs NATIONAL SMALL INDUSTRIES CORPORATION LTD., NEW DELHI v. Messrs PUNJAB TIN PRINTING AND METAL INDUSTRIES AJRAUNDA, FARIDABAD (HARYANA) AND OTHERS (AIR 1979 Delhi 58).
7. On the basis of the above arguments and the judgments relied upon, the learned counsel prayed that the appeal may be allowed and the impugned order be set aside so that the suit can proceed.
8. Mr. Ali Mumtaz Shaikh assisted the Court and supporting the order of the learned Single Judge he submitted that even if the first agreement has no nexus with the suit being filed the offer of the respondent to allocate two plots to the appellant, acceptance of this offer by the appellant and the payment of the consideration by the appellant to the respondent constitutes a contract and the dispute in this contract is about the cancellation of the allocation of two plots to the respondents and therefore although this deemed agreement does not include an arbitration clause but it will be governed by section 24 of Ordinance IV of 1980 which provides a remedy for such situation. He submitted that in the Arbitration application the respondents have referred to the provisions of clause 24 Ordinance IV of 1980 and therefore it has to be seen whether this clause covers the application filed by the respondent. In support of his arguments that the offer, acceptance and payment made constitutes a contract he relied on a judgment of this Court in the case of ALI MUHAMMAD KHAN v. RIAZUDDIN KHERA (PLD 1981 Karachi 110).
9. So far as the non-mentioning of the dispute in the arbitration application is concerned the learned counsel submitted that in the arbitration application the matters and disputes have been mentioned with reference to the disputes highlighted by the present appellant in his prayer clause and it has been stated that these matters have to be resolved through arbitration as contemplated under section 24 of the Export Processing Zone Authority Ordinance, 1980. He pointed out that in the letter dated 3-5-2007 while replying to the advise of the respondents to consider changing their line of activity the appellant had himself stated that the subsequent project was just an extension of the same project and therefore arbitration will not only be governed under section 24 of Ordinance IV of 1980 but also clause 40 of the earlier agreement. He therefore prayed that the appeal may be dismissed and the order of the learned Single Judge may be upheld.
10. We have examined the case in the light of the arguments of the learned counsel and have perused the records of the case including the judgments relied on by the learned counsel.
11. The learned counsel for the appellant had relied mainly on the judgment of the learned Lahore High Court in the case of Novelty Cinema quoted supra. In this case Justice B.Z. Kaikaus as he then was held as under:--- "5. The second reason for the dismissal of this application is that it mentions no dispute. I have already experienced a difficulty in deciding some other cases under section 34 of the Arbitration.
Act because in the application for stay the dispute was not specified. There seems to be a general impression that the dispute cannot possibly be specified in the application because the defendant is debarred from filing a written statement if he puts in an application for stay, and a statement as to what is the dispute will amount to the filing of a written statement. This is misapprehension.
When a person applies under section 34, he has to satisfy the Court firstly that there is an agreement to refer and secondly that the suit relates to any matter agreed to be referred, that is, there is a dispute between the parties which is covered by the agreement. Unless that is shown the suit cannot be stayed. If a suit is filed on the basis of an agreement which contains an arbitration clause, the mere fact that the defendant is not prepared to pay the amount to which he is liable under the agreement does not mean that there is a dispute between the parties. It is not necessary to quote authorities to show that a dispute does not mean simply a refusal to pay money for which a person is liable. A dispute is constituted by a proposition of fact or law being alleged by one party and denied by the other. The defendant must state, though not in detail, the matters which the other party alleged and which he denies or he alleges and the other party denies and the decision of which would affect the rights of the parties. When the defendant thus states the dispute, the Court will determine whether it falls under the arbitration agreement."
' In all the other cases relied on by the learned counsel this judgment has been followed and in all the Indian cases the same ratio decidendi has been given. The learned counsel for the appellant referring to the arbitration agreement submitted that his case is fully covered by these judgments because in the arbitration.Application the dispute has not been specified and therefore it cannot be seen whether the dispute is covered by the agreement or not.
12. He has further submitted that reference has been made to the clause 40 of the earlier agreement and that agreement has no nexus with the dispute referred to in the suit and therefore the arbitration application is not in conformity with the ratio decidendi given in these judgments and has to be rejected. From the impugned order it is seen that the learned Judge had decided the case after holding that the provisions of section 24 of Ordinance IV of 1980 covers the dispute in question and that the matter has to be referred to Arbitration. The, learned counsel for the appellant had also conceded to the arguments of Mr. Ali Mumtaz Shaikh that making of an offer, acceptance of that offer and payment of consideration constitutes a contract but his view was that since these transactions have not been referred to in the arbitration application therefore the dispute has not been disclosed and therefore the application is not maintainable. We are of the view that at this stage it is relevant to reproduce section 24 of the IV Ordinance No,IV.
"Disputes to be referred to arbitration.--- (1) Any dispute relating to the interpretation of the provisions of any agreement made under any scheme prepared under section 10 between the Authority and investor or the right of the parties to such agreement or any rights conferred or any liability imposed by this Ordinance shall be referred for arbitration to an arbitrator appointed by the parties."
' The learned counsel for the appellant has read and stressed on the first part of this clause and submitted that since no agreement, has been made in respect of allocation of the two plots which were cancelled as the agreement has to be made after the plots are allocated, therefore, since the dispute does not relate to the interpretation of any provisions of the agreement made under section 10 between the authority and the investors and therefore the matter cannot be referred to arbitration but has to be adjudicated by the Court. However, the learned counsel has completely ignored the second part of this clause which provides that any right conferred or any liability imposed by this Ordinance shall be referred for. Arbitration. We agree with the learned Single Judge that the offer for the allocation of the plots made by the respondents and accepted by the appellant was .Made under the Ordinance and the consideration was also paid under the Ordinance, therefore, the right of plot being allocated and the liability of the respondents to allocate the plot if any has been imposed by the Ordinance and therefore section 24 of the Ordinance IV of 1980 which has to be read as a whole will also apply to the transaction in question against which the suit has been filed by the present appellant. We also agree with the view of the learned Single Judge that the disputes have been menticned in the plaint itself by the present appellant and in the arbitration application it has been Stated that the matters and dispute between the parties have to be resolved between the parties as contemplated under section 24 of the Export Processing Zone Authority 1980. We also agree with the view of the learned counsel Mr. Ali Mumtaz Shaikh that the disputes referred by the respondents in their arbitration application are the disputes which have been highlighted by the appellant in his plaint and since the arbitration is not under the clause of agreement but has also been provided in the Ordinance itself therefore the judgments relied on by the learned counsel in support of his contention that the disputes have to be specified are not applicable because in the judgment in the Novelty Cinema case, quoted supra, which is the main case relied on by the learned counsel, it has been stated that if the suit is filed on the basis of agreement which contains an arbitration clause, then reference to the dispute has to be made and is therefore distinguishable from the facts of the present case. We are of the view that if the suit has been filed not on the basis of an agreement but is covered by the Ordinance then it is not necessary that the disputes are specifically highlighted as from a reading of all the pleadings it is clear as to what the dispute is and the only thing the Court has to examine is that whether such disputes are covered .By the arbitration A clause in the Ordinance/Act or not and since we are satisfied that it is covered by the arbitration clause therefore the arbitration application has to be allowed.
13. We are therefore of the considered view that the order of the learned Single Judge is unexceptionable and no interference is called from this Court. This appeal is therefore dismissed in limine along with pending applications.