' SHAHID KARIM, J.---This is a second appeal under section 100 of Code of Civil Procedure (C.P.C.) and lays a challenge to the judgment and decree dated 20.6.2005 passed by the Addl. District Judge, Multan.
By the said judgment and decree appeal filed by the respondents Nos.2 to 5 was accepted and the judgment and decree dated 12.12.2000 passed by the Civil Judge, Multan was set aside.
2. The relevant facts are that a contract was executed between the appellant and the respondent No.2 on 15.3.1989. On the allegation of breach of contract and the non-fulfillment of the necessary terms of the contract, the respondent No.2 stopped making payments against the bills of the appellant. An application under section 8 of the Arbitration Act, 1940 (Act, 1940) was filed by the appellant. On 11.3.1994 arbitrators were appointed by the civil court who conducted the arbitration proceedings and issued the award dated 11.3.1994 in favour of respondent No.2-authority. Vide order dated 5.11.1995, the objections were accepted and the award in favour of Multan Development Authority (MDA) was set aside. On 27.11.1995 on the application of the appellant, the civil court ordered for the withdrawal of the application under section 8 of the Act, 1940. This order is at page 511 of the file and is Ex.P.93. On 17.12.1995 a suit for declaration was filed by the appellant herein. This suit was decreed by Civil Judge, Multan on 12.12.2000. An appeal filed by the respondent No.2 was accepted vide judgment and decree dated 20.06.2005.
3. The trial court struck the following issues from the respective pleadings of the parties:
(1) Whether the suit is incompetent in view of preliminary objection No.1? OPD.
(2) Whether the plaintiff is estopped to file the suit by his words and conduct? OPD.
(3) Whether the suit is time barred? OPD.
(4) Whether the suit is bad for misjoinder of the parties i.e. Defendants Nos.3 to 5, if so, its effect?
OPD.
(5) Whether the plaintiff failed to complete the work in accordance with the terms and conditions of the agreement and therefore he is liable to bear the consequences occurred later on? OPD.
(6) Whether the plaintiff is entitled to recover Rs. 688052/- from the defendants the detail of which is given in para No.17 of the plaint? OPD.
(7) Relief.
4. The learned counsel for the appellant submits that the findings of the lower appellate court have been rendered primarily on issue No.1 and is a decision which is contrary to law and has also failed to determine material issues of law.
5. Learned counsel for the respondents Nos.2 to 5, on the other hand, has supported the impugned judgment of the lower appellate court and submits that the lower appellate court has rightly held the suit to be incompetent in view of the section 32 of the Act, 1940 which bars a challenge to the existence or validity to the arbitration agreement or award.
6. The judgment and decree of the lower appellate court is merely confined to issue No.1 which relates to the competence or otherwise of the suit filed by theappellant. The lower appellate court has held that the crucial issue No.1 has been decided "in a slipshod manner while ignoring the basic law as the plaintiff was required to file fresh list of proposed arbitrators after setting aside the award".
7. The entire reliance of the lower appellate court was on section 32 of the Act, 1940 on the basis of which it was held that a challenge in the nature of suit for declaration was barred and it was well settled that once the dispute between the parties had been referred to arbitration, the only remedy was under the Act, 1940 and not through any suit. While doing so, the lower appellate court fell into a palpable error. It was assumed by the lower appellate court that once remedy under Act, 1940 had been invoked or availed, the normal remedy under the plenary jurisdiction of the civil court was barred. This is a fallacy and does not have a basis in law. Further, the lower appellate court has proceeded on the presumption that an award was made and the subject matter and reference had merged in the award and, therefore, no suit would lie. This again is negated as the award had been set aside by the order of the civil court and subsequently the application under section 8 of the Act, 1940 had been withdrawn by the appellant. This was a right which was validly exercised by the appellant and no cavil could be taken to it. Further, it could not be held against the appellant so as to bar his right to file a suit for declaration subsequently. There is no precedent cited by the lower appellate court nor has any provision of law referred to in this regard while holding that "a court proceeding to hear such a suit will be acting without jurisdiction, since as a court of general jurisdiction, its jurisdiction to hear a cause of this nature is curtailed".
8. While so holding, the lower appellate court was swayed by the provisions of section 32 of the Act, 1940. Suffice to say that the provisions of section 32 and it tenor is not attracted to the facts of the present case. Section 32 merely bars a suit to challenge a decision upon the existence, effect or validity of an arbitration agreement or award and it further prohibits the setting aside or amendment of an arbitration agreement or an award otherwise than as provided in the Act, 1940: As is evident from the summary of facts brought forth, the suit for declaration was not brought to decide upon the existence, affect or validity of an arbitration agreement or award. The suit merely sought a declaration that the order dated 16.10.1996 whereby the security of the appellant was confiscated after terminating the contract as well as the order dated 17.10.1991 whereby the contract was awarded to another contractor at the risk and cost of the appellant was void, without jurisdiction and ineffective. Simultaneously, a recovery for Rs.6,88,052/- under different heads was also sought. This cannot, by any stretch of imagination, be considered as being barred by section 32 of the Act, 1940. Clearly, the lower appellate court has misinterpreted the provisions of section 32 and while doing so has fallen in palpable error of law. In fact, there were other substantial questions which were involved in the suit from which the present appeal arises and it seems that the respondents have neither taken those objections nor have the courts below adverted to them. I would not like to comment on the objection which could validly be taken and adjudicated upon by the courts below. Since the lower appellate court has rendered its decision merely on issue No.1, there is no escape but toremand this case for the decision on other issues which have gone abegging in the impugned judgment.
9. In view of the above, the judgment and decree of the lower appellate court dated 20.06.2005 is set aside and the case is remanded to the Addl. District Judge, Multan for decision afresh on all the issues in accordance with law.